Angry Birds Revenue Rises as Rovio Spends More to Lure Players

(Bloomberg) -- Angry Birds maker Rovio Entertainment Oyj is spending more money attracting players to its mobile games, buying sales growth at the expense of profitability.

Rovio spent 35 percent of revenue in its Games unit on keeping users coming back more often in the second quarter, up from about 25 percent a year earlier. Bookings increased for “Angry Birds 2,” “Angry Birds Friends” and “Angry Birds Match,” while other new games failed to generate expected growth, Chief Executive Officer Kati Levoranta said in an earnings statement on Friday.

The company’s revenue of 71.8 million euros ($81.7 million) beat the highest of three analyst estimates compiled by Bloomberg. While operating profit of 6 million euros topped the 5.4 million estimate, it was 58 percent lower than a year earlier, when the company was still reaping the benefits of “The Angry Birds Movie.”

The stock rose 2 percent to 5.56 euros at 11:25 a.m. in Helsinki.

Games revenue rose by 6.4 percent to 65.3 million euros, but profitability was lower due to the increase in investments to gain users, the company said.

While reiterating that the cost per acquired user has risen significantly, Rovio still expects to see revenue of as much as 300 million euros this year, with an adjusted profit margin of 9 percent to 11 percent of sales.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo, Kim Robert McLaughlin

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