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Good afternoon, everyone and welcome to Rovio's First Quarter 2023 Earnings Audiocast. My name is Timo Rahkonen. And I'm Vice President of Investor Relations and Corporate Strategy at Rovio. And I will be your host for today.
In today's audio cast, we will go through Rovio's First quarter 2023 financial results. With me here in the studio are Rovio CEO, Alex Pelletier-Normand; and CFO, René Lindell.
After the presentation, we will host a Q&A session. [Operator Instructions] But let's kick off now. Alex, please continue.
All right. Good afternoon, everyone. Thank you for joining us today. Welcome to our Q1 2023 Earnings Call. As usual, we will start by reviewing the quarterly highlights. The U.S. market continued its modest growth in Q1, gaining 1.6% sequentially. Our comparable gross bookings grew in line, progressing 0.9% sequentially. The first month of the year was slower for our live games and a better momentum started to build up in February.
Angry Birds Dream Blast continued to beat records and grew by 67.7% year-on-year, reaching a run rate of about EUR 100 million annually. We also saw good progress in our new games development. Moomin: Puzzle & Design successfully passed its midterm retention test in Japan and Bad Piggies 2 is starting its soft launch as we speak.
Finally, the Board's strategic review reached a conclusion with a recommended cash offer by Sega to Rovio's shareholders. We will cover this at the end of this section. Next, let's look at the performance of our portfolio of live games. Our comparable gross booking grew by 0.9% sequentially but declined by 10.9% year-on-year given the launch and scale of Angry Birds Journey in Q1 of 2022.
Angry Birds 2 had a slow first month of the year and started to improve in the February time frame. The game remains our top operational priority as we continue to see future -- further growth potential. Our plan is to execute a similar strategy as we have done for Dream Blast. Angry Birds 2 has a very solid base of regular users. So our main focus is to improve the user experience of the newer cohorts, which do not perform as well. We are also optimizing our UA in similar ways as we did for Dream Blast.
During Q1, Angry Birds 2 hit the bar of EUR 700 million and Angry Birds Friends, EUR 250 million in cumulative gross bookings. Angry Birds Dream Blast continued its impressive growth of 67.7% year-on-year and 15.3% sequentially. It was the biggest game in our catalog this quarter and we will give further details in the next slide.
So on this slide, we see a monthly breakdown of Angry Birds Dream Blast revenues. As we can see, the steady growth of the game continued during the quarter. The game reached a new monthly record in March with EUR 9 million gross bookings and 84% progression compared to March of 2022. The current annual run rate of the game is about EUR 100 million, an increase of over EUR 13 million since last quarter.
The reason for the revenue improvements are: first, a slightly bigger team as we managed to recruit additional key talent. As a result, we are producing more content and we are accelerating our learning. Second, player engagement and monetization was also improved further, thanks to new event types and game features. For instance, our Valentine's Day seasonal event was particularly successful. And third, we also have a new creative team working on our marketing campaigns and greatly improving their efficiency across numerous networks.
So given those reasons, we are confident that the current scale of the game is not a temporary abnormality. We feel that the game is on solid ground and can continue to improve. Together with Angry Birds 2, having a second game reaching this level of revenue is positive as it gives us a second large footprint in a very different part of the market, providing more stability. It is also positive to see that our mastery of live ops expands to different genres.
We announced last quarter that we would do a midterm retention test for Moomin: Puzzle & Design in the Japanese market. This test took place as expected and measured retention up to D14 as well as the cost per install in UA campaigns. Again, focusing on the Japanese market is new to us and we're happy to see all those metrics reaching healthy levels.
It also made clear that additional content is now needed as a next step. Many players completed the 680 levels in a few weeks by playing more than 4 hours per day. As a result, we are ramping up content to cover the last stretch before global launch. Also concerning new games, our Stockholm studio is currently releasing Bad Piggies 2 in soft launch. This is the main topic of conversation with the fans when I discuss with them on Discord. It is highly anticipated.
The game boasts stunning 3D visuals and an art direction that draws inspiration from the Angry Birds movies. One major improvement we've made to Bad Piggies 2 is its accessibility. It is more casual and more fast paced than the first Bad Piggies. This allows for more dynamic level mechanics that enhance the long-term fun factor. In Bad Piggies 2, players can expect a wide varieties of ways to win and compete. We are an all-new event system that allow us to constantly add new types of gameplay and competition.
We've also added a meta game that provides significant depths to the gameplay and allows for more monetization mechanics, for more modern monetization mechanics. Bad Piggies 2 is a truly unique game unlike anything else on the market at the moment. We're eager to see the result of this first test and iterate based on what we learn.
