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Third party research

Rovio: Expectations ahead of Q2 results - Nordea

Rovio Entertainment

This is a third party research report and does not necessarily reflect our views or values

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Rovio will publish its Q2 report on 11 August at 9:00 EET. For Q2, we expect Games revenue to decrease by 4% q/q (+19% y/y), driven by the lack of releases from Ruby Games and sequentially lower UA spend for AB Journey. Based on Rovio's mid-quarter meeting and data.ai, we believe the older AB games have performed broadly in line with our expectations. UA guidance for Q2 stands at 25-30% of Games revenues, which compares to 38% in Q1 and our Q2 estimate of 27%. Our top-line estimate is in line with pre-Q2 Infront consensus, while our adjusted EBIT estimate is 1% below. Despite the mobile gaming market currently facing headwinds (US market -11% y/y growth in Q2, according to Sensor Tower) from post-pandemic reopening, rising inflation and IDFA deprecation, we expect Rovio to repeat its 2022 outlook for strong top-line growth, supported by the launch of AB Journey (20 January 2022) and the acquisition of Ruby Games (12 August 2021), as well as for declining adjusted EBIT. We forecast 18% top-line growth (7% organic) and an adjusted EBIT decline of 5% for 2022E, which puts us 1% ahead of consensus on sales, but 4% below on EBIT for 2022E. UA guidance for Q3 (Nordea estimate: 33% of Games revenue) will receive focus as a q/q uptick could be an indication of the global launch of Hunter Assassin 2 (which we model for Q3) or an improvement in key KPIs for AB Journey. We find no reason to changes our estimates ahead of the Q2 report.
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