King Digital Entertainment PLC (NYSE:KING) is struggling to maintain its user activity for Candy Crush Saga with lower revenue and earnings stream for the second quarter of 2014. The company has lost over 25% share value after its second quarter financial results announcement on August 12, 2014 and the shares are trading near their 52-week low margin.

Weak quarterly result is not the only concern for the company and its biggest problem lies with monetization of its games. As of now, the main source of earnings for King Digital Entertainment PLC (NYSE:KING) includes a small number of monthly paying users who are ready to pay for their games. The worst thing notice in the second quarter results is the fall of these monthly paying users by 12% and it has just over 10.4 million paying users left.

The company has impressive number of monthly active users standing at 485 million with 83% year-over-year improvement and 138 million daily active users. The company witnessed a growth of 30% in its revenue and 34% in its adjusted EBITDA. However, the biggest concern for the company is that it relies over 2% of its monthly active users (485 million) for all its earnings.

There are some positive things to look forward to include increase in MGABPPU (Monthly gross average bookings per paying user) which rose to $19.54 in the second quarter of 2014 with 26% YOY growth. According to a press release from King Digital Entertainment PLC (NYSE:KING),

“We believe the increase in MGABPPU reflects our retention of our more engaged customers as we have seen that payers who play in more than one game tend to spend more. Additionally, we believe our launch of additional games that offer virtual currency, which creates the opportunity to transact at higher amounts, had a positive impact on our MGABPPU during the period.”

Earlier, King Digital Entertainment PLC (NYSE:KING) reported revenue of $594 million for the second quarter of 2014 as compared to the $455 million for the same quarter last year. The company even announced a large dividend of $150 million to keep investors interest in its shares.

This article has been written by Prakash Pandey and edited by Serkan Unal.

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