Angry Birds creator reports sharp drop in quarterly revenue amid mobile gaming decline

Rovio Entertainment today posted a sharp decline in revenue in its second quarter, despite sales for its games business rising six per cent.

The Figures

Adjusted operating profit for the second quarter fell to €6m, down from €16m in 2017. This was slightly above consensus estimates, according to analysts polled by Thomson Reuters.

Total sales fell 17 per cent to €72m, but sales in gaming rose 6 per cent to €65m. The drop was largely attributed to a decline in brand licensing revenue to €6.5m, after revenue from the Angry Birds Movie hit a peak in the second quarter of last year at €24.9m.

Daily active users of its games rose to 8.8m, up from 8.7m in the previous quarter. 

For 2018, Rovio has maintained its outlook and expects group revenue of between €260m and €300m compared with €297m in 2017. Profitability as measured by earnings before interest and tax, excluding items affecting comparability, is expected to be between 9 per cent to 11 per cent.

Why it's interesting

Mobile gaming firms have been seeing a decline in recent months, particularly those in China hit by a freeze on new gaming licences being approved. 

Analysts at OP Bank evoked a message of confidence in Rovio after it posted the results, concluding that investments into user acquisition have paid off.

Other promising signs for the company include the proposal for a sequel to the Angry Birds Movie next year, as well as a step-up in investments into its subsidiary companies. 

What Rovio said

Chief executive Kati Levoranta said: "Rovio's innovative updates in Angry Birds 2 and increased user acquisition investments propelled Rovio's second quarter games revenues to €65.3m which is close to the record-breaking fourth quarter in 2017 showing 6.4 per cent improvement year-on-year."

"However, for the other new games, we did not see the growth we wanted."