Rovio: Improved download rankings for AB2 a positive leading indicator for the revenue of Games - Nordea

We take a look into key datapoints on Rovio’s games and find evidence that the revenue of Games has developed positively during Q2. Our data source Reflection.io suggests 15% QTD revenue growth q/q for Games, compared to our Q2 estimate of +4%. The positive development seems to be driven mainly by Rovio’s largest game, Angry Birds 2 (AB2), which, according to Reflection, has recorded 18% higher daily sales QTD in Q2 compared to Q1 (this figure tends to be volatile). AppAnnie’s rankings data also give a positive signal and suggest a steep increase in AB2 download volumes. We believe that the improvements made to AB2 in Q4 are gradually paying off and might have allowed the company to increase its UA investments for the game, owing to shorter payback times. Looking to the latest release, Darkfire Heroes, its gross bookings have not grown materially since the launch in mid-April, according to Reflection.io. Ro vio will roll out improvements to the game and ramp-up user acquisition gradually which could help the game to eventually gain momentum. We are 1% above consensus for Q2 group net sales and 28% for adjusted EBIT. The share trades at 2021E EV/EBIT of 9.5x, or 8.4x if we were to increase our AB2 growth estimate from -3% to +5% for 2021.