Adjusted operating profit margin 18.9%, games gross bookings at last year’s level with lower user acquisition
Kati Levoranta, CEO:
In Q3 2020, our Games revenues declined slightly quarter-on-quarter after the revenue and player engagement normalized from the peak during the global shelter-at-home situation in Q2 2020. The revenues were higher than in Q1 2020 and, in comparable currencies, games revenues grew by 1% and gross bookings by 3% year-on-year.
The user acquisition investments were marginally increased quarter-on-quarter as expected as we continued to scale up our newest game Small Town Murders. However, during the quarter, the user acquisition investments were at a considerably lower level than in Q3 2019. As a result of the moderate level of UA investment and stable games revenues the profitability continued to be at a high level and improved significantly year-on-year. As earlier stated, our UA investments are driven by our 12-month payback model and the overall investment level is dependent on both the games performance and the external market environment. Due to high profitability our operative cash flow was very strong.
During the third quarter, our largest game Angry Birds 2 grew year-on-year and has continued at a quite stable run-rate since the end of Q2 when the revenues normalized after the Covid-19 peak. We are happy with the continued strong performance of Angry Birds 2 and its exciting road map of new updates and features for Q4 this year. The strong momentum of Angry Birds Friends that started at the end of Q1 continued during Q3. Angry Birds Dream Blast’s revenue declined from the previous quarter and due to much lower UA compared to one year ago, the revenue was also lower year-on-year.
We continued to scale up Small Town Murders, our newest game that was released in June this year. New murder mysteries and puzzles are being added to the game every month. We introduced the game with an end-game feature to increase player engagement especially with the most advanced players who play through the content very fast. In October the game was localized to 10 new languages including Japanese and Korean. We believe that localized languages can enable higher engagement and monetization
Our new games roadmap is healthy with 3 games in soft launch and in total 8 games in various stages of development. The timing of new game releases is always uncertain until the KPI’s and the user acquisition scalability is verified in the soft launch stage. We believe that our current games in soft launch will in the long run benefit from having more time in development and thus, we are not launching a new game at the end of 2020. While we keep on adding new projects into our roadmap, we have also continued strengthening our studios with recruitments and appointed Andy Muesse as head of our Stockholm games studio.
We announced on 5th of October that I will be leaving Rovio at the end of 2020. I started as Rovio CEO in January 2016, and during the past five years we have crystalized our strategy and brought more focus in our operations. At the same time, we have transformed the company from a privately-owned company into a public company. It’s been great to work with top professionals in the game business and be surrounded with talented and passionate people. Today, Rovio is in good financial shape, has a strong games portfolio, and we have an amazing crew of talented people.
Link to full report here.