Here’s what a top mobile game developer can make in a single year: $892 million off two games across Android and iOS.
That’s what Finnish developer Supercell said on a call last that night that it earned last year. Although Supercell is privately held, it still has to report earnings once a year in accordance with Finnish law. The company sold slightly over half of itself to Japanese carrier Softbank and game maker Gung-Ho last year for $1.53 billion.
Their lofty valuation came from explosive earnings from two games: Clash of Clans and Hay Day. Those two titles helped the game maker go from earning $101 million in revenue in 2012 to nearly nine times as much the following year.
Earnings before interest, taxes, depreciation and amortization worked out to be $464 million. That’s about $3.4 million in EBITDA per employee at Supercell’s headcount of 138 people. The company is planning on releasing a third title, Boom Beach, next month.
Surprisingly though, the earnings aren’t that much higher than the annualized runrate the company reported back in the first quarter of last year, when it said it earned $179 million in first-quarter revenue. (That would have worked out to slightly over $700 million per year, and that’s before Supercell launched the Android versions of its games.)
There’s one other interesting thing from the call, too. What’s the difference between an American company’s earnings call and a Finnish one?
Supercell’s Ilkka Paananen had to stress how much the company paid in taxes. (Imagine if Apple or Google did that.)
Because of the company’s huge exit last year, Supercell has had to manage domestic press relations in a sensitive way before a country that prides itself on its socioeconomic equality. Paananen said Supercell paid $345 million in taxes to the government, including corporate tax, income tax and taxes related to the sale.
On top of that, Paananen said Supercell was not using any international financial maneuvering to avoid paying taxes to the Finnish government. This is in contrast to companies like Apple, which have used subsidiaries in countries like Ireland, the Netherlands and the Caribbean to avoid billions of dollars in income taxes. In a New York Times piece in 2012, a former Treasury Department economist told the newspaper that Apple’s federal tax bill would have likely been $2.4 billion higher if it hadn’t used these accounting techniques.
“We don’t use any tax optimization,” Paananen said. “We’ve gotten so much from this community here. Helsinki is the best place to set up your company, especially if you’re a games company.”