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Rovio Entertainment Corporation Stock Exchange Published on August 11, 2022 at 9:00AM EST
Rovio Entertainment: 2022 Semi-Annual Financial Report: Good results in a market facing headwinds in the second quarter
Highlights from April to June 2022
- Rovio Group revenue increased by 14.0% to EUR 78.4 million (68.8). On a comparable basis, revenue (on a constant currency basis, excluding Ruby Games) declined -1.1%.
- Group Adjusted EBITDA rose to EUR 15 million (8.7) and adjusted EBITDA margin increased to 19.1% (12.7).
- The Group’s adjusted operating profit was EUR 11.3 million (6.2), and the adjusted operating margin improved to 14.3 percent (8.9).
- Total game bookings rose 8.8% to €72.4 million (66.6). Comparable gross bookings (on a constant currency basis, excluding Ruby Games) were down 6.5%.
- Rovio’s biggest game, Angry Birds 2, recorded €28.4 million in gross bookings, up 6.9% year-on-year
- Angry Birds Friends grew by 10.0% year-on-year with total bookings of EUR 9.1 million.
- Rovio’s latest game, Angry Birds Journey, launched on January 20, 2022, with a total pre-order of €7.3 million.
- User acquisition investment was EUR 20.9 million (21.3), representing 27.5% (32.0%) of game revenue.
- Operating cash flow was EUR 15.3 million (7.6).
- Earnings per share were EUR 0.13 (0.07).
Highlights from January to June 2022
- Rovio Group revenue rose 20.2 percent to 163.4 million euros (135.9). Comparable growth (in constant currency, excluding Ruby Games) was 5.3%.
- Group Adjusted EBITDA increased to EUR 28.6 million (21.0) and adjusted EBITDA margin increased to 17.5% (15.5).
- The Group’s adjusted operating profit was EUR 21.2 million (16.2) and the adjusted operating margin improved to 13.0% (12.0).
- Gross game bookings increased by 17.2% to EUR 153.2 million (130.8). Comparable gross bookings growth (in constant currency, excluding Ruby Games) was 1.9%.
- User acquisition investment was €52 million (38.5), or 32.9% (29.4%) of game revenue.
- Operating cash flow was EUR 29.3 million (10.1).
- Earnings per share were EUR 0.20 (0.17).
key figure
| 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ | |
| million euros | 2022 | 2021 | % | 2022 | 2021 | % | 2021 |
| income | 78.4 | 68.8 | 14.0% | 163.4 | 135.9 | 20.2% | 286.2 |
| EBITDA | 14.3 | 8.7 | 63.7% | 25.4 | 20.5 | 24.1% | 50.8 |
| EBITDA margin | 18.2% | 12.7% | 15.5% | 15.1% | 17.7% | ||
| Adjusted EBITDA | 15.0 | 8.7 | 72.2% | 28.6 | 21.0 | 36.4% | 54.8 |
| Adjusted EBITDA margin, % | 19.1% | 12.7% | 17.5% | 15.5% | 19.1% | ||
| operating profit | 10.5 | 6.2 | 70.7% | 18.0 | 15.7 | 14.7% | 37.7 |
| Operating profit margin, % | 13.4% | 8.9% | 11.0% | 11.5% | 13.2% | ||
| Adjusted operating profit | 11.3 | 6.2 | 82.8% | 21.2 | 16.2 | 30.7% | 43.7 |
| Adjusted operating margin, % | 14.3% | 8.9% | 13.0% | 12.0% | 15.3% | ||
| profit before tax | 12.5 | 6.1 | 106.4% | 20.1 | 16.5 | 22.4% | 40.3 |
| Capital expenditures | 1.1 | 0.8 | 34.2% | 3.2 | 1.8 | 84.4% | 4.0 |
| User acquisition | 20.9 | 21.3 | -1.9% | 52.0 | 38.5 | 34.8% | 77.2 |
| Return on Equity (ROE), % | 22.5% | 18.5% | 22.5% | 18.5% | 22.2% | ||
| Net debt ratio, % | -82.4% | -72.5% | -82.4% | -72.5% | -77.4% | ||
| Equity ratio, % | 71.0% | 84.9% | 71.0% | 84.9% | 70.8% | ||
| Earnings per share, EUR | 0.13 | 0.07 | 94.3% | 0.20 | 0.17 | 21.5% | 0.41 |
| Earnings per share, diluted in euros | 0.13 | 0.07 | 92.2% | 0.20 | 0.17 | 20.8% | 0.41 |
| Net cash flow from operating activities | 15.3 | 7.6 | 101.9% | 29.3 | 10.1 | 191.2% | 44.0 |
| Employees (period average) | 503 | 481 | 4.7% | 499 | 484 | 4.4% | 490 |
Unless otherwise stated, comparative data in parentheses refer to the same period of the previous year. Calculations and definitions are provided in the Performance Measurement section.
Changes in comparable currencies are derived by converting the data for the reporting period to the average USD/EUR exchange rate for US in-app purchases and global ad network sales in US dollars during the comparison period.
