Korean winners Com2uS and Gamevil, and King's good/bad IPO timing

foreign Weekly News Digest this is for the week ending the 7th of November 2014. hi I'm John Jordan um so this week um as a bit of last week we're kind of in the in the financial kind of a reporting period so that means all the companies who have their shares on various stock exchanges around the world are reporting their um uh kind of quarterly not normally they're they're Q3 um depending on how they kind of arrange their their quarters but basics for the three months ending 30th 30th of September so September August and July um sales obviously these tend to be the bigger companies um but it's kind of interesting every every kind of three months we get to see kind of a snapshot of how different companies are a kind of uh operating if they're going up or down and equally kind of how different kind of markets particularly Global markets are kind of a

kind of a developing um I've been kind of particularly interesting this week where there's two um two companies uh two Korean uh based games Publishers come to us in game build so for a long time they were they were kind of Archer Rivals they were um they were the kind of the the mid-sized pure mobile developers of Publishers in that country um making free to play games having quite strong uh kind of revenue from Korea and then over the last kind of a couple of kind of four three or four years they've been developing uh internationally particularly in in the US um but what's kind of interesting and so we kind of on popular because we've been tracking them for for a number of years and kind of comparing them because they're kind of similar companies doing similar things and come to us used to be the bigger one and then kind of gameville a kind of like kind of like was a scrappy Underdog and fought its way back to become bigger um and then kind of game of all kind of accelerated away again but um now the kind of the that's kind of slightly less of the undercurrent now because game Bill actually owns a majority stake in in come to us that happened kind of last year so they're kind of like the arrival they're kind of well they're not really Rivals now but they're kind of like two parts of the same company in a way but

it's still kind of interesting to compare them so but both of them put their quarterly figures out this month and both of them are actually their quality figures are kind of amazing really um so come to us is the bigger of of the two by by Revenue so it's um a great look at my cheat sheet so it's revenue is up 102 that's quarter on quarter for Q3 so it's basically doubled um compared to Q2 so it's obviously pretty pretty impressive um and that was uh it's kind of Revenue figures are you know it was 85 million dollars which is a you know a fairly large amount of money um and most interesting I guess you kind of get to see particularly in in what we are now in the free-to-play market it's actually its profit was it was 40 million almost 40 million dollars so effectively its margin was profit to sales was 50 which is which is um pretty incredible so and it's kind of come off two games and not necessarily I mean that well known so there's Ace Fishing which is a fishing game and someone has War which has been downloaded over 20 million times but it's still a fairly what we call kind of a mid-core hardcore kind of RPG

um so it's kind of interesting that those those games have kind of propelled the company um to that status and and fairly kind of quickly in that quarter so you can see it's doubled from the last quarter so we've kind of see in three to play in this industry that when you have a hit you get hit very quickly and very big um you know things can change quite quickly I guess we saw that big glue last week um so the other companies game bills it's a kind of smaller company um but a big thing for it is it's uh it's um sales for 2014 which is actually calendar year 2014 or for the first time be over 100 million dollars which for it is is is obviously kind of a a great thing but if you can tell the comparison that gave those sales to 2014 as a whole will be 100 million dollars whereas come to us for a quarter was 85. so obviously um kind of come to us is by far the biggest company but um with game evil so it's sales I'm having a quick check my cheat sheet again so it's sales rep 28 quarter on quarter and what's interesting in both of those kind of kind of um with business companies while the Korean market is very strong and lucrative um where they're basically seeing very

strong growth is outside of Korea and particularly people come to us which kind of really broke down its figures um it's seeing really big sales in what they call um Asia Pacific outside Korea so they're saying that Japan China uh Hong Kong and Taiwan are the big big markets for that but even even and that's that's about 50 50 of this market now um is is in Asia include a career as well but um the kind of interesting thing was uh actually Europe although kind of much smaller in terms of absolute size Europe grew year on year I think it was something like 100 1 600 um so kind of Europe was growing as fast as Asia Pacific for for they come to us partly because I didn't have such a big um kind of sales in in that market before but it's kind of interesting so often in the west we look at kind of China I guess in particular but um we look at Asia Pacific has been the big growth area but for companies like come to us who are in Asia Pacific actually Europe and the US can still be a very strong growth market for them as as big as China would be potentially for Western companies so it's kind of get a different perspective so I guess the other big companies that it was

