Rovio Entertainment Corp.: Financial Statement Bulletin 2022: Games’ overall performance in line with a soft market in Q4 – Angry Birds Dream Blast took off

Rovio Entertainment Corporation       Stock Exchange Release       February 9, 2023 at 9.00 a.m. EET

Financial Statement Bulletin 2022: Games’ overall performance in line with a soft market in Q4– Angry Birds Dream Blast took off

October–December 2022 highlights

• Rovio’s group revenue declined by 2.5% to EUR 76.9 million (78.9). On a comparable (*) basis, revenue declined by 10.0%.
• Group adjusted EBITDA declined to EUR 9.6 million (16.5), while the adjusted EBITDA margin declined to 12.4% (21.0). The main adjustment was EUR 4.6 million related to the New Mexico lawsuit settlement, including legal fees.
• Group adjusted operating profit declined to EUR 5.9 million (13.1), while the adjusted operating profit margin declined to 7.7% (16.6).
• Games’ gross bookings were stable at EUR 74.0 million (74.0). Comparable (*) gross bookings declined by 7.9%, while the global mobile gaming market, excluding China, declined by 7% (**).
• The gross bookings of Angry Birds Dream Blast, Rovio’s second largest game, increased by 33.4% to a new record of EUR 21.6 million.
• User acquisition investments increased to EUR 23.3 million (20.6), representing 31.3% of games’ revenue (26.9).
• Operating cash flow decreased to EUR 12.0 million (17.1).
• Earnings per share decreased to EUR 0.00 (0.08). Adjusted earnings per share decreased to EUR 0.04 (0.14).

January–December 2022 highlights

• Rovio’s group revenue increased by 11.0% to EUR 317.7 million (286.2). On a comparable (***) basis, revenue declined by 1.2%.
• Group adjusted EBITDA decreased to EUR 53.9 million (54.8), while the adjusted EBITDA margin declined to 17.0% (19.1).
• Group adjusted operating profit decreased to EUR 39.2 million (43.7), while the adjusted operating profit margin declined to 12.3% (15.3).
• Games’ gross bookings increased by 9.8% to EUR 298.0 million (271.5). Comparable (***) gross bookings declined by 2.8%, while the global mobile gaming market, excluding China, declined by 10% (**).
• User acquisition investments increased to EUR 96.5 million (77.2), representing 31.5% of games’ revenue (27.9).
• Operating cash flow increased to EUR 49.9 million (43.9).
• Earnings per share decreased to EUR 0.30 (0.41). Adjusted earnings per share decreased to EUR 0.42 (0.47).
• Dividend proposal EUR 0.13 per share (0.12) 

*) Comparable growth is calculated at constant USD/EUR exchange rates.
**) Source: data.ai
***) Comparable growth is calculated at constant USD/EUR exchange rates and including Ruby Games starting in September.

Key figures

	10–12/	10–12/	Change,	1–12/	1–12/	Change,
EUR million	2022	2021	%	2022	2021	%
Revenue	76.9	78.9	-2.5%	317.7	286.2	11.0%
EBITDA	5.7	13.4	-57.7%	43.3	50.8	-14.9%
EBITDA margin	7.4%	17.0%		13.6%	17.7%
Adjusted EBITDA	9.6	16.5	-42.1%	53.9	54.8	-1.6%
Adjusted EBITDA margin, %	12.4%	21.0%		17.0%	19.1%
Operating profit	2.0	8.1	-75.3%	28.6	37.7	-24.3%
Operating profit margin, %	2.6%	10.2%		9.0%	13.2%
Adjusted operating profit	5.9	13.1	-55.1%	39.2	43.7	-10.2%
Adjusted operating profit margin, %	7.7%	16.6%		12.3%	15.3%
Profit before tax	0.2	9.2	-98.1%	30.6	40.3	-24.1%
Adjusted profit for the period	3.2	10.3	-68.8%	31.4	34.9	-10.0%
Capital expenditure	2.4	1.3	90.5%	7.0	4.0	76.4%
User acquisition	23.3	20.6	12.9%	96.5	77.2	25.0%
Return on equity (ROE), %	14.4%	22.2%		14.4%	22.2%
Net gearing ratio, %	-72.7%	-77.4%		-72.7%	-77.4%
Equity ratio, %	79.3%	70.8%		79.3%	70.8%
Earnings per share, EUR	0.00	0.08	-98.7%	0.30	0.41	-25.3%
Earnings per share, diluted EUR	0.00	0.08	-98.8%	0.30	0.41	-25.8%
Adjusted earnings per share, EUR	0.04	0.14	-69.6%	0.42	0.47	-11.4%
Net cash flows from operating activities	12.0	17.1	-29.8%	49.9	43.9	13.8%
Employees (average for the period)	534	501	6.6%	513	490	4.7%

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 denominated in-app-purchases in the United States and for global ad network sales.