Alex Pelletier-Nomand, CEO
I am proud to report that we performed well in a challenging environment in the second quarter. We have significantly outperformed the market and I would like to thank all Rovians for their dedication and hard work during this time. During the second quarter, we reported healthy growth in revenue due to the release of Angry Birds Journey, the integration of Ruby Games, and favorable foreign exchange. Our comparable revenue was nearly flat year-over-year, while our profit grew significantly.
Our biggest game, Angry Birds 2, continues to grow year over year and celebrates its 7th anniversary with a special community-driven gaming event at the end of July. We’re really humbled to see how lively the games are still and how much fans are involved in such events. Our hyper-casual game studio, Ruby Games, grew pro forma by 23% year over year, but down from the first quarter of this year; hyper-casual games, which are primarily monetized through advertising, were impacted by lower global advertising investment and Apple ATT.
Angry Birds revenue this quarter was below the release peak of the first quarter. User acquisition investment decreased in the second quarter after going live. The team is now pursuing new growth paths, including dynamically adjusting the game’s difficulty based on players’ individual playstyles, as well as incorporating deeper meta-games to increase engagement.
In our new game pipeline, Moomin: Puzzle & Design successfully completed market testing in Japan, and the team is now continuing to add content in preparation for the next phase of soft launch. Ruby Games’ Hunter Assassin 2 continues to make progress on the soft launch, adding a real-time multiplayer mode and a deeper meta-system.
We strongly believe that one of our growth vehicles is our live games; Friends of Angry Birds has shown us that there is a lot of potential in these fan-favorite games that are very rich in content and have built up over the years a loyal fan base. We are planning to increase our investment in our best performing live games to bring them to their full potential. We believe the best is yet to come for these titles.
Our brand building plans continue with the release of the second season of Angry Birds Summer Madness on Netflix in June. The series has a fresh style, which is very exciting for our fans and allows us to expand our audience. Season 1 hit the top 10 in Netflix’s Kids category in 55 regions in its first week.
Looking at the market, the second quarter of the year was challenging. In-app purchase revenue in the U.S. fell 19% year over year, according to estimates from market intelligence provider data.ai. This was the fourth consecutive quarter of declines and we believe this is due to three main factors:
First: the normalization of consumption habits after the lockdown. As more and more people return to normal, so do their game modes.
Second: Apple’s ATT policy limits publishers’ ability to target players effectively. Marketing campaigns now tend to attract more customers, but the fit between product and players has become looser.
Third: Macroeconomic factors such as rising inflation affect both consumers and businesses. Players are less willing to pay, and advertisers lower their budgets. This aspect has a negative impact on ad revenue, but may present an opportunity in terms of user acquisition. Market volatility also allows us to strengthen our flock with amazing new talent.
As we entered the third quarter of the year, we saw improved user acquisition momentum and performance. While we expect market headwinds to persist in the near term, we strongly believe in the growth of the mobile gaming industry. I find it especially inspiring to see all the exciting game updates, new games, and branded projects the team is working on. Additionally, we’re proud to know that our competitive advantage in the Angry Birds brand and our Beacon growth platform positions Rovio well in this market.
Outlook for 2022 (unchanged)
Based on the positive momentum of our top live games, the launch of Angry Birds Journey in January, and the full benefit of the acquisition of Ruby Games from the beginning of the year, we expect strong revenue growth this year. Adjusted operating profit is expected to decline year-over-year, depending on the pace of growth and user acquisition investments to drive growth, especially in the case of new games, and our greater investment in new game development.
More on User Acquisition Investments in Q3 2022
User acquisition investments in the third quarter of 2022 are expected to account for 25-30% of game revenue.
Audio broadcasts and conference calls
Rovio will host an English-language audio broadcast and conference call, including a question-and-answer session, on 2022 half-year financial results for analysts, media and institutional investors on August 11, 2022, from 14:00-15:00 EST. Audio broadcasts can be viewed live: https://investors.rovio.com/enand later the same day as a recording.
Conference Call Details:
Password: 19635962#
Finland: +358 981 710 310
Sweden: +46 856 642 651
UK: +44 3333 000 804
USA: +1 6319 131 422
More information:
Alex Pelletier-Nomand, CEO, tel. +358 40 485 8985 (media call)
René Lindell, Chief Financial Officer, tel. +358 40 485 8985 (media call)
Distribution: Nasdaq Helsinki, Major Media, https://investors.rovio.com/en
About Rovio
Rovio Entertainment Corporation is a global mobile-first gaming company that creates, develops and publishes mobile games with more than 5 billion downloads. Rovio is best known as the global Angry Birds brand, which started out as a popular mobile game in 2009 and has evolved from gaming to a variety of entertainment, animation and consumer products licensed by the brand. Rovio produced The Angry Birds Movie (2016) and its sequel, The Angry Birds Movie 2, was released in 2019. The company offers a wide range of mobile games and has seven game studios – two in Espoo (Finland), one in Stockholm (Sweden), Copenhagen (Denmark), Montreal and Toronto (Canada), and one in Izmi Ruby Games, a subsidiary of Turkey (Turkey), which was acquired in 2021. Most of the employees are located in Finland, where Rovio is headquartered. The company’s shares are listed on the main board of the Nasdaq Helsinki Stock Exchange under the symbol ROVIO.
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