Rovio Entertainment Financial Statements 2017
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Rovio Entertainment Financial Statements 2017 Kati Levoranta, CEO René Lindell, CFO March 2, 2018 Agenda for today Business overview Financial review Outlook for 2018 Strategy Rovio © 2018 Confidential BUSINESS OVERVIEW Rovio © 2018 Confidential Strong growth continued in FY 2017 Revenue (EUR million) Adjusted EBIT (EUR million)(*) Brand Licensing +55% +112% Games 297 35,9 49 +35% 192 16,9 33 142 29 248 159 114 2015 2016 2017 -21,6 2015 2016 2017 (*) 2015 figure unadjusted Rovio © 2018 Confidential Q4 2017 - steady growth Revenue (EUR million) Rovio’s revenue grew 17% y-o-y to EUR 73.9 million. 86 Games revenue grew 42% year-on-year to EUR 66 Brand Licensing 74 million, 3.4% Q3 to Q4. Games 25 71 66 8 The new games of 2017 Angry Birds Match, Angry 63 7 10 Birds Evolution and Battle Bay did not generate as 17 large revenue growth as expected. This was due to 50 44 4 very competitive market for user acquisition at the 7 end of the year. 34 66 4 61 64 Proceeds from the Angry Birds movie declined as 57 46 46 expected, resulting in a 53% decline in Brand 37 Licensing revenue. 30 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 5 Rovio © 2018 Confidential Gross bookings per game Q4 Developments: Gross bookings • Angry Birds 2 growing from Q3 to Q4 (EUR million) • Angry Birds Friends stable in Q4 75 • New games AB Blast, AB Evolution and Battle Bay lower vs. Q3 • New game Angry Birds Match – lower Q4 vs. expectation • Other games, i.e. older portfolio declined 50% y-o-y 65 66 62 56 Angry Birds 2 18 20 21 50 46 20 40 8 8 Angry Birds Friends 37 16 9 12 8 Angry Birds Blast 29 9 8 9 11 Angry Birds Evolution 25 6 10 9 8 8 11 10 6 1 3 7 Angry Birds Match 7 8 8 6 3 5 7 5 Angry Birds Pop! 4 5 5 4 Battle Bay 12 13 12 12 10 9 7 6 Other Games 0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Rovio © 2018 Confidential 2018 – how to drive growth in live games User • Continuous improvement of key games Life-Time • New features Value • Events (LTV) … all driving monetization and retention, i.e. LTV, higher LTV > CPI • Optimize user acquisition per geography and advertising Cost Per channel Install • Leverage Angry Birds brand and marketing activities • Full marketing funnel optimization (CPI) ... all aiming to drive CPI’s lower Rovio © 2018 Confidential Game-as-a-Service: Angry Birds Game events Angry Birds 2 daily gross bookings (EUR) Game updates (new features, new content) 500.000 400.000 300.000 Launch 200.000 100.000 0 30th July 2015 31st Dec 2017 Rovio © 2018 Confidential FINANCIAL REVIEW Rovio © 2018 Confidential Largest Games growth in 2017 through new games New games Older games +83MEUR -23MEUR 10 13 Angry Birds 2 22 249 +36MEUR 39 -23 36 2 152 2016 Gross AB2 AB Friends AB Blast AB Evolution Battle Bay AB Match Other games 2017 Gross bookings bookings Rovio © 2018 Confidential Decline of older games portfolio and the targeting of user acquisition continued to reduce daily active users DAU MUP (Daily Active User), (Monthly Unique Payers), millions 1000’s 20 600 571 550 563 555 495 479 487 500 456 440 435 447 13,5 12,6 382 400 354 11,2 341 11,1 10,6 10,7 10 9,2 300 6,7 6,2 6,0 200 5,0 4,9 4,6 4,0 100 0 0 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 TOP5 games All games TOP5 games All games 11 Rovio © 2018 Confidential Games monetization continued to improve ARPDAU doubled y-o-y, MARPPU +30% ARPDAU MARPPU (Average Revenue Per Daily Active User) (Monthly Average Revenue per Unique Payer) EUR EUR 0,2 40 36 35 33 34 30 28 0,14 30 27 0,12 24 0,11 0,11 25 0,1 20 0,08 0,07 0,07 15 0,06 0,06 0,06 0,05 0,04 10 0,03 0,03 5 0,0 0 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 12 Rovio © 2018 Confidential Strong cash flow and cash position Consolidated statement of cash flows, EUR million 10–12/2017 10–12/2016 1–12/2017 1–12/2016 Cash flow from operating activities* 5.8 8.3 59.6 22.8 Cash flow from investing activities* -1.1 -4.8 -8.1 -23.3 Cash flow from financing activities -4.6 -8.0 13.1 -5.6 Change in cash and cash equivalents 0.2 -4.5 64.6 -6.0 Net foreign exchange difference 0.0 0.9 -2.7 0.5 Cash and cash equivalents at the beginning of the 90.7 32.5 28.9 34.4 period Cash and cash equivalents at the end of the period 90.8 28.9 90.8 28.9 13 Rovio © 2018 Confidential EPS and proposal for Dividend 2017 Dividend per share, EPS (EUR) euros +67% 0,30 0,10 0,27 +50% 0,09 0,25 0,20 0,06 0,15 0,14 0,05 0,10 0,05 0,00 0,00 2016 2017 2016 2017 PROPOSAL 14 Rovio © 2018 Confidential 2018 outlook statement Rovio Group revenue is expected to be 260-300 million euros in 2018 (297 million euros in 2017). 