While Darkfire Heros (1st RPG from the Copenhagen studio) will be improved in the coming quarters following disappointing launch in Q2, Espoo strategy studio will pivot towards 4X type of games for a wider audience following surprising termination of soft launch for Hardhead Squad in Q2. We did review the accretive-looking Ruby Games acquisition that we expect to cost EUR 90m over the next five years, adding ~5% to revenues and ~20% to EBIT in 2023.
Even though management remains tight-lipped regarding agreed revenue and EBITDA earn-outs, it acknowledged that any value per share pick-up would require corresponding step-up in financial metrics (we estimate 6.6x revenue and 14.7x EBIT multiple for the initial 20% tranche).
Ruby Games has phenomenal track-record in hyper-casual games as of the 13 games launched, eight reached the US Top 10 download rank and three the US Top 1 download rank.
Best-performing game Hunter Assassin was the world’s 6th most downloaded game in 2020 (350m downloads in total). In addition to its financials, Ruby Games with 600m downloads grows Rovio DAU by 50%. We expect Rovio to consolidate Ruby Games from Q4 onwards, improving it s growth and margin profile. On Moomin cooperation, the company has promised a soft launch by the year-end. Assuming this is a more straightforward puzzle game, we could see the IP start generating revenues from H2 2022 onwards.
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