King beats estimates with revenues of $608 million on continuing Candy Crush Saga dominance

Many investors worry that King is too reliant on Candy Crush Saga, but for now, the developer is having a hard time hearing those concerns from high atop its pile of money.

The London-based developer posted the results for its fiscal first quarter today, which ended March 31. During that period, the company generated $607.6 million in revenues, which is up from $206 million year-over-year. That also bests the Wall Street consensus of $601 million. Its earnings hit $248.6 million, which is up from $81.4 million in the same period of 2013.

The developer is one of the major mobile-game publishers. Its Candy Crush Saga puzzler, which has players matching up candies to score points, was the top-grossing game of 2013. It continues to land near the top of the highest-grossing chart on iOS, Android, and Facebook. King’s Pet Rescue Saga and Farm Heroes Saga are also huge hits that are regularly in the top-grossing chart, but neither have duplicated Candy Crush Saga’s success.

“We are pleased with our first quarter 2014 results and are executing on our plan to build a strong portfolio of games,” King chief executive Riccardo Zacconi said in a statement. “Our existing titles are performing well, and with the strong performance of Farm Heroes Saga following its January mobile launch, we had three games in the top 10 grossing games list on all major platforms for the first quarter. With the massive reach of our player network, our existing portfolio of highly engaging games, and our development plan for additional games well underway, we are well-positioned for gross bookings growth and diversification in 2014.”

King now boasts 481 million monthly active users across all of its titles on mobile, social, and the web. That’s up from 138 million in Q1 of 2013. This represents a 249 percent increase year-over-year. This number is also up 73 million, or 18 percent, from Q4 2013.

But the developer is starting to diversify its earnings. Prior to this quarter, Candy Crush Saga represented 78 percent of its gross bookings. The game now accounts for 67 percent of bookings.

While King has a stable of hits, the fact that it still derives most of its revenue from one product has caused investors to hesitate. The company debuted its initial public offering on March 26 at $22.50 and a market cap of $7 billion. Its share price took an immediate hit and has never traded higher than $21.39 since, while sometimes reaching as low as $15.84. King is currently trading at $19 with a market cap of $6 billion.

The developer is moving in the right direction. It is continuing to grow while relying less on one game. That’s what investors want to hear, and King delivered.

On Monday, a number of analysts (including several underwriters of the King IPO) initiated coverage of the stock. Most of the underwriters believe the market is undervaluing the game company and that it isn’t a one-hit wonder. Cowen & Company, for example, gave a price target of $31. Eilers Research targeted it much more modestly at $19. Everyone knows that King needs to replace revenue it is currently making from Candy Crush Saga now with something else in the future, and King’s value going forward will directly reflect whether it is capable of doing that.

For its 2014 fiscal outlook, King expects revenues of 2.4 billion to 2.5 billion, which is in line with its previous guidance.