Rovio Entertainment Corp.: Interim Report for January-September 2017
Rovio Entertainment Corporation Interim report November 23, 2017 at 9:00
Rovio Interim Report for January-September 2017
ROVIO'S REVENUE GREW BY 41%, THE COMPANY SIGNIFICANTLY INCREASED ITS USER ACQUISITION INVESTMENTS
July-September 2017 highlights
- Rovio's revenue increased by 41% to EUR 70.7 million (50.0)
- Adjusted EBITDA was EUR 8.6 million (8.5).
- EBITDA was EUR 6.1 million (8.5).
- Operating profit was EUR 1.6 million (5.2).
- Profit before taxes was EUR -0.5 million (4.6)
- Earnings per share were EUR -0.01 (0.05)
- Diluted earnings per share were EUR -0.01 (0.05)
- Net cash flows from operating activities increased to EUR 18.0 million (11.8)
- Games global quarterly ARPDAU increased to EUR 7 cents (3). TOP 5 games quarterly ARPDAU increased to EUR 12 cents (6).
- User acquisition investments totaled EUR 22.2 million (5.4), or 35% of the Games segment's revenue (11.9%)
- The Games segment launched the Angry Birds Match game in August
January-September 2017 highlights
- Rovio's revenue increased by 74% to EUR 223.2 million (128.5)
- Adjusted EBITDA increased to EUR 50.4 million (19.5)
- EBITDA increased to EUR 46.0 million (19.5)
- Operating profit increased to EUR 20.9 million (12.0)
- Profit before taxes increased to EUR 16.7 million (10.2)
- Earnings per share were EUR 0.17 (0.10)
- Diluted earnings per share were EUR 0.16 (0.10)
- Net cash flows from operating activities increased to EUR 53.7 million (14.5)
- User acquisition investments totaled EUR 53.7 million (10.6), or 30% of the Games segment's revenue (9.4%)
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). The figures in this report are unaudited.
Outlook for 2017 (unchanged):
Rovio maintains the outlook published in its half-year financial report (offering circular dated September 18, 2017), according to which the Company's annual revenue and EBITDA are expected to increase significantly in the financial year ending December 31, 2017, compared to the financial year ended December 31, 2016.
|EUR million||7-9/ 2017||7-9/ 2016||Change, (%)||1-9/ 2017||1-9/ 2016||Change, (%)||2016|
|Adjusted EBITDA margin, %||12.1%||17.1%||22.6%||15.2%||18.5%|
|Operating profit margin, %||2.2%||10.3%||9.4%||9.3%||8.8%|
|Profit before tax||-0.5||4.6||16.7||10.2||63.1%||15.4|
|User acquisition cost||22.2||5.4||308.7%||53.7||10.6||408.2%||18.2|
|Return on equity (ROE), %||20.8%||-||20.8%||-||19.1%|
|Net gearing ratio, %||-62.8%||-6.3%||-62.8%||-6.3%||-11.5%|
|Equity ratio, %||72.9%||60.6%||72.9%||60.6%||64.1%|
|Earnings per share, EUR||-0.01||0.05||0.17||0.10||67.2%||0.14|
|Earnings per share, diluted EUR||-0.01||0.05||0.16||0.10||65.0%||0.14|
|Net cash flows from operating activities||18.0||11.8||52.0%||53.7||14.5||270.7%||22.8|
|Employees (average for the period)||400||474||-15.6%||422||478||-11.7%||476|
Calculations and definitions are presented in the Performance Measures section below.
Kati Levoranta, CEO:
In the third quarter of 2017, we continued to execute our Games First growth strategy. Revenue increased by 41% year-on-year and amounted to approximately EUR 71 million. In line with our growth strategy, we significantly increased our investments in user acquisition, which predictably led to a decline in profitability. Rovio's successful listing on the Helsinki stock exchange at the end of September was evidence of the strong interest in our growth strategy, also in the capital markets.
Rovio's Games business achieved strong growth in the third quarter. The Games business unit's revenue increased by 40% year-on-year, boosted by the improved monetization of top games. We significantly increased our investments in user acquisition, and at the same time in future revenues, for our top-performing games: investments increased to EUR 22 million in the third quarter, which, as expected, reduced the profitability of the Games business unit for the third quarter. We expect the payback time for these investments to be 8 to 10 months. In August, Rovio launched a new game, Angry Birds Match, which has promising performance indicators and the potential to become one of Rovio's best performing games.
The revenue of the Brand Licensing business saw substantial growth in the third quarter, as expected, rising to EUR 6.7 million mainly on the strength of income related to the Angry Birds Movie. In September, Rovio established a marketing partnership with the English Premier League club Everton to strengthen the local and global visibility of the Angry Birds brand. Movie-related revenue helped the Brand Licensing business achieve a significant year-on-year improvement in profitability.
Rovio continues to improve the monetization of its top games by optimizing user acquisition investments in accordance with a carefully managed process and also by continuously introducing new features to its games. As part of its growth strategy, Rovio is also continuously developing new games, with only those games that pass strict internal assessments being approved for market launch.
Rovio's Initial Public Offering in September 2017 saw the Company acquire more than 11,000 new shareholders and accumulate gross proceeds of EUR 30 million. Rovio plans to use the funds to support its growth strategy. Listing on the stock exchange also enables Rovio to make more transparent use of shares as the foundation of the long-term incentive scheme for personnel.
Rauno Heinonen, SVP, Corporate Communications and Investor Relations, tel. +358 40 861 9345
Briefing and webcast:
Rovio will organize a Finnish-language briefing for media, analysts, and institutional investors on November 23, 2017 from 11:30 to 12:30 EET at the Rovio office located at Keilaranta 7, Espoo. Registration for attendance should be made in advance by e-mail to firstname.lastname@example.org.
The Company will also organize an English-language webcast starting at 15:30 EET. The information about how to participate in the webcast can be found on Rovio's website http://www.rovio.com/investors/investor-relations. The presentation materials will be available after the briefing and webcast on the Rovio website at www.rovio.com/investors.
ROVIO ENTERTAINMENT CORPORATION
Board of Directors
Distribution: Nasdaq Helsinki, principal media, www.rovio.com
Rovio in brief
Rovio is a games-first entertainment company that creates, develops and publishes mobile games and acts as a brand licensor in various entertainment and consumer product categories. The Company is best known for the global Angry Birds brand, which started from a popular mobile game in 2009. Today, the Company offers multiple mobile games, has produced The Angry Birds Movie, which opened number one in theatres in 50 countries, and licenses the Angry Birds brand to consumer products and other entertainment content. Rovio's operations are divided into two business units, Games and Brand Licensing. Rovio is headquartered in Finland and has offices in Sweden, the United Kingdom, China and the United States.