Rovio Entertainment Corporation Stock Exchange Release February 19, 2021 at 9.00 a.m. EET
Good profitability and cash flows continued
October–December 2020 highlights
• Rovio group revenue was EUR 68.5 million (71.6) and declined 4.3% year-on-year due to lower brand licensing revenues and impact from FX
• Group adjusted operating profit grew to EUR 7.5 million (0.2) and adjusted operating profit margin increased to 10.9% (0.3%) due to lower level of user acquisition year-on-year
• Games revenue declined 3.4% year-on-year to EUR 64.4 million (66.7) due to FX. In comparable currencies, games revenue grew approximately by 2%.
The Games gross bookings were EUR 64.9 million (67.0) and declined 3.2% year-on-year. In comparable currencies, the gross bookings grew approximately by 2%
• Scaling up of Rovio’s newest game Small Town Murders’ continued and its gross bookings reached EUR 3.8 million and a yearly run-rate of EUR 15 million
• Angry Birds Friends game made its best quarter since Q3 2018 with gross bookings growing to EUR 8.0 million (5.9)
• User acquisition investments were EUR 16.0 million (27.5), or 24.9% of the Games segment’s revenue (41.3%)
• Angry Birds Legends game was cancelled, and EUR 4.6 million assets were written-off
• Brand Licensing revenue was EUR 4.1 million (4.9) and declined 16.2% year-on-year
• Group adjusted operating profit excluding Hatch Entertainment was EUR 9.1 million (3.2) and adjusted operating profit margin excluding Hatch Entertainment was 13.3% (4.5%)
• Operating cash flow was EUR 17.6 million (3.1)
• Earnings per share was EUR 0.04 (-0.01)
• Rovio’s head of Games Alexandre Pelletier-Normand was appointed as Rovio CEO starting from 1st January 2021.
January-December 2020 highlights
• Rovio group revenue was EUR 272.3 million (289.1) and declined 5.8% year-on-year
• Group adjusted operating profit grew to EUR 47.2 million (18.3) and adjusted operating profit margin increased to 17.3% (6.3)
• Games revenue declined 2.5% year-on-year to EUR 258.2 million (264.8). In comparable currencies, games revenue declined approximately by 1%. The Games gross bookings were EUR 259.2 million (263.2) and declined by 1.5% year-on-year. In comparable currencies, the gross bookings were stable year-on-year.
• User acquisition investments were EUR 58.7 million (99.7), or 22.7% of the Games segment’s revenue (37.7%)
• Brand Licensing revenue was EUR 14.0 million (24.3) and declined 42.5% year-on-year
• Group adjusted operating profit excluding Hatch Entertainment was EUR 54.6 million (29.2) and adjusted operating profit margin excluding Hatch Entertainment was 20.1% (10.1%)
• Operating cash flow was EUR 63.6 million (10.5)
• Earnings per share was EUR 0.43 (0.17)
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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.
The parent company’s distributable funds amount to EUR 185.326.802,90, of which the profit for the period is EUR 52,855,821.49. The Board of Directors proposes to the Annual General Meeting to be held on March 30, 2021 that a dividend of EUR 0.12 per share be paid (EUR 0.09 for 2019). Based on the number of shares outstanding as of the balance sheet date, December 31, 2020, the total amount of the dividend is EUR 8,817,510.60.
Alex Pelletier-Normand, CEO:
My experience as the Head of Games of Rovio has shown me that as a company, we have the right ingredients to be competitive in today's mobile gaming market. We have focused teams, deep know-how in the Casual segment - the largest segment in mobile games - a brand with a wide appeal and extremely high global awareness, a will to pioneer future paradigm changes in the market, and a strong balance sheet to fuel growth. I am honored to have been appointed as the CEO of such a company at the beginning of the year.
