Rovio: Guiding for a stable 2023 - Nordea

Rovio reported Q4 2% below Modular Finance consensus. Adjusted EBIT of EUR 5.9m missed by 18% relative to consensus of EUR 7.2m. The miss on EBIT is mainly accounted for lower-than-expected top-line and user acquisition (UA) investments being slightly higher than anticipated, we argue. Games' gross bookings grew by -7.9% y/y and by 5.4% q/q organically. This compares to mobile gaming market growth of -7% y/y globally and -11% y/y in the US in Q4. User acquisition (UA) investments at EUR 23.3m were above our estimate of EUR 22.4m, i.e. 31.3% of Games revenue (Nordea: 30.4% / consensus: 30.7%) compared to 28.7% in Q3 2022 and 26.9% in Q4 2021. UA increased for ABDB in particular. Rovio expects 2023 to be a stable year for the mobile gaming market. The company guides for its comparable revenue and adjusted EBIT to be flat y/y in 2023. Modular Finance consensus has been looking for 1% revenue growth and 5% adjusted EBIT growth for 2023 relative to 2022 figures. UA investments in Q1 2023 are expected to be 29-34% of Games revenue (Nordea 26.0%). Despite of the Q4 report implying some downside to consensus estimates, we believe the share price will be more driven by takeover speculation in the near-term.