Rovio Entertainment Interim Report January–March 2020

Kati Levoranta, CEORené Lindell, CFO

April 28, 2020

Dial:

FI: +358 981 710 310SE: +46 856 642 651UK: +44 333 300 08 04US: +1 855 857 06 86

PIN: 76415854#Kati Levoranta

CEO

Rene Lindell

CFO

2

Today’s speakersTo ask your question

• Adjusted EBIT margin was 19.6%. Profitability was impacted by a low level of user acquisition (UA) and stable key games performance, most notably Angry Birds 2

• Operating cash flow increased y-o-y to EUR 11.5m (3.3)

• Group revenue was EUR 66.6m, decreased 6.0% y-o-y.

• Games revenue EUR 62.7m, Brand Licensing EUR 3.9m

• UA investment were 21.5% of Games revenues.

• Exciting game roadmap: altogether 10 new games in development, of which 3 are in soft launch

• Angry Birds long-form animated series announced with Netflix scheduled for release in 2021

• Hatch completed restructuring of operations as planned. The restructuring is estimated to result in annualized cost savings of approximately EUR 6 million effective from June 2020 onwards.

3

First Quarter of 2020 in an EggshellImproved profitability, cash flow and the performance of Angry Birds 2

• Group Q120 revenue declined 6.0% to EUR 66.6m (70.9)

• Games revenue declined 5.3% to EUR 62.7m (66.3)

• Angry Birds 2 gross bookings declined vs. Q119 but were at a stable level compared to three previous quarters

• Angry Birds Dream Blast revenue declined vs. Q419 due to lower level of UA. Sugar Blast gross bookings marginally increased vs. Q419.

• Brand Licensing declined 15.9% y-o-y to EUR 3.9m (4.6) due to lower revenues from The Angry Birds Movie as expected.

Q120: Rovio Group revenue declined by 6.0%

62.7

70.94.6

66.3

Jan-Mar 19 Jan-Mar 20

66.6-6.0%

Revenue (EUR million)

GamesBrand Licensing

4

3.9

• Group adjusted operating profit was EUR 13.0m (7.5), and adjusted operating profit margin was 19.6% (10.5%)

• Key drivers of the improvement in profitability were strong performance in Angry Birds 2 and the decrease in UA investments.

• Games adjusted operating profit increasedto EUR 16.6m (10.1) y-o-y

• Brand Licensing unit adjusted operating profit increased to EUR 0.8m (0.6)

Q120: Improved profit margin due to stability of key games despite lower user acquisition

Adjusted operating profit (*)(EUR million)

0.8

-4.4

10.1

-3.3

Jan-Mar 19

16.6

Jan-Mar 20

7.5

13.0

Adjusted operating profit Margin (*)

5

Other GamesBLU

Jan-Mar 20Jan-Mar 19

10.5%

19.6%

(*) The adjustments during the Jan-Mar 2020 period amounted to EUR 0.3 million and were related to the restructuring of Brand Licensing and Hatch Entertainment. There were no adjustments in the Jan-Mar 2019 period.

0.6

Q120: Games gross bookings declined 5.7% y-o-y• Games gross bookings EUR 62.1m

(65.8) and 5.7% y-o-y growth; declined approximately 8% in comparable currencies

• Angry Birds Dream Blast grew y-o-y, but declined q-o-q as a result of reduced UA investments

• Angry Birds 2 grew marginally q-o-q.The game performance improved on the back of new updates

• Sugar Blast gross bookings wereEUR 2.3m in Q120. Working to improve scalability.

1Q19

6.2

1Q20

6.9

65.1

4Q19

26.5 25.0

65.8

32.0

7.2

7.3

6.8

3.3

9.7

6.6

6.6

18.8

8.5

2.7

2Q19

17.8

5.72.73.0

3Q19

0.57.3

24.9

5.9

5.3

2.2

14.0

67.0

62.1

6.1

2.6

65.2

5.6

16.1

25.0

2.3

4.4

Games gross bookings (EUR million)

6

AB 2

AB Match

Sugar Blast

AB Dream Blast

AB Pop

Other games

AB Friends

Angry Birds 2 (Earn) was the highlight of Q1

7

Games gross bookings (EUR million)

§ Sugar Blast§ Angry Birds Dream Blast§ + games in soft launch

§ Angry Birds 2§ Angry Birds Match§ Angry Birds Friends§ Angry Birds Pop

§ +other games9,7 8,5 7,3 7,3 6,1

49,342,7

39,6 38,8 37,6

6,914,0 18,3 21,0

18,4

Q3/19Q1/19 Q2/19 Q4/19

65.8 65.2 65.1 67.0

GrowEarnCatalogue

Q1/20

62.1

Q120: Lower level of user acquisition investments

• Q120 UA investments were EUR 13.5m (23.7) or 21.5% (35.8%) of games revenue

• The largest reduction of UA took place in Angry Birds Dream Blast

• Significant proportion of UA for the “Grow” – category of games

• Angry Birds 2 received less UA vs. Q419 (and significantly less vs. Q119)

8

User acquisition investments (EUR million)

Q219

23.3

Q218 Q318 Q419

17.8

Q418 Q120Q119 Q319

22.9 23.721.3

27.1 27.5

0

10

20

30

40

50

Q119

35.7 32.6

28.2

Q418Q218

35.1

Q318

35.8

Q219 Q319 Q419

40.8

Q120

41.3

User acquisition investments,% of games revenue

13.5

21.5

9

Q119-Q120 UA split (%) per games category

0.7

28.4

48.7

0.0

49.2

2.1

Q119

70.8

Q219

70.3

29.7

Q319

76.8

23.1

0.1

Q419

• 66.2% was allocated to “Grow” category games Angry Birds Dream Blast and Sugar Blast.

