Rovio's 70% profit growth has not regained market confidence
The Finnish Rovio is struggling with the distrust of the market. The company reported a successful completion of the quarter, but the exchanges reacted with restraint to the success report. Despite a 70% increase in operating profit, Rovio’s shares strengthened by only 5%.
What happened
In the first three months of 2018, Rovio earned almost the same as a year earlier — €65.7 million. A significant share of the revenue came from games, they generated €56.8 million. The company noted the performance of Angry Birds 2 and Angry Birds Friends titles.
The operating profit of the Finnish studio increased from €5.3 to €9.2 million. The rise in profits is explained by a 90% reduction in capital expenditures. Perhaps this is due to a 15% reduction in staff — 72 employees left the company during the year. In addition, Rovio has reduced user acquisition costs by 11%.
After the publication of the report on May 17, the value of one Rovio share rose from €4.99 to €5.33. Recall that after the company went on the stock exchange last fall, the studio was given about € 9 for a security.
Growth in the value of Rovio shares after the quarterly reportWhat does it mean
The market is suspicious of a gaming company that has not released a single hit in the last few years. Its current performance is provided by the results of old products.
Against the background of stagnation in the production of strong projects, Rovio shares collapsed by 50% at the end of February this year. Following this, two top managers left the company.
Rovio shares fall in Q1 2018
But this does not mean that you can put an end to Rovio.
The studio is currently producing about 10 new titles. In addition, a sequel to the full-length cartoon Angry Birds will be released in 2019, which may return consumer interest in the famous franchise.
In addition to games, Rovio intends to invest €10-15 million in its subsidiary streaming service Hatch this year. According to the head of the company, Kati Levoranta, this will help diversify the Finnish developer’s gaming business.
Also on the topic:
- The Vice President of Investor Relations has resigned from Rovio. He spent less than a year in the company
- Rovio top managers will have their salaries cut by 25%
Source: Rovio
