Candy Crush game studio King has proved it's not just a one-trick pony

King Digital, best known for the wildly popular mobile game Candy Crush Saga, has had a rough couple of years.

It had a disastrous IPO in March 2014, dropping 15% on its first day - one of the worst of the year.

People had questioned the wisdom of the IPO upon its initial announcement, given the unpredictable, hot-hit-wonder nature of mobile gaming. "Games companies seem like the kind of startups who might best remain private," my colleague Jim Edwards wrote, "where they can ride the financial roller coaster of the App Store behind closed doors."

At one point last year, the company, there was speculation that King Digital had "waved the white flag on its future" after electing to issue a $150 million dividend. Stock subsequently dropped 25% in after-hours trading.

But when the games company posted better-than-expected results yesterday, stocks soared. It jumped by more than 15%, to $17.87 at its peak. Today it's sitting at $16.92.

In Q4 2014, King Digital booked sales of $586 million, above expectations of $520 million. But this isn't why investors are getting excited. Instead - for the first time - less than 50% of King's revenue is coming from Candy Crush.

It's a dangerous game developing mobile apps. They can become multi-million-dollar businesses overnight, but there's little-to-no brand loyalty from consumers towards the development studios themselves. Games are also unpredictable: They can become hits at any time, then fade away as quickly as they came.

The ultra-simple Flappy Bird was one of the biggest viral sensations of 2014. It got so big that developer Dong Nguyen ultimately removed it from app stores, as he was unable to handle the pressure. But when his studio .GEARS released its second title, Swing Copters, later that year, it failed to get the same traction.

Another example is Mind Candy. It's the studio responsible for the web-based mega-hit Moshi Monsters. But it's also seen massive losses over the past few years, as it has failed to capitalise on its success and diversify its portfolio. "Moshi Monsters captured the imaginations of children and launched at a time when the consumer web was just taking off," CEO Michael Acton Smith said at TechCrunch Disrupt in October 2014. But it's "been a tough time in the last couple of years... There have been lots of sleepless nights."

But analysts - and investors - think that King Digital has managed to sidestep this trap. Its new title, Candy Crash Soda Saga, has done extremely well, and it has a broad stable of other titles including Bubble Witch Saga 2, Farm Heroes Saga, Pet Rescue Saga and Diamond Digger Saga.

A research note from Deutsche Bank says the company "has come a long way towards proving it can bring more hits to market." JP Morgan, meanwhile, believes that the company is "increasingly benefiting from its scale & marketing power as it can outspend peers and leverage significant data to encourage cross-game adoption."

In short, King is using its existing userbase to successfully plug new products before it's too late. And these new titles aren't damaging the established games either. A report from Credit Suisse says "the newer game [Candy Crush Soda Saga] did not cannibalise the older title [Candy Crush Saga] and instead increased engagement overall."

Candy Crush Saga alone is still responsible for 45% of the company's revenue. But as Re/code reports, that's down from 85% a year ago. In Q4, King had three of the top 10 grossing games in the US Apple App Store - and four of the top grossing games in the US Google Play Store.

Candy Crush Saga bookings are declining, Wedbush notes - but contributions from other non-Candy Crush titles "more than offset" this. "Non-Candy Crush games contributed $324 million, up from $264 million last quarter. Perhaps more importantly, Candy Crush bookings were $262 million, down only $18 million sequentially."

Here's how non-Candy Crush Saga gross bookings have grown:

It's still early days, and King hasn't yet proved its longterm stability. J. P. Morgan think it's still "uncertain" whether the company can "sustain multiple strong games for extended periods of time." But it looks like King has proved there's life beyond Candy Crush Saga- and investors are loving it.