Join gaming leaders online at GamesBeat Summit Next this upcoming November 9-10. Learn more about what comes next.
Almost two months after its IPO, Angry Birds maker Rovio Entertainment today learned a painful lesson about life as a public company when investors battered its stock following an earnings report that failed to meet expectations.
Rovio missed on both profits and sales, which sent its stock down 18.87 percent in mid-day trading on the Helsinki exchange, dipping below its IPO price.
The company blamed increased spending on users for denting profits for the three months ending in September.
“In line with our growth strategy, we significantly increased our investments in user acquisition, which predictably led to a decline in profitability,” said Rovio CEO Kati Levoranta, in a statement. “Rovio’s successful listing on the Helsinki stock exchange at the end of September was evidence of the strong interest in our growth strategy, also in the capital markets.”
Three top investment pros open up about what it takes to get your video game funded.
Indeed, user acquisition costs were up 308.7 percent in the quarter compared to the same quarter a year ago. As a result, operating profits tumbled 70 percent.
That investment did pay off in terms of revenues, which grew 41.2 percent in the quarter to $83.72 million, though less than analysts had projected.
Still, this offers some hope that the company can continue the turnaround that helped it regain momentum over the past two years. Levoranta said the company expects the massive spike in marketing this past quarter to pay off in terms of profits and revenues in about 8 to 10 months.
GamesBeatGamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. How will you do that? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational, and fun speakers at our events
- Networking opportunities
- Special members-only interviews, chats, and "open office" events with GamesBeat staff
- Chatting with community members, GamesBeat staff, and other guests in our Discord
- And maybe even a fun prize or two
- Introductions to like-minded parties