'Angry Birds' Developer Rovio's Quarterly Revenues Nearly Double Amid IPO Rumors

Angry Birds developer Rovio released its quarterly financials Tuesday and the company’s strong performance comes amid increasing speculation about a possible initial public offering for the company.

According to Rovio, the developer saw a 94 percent year-over-year jump in revenue for the second quarter of 2017. For the quarter, Rovio brought in 86.2 million euros compared to 44.5 million euros in 2016.

The strong quarterly performance also continues a similar trend for Rovio this year. For the first half of 2017, the company reported revenues of 152.6 million euros versus 78.5 million euros for the previous year. Rovio also saw a 30 percent increase in the number of monthly paying users for its games and a 51 percent jump in revenue per monthly paying user.

In a statement, CEO Kati Levoranta credited the strong quarterly performance to several factors in Rovio’s portfolio. Rovio saw the launch of Battle Bay and Angry Birds: Evolution this year and both titles have performed well for the studio. Elsewhere, Rovio also formalized an agreement with Columbia Pictures that’ll see a sequel to “The Angry Birds Movie” come out in September 2019.

“The Angry Birds Movie,” which originally came out in spring 2016, was an animated film that featured the characters from the Angry Birds franchise. Despite middling reviews, the movie grossed $350 million against a budget of $73 million. Levoranta also noted that improved licensing models that are expected to result in lower operating expenses were implemented recently and should result in improved revenue later this year.

For Rovio, the studio reportedly wants to leverage this momentum towards a potential IPO. As Bloomberg reported, the company has looked into an offering that could include an estimated valuation of around $2 billion. In June, the studio told Reuters that while it had no confirmed plans for an IPO at the time, such a move “could be possible.”

While the move could be a short-term benefit for Rovio’s bottom line — Bloomberg notes that a potential listing could bring in around $400 million — it’s widely expected to come with substantial risks.

Past offerings from mobile game publishers have often launched with high expectations followed by quick stumbles. Studios Zynga and King Digital were best known for games like Candy Crush and Farmville when they had their IPOs, which each featured valuations of around $7 billion, but both studios failed to recapture the initial momentum of their early hits. King was acquired by Activision in 2015 and Zynga’s stock price has remained stagnant for years at around $3.00 per share since its 2011 IPO.

The sustainability of Rovio’s current upswing, which has come after several years of steady declines, has also been a source of uncertainty for potential buyers.

The studio has made some ventures outside of the traditional Angry Birds universe, as Battle Bay is a multiplayer ship combat title and Angry Birds: Evolution features turn-based role-playing gameplay. But since 2009’s original Angry Birds , the Angry Birds franchise has been a primary driver for Rovio’s revenues — the series has been seen in numerous games, spinoff titles and animated properties — and the studio likely wants to demonstrate to investors that it can diversify its properties beyond a single cash cow.

On paper, Rovio’s potential valuation also takes an aggressive stance towards investors. As Bloomberg Businessweek notes, the studio’s reported $2 billion valuation would give it a valuation multiple of 10 times its 2016 revenue of around $200 million. By comparison, Zynga had a valuation multiple of five times.

While Rovio has yet to make concrete moves towards an IPO, the company has also been tied to other avenues that would benefit its bottom line. Chinese internet conglomerate Tencent had potentially looked into acquiring Rovio for an estimated $3 billion in June, The Information reported. If the move were to go through, it would give Tencent an additional premium asset within the mobile games space. The company is also responsible for hit Chinese mobile game Honor of Kings , which has an estimated install base of around 50 million users.