2018 OUTLOOK GROUP Rovio’s profitability as measured by earnings before interest and tax excluding items affecting comparability is expected to be 9 to 11 percent (10.6 percent in 2017). Rovio © 2018 Confidential Basis for 2018 outlook In 2018, Rovio Games business will focus on continuing development of its live game portfolio according to the Games-as-a-Service strategy, profitable user acquisition and development of new games. The user acquisition investments are expected to be around 30 percent of Games revenues GAMES for the full year, however, the amount may vary depending on development of the games’ monetization and the level of competition in the market. The cost per acquired user has risen significantly in the market. Brand Licensing segment revenues are expected to decline by 40% in 2018. The decline is due to the declining profile of the Angry Birds movie. The consumer products revenues are expected to BRAND LICENSING be at similar level as in 2017. The focus of Brand Licensing in 2018 is on preparing the license portfolio for 2019 and the Angry Birds movie sequel. During 2018, Rovio estimates to invest 10-15 million euros in its subsidiary Hatch Entertainment Oy that develops cloud streaming based game service (5 million euros in 2017). Approximately HATCH half of the investment will impact Group profit, ie. an impact of 2–3 %-points to the expected EBIT margin, and half will be capitalized development costs and advance payments. Rovio © 2018 Confidential Rovio’s long-term financial targets remain Games business unit revenue growth faster Growth than market growth in Western markets. Profitability Group operating profit margin of 30 percent. Rovio © 2018 Confidential STRATEGY Rovio © 2018 Confidential Mobile gaming market is growing rapidly Market size of global mobile games 2013-2020 (USD Billions) Key drivers and trends Growth differs per market (CAGR 2017-2020E): § North America 5.1% Growing number § Western Europe 5.6% of smartphones § APAC 13.4% § China 13.8% CAGR 13% 72 65 Share of mobile gamers is 23% 58 increasing 50 41 Average in-game spend 31 per user is increasing 25 18 Attractive free-to-play revenue model extends lifetime of games 2013 2014 2015 2016 2017 2018E 2019E 2020E Source: Newzoo, Rovio Rovio © 2018 Confidential 2017 progress in strategy execution Grow the Explore the Leverage strong Grow Games business Angry Birds brand and future of gaming consolidation platform Licensing business § Record-breaking § Hatch beta test (soft § Strong balance sheet § Angry Birds 2 most revenue 56 % growth launch) phase including IPO visible game in top § 3 new games launched in 16 § Active screening charts launched countries on Android § Movie sequel deal signed for 2019 § Partnerships Rovio © 2018 Confidential Rovio © 2018 Confidential Rovio © 2018 Confidential In 2018 we will continue to execute our strategy Grow the Explore the Leverage strong Grow Games business Angry Birds brand and future of gaming consolidation platform Licensing business § Improve existing top § Continue to invest § Continue screening § Build licensing games through into Hatch and evaluation program for Movie Games as a Service § Investigate § Prime focus on free- sequel in 2019 and developing new opportunities in new to-play mobile games § Continue building games technologies and brand partnerships § Continue the work to platforms (ie. AR, VR) expand operations in China Rovio © 2018 Confidential QUESTIONS? Rovio © 2018 Confidential.