interesting to look at this quarter was King Sophie King as um floated last uh this year didn't it um so it's not done that many courses of Revenue but it's kind of a in some ways you can kind of see his IPO was was was very cleverly done it clearly floated at the at the right time so um obviously for companies you want to float just before just for your profits are kind of still exploding um because of investors obviously want to see that you're very profitable and your profits are increasing and they want them by shares in the company with the we're not necessarily the assumption but there is a it's an underlying assumption that there's that growth is going to continue um obviously King's greatest as we've spoken about the kind of how the free play market Works Kings kind of growth in its IPO was predicated on the massive success of Candy Crush Saga there's one of the kind of few games it's a billion dollar game um a kind of a franchise um what's the kind of second one after after gungko's Puzzle and Dragons um and that kind of really profitable but kind of you know the success Global success of um Candy Crush Saga kind of completely

changed kind of King as a company a company that was just generating lost amounts of of profit I guess unfortunately you can kind of suggest that um maybe in the long term it's not good IPO when you're just the next quarter after your IPA quarter is going to be a weaker quarter because you're because you're basically you peaked before the IPA if you see what I mean and that's kind of what's happened with King so it's kind of one of the duality of things there where people go oh King they're a declining company and and and uh check my cheats so um the quarterly sales were down 13 which is you know investors don't like to see that but if um that kind of like hides I guess some absolute figures the kind of Revenue was over a 500 Revenue was 514 million dollars in the quarter which is just enormous clearly compared to those Korean companies it's all about this um you know five six times bigger so King is still a massive company and the other interesting thing is when you look at these companies is how they're generating cash so between the quarter King generated over 140 million dollars of cash um and its cash pile is now just under a billion dollars so it's one of these

companies where you kind of the share you look at the share price from the IPO it's not being successful at all if you bought shares in companies well if you bought those engaged companies you just have your head examined people who certainly individuals shouldn't be doing that and and it's very tricky to buy shares and games games companies um and make make money I think it might be personally um but what's interesting for Kings it's still generating vast amounts of kind of Revenue per course and actually so it lasts quarter it generally um they said it was going to give a dividend out um to people who bought the shares it was a standard way of kind of move the share price doesn't isn't going up then you can give money back to the shareholders by dividend um it's not technically you know tech companies tend not to do that so it took Apple a long time to start giving dividends back to it shareholders even it had you know 100 million 100 billion dollars in cash um so it's not something that people tend to like to do I think it's something that someone like a company like King probably should be doing more of because it's kind of growth phase is over although it was trying to pretend it will not pretend that's the dangerous word isn't it um he was pointing out that um if you strip out Candy Crush Saga which is by far its largest game um it still has a billion dollars of

revenue from games that aren't Candy Crush Saga so it kind of came up with this phrase it's it's non-candy Crash Saga business um which is kind of a I mean it could be a clever way of doing it or you know clever kind of like trying to uh um kind of tell people that it's a big hit isn't necessarily um as important to the company as as they think it is but potentially that could be weakness as well because it has a massive hidden camera which is gonna do more games on um it's got a new game coming out based on the mechanic Crush Saga um this month um so anyway that's kind of interesting that's kind of like what's going on with some of the big companies um and just another company this isn't it's not a publicly owned company so um it doesn't put out it's kind of share price or I didn't put out it's financials but um not that one I'm still in the in the mobile space pretty big in in Facebook and browser stuff but it's a company from Germany called good game studios which kind of has come to prominence it's doing a lot more mobile stuff now and it kind of came performance a couple of weeks ago it had a press release that um announced it had hired its thousandth employee so it now claims it's the biggest games

developer in Germany um a thousand employees is clearly a lot um and it just won a Delights award for its growth over the last five years was uh it's great it's they didn't say what the what the um sales are but over five years its growth has been 28 000 which is um pretty pretty impressive so maybe at some point we'll see we'll see good games and ipn as well I mean I look at their kind of quarters but that was the uh that was lots of lots of numbers this this week um maybe we'll get a bit more uh kind of a personal news next week but see you then thank you