Rovio ended the year 2020 with stable key game bookings, good profitability, and strong cash flow. In the last quarter, games gross bookings grew year-on-year in comparable currencies. Working from home we continued to deliver on our strategy of putting our players first through great live services. I am happy to say that our operations and new game projects are progressing well despite the unusual circumstances brought on by the COVID pandemic. I want to thank all Rovians for their great efforts and perseverance in 2020. They adapted to the challenges brought by remote work fast, resolutely, and flawlessly. Our eagerness to approach new circumstances head-on is deeply representative of how we will tackle market evolutions.
In the fourth quarter, our largest game Angry Birds 2 gross bookings grew year-on-year and we launched a significant update - Arena 2.0 - that was especially targeted at the most engaged and competitive players, showing them a deeper sense of progression. This update was intended to act as a launchpad, opening new opportunities for evolutions, and allowing us to start the year 2021 in a good position. Angry Birds Dream Blast declined year-on-year, attributable to a much lower level of user acquisition. We are in the progress of renewing the game’s visual progression system and introducing new events that we believe will increase player retention. Angry Birds Friends had its best quarter since Q3 2018, and we can now see that the investments we made on this game since 2019 are paying off. During the quarter we continued to gradually scale up our newest game Small Town Murders while introducing new content, new language versions and an end-game loop as important steps to enable increased player engagement and further scalability.
In 2020, we took steps forward on a strategic level. Firstly, we believe it is necessary to think about the shape that will take the industry in years ahead. To be at the forefront of those innovations, we set up a forward-looking studio in Montreal, exploring trends that will drive the games of tomorrow, including games being used as social networks, the switch towards a post-platform paradigm, and the emergence of the metaverse. Secondly, we acquired a studio in Copenhagen for which we identified strong synergies. The combination of the team’s deep knowledge of the action RPG genre and Rovio’s marketing and analytical support gave fruit to significant progress of their game during the fall. I am happy to announce that the studio’s game Darkfire Heroes, which was in soft launch in 2020, is planned to be launched in April of this year.
Lastly, the year ended with my nomination as CEO. Knowing the company very well given my previous role, I expect the transition to continue to unfold smoothly, with the support of Rovians. In 2021, we focus on executing our strategy on all fronts and keep putting our players first. Our live game portfolio is solid, and the new game pipeline is deep with numerous promising projects. At the same time, we are paving the way for the years ahead by continuing to invest into forward-looking products that take advantage of industry shifts that were accelerated by the pandemic. On the M&A front we engage with companies that have innovative games, clear synergies and talented teams that share our vision of the future. My highest priority is to work with fellow Rovians to drive long-term growth through delivering on our mission: craft joy with player-focused gaming experiences that last for decades.
We will focus on improving the performance of our key live games and on launching new innovative products. We continue to show diligence in our UA spend. Depending on market conditions, the performance of our investments, and the launch of new games, we aim to increase our UA investments to build growth for the coming years. This may have implications on short-term profitability.
We will continue investing in our Future of Gaming initiatives, taking advantage of the trends we see in consumer behavior and building our positioning in the rapidly evolving market.
In addition, we seek growth through synergistic acquisitions that can deliver long-term value growth.
Audiocast and conference call:
Rovio will host an English language audiocast and conference call on the fourth quarter and full year 2020 financial results, including a Q&A session for analysts, media and institutional investors at
14:00-15:00 EET on February 19, 2021. The audiocast can be viewed live at: https://investors.rovio.com/en, and later on the same day as a recording.
Conference call details:
Finland: +358 981710310
Sweden: +46 856642651
United Kingdom: +44 3333000804
United States: +1 6319131422
Alex Pelletier-Normand, CEO, tel. +358 40 485 8985 (media phone)
René Lindell, CFO, tel. +358 40 485 8985 (media phone)
Distribution: Nasdaq Helsinki, key media, https://investors.rovio.com/en
Rovio in brief
Rovio Entertainment Corporation is a global, mobile-first games company that creates, develops and publishes mobile games, which have been downloaded over 4.5 billion times so far. Rovio 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, Rovio offers multiple mobile games, animations and produced The Angry Birds Movie in 2016. Its sequel, The Angry Birds Movie 2, was released in 2019. 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. (www.rovio.com)