Rovio Entertainment Corp.: Due to increasing investments in user acquisition and long-term growth, Rovio lowers its 2019 outlook

Rovio Entertainment Corporation       Stock Exchange Release       Sept.12, 2019 at 8.30 a.m. EET

Due to increasing investments in user acquisition and long-term growth, Rovio lowers its 2019 outlook

Rovio Entertainment lowers its 2019 profit outlook due to increasing user acquisition investments for the second half of 2019 and focusing on long-term growth. Revenue outlook for 2019 is slightly lowered due to lower revenue expectations from our older games as well as from brand licensing. In 2019, Rovio expects group revenues to be EUR 295 – 310 million (previous outlook EUR 300-330 million) and adjusted operating profit margin to be between 5 and 8 per cent (previous outlook 9-11 per cent). 

"We see a window of opportunity in the market to scale up our top games and we are seizing this opportunity. The continued good performance of Angry Birds Dream Blast, which reached a yearly gross bookings run-rate of EUR 70 million in August, enables scaling up user acquisition to record numbers in the third quarter. We are also proud to have launched a new game, Sugar Blast with a new IP. With additional investment in UA we want to maximize the opportunity to grow our games business in Q4 and set a good baseline for next year”, says Rovio’s CEO Kati Levoranta. 

"The increase in user acquisition investments naturally leads to a lower profitability for 2019 and 2020 as we work towards building growth and long-term cash flows. With several new growth games in the portfolio, we are aiming to keep a high level of user acquisition investments for the rest of the year. For 2020, we are targeting higher growth on the back of the top live games and by launching 1-3 new games in 2020. We are aiming to soft launch 2-3 games with new IPs still this year”, Levoranta continues.

Updated 2019 outlook

In 2019, Rovio expects group revenues to grow to EUR 295 – 310 million (2018: EUR 281 million) and adjusted operating profit margin to be between 5 and 8 per cent (2018: 11.1 per cent). 

Basis for outlook

The lower adjusted EBIT margin boundary is associated with the upper revenue boundary  which is a result of higher user acquisition investments, and vice versa.

In 2019, Rovio Games business continues developing its live game portfolio according to the Games as a Service strategy, profitable user acquisition and development of new games. Rovio has launched two new games during the first three quarters of 2019: Angry Birds Dream Blast was launched on January 24th and Sugar Blast on September 5th, 2019.

The user acquisition investments are expected to be 35-40 percent of Games’ revenues for the full year with an average payback time of 12 months. The amount of user acquisition may vary depending on the development of the games’ monetization and the level of competition in the market. 

The Brand Licensing segment revenues are expected to be at a similar or slightly higher level in 2019 with focus on the second half of the year after the release of the Angry Birds Movie sequel.

On group level the largest revenue growth is expected during the second half of 2019.  The profit margin excluding Hatch Entertainment is expected to be between 8 and 11 per cent for the full year.

Previous 2019 outlook

In 2019, Rovio expects group revenues to grow to EUR 300 – 330 million and adjusted operating profit margin between 9 and 11 per cent.

Basis for outlook

In 2019, Rovio Games business continues developing its live game portfolio according to the Games as a Service strategy, profitable user acquisition and development of new games. Target is to launch at least two new games in 2019 (the first one, Angry Birds Dream Blast, was launched on January 24th). The expected timing of the second launch is during the second half of the year. 

The user acquisition investments are expected to be 30-35 percent of Games revenues for the full year with an average payback time of 12 months. The amount of user acquisition may vary depending on the development of the games’ monetization, timing of new game launches and the level of competition in the market. 

The Brand Licensing segment revenues are expected to be at a similar or slightly higher level in 2019 with focus on the second half of the year when the Angry Birds Movie sequel is scheduled for release. 

On group level the largest revenue growth is expected during the second half of 2019.  The profit margin excluding Hatch Entertainment is expected to be between 12 and 14 per cent for the full year.

Rovio will host an English language teleconference, including a Q&A session, for investors, analysts and media at 2 p.m. - 3 p.m. EET on September 12, 2019. 

Dial in details for the teleconference: 
FI: +358 9 81710310 - Pin: 31042737#
SE: +46 856642651 - Pin: 31042737#
UK: +44 3333000804 - Pin: 31042737#
US: +1 8558570686 - Pin: 31042737#

More information:
CEO, Kati Levoranta, tel. +358 207 888 300
CFO, Rene Lindell, tel. +358 207 888 300

About Rovio:

Rovio Entertainment Corporation is a global, games-first entertainment company that creates, develops and publishes mobile games, which have been downloaded 4.5 billion times so far. 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. Its sequel, The Angry Birds Movie 2, released worldwide in August 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)