HELSINKI: Quarterly profit at “Angry Birds” maker Rovio Entertainment plunged 96 percent as the mobile games company was hit by the slower-than-expected take up of its 5G gaming platform Hatch and higher marketing costs.
Shares in the Finnish company slumped 22 percent in early Wednesday trading after it said it was evaluating “strategic alternatives” for Hatch, while also looking to make annual cost savings of €6 million ($6.6 million) for the 80 percent-owned unit.
It did not elaborate what those alternatives might be, but said it planned to shift the unit’s emphasis to Hatch Kids, a subscription and streaming service for children.
Rovio, looking for ways to build on the success of the 10-year-old “Angry Birds” series of games, said competition in games streaming had intensified globally while the roll-out of 5G networks and devices had been slower than anticipated.
Last year, the company opened Hatch to outside investment, but on Wednesday closed the fundraising without announcing new investors.
Fourth-quarter adjusted operating profit tumbled to €200,000 ($220,000) from €5.3 million a year earlier, while sales dropped 1.4 percent to €71.6 million.
Games revenue and gross bookings both hit new records, at €66.7 million and €67 million, respectively.
But so-called user acquisition costs, such as the cost of getting games displayed prominently in app-stores, jumped 18 percent to €27.5 million, or 41.3 percent of games revenues for the quarter.
The company said acquisition costs had been lower so far this year which, coupled with planned savings at Hatch, should lead to improvement in operating profit in 2020. It did not give revenue guidance for this year.
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