Rovio Entertainment Corporation Financial Statement Bulletin March 2, 2018 at 12:00 EET
Rovio’s Financial Statements Bulletin for January-December 2017
ROVIO’S Q4 2017: REVENUE GROWTH CONTINUED, OPERATING PROFIT MORE THAN DOUBLED
October-December 2017 highlights
January-December 2017 highlights
Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period).
Key figures
Calculations and definitions are presented in the Performance Measures section below.
Outlook for 2018
Rovio Group revenue is expected to be 260-300 million euros in 2018 (297 million euros in 2017). Rovio’s profitability as measured by earnings before interest and tax excluding items affecting comparability is expected to be 9 to 11 percent (10.6 percent in 2017).
Basis for outlook
In 2018, Rovio Games business will focus on continuing 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, however, the amount may vary depending on development of the games’ monetization and the level of competition in the market. The cost per acquired user has risen significantly in the market.
Brand Licensing segment revenues are expected to decline by 40% in 2018. The decline is due to the declining 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 license portfolio for 2019 and the Angry Birds movie sequel.
During 2018, Rovio estimates to invest 10-15 million euros in its subsidiary Hatch Entertainment Oy that develops cloud streaming based game service (5 million euros in 2017). Approximately half of the investment will impact Group profit, ie. an impact of 2-3 %-points to the expected EBIT margin, and half will be capitalized development costs and advance payments. Hatch represents one possible way to play mobile games in the future. By investing in the development of Hatch’s streaming service Rovio diversifies its portfolio, aims to utilize the possibilities that new technologies offer for games business, and implements company’s strategy to explore the future of gaming alongside the continuous free-to-play games development.
Dividend proposal
The parent company’s distributable funds amount to EUR 129,800,550.68, of which the profit for the period is EUR 19,577,177.06. The Board of Directors proposes to the Annual General Meeting to be held on April 16, 2018 that a dividend of EUR 0.09 per share be paid (EUR 0.06 for 2016). No dividend will be paid on any treasury shares held by the Company. Based on the number of shares as of the balance sheet date, December 31, 2017, the total amount of the dividend is EUR 7,125,414.75.
Kati Levoranta, CEO:
“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.”
More information:
Kati Levoranta, CEO, tel. +358 207 888 300
René Lindell, CFO, tel. +358 207 888 300
Rauno Heinonen, SVP, Corporate Communications and Investor Relations, tel. +358 40 861 9345
Briefing and webcast:
Rovio will organize an English-language briefing on the result for the financial year for media, analysts, and institutional investors on March 2, 2018 from 14:00 to 15:00 EET at the Rovio office located at Keilaranta 7, Espoo. Registration for attendance should be made in advance by e-mail to comms@rovio.com. The event can be viewed as a real-time webcast and subsequently as a recording on the Company’s 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, Great Britain, China, and the United States.