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What: Shares of mobile game maker King Digital (NYSE:KING) slumped on Friday after the company reported its second-quarter results. While earnings came in above analyst expectations, a shrinking user base and declining bookings sent the stock tumbling. At 12:15 Friday afternoon, the stock was down about 11%.

So what: King reported quarterly revenue of $490 million, down 17.5% year-over-year. Gross bookings, while above the company's previous guidance, also declined, falling 13.4% year-over-year to $529 million. Three of King's games, Candy Crush Saga, Candy Crush Soda Saga, and Farm Heroes Saga, were within the top 10 grossing games in both the Apple App Store and the Google Play Store in the United States.

While the number of monthly active users rose year-over-year, monthly unique users declined by 1.4% to 340 million, and monthly unique payers slumped 27% to 7.59 million. King's mature Candy Crush Saga continues to decline, dragging down gross bookings, while newer franchises aren't growing fast enough to counteract this weakness. Gross bookings for games other than Candy Crush Saga were $324 million during the quarter, up 30% year-over-year, but down 14% from the first quarter.

King reported non-GAAP EPS of $0.49, down 17% year-over-year but higher than analysts were expecting. On a GAAP basis, EPS plunged 27% year-over-year to $0.38. While sales and marketing costs were slashed during the quarter, it wasn't enough to keep profits from falling.

Now what: King expects gross bookings between $460 million and $485 million during both the third and fourth quarters, below analyst expectations of $490 million. While King has been churning out new games, Candy Crush Saga still represents a significant chunk of King's business, accounting for nearly 40% of gross bookings during the second quarter.

While the stock now trades at less than eight times last year's earnings following today's decline, there's no telling how much further profits will fall as Candy Crush Saga continues its decline. Investors seem to be betting that things can get a whole lot worse.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends and owns shares of AAPL, GOOG, and GOOGL. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.