Rovio has problems: the company reported a 57.5 drop in profit%

The authors of Angry Birds shared their financial results for the quarter and half of the year. Both reports show significant negative dynamics. The only thing that the company still consistently earns is classic games about angry birds.

There are three main figures in the quarterly results (for April-June 2018):

• revenues fell by 16.8% (€71.8);
• operating profit fell by 57.5% (€6 million);
• cash flow fell by 94% (€1.8 million).

In other words, compared with the results for the same period last year: the company’s total sales fell by almost a quarter, profits halved, and the inflow of money decreased catastrophically.

In the semi-annual results (January-June 2018), the same indicators also show a drop, although not so significant.

• revenues fell by 9.9% (€137.5);
• operating profit fell by 21.4% (€15.2 million);
• cash flow fell by 65.6% (€12.3 million).

Based on the report, there are three main reasons for such indicators.

The first one that Rovio mentions more than once or twice is last year’s May release of Angry Birds: The Movie. In 2017, he raised his brand licensing revenues very high. There is no new film this year, so there is a reduction in incoming funds.

The second reason is the continued growth of traffic costs. For example, in the second quarter of this year, 52% more was spent on it than a year earlier.

The report does not focus on the third reason, but in the comments to the tables, Rovio CEO Kati Levoranta mentions it: the studio’s new games do not show the desired growth.

However, the company’s gaming business is still growing. In April-June, the company earned €65.3 million at the games. This is 6.4% more than a year earlier. As for the last half of the year, its indicators increased by 3.3% to €122.1 million.

The main driver of game sales is Angry Birds 2, for which the last quarter was a record revenue in history. Angry Birds Friends and Angry Birds Match also showed growth. The youngest game from the selection was released in 2016.

Also on the topic:

• Rovio’s 70% profit growth has not regained market confidence
• Rovio named the release date of the sequel to the Angry Birds movie
• Rovio top managers will have their salaries cut by 25%

Source: Rovio