Dividend proposal
The parent company’s distributable funds on December 31, 2022, amounted to EUR 216,685,467.18, of which the profit for the period was EUR 334,327.87. The parent company’s low profit in 2022 was due to a write-down of the Hatch Entertainment subsidiary’s shares. Rovio’s Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.13 per share shall be paid to shareholders in respect of the financial year 2022. Based on the number of shares outstanding as of the balance sheet date, December 31, 2022, the total amount of dividends would be EUR 9,893,971.88. 

There have been no significant changes in the Company’s financial position after the end of the financial year. In the Board of Directors’ view, the proposed dividend distribution does not compromise the Company’s solvency.

Alex Pelletier-Normand, CEO
In 2022, we maneuvered well through diverse uncertainties. The mobile gaming market declined compared to the previous year for the first time ever. Rovio’s strategy, focusing on widely appealing casual games and the strong Angry Birds brand, allowed us to outperform the market. All our three top live games – Angry Birds 2, Angry Birds Dream Blast and Angry Birds Friends – made record-high revenue during the year. I would like to express my sincere appreciation to all Rovians for their commitment and efforts.

The market showed signs of stabilization
The mobile gaming market showed signs of stabilization towards the end of the year. In the fourth quarter, the global market declined by 1% sequentially, while in the US it increased by 2%. After five consecutive quarters of decline, it was encouraging to see the US market turn to slight growth; however, near-term development remains uncertain.

Strong growth of Angry Birds Dream Blast continued
In the fourth quarter, our games’ comparable gross bookings grew by 5.4% compared to the previous quarter but decreased by 7.9% compared to the fourth quarter of 2021, outperforming our largest market, the US, which declined by 11%. At the same time, we saw opportunities and were able to increase our investments in user acquisition. Those investments coupled with our increased focus on our live games have started to pay off: Angry Birds Dream Blast had an amazing second half of the year and grew by 33% in gross bookings in the last quarter. Next, we will try to scale these learnings and duplicate the success with our other top live games.

Game development progressing
Our work on new game titles is progressing. Moomin: Puzzle & Design is being prepared for the next soft launch test in Japan. Ruby Games’ latest hybrid-casual game Wizard Hero already entered soft launch with promising early results, while the two new Hunter Assassin games continue in soft launch. Bad Piggies 2 is approaching soft launch as well.

Focused investments in 2023
As the economy recovers, we are expecting 2023 to be a stable year for the mobile gaming market. With a rich pipeline of new titles, our strong brand, and the growth potential of our top live games, we are confident that we can continue to perform well in those conditions. We will continue to invest in projects showing signs of growth, such as our top live games, while remaining disciplined with our investments in new titles, focusing our efforts on brands and projects that show strong market traction. Despite the short-term headwinds, mobile continues to be the largest and fastest growing gaming segment, which we intend to take advantage of.

2023 outlook
We expect our comparable revenue and adjusted operating profit to be at last year’s level.

Additional information on user acquisition investments in Q1 2023
User acquisition investments in Q1 2023 are expected to be 29–34% of games’ revenues.

Audiocast and conference call
Rovio will host an audiocast and phone conference on the Q4 and full year 2022 financial results, including a Q&A session, for analysts, media and institutional investors in English on February 9, 2023 at 14:00–15:00 EET. The audiocast can be viewed live at https://investors.rovio.com/en and as a recording later the same day.

Dial-in details for the phone conference
https://palvelu.flik.fi/teleconference/?id=10010644

More information
Alex Pelletier-Normand, CEO, tel. +358 40 730 3442 (Investor Relations phone)
René Lindell, CFO, tel. +358 40 730 3442 (Investor Relations 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 5 billion times. 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, animations and consumer products in brand licensing. Rovio has produced The Angry Birds Movie (2016), and its sequel, The Angry Birds Movie 2 was released in 2019. The company offers multiple mobile games and has eight game studios – one in Espoo (Finland), one in Stockholm (Sweden), one in Copenhagen (Denmark), one in Barcelona (Spain), two in Montreal and one in Toronto (Canada). The studios also include a subsidiary in Izmir (Turkey) called Ruby Games, which was acquired in 2021. Most of the employees are based in Finland where Rovio is headquartered. The company’s shares are listed on the main list of NASDAQ Helsinki stock exchange with the trading code ROVIO.

Attachment

• Rovio Financial Statement Bulletin 2022

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