Angry Birds maker Rovio investment in top games weighs on profits

Angry Birds maker Rovio’s shares took a battering today as it reported a loss in its maiden results as a public company.

The figures

Loss before tax was €500,000 (£445,000) for the three months to September, compared with €4.6m profit last year.

This was despite an increase in sales to €70.7m, up from €50m.

The company invested €22m in games during the period.

Why it’s interesting

The company floated for almost €900m on the Helsinki stock market in September, but its debut results as a listed company sent shares down 22 per cent, reducing its market value to around €717m.

But the company was upbeat about meeting its full year targets, including a rise in underlying profits.

The major investment which weighed on the group’s profits this period was put into user acquisition for its top-performing games, a strategy which management said was paying off.

New spin-offs of its flagship Angry Birds brand have proved popular. Brand licensing for this creation also brought in extra revenue off the back of the Angry Birds movie.

What Rovio said

Chief executive Kati Levoranta said:

Rovio’s Games business achieved strong growth in the third quarter. The Games business unit’s revenue increased by 40 per cent 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 €22m 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.

Read more: Angry Birds maker Rovio is flying high after floating for almost €900m