• 33.6% of UA to “Earn” category, mainly to Angry Birds 2

• Catalogue games did not receive any significant UA investments

GrowEarnCatalogue

Q120

0.2

33.6

66.2

• Operating cash flow was EUR 11.5m in Q120 (3.3)• Cash flow increased significantly

y-o-y as a result of improved profitability

• Cash balance at end of Q120EUR 121.1m (end of Q419: EUR 124.7m)• EUR 11.1m cash used to

purchase treasury shares during Q120

Operating cash flow improved

Q219-0.7

Q419Q119Q218 Q319Q318

11.1

Q418 Q120

1.8

19.2

3.34.8

3.1

Operating cash flow (EUR million)

10

97,0107,4

123,6 128,8

124,6

127,9 124,7

121.1

0

20

40

60

80

100

120

140

Q319Q218 Q219Q418Q318 Q119 Q419 Q120

Cash & cash equivalents (EUR million)

11.5

No changes to 2020 Outlook

11

2020 outlook

During 2020 we aim to launch 1-3 new games. The timing of new game launches depends on how the games progress in soft launch. Therefore, we do not give a full year 2020 revenue guidance. We start the year at a lower user acquisition level than we ended last year. Due to lower user acquisition investments and the planned cost savings in Hatch Entertainment Oy our adjusted operating profit improves.

Basis for outlook• Our long-term strategy is to seek growth in the Games business through improving the

performance of our key games and developing new games.

• Brand Licensing segment is optimized for profit at a lower revenue which is expected to decline approximately 50% year-on-year in 2020.

• Hatch Entertainment annualized expenses are expected to be approximately EUR 5 million (2019: EUR 10.9 million) on an adjusted basis after restructuring and aligning with its new strategy.

Basis for 2020 outlook per games category

12

We believe Angry Birds Dream Blast will grow on an annual basis, but starts the year at a lower quarterly run-rate compared to the end of 2019. We have a strong feature roadmap for the game focusing on improvements to long term retention and the marketability of the game. We are devoted to improving Sugar Blast gameplay and introducing new live operations to improve retention and monetization to scale the game up.

The revenues of Angry Birds 2 stabilized despite much lower user acquisition investments y-o-y. We further focus on improving the performance of the game through introducing new updates that increase engagement with our core users. The revenue of other games (Angry Birds Match, Angry Birds Friends and Angry Birds Pop) is expected to continue decline at a steady slow pace. We have lowered or stopped user acquisition investments into these three games.

We expect these games to continue declining over time. They still receive substantial organic downloads but the active user base and revenues are expected to decline over time and we do not develop these games further.

We aim to launch 1-3 new games in 2020. Currently we have three games in soft launch and several games in other phases of production.

GROW

EARN

CATALOGUE

NEW GAMES

Games roadmap broadened• We have altogether 10 new games in development, of

which 3 are in soft launch: • World Quest (soft launched July 2019)

• Small Town Murders (soft launched October 2019)

• Phoenix Rangers (soft launched November 2019)

• Aiming to launch at least 1-3 new games during 2020, timing always dependent on game KPIs and the scalability of user acquisition

• Small Town Murders scheduled for launch in June 2020.

• We continue to manage the game development pipeline by adding more new projects to the beginning of the funnel and assessing the potential in existing projects

• Angry Birds Pop Blast discontinued in January. 13

Phoenix rangers pic

Dial:

FI: +358 981 710 310SE: +46 856 642 651UK: +44 333 300 08 04US: +1 855 857 06 86

PIN: 76415854#Kati Levoranta

CEO

Rene Lindell

CFO

17

To ask your question

Q&A

Appendix

Lower UA reflected in DAU and MUP during Q1• Daily active users (DAU) in

Q120 for top games was 3.7 million.

• Monthly unique payers (MUP) for top 5 games was 393 thousand.

• Lower UA and seasonally weaker Q1 vs. Q4 are two key drivers explaining the drop in these metrics.

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DAU (Daily Active User), millions

4,0 3,8 3,5 3,5 3,43,8 4,1

3,7

8,88,0

7,0 7,06,6 5,9 5,9

5,4

0

2

4

6

8

10

Q318Q218 Q119Q418 Q219 Q419Q319 Q120

Top 5 games All games

MUP (Monthly unique Payers)thousands

497 451 444 422 394428

426393

581517 504 495

460 489 497454

0

200

400

600

Q120Q119Q218 Q319Q318 Q219Q418 Q419

Monetization has remained stable q-o-q• ARPDAU for all games

EUR 0.13

• ARPDAU for top 5 games EUR 0.16

• MARPPU for top 5 games was EUR 39.6

21

ARPDAU (Average Revenue Per Daily Active User), EUR

0,150,16

0,… 0,18 0,180,16

0,150,16

0,080,09

0,10 0,10 0,110,12 0,120,13

0.2

0.0

0.1

1Q18 4Q182Q18 3Q18 2Q19 4Q193Q191Q19

Top 5 games All games

MARPPU (Monthly AverageRevenue per Unique Payer), EUR

33,536,0 38,7 39,0 41,5

38,038,3 39,6

0

25

50

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19