King Digital, maker of Candy Crush, reported its earnings for Q2 2014 on Tuesday, and they weren’t pretty. The market acted as if its results had suddenly soured from one quarter to another, but the reality is that most of the underlying trends have been worsening for about a year now, since well before its March IPO. See the charts below.

As a primer, two things to know about King and its financials. One is that Candy Crush, easily its most popular game, dominates its results. The other is that its main business model is in-app purchases, and that this model works on the basis that a small percentage of its users make them, but those that do make them spend enormous amounts of money on them. So bear those two facts in mind as you proceed.

First, gross average bookings per user, which King reports on a daily basis. You can see that these peaked a year ago, in Q2 2013, and have been falling since:

So why is this number falling? Well, almost every component which goes to make up that number is in decline or at least slowing down. First, overall user numbers, which King measures three different ways (daily active users, monthly active users, and monthly unique users, all in millions): Continue reading →