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Rovio Entertainment Corp.: January-March 2021 interim report: Games revenue grew 10% in comparable currencies

Rovio Entertainment Corporation
·8-min read

Rovio Entertainment Corporation Stock Exchange Release April 29, 2021 at 9.00 a.m. EEST

Games revenue grew 10% in comparable currencies

January–March 2021 highlights

  • Rovio group revenue was EUR 67.1 million (66.6) and grew 0.7% year-on-year.

  • Group adjusted operating profit was EUR 10.1 million (13.0) and adjusted operating profit margin 15.0% (19.6)

  • Group adjusted EBITDA was EUR 12.3 million (16.2) and adjusted EBITDA margin 18.3% (24.3)

  • Games revenue grew 3.4% year-on-year to EUR 64.9 million (62.7). In comparable currencies, Games revenue grew approximately by 10%. The Games gross bookings were EUR 64.2 million (62.1) and grew 3.4% year-on-year. In comparable currencies, the gross bookings grew approximately by 10%.

  • Gradual scaling up of Small Town Murders continued and it reached a gross bookings of EUR 3.9 million

  • Angry Birds Friends continued its strong performance and made its best quarter since Q3 2018 with gross bookings growing 44% y-o-y to EUR 8.1 million (5.6)

  • User acquisition investments were EUR 17.3 million (13.5) and 26.7% of the Games segment’s revenue (21.5%)

  • Brand Licensing revenue was EUR 2.2 million (3.9) and declined 41.8% year-on-year. Consumer products revenue in the quarter were impacted by Covid-19 that has weakened sales across categories.

  • Operating cash flow was EUR 2.5 million (11.5)

  • Earnings per share were EUR 0.10 (0.11)

Key figures

1-3/

1-3/

Change,

1-12/

EUR million

2021

2020

%

2020

Revenue

67.1

66.6

0.7%

272.3

EBITDA

11.8

15.9

-25.9%

60.0

EBITDA margin

17.5%

23.8%

22.0%

Adjusted EBITDA

12.3

16.2

-24.1%

60.1

Adjusted EBITDA margin, %

18.3%

24.3%

22.1%

Operating profit

9.5

12.7

-25.1%

42.5

Operating profit margin, %

14.2%

19.1%

15.6%

Adjusted operating profit

10.1

13.0

-22.7%

47.2

Adjusted operating profit margin, %

15.0%

19.6%

17.3%

Profit before tax

10.4

11.5

-9.7%

40.7

Capital expenditure

0.9

0.8

19.2%

3.9

User acquisition

17.3

13.5

28.5%

58.7

Return on equity (ROE), %

23.3%

13.3%

24.4%

Net gearing ratio, %

-75.1%

-69.5%

-77.6%

Equity ratio, %

83.4%

80.8%

82.3%

Earnings per share, EUR

0.10

0.11

-11.3%

0.43

Earnings per share, diluted EUR

0.10

0.11

-11.7%

0.43

Net cash flows from operating activities

2.5

11.5

-78.3%

63.6

Employees (average for the period)

487

466

4.4%

470

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.

Alex Pelletier-Normand, CEO:

I can definitely say this first quarter as CEO has been exciting. The Rovio hive has been buzzing with activity during these first months of 2021. The good momentum from last year has carried on to the first quarter of 2021 and resulted in sales growth across our key games. Our Games business grew 3.4% y-o-y in reported currencies and 10% in comparable currencies. Our profitability was healthy during the quarter; our Adjusted Operating Profit Margin reached 15%. This represents a decline y-o-y which can be attributed to an incremental increase in UA spending, building up for the launch of Darkfire Heroes and taking advantage of opportunities we detected in other games, such as Small Town Murders. Our operating expenses also increased y-o-y, as we have added two more game studios, aimed at extending our market footprint.

Our biggest game, Angry Birds 2 grew y-o-y and the game’s revenue improved further towards the end of the quarter. In fact, the game reached the half-a-billion euros mark in cumulative gross bookings since its launch in 2015. Angry Birds Dream Blast had a large update in the first quarter, which had a positive impact on monetization. The game grew vs. the seasonally stronger Q4 2020 and we look forward to further improving the game going forward. Angry Birds Friends is our oldest live game, and it continued its impressive momentum and grew 44% y-o-y, reaching its best quarter since Q3 2018. Small Town Murders ended the first quarter with seven straight weeks of consecutive growth. These games demonstrate well the longevity and tenacity of the games-as-a-service business model and our sophisticated live operations.

Our new game development pipeline made good progress in the first quarter. In January we soft-launched Angry Birds Journey, a casual slingshot game that targets a broad audience. More recently, at the beginning of April, Supernatural City also joined the list of games in soft launch. The game perfectly exemplifies our genre mastery strategy as it is our second narrative puzzle game, building from the experience of Small Town Murders. Finally, we were delighted to virtually celebrate with our Copenhagen studio, the global launch of Darkfire Heroes, a strategic team-based RPG. The game launched on 15th of April and we will now focus on scaling the game gradually and keep on improving it as a live service. I am really pleased to see how this newly acquired studio was able to flourish within the Rovio ecosystem and how together, we were able to reach this milestone with the game.

As stated in the introduction, it has been a busy and exciting quarter! I am proud of the progress achieved by the teams, and at the same time, I see how much potential there is. We made big steps in new game development and improved our live titles across the board. It is worth noting that we released a second game working from home, showing that Rovians adapted well to the situation and continue to deliver consistently. We will continue building on the progress and focus on seeking new sources for organic growth. We will continue to map out and identify potential targets for M&A to gain new growth vectors and diversify our portfolio. We have a positive momentum, and we are determined to keep it up throughout the year.

2021 outlook (unchanged)
The mobile gaming market continues to grow with casual gaming being a major growth driver. The ongoing changes in consumer behavior and underlying market trends are accelerated by the COVID pandemic and plays an important role in both current games’ operation and new game development. This combined with industry changes like Apple’s privacy policy fuels the near-term uncertainty in the market environment.

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 first quarter 2021 financial results, including a Q&A session for analysts, media and institutional investors at
14:00-15:00 EEST on April 29, 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:
PIN: 72543629#

Finland: +358 981710310
Sweden: +46 856642651
United Kingdom: +44 3333000804
United States: +1 6319131422

More information:
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)

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