Rovio Entertainment Corporation Stock Exchange Release August 17 2018 at 08.30 a.m. EET
Rovio’s half year financial report for January – June 2018
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.
Rovio continued its successful Games as a Service (“GaaS”) strategy in the second quarter of 2018. Rovio’s innovative updates in Angry Birds 2 and increased user acquisition investments propelled Rovio’s second quarter Games revenues to EUR 65.3 million which is close to the record-breaking Q4/2017 showing 6.4% improvement year-on-year. Weak dollar continued to affect the growth in Euro terms and in comparable currencies the growth was 12 %.
Angry Birds 2 made again a new record quarter of EUR 29.7 million in gross bookings which is 38% better than the previous record quarter earlier this year. The gross bookings of Angry Birds Friends grew by 11% compared to the previous quarter. Angry Birds Match also grew from the previous quarter, however, for the other new games, we did not see the growth we wanted.
The total Games revenue in the first half of 2018 was EUR 122.1 million (117.9 million). Growth was thus 3.5% year-on-year. In comparable currencies Rovio’s Games business grew 12% in the first half of 2018.
The amount of daily and monthly active users also improved from previous quarter and so did the average revenue per daily active users. The number of monthly unique payers reached an all-time high of 581 thousand.
The revenue of Rovio’s Brand Licensing Unit was, as expected, lower year-on-year mainly due to fact that a large chunk of The Angry Birds Movie income was recognized in the second quarter last year. This quarter, the Brand Licensing Unit launched the licensing program for The Angry Birds Movie 2 in Las Vegas and has signed licensing contracts with many top consumer brands such as Chupa Chups, Crocs, and Pez.
Mainly due to smaller movie income, Rovio group revenue was 9.9% smaller in the first half of 2018 that in the corresponding period of 2017 and was EUR 137.5 million (152.6). Growing user acquisition investments and smaller movie revenue resulted in a smaller but still healthy operating profit of EUR 6.0 million (14.1) or 8.4% of revenues in 2Q18. Rovio is keeping its guidance for revenue and profitability unchanged.
In July, Hatch Entertainment took home an European award for Hottest Media/Entertainment Startup. The development of Hatch’s game streaming service continues actively, and the beta version is available on Android in 18 European countries.
Rovio maintains its full year outlook as reported in the 1-12/2017 financial statement bulletin. Rovio Group revenue is expected to be EUR 260-300 million in 2018 (EUR 297 million 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 (12.1 percent in 2017).
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 licensing portfolio for 2019 and The Angry Birds Movie sequel.
During 2018, Rovio estimates to invest 10-15 million euros in its subsidiary Hatch Entertainment Ltd. that develops a cloud-based game streaming service (5 million euros in 2017). Approximately half of the investment will impact Group profit, i.e. 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.
Rovio will host an English language webcast on the half year 2018 financial results for investors and media at 14:00-15:00 EET on 17.8.2018. The webcast can be viewed at: https://www.rovio.com/investors-investor-calendar, and later as a recording.
Kati Levoranta, CEO, tel. +358 207 888 300René Lindell, CFO, tel. +358 207 888 300Mikko Setälä EVP, Investor Relations, tel. +358 400 607 437
Distribution: Nasdaq Helsinki, principal media, www.rovio.com
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