Rovio is spending more money attracting players to its mobile games to drive sales growth.
Rovio spent 35% of revenue in its Games unit on keeping users coming back more often in the second quarter, up from about 25% on the previous year. Bookings increased for Angry Birds 2, Angry Birds Friends and Angry Birds Match, while other new games failed to generate expected growth, CEO Kati Levoranta said in an earnings statement.
The company’s revenue of 71.8m euros beat the highest of three analyst estimates compiled by Bloomberg. While operating profit of 6m euros topped the 5.4m estimate, it was 58% lower than a year earlier when the company was still reaping the benefits of The Angry Birds Movie.
Games revenue rose by 6.4% to 65.3m euros, but profitability was lower due to the increase in investments to gain users, the company said.
Although the cost per acquired user has risen significantly and sales growth has therefore come at the expense of profitability, Rovio reiterated that the company still expects to see revenue of as much as 300m euros this year, with an adjusted profit margin of 9% to 11% of sales.