• Abstract and Figures
• Public Full-text

May 14, 2012 PRISM PROGRESS REPORT for INTERNET and SOCIAL MEDIA Making diffuse information about the Internet and Social Media crystal clear IN THIS ISSUE: . Rovio 2011 Financials . comScore: U.S. Mobile Usage . Facebook Amends S-1 . Facebook Acquires Glancee . Facebook Launches App Center THE INFORMATION HEREIN IS ONLY FOR ACCREDITED INVESTORS AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933 OR Michael Pachter INSTITUTIONAL INVESTORS. (213) 688-4474 [email protected] Wedbush Securities does and seeks to do business with companies covered Yoni Yadgaran in its research reports. Thus, investors (212) 938-9924 should be aware that the firm may have a conflict of interest that could [email protected] affect the objectivity of this report. Investors should consider this report as only a single factor in making their 1000 Wilshire Blvd, • Los Angeles, CA 90017 investment decision. Please see page 213.688.8000 • www.wedbush.com 14 of this report for analyst MEMBER NYSE/FINRA/SIPC certification and important disclosure information. WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` About Wedbush Securities Private Shares Group The Private Shares Group of Wedbush Securities is a leader in providing research and trading to the rapidly growing industry of privately traded securities, with an emphasis on companies in the social media space. We assist companies in raising growth capital through traditional private placements and provide liquidity options for existing and former employees through tailored selling programs. We also work with venture capital, private equity and hedge fund investors to help them adjust their holdings in some of the most dynamic companies. We endeavor to understand the underlying industries of the private companies we trade, in order to help our clients make informed decisions about their investments. We provide discreet customized solutions for our institutional and accredited private clients through a team of professionals located in New York, Los Angeles and San Francisco. About Michael Pachter Michael Pachter is the Managing Director of Equity Research, providing coverage across the Digital Media sector, as well as the Head of Research for the Private Shares Group. He has been recognized as StarMine’s “Top Earnings Estimator” year after year and “Best on the Street” by the Wall Street Journal. Michael brings over 20 years of experience as a financial professional to the Private Shares Group, along with extensive knowledge across the social media sector in both public and private companies. Mr. Pachter holds an M.B.A. from the Anderson School at the University of California at Los Angeles, a juris doctor from Pepperdine University, an LL.M. in Taxation from the University of Florida, and a bachelor’s in Political Science from California State University, Northridge. About Yoni Yadgaran Yoni Yadgaran joined Wedbush from Bank of America Merrill Lynch. Originally covering Internet & E-commerce within Equity Research, he later moved on to help pioneer the Private Shares Group’s Research efforts. Yoni is a CFA level 3 candidate and received a B.B.A in Finance from Baruch College. Contact Wedbush Securities Private Shares Group: Michael Pachter Managing Director, Equity Research Kevin Cohen Head of Research, Private Shares Group Director of Trading, Private Shares Group (213) 688-4474 | [email protected] (213) 688-8089 | [email protected] Twitter: @michaelpachter Yoni Yadgaran Matt McGrath Research Associate, Private Shares Group Director of Client Strategies (212) 938-9924 | [email protected] (213) 688-6632 | [email protected] Cyrus P. Pirasteh Managing Director, Private Shares Group Head of Equity Trading, Technologies & Operations (213) 688-6661 | [email protected] About Wedbush Securities Founded in 1955, Wedbush Securities is a leading investment firm that provides brokerage, clearing, investment banking, equity research, public finance, fixed income sales and trading, and asset management to individual, institutional and issuing clients. Wedbush currently ranks as a top liquidity provider for the NASDAQ, and was ranked #1 stock picker for 2010, and again in 2011 by Barron’s. Headquartered in Los Angeles, with over 100 offices nationwide, Wedbush focuses on relentless service, client financial safety, continuity, and advanced technology. (www.wedbush.com) 2 | P a g e WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` Rovio Rovio, the mobile game developer behind the Angry Birds franchise, reported 2011 financials last week. The company generated revenues of €75.4 million ($106.3) million for the year, with 30% from consumer products. The segment generates most of its revenue through the sale of Angry Birds-branded