Comment from CEO, Kati Levoranta:
“The year 2017 was the best year in Rovio’s history. The performance indicators of the Company’s top games improved and Games revenue grew by 56%. Group revenue increased by 55%, and both the adjusted operating profit and earnings per share doubled. I therefore wish to thank all our employees for this great achievement!
During the year the key figures of Games segment showed strong development due to the improved monetization of the top games. However, in the last quarter of the year our new games, Angry Birds Match, Angry Birds Evolution and Battle Bay landed short of our expectations. Competition in the market intensified, which led to a significant increase in the unit costs of user acquisition, especially in the puzzle genre. Due to this development, Rovio reduced its relative investments in user acquisition to 24% of Games segment revenues in the last quarter. Measured by EBITDA, the unit’s profitability was at a good level of 21 percent.
Although Rovio’s business has a healthy foundation, we are not satisfied with the current performance. Our intention is to return to a higher growth path. We seek to grow our Games business through continuous development, renewal, and improved monetization of our current top live games, and through profitable user acquisition. This Games-as-a-Service model was well proven by our top game Angry Birds 2 as it grew its gross bookings by 83% in 2017. Likewise Angry Birds Friends, launched in 2012, still goes strong. While we see a lot of potential in our existing live game portfolio, Rovio also continues to invest in the development of new games. In response to the increased competition we want to raise our game development and operations to the next level.
The revenue of the Brand Licensing business decreased in the fourth quarter as expected by the declining revenue profile of the Angry Birds Movie. In spite of the decrease in revenues, the unit’s EBITDA amounted to nearly 50% of revenues. Rovio will continue to strengthen the Angry Birds brand in 2018 by, e.g., bringing new video content to the market in cooperation with partners, licensing the brand for new activity parks, and preparing the launch of the Angry Birds Movie sequel, set for release in September 2019.
Rovio continued to finance the beta phase product testing and go-to-market of its subsidiary Hatch Entertainment Oy by approximately EUR 5 million in 2017. The increasing investments in Hatch during 2018 supports Rovio’s strategy of exploring the future of mobile gaming in addition to the development of free-to-play games. Rovio will also continue to actively assess potential acquisition targets.”
You can read full results here.