Rovio continues to see good profitability despite drop in revenue

The Angry Birds creator generated $329.7 million in 2020

Rovio continues to see good profitability despite drop in revenue

Rovio continued to see good profitability in 2020 despite a drop of 5.8 per cent in revenue as it grossed €272.3 million ($329.7 million).

According to the company's latest financial report, Rovio's operating profit did increase to €47.2 million ($57.2 million), while its adjusted operating margin grew to 17.3 per cent.

Meanwhile, the amount of revenue generated via games saw a decrease of 2.5 per cent year-over-year as it reached €258.2 million ($312.8 million). Furthermore, gross bookings from games dropped 1.5 per cent year-on-year to €259.2 million ($314 million).

User acquisition accounted for 22.7 per cent of revenue for the games segment. Moreover, UA investments reached €58.7 million ($71.1 million) in 2020.

Last year, Rovio said goodbye to former CEO Kati Levoranta, who stepped down from the chief executive position at the end of 2020, which she had held since 2016. On January 1st 2021, Alexandre Pelletier-Normand took over.

A good year

My experience as the Head of Games of Rovio has shown me that as a company, we have the right ingredients to be competitive in today's mobile gaming market," said Pelletier-Normand.

"We have focused teams, deep know-how in the Casual segment -the largest segment in mobile games -a brand with a wide appeal and extremely high global awareness, a will to pioneer future paradigm changes in the market, and a strong balance sheet to fuel growth. I am honoured to have been appointed as the CEO of such a company at the beginning of the year.

"Rovio ended the year 2020 with stable key game bookings, good profitability, and strong cash flow. In the last quarter, games gross bookings grew year-on-year in comparable currencies.

He continued: "Working from home, we continued to deliver on our strategy of putting our players first through great live services. I am happy to say that our operations and new game projects are progressing well despite the unusual circumstances brought on by the COVID pandemic.

"I want to thank all Rovians for their great efforts and perseverance in 2020. They adapted to the challenges brought by remote work fast, resolutely, and flawlessly. Our eagerness to approach new circumstances head-on is deeply representative of how we will tackle market evolutions."

Closing quarter

In Q4 2020, Rovio generated €68.5 million ($83 million), a decline of 4.3 per cent year-on-year due to decreased brand licensing revenues.

Meanwhile, between October and December, the company's operating profit reached €7.5 million ($9 million), while its adjusted operating profit margin grew to 10.9 per cent.

Overall, games revenue saw a decrease of 3.4 per cent year-on-year in Q4 as Rovio generated €64.4 million ($78 million). Furthermore, gross bookings dropped 3.2 per cent to €64.9 million ($78.5 million).

A couple of games showed great performance in Q4 2020, one of which was Small Town Murders which generated €3.8 million ($4.6 million). Meanwhile, Angry Birds Friends experienced its best quarter since Q3 2018 with gross bookings of €8 million ($9.7 million).

However, not all games saw success, as Rovio chose to cancel Angry Birds Legends, thus writing off €4.6 million ($5.6 million) worth of assets.

Quarter of games

"In the fourth quarter, our largest game Angry Birds 2 gross bookings grew year-on-year and we launched a significant update -Arena 2.0 -that was especially targeted at the most engaged and competitive players, showing them a deeper sense of progression," said Pelletier-Normand.

"This update was intended to act as a launchpad, opening new opportunities for evolutions and allowing us to start the year 2021 in a good position. Angry Birds Dream Blast declined year-on-year, attributable to a much lower level of user acquisition. We are in the progress of renewing the game's visual progression system and introducing new events that we believe will increase player retention.

Pelletier-Normand continued: "Angry Birds Friends had its best quarter since Q3 2018, and we can now see that the investments we made on this game since 2019 are paying off.

"During the quarter, we continued to gradually scale up our newest game Small Town Murders, while introducing new content, new language versions and an end-game loop as important steps to enable increased player engagement and further scalability."

To the future

No doubt Rovio will hope to see continued success in 2021. The company has already made the decision to shut down Hatch this year, due to it eating away at resources. However, Hatch Kids is still going.

Moreover, in January, Angry Birds Journey finally entered soft-launch across the US, Finland, Sweden, Denmark, Canada and Poland. It can be downloaded via both the App Store and Google Play.

Furthermore, the company has confirmed an April launch for its upcoming title Darkfire Heroes.

"The mobile gaming market continues to grow with casual gaming being a major growth driver. The ongoing changes in consumer behavior and underlying market trends are accelerated by the COVID pandemic and plays an important role in both current games operation and new game development," said Pelletier-Normand.

"This combined with industry changes like Apple’s privacy policy fuels the near-term uncertainty in the market environment. We will focus on improving the performance of our key live games and on launching new innovative products.

"We continue to show diligence in our UA spend. Depending on market conditions, the performance of our investments, and the launch of new games, we aim to increase our UA investments to build growth for the coming years.

He concluded: "This may have implications on short-term profitability. We will continue investing in our Future of Gaming initiatives, taking advantage of the trends we see in consumer behavior and building our positioning in the rapidly evolving market. In addition, we seek growth through synergistic acquisitions that can deliver long-term value growth."

Staff Writer

Kayleigh is the Staff Writer for Besides PGbiz and PCGI she has written as a list writer for Game Rant, rambling about any and all things games related. You can also find her on Twitter talking utter nonsense.