Rovio Entertainment Corporation Stock Exchange Release Nov. 16, 2018 at 08:30 a.m. (EET)
Rovio Entertainment Interim Report January – September 2018
Increased Profit, Strong Cashflow, Yet Another Record Quarter for Angry Birds 2
July-September 2018 highlights
January-September 2018 highlights
Key figures
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year. Calculations and definitions are presented in the Performance Measures section.
The changes in comparable currencies have been calculated by translating the reporting period figures with the average USD/EUR exchange rates of the comparison period for the US dollar dominated in-app-purchases in United States and global ad network sales.
Kati Levoranta, CEO:
Rovio’s operating profit in the third quarter of 2018 grew to EUR 10.4 million from EUR 1.6 million of the third quarter in 2017 and the company operating cashflow was over EUR 11 million. The revenue in the quarter was on the same level as the year before, growing 0.5% to EUR 71.0 million from the last year’s EUR 70.7 million.
The costs of acquiring new users were somewhat higher than in the previous quarter. In order to keep the payback time of these investments within the targeted 8-12 months range, the company invested less in user acquisition this quarter which also contributed to a better operating profit.
Angry Birds 2 gross bookings grew for the third quarter in a row and 68% year-on-year, while Angry Birds Friends proved itself a reliable wingman with a steady performance. Angry Birds 2 has kept its position in the top grossing charts thus, providing a good base for next year’s 10th year anniversary of Angry Birds and The Angry Birds Movie sequel. To ensure faster innovation cycle in Angry Birds 2, a third development team was added during the year.
While we reiterate the importance of continuously improving our live games with the goal of increasing their revenue over time, it is clear that we need new games in order to accelerate growth. Consequently, we are increasing the number of new internal and external game projects for the next and following years. We have 12 game projects ongoing in different phases and next year, our goal is to launch at least two new games. We have now two Angry Birds games in soft launch and, in addition, one game is waiting for publishing decision for the Chinese market.
In August, as a part of Rovio’s exploration in the future of gaming, we saw the launch of Angry Birds Mixed Reality (MR) game Angry Birds: FPS (First Person Slingshot) on the Magic Leap MR platform. Moreover, Rovio’s 80% owned cloud-based game streaming service Hatch has left beta phase and was recently publicly released on Google Play in the Nordic countries, UK and Ireland.
On November 14th Rovio announced that Alexandre Pelletier-Normand has been appointed as the Executive Vice President of Rovio’s Games Business Unit and a member of Rovio’s Leadership Team. Alexandre is a seasoned games executive with a remarkable career in the industry. He is joining Rovio from Gameloft and starting on January 2, 2019.
Outlook for 2018 specified
Rovio specifies its full year 2018 outlook. Rovio Group revenue is expected to be EUR 280-290 million in 2018 (previous outlook EUR 260-300 million). Rovio’s profitability as measured by earnings before interest and tax excluding items affecting comparability is expected to be 10 to 11 percent (previous outlook 9 to 11 percent).
Basis for outlook
In 2018, Rovio Games business continues development of its live game portfolio according to the Games as a Service strategy, profitable user acquisition and development of new games. The user acquisition investments are expected to be around 30 percent of Games revenues for the full year and have a payback time of 8-12 months. The amount of user acquisition may vary depending on development of the games’ monetization and the level of competition in the market. Overall, we estimate that the Games business segment is growing slightly in revenues in 2018.
Brand Licensing segment revenues are expected to decline by approximately 37% in 2018. The decline is due to the declining revenue profile of the Angry Birds Movie. The consumer products revenues are expected to be at similar level as in 2017. The focus of Brand Licensing in 2018 is on preparing the licensing portfolio for 2019 and The Angry Birds Movie sequel.
In 2018, Rovio invests approximately 8 million euros (EUR 7 million in operating expenses and rest in advance payments and capitalized development expenses) in its subsidiary Hatch Entertainment Ltd. that develops a cloud-based game streaming service (5 million euros in 2017)
Briefing and webcast:
Rovio will host an English language webcast on the interim financial results for investors, media and institutional investors at 14:00-15:00 EET on 16.11.2018. The webcast can be viewed live at: https://www.rovio.com/investors-investor-calendar , and later during the same day as a recording.
Further information: CEO, Kati Levoranta, tel. +358 207 888 300CFO René Lindell, tel. +358 207 888 300
EVP, Investor Relations, Mikko Setälä tel. +358 400 607 437mikko.setala@rovio.com
ROVIO ENTERTAINMENT CORPORATIONMikko Setälä
Distribution: Nasdaq Helsinki Key media www.rovio.com
About Rovio: Rovio Entertainment Corporation is a global entertainment company that creates, develops and publishes mobile games, which have been downloaded over 4 billion times. The Company is best known for the global Angry Birds brand, which started as a popular mobile game in 2009, and has since evolved from games to various entertainment and consumer products in brand licensing. Today, the Company offers multiple mobile games, animations and has produced The Angry Birds Movie, which opened number one in theatres in 50 countries and the sequel which is in production. Rovio is headquartered in Finland and the company’s shares are listed on the main list of NASDAQ Helsinki stock exchange with the trading code ROVIO. (www.rovio.com)