Rovio: Takeaways from Q2 mid-quarter analyst meeting - Nordea

We attended Rovio’s Q2 mid-quarter meeting for sell-side analysts on Friday hosted by IR Timo Rahkonen, CEO Alexandre Pelletier-Normand and CFO René Lindell. The company continued to highlight near-term headwinds for the mobile gaming market from post-pandemic reopening and Apple’s IDFA changes, which according to data.ai have led to a 6% y/y market decline in April-May. Rovio’s largest market, the US, has taken the biggest hit with a 20% y/y decline, whereas the market in China has been able to grow due to the recent lockdowns. We were left with the impression that Rovio’s Games revenue has witnessed y/y growth, but slight q/q decline in Q2 due sequentially lower UA spend on AB Journey and lack of game releases by Ruby Games. We have been expecting 1% q/q decline in Games revenue, but we note that the sequential decline for Ruby Games does suggest some additional downside to our Q2 estimates as we had expected positive growth for the studio. The older Angry Birds games (AB2, ABDB, AB Friends) have performed broadly in line with our expectations. For Q2, our estimates have been 1% above Infront consensus on top-line, but 3% below on adjusted EBIT. Given the somewhat soft Q2 after a strong Q1 and the market normalisation trends after abnormally high demand, we find limited catalysts for the shares until the launch of Hunter Assassin 2, which should take place in H2 2022E.