toys that are priced between $5 – 105. The company has over 200 licensing partners for its branded products, and according to Reuters, the consumer products segment continued to increase share of revenue generated in Q1:12. The remaining 70% of revenue was generated from a mix of paid downloads of Angry Birds (Angry Birds: Classic, Rio, Seasons), in-app mobile and social virtual goods, and advertising. According to Reuters, Rovio had generated $10 million in revenue in 2010, plans to release several new titles this year, and is preparing for an initial public offering in Hong Kong or New York. The company will be releasing a title outside its Angry Birds franchise this year, and is working on an animated feature film as well. The $74.4 million generated from games (paid downloads, virtual goods and ads) in 2011 suggests that Rovio’s mobile ad performance was weaker than we previously reported. In an earlier note (available here: http://bit.ly/HbCto0) we estimated that the company had generated $32 million from cumulative mobile downloads (using data published by Xyologic), leaving only around $42 million from virtual goods and ads combined. We previously estimated that Rovio generated close to $4 million per month in incremental ad revenue, although the company’s report now suggests that its ad revenue was materially lower. We also posited that if Rovio was selling virtual items to 40% of iOS users, as it had claimed, the company would have generated at least an incremental $27 million from virtual goods sales. Rovio reported that its games had been downloaded 648 million times by the end of 2011, and the company this week announced that Angry Birds had seen over 1 billion downloads to date. Angry Birds Xyologic Download Estimates (Millions) Downloads Net Download Revenues Platform Cumulative Jan. 2012 % U.S. Price Cumulative Jan. 2012 iPhone Paid Original 16.6 1.8 49% $0.99 $11.50 $1.2 Rio 4.0 0.7 47% $0.99 $2.80 $0.5 Seasons 5.1 1.0 49% $0.99 $3.50 $0.7 iPhone Free Original 21.2 5.4 57% - - - Rio 12.0 2.9 48% - - - Seasons 9.4 3.1 46% - - - Android Free Original 56.1 1.5 46% - - - Rio 23.1 0.6 41% - - - Seasons 32.4 1.4 48% - - - iPad Paid Original 2.3 0.4 48% $4.99 $7.96 $1.2 Rio 1.4 0.2 45% $2.99 $2.89 $0.5 Seasons 1.8 0.3 45% $1.99 $2.49 $0.5 iPad Free Original 11.9 2.6 43% - - - Rio 5.9 1.1 42% - - - Seasons 4.7 1.0 41% - - - Windows Phone Original 0.46 0.05 35% $2.99 $0.96 $0.1 Total 208.3 23.9 48% $0.22 $32.11 $4.63 Source: Wedbush Securities, Xyologic Rovio reported an operating margin of 64% (€48 million or $67.6 million). The company recently launched it fourth title, Angry Birds: Space, which likely drove heavy marketing by Rovio prior to its release, and the company’s headcount grew from 28 to 224 employees in 2011. The company recently opened offices in Tampere and Shanghai, and will be hiring as many as 30 employees for its Stockholm office this year. Rovio reports 200 million monthly active users (MAUs) across the various Angry Birds platforms. Rovio’s single title on Facebook, which was released in February, has grown to over 23 million MAUs and 2.9 million daily active users (DAUs). Angry Birds for Facebook is the sixth most popular game on the social network, ranked by MAUs, and the only title among the top seven that is not published by Zynga. The title is also the only top hit to have gained MAUs over the past month, although we note that engagement and DAUs have fallen off substantially. The issue Rovio faces is the lack of inherent social dynamics in its games, which prevents users from continuing to play the game once they have cleared the included levels. Without an engaged audience, Rovio is likely to have difficulty monetizing its games to the extent that Zynga has, 3 | P a g e WEDBUSH | PROGRESS REPORT for INTERNET and SOCIAL MEDIA ` although the ability to charge for app installations, which Facebook will soon launch, provides the company a channel for monetizing its games that will supplement the sale of virtual goods. This week the company attempted to add a social element to Angry Birds on Faceook by releasing a “Share & Play” option so that users can embed a level of the game into their Facebook timelines or offsite webpages that can be played instantly. Players can also challenge their Facebook friends to beat their top scores in the game. Angry Birds On Facebook 30 (Millions) MAU DAU DAU/MAU (%) 25 20 15 10 5 0 Feb. '12 Mar. '12 Apr. '12 May. '12 Source: Wedbush Securities, Appdata In August, Bloomberg reported that Rovio planned to raise capital at a $1.2 billion valuation. Since then, we have seen estimates of valuation at over $9 billion, although last week’s figures don’t appear to come close to supporting this number.

Load more

  16

Copy Link