Rovio takes a drop in share price but games revenue is up

After months of rumour and deliberation, Angry Birds developer Rovio finally made their move to go public. The IPO in late September was so popular, it was closed due to being oversubscribed. Today’s news was encouraging, although there are potential negatives to read between the lines

The Finnish company released its first financials since its IPO for the three months that ended on September 30th. The company’s shares traded on October 3rd so none of the public investment is accounted for. Despite this, the share price in the company has dropped from its initial $13 a share to around $11.

The reason for this is the increasing cost of user acquisition, which rose by 308.7 per cent to $26.3 million. Overall profits fell by 70 percent and the outlook for 2017 remains unchanged. However, it should be noted that the revenue of the game division actually increased due to a boost from the companies top titles such as new release Angry Birds Match

"In the third quarter of 2017, we continued to execute our Games First growth strategy," said Rovio CEO Kati Levoranta. "Revenue increased by 41 per cent year-on-year and amounted to approximately EUR 71 million. In line with our growth strategy, we significantly increased our investments in user acquisition, which predictably led to a decline in profitability. Rovio’s successful listing on the Helsinki stock exchange at the end of September was evidence of the strong interest in our growth strategy, also in the capital markets.

"Rovio’s Games business achieved strong growth in the third quarter. The Games business unit’s revenue increased by 40% year-on-year, boosted by the improved monetization of top games. We significantly increased our investments in user acquisition, and at the same time in future revenues, for our top-performing games,". "Investments increased to $26 million in the third quarter, which, as expected, reduced the profitability of the games business unit for the third quarter.

"We expect the payback time for these investments to be 8 to 10 months. In August, Rovio launched a new game, Angry Birds Match, which has promising performance indicators and the potential to become one of Rovio’s best performing games."

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