And finally, on April 17, Sega announced a recommended cash offer of EUR 9.25 per share to the shareholders and EUR 1.48 per options to the option holders of Rovio. The total value of the offer amounts in aggregate to approximately EUR 706 million. Shareholders in Rovio, who in aggregate hold shares corresponding to approximately 49.1% of the outstanding shares and votes in Rovio have irrevocably undertaken to accept the offer, subject to certain customary conditions.
The Board of Directors of Rovio has unanimously agreed to recommend that the shareholders and the option holders of Rovio accept the offer. The offer is currently expected to be completed during the third quarter of 2023. The offer provides concrete evidence that our mission and strategy focusing on wide appeal games and brands on mobile is attractive. We are excited at the idea of using our expertise and tools to bring even more joy to our players, enhancing and expanding Rovio's and Sega's IPs.
Red, the Angry Bird and Sonic, the Hedgehog, are 2 globally recognized and iconic characters made by 2 remarkably complementary companies. Together, we have a worldwide reach that spans mobile, PC, console and beyond.
This planned transaction supports the cross-platform expansion of Angry Birds using Sega's capabilities while enabling Sega to use our distinctive know-how in live operation and our growth platform, Beacon, to bring their titles to the global mobile gaming market.
For now, we continue our daily work as usual operating and improving our live games while creating ambitious and innovative new games for our players. We remain strongly confident in our stand-alone strategy. However, combining the strengths of Rovio and Sega presents an exciting project.
I will now give it to René to dig deeper into the financials.
Thanks, Alex and good afternoon to everyone on the call. In the first quarter of the year, we saw our reported revenue decline by 10.5% and the comparable revenue at constant currency declined by 13.2%.
And last year, we had a very tough comparison period as we launched Angry Birds Journey in Q1, when the game saw also a very large organic revenue peak, which impacted the year-on-year comparison. The beginning of the first quarter in January was slow, continuation of a slower-than-normal holiday period in December. Although Angry Birds Dream Blast had an amazing start of the year and grew by 67.7% year-on-year, this was not enough to compensate for the year-on-year decline in Angry Birds Journey and Angry Birds 2.
However, on a sequential basis, the comparable gross bookings grew slightly from Q4 '22 in line with the market. The Q1 adjusted operating profit declined to EUR 8.8 million from last year's EUR 10 million.
And the adjusted operating profit margin was slightly lower than last year at 11.5%. The lower profit in the quarter was primarily due to the lower top line year-on-year, although the user acquisition costs were also much lower during the quarter as will be discussed a bit later.
The lower top line impacted also the adjusted EBITDA, and this was lower year-on-year and was at EUR 12.1 million compared to last, just EUR 13.6 million. The adjusted EBITDA margin was practically at the same level as last year or about 16%.
The user acquisition investments in the first quarter amounted to EUR 23.9 million and represented 32.3% of games revenues. This was in line with our guidance range of 29% to 34% given in our February earnings call. The UA thus increased slightly sequentially as it has done for the last 4 quarters. And this is due to the good performance we're seeing with Angry Birds Dream Blast. Naturally, this quarter's level was much lower than last year when we released Angry Birds Journey with a large initial user acquisition investment.
The operating cash flow in the first quarter was negative at minus EUR 8.8 million due to changes in working capital. The largest payment in the quarter was the 2022 accrued bonuses of EUR 10 million, which were paid at the end of March.
And another large payment was the USD 4.2 million, New Mexico lawsuit settlement that was reported as a cost in Q4 last year but paid in the very first days of January this year.
The cash balance end of Q1 was EUR 158.8 million and this was before the dividend payments on April 14, that amounted to about EUR 10 million.
Finally, the outlook for 2023 remains unchanged. We expect our comparable revenue and adjusted operating profit to be at last year's level.
And for the second quarter of this year, we expect the user acquisition investments to be in the range of 27% to 32% and of games revenues.
Thank you, Alex and René. We are now ready to move on to the questions. So operator, please continue.
[Operator Instructions] The next question comes from Sebastian Patulea from Jefferies.
Hello, everyone. Thank you very much for the presentation. May I please ask, so Rovio has about 450 million monthly active players, active users, unique players. May I please ask, what's the possibility to cross-sell some of these users to another unique library of new games, to sell them to new games basically? Is it easy to do? Is it more cost efficient than in other channels?
So I understand the questions about cross-promotion. So promoting different games in the catalog of games. And that's something that we already do. So it's definitely possible to do this.
Of course, it works better when the catalog of games are compatible so that they have users that have similar interest. But it's definitely something that we are already doing and that we can do, the larger the catalog, the better for cross promotion.
And may I please follow up on that. Is it more efficient? Is it more cost efficient than other media channels?
Well, it is in the sense that -- the idea there is that you acquire those users from external channels only once and then they can play and pay in different games on -- in your own network. So in that sense, it increases the -- what we call the network LTV of those users. So that is more efficient for sure.
[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Thank you, everyone, for your questions and joining us today. So we wish you all a nice rest of the day and happy weekend.