The CEO of Nordic betting operator Betsson AB has earned an early nod for understatement of the year by admitting that the company’s second quarter results “did not live up to our expectations.”
Three weeks ago, Betsson saw its shares shed one-third of their value after the company alerted investors that profits in the three months ending June 30 were likely to come in 25% lower than the same period last year.
On Thursday, Betsson released its interim report covering the first half of 2016, which showed revenue up 13% to SEK 1.93b ($225m), operating income down 10% to SEK 408m and profit down 9% to SEK 380m. Perhaps because things weren’t worse, Betsson shares closed Thursday’s trading up over 13%.
As for that disappointing Q2, results largely mirrored those earlier dire forecasts. Revenue was up 9% to SEK 935m, operating income fell 26% to SEK 158m and profit was off 27% to SEK 146m.
The company said almost SEK 33m of the Q2 profit decline was due to negative currency fluctuations. Poor sports margins spoiled an 8% rise in sportsbook revenue during the quarter while casino revenue was up 11% to SEK 683m.
Revenue should conceivably have been much higher given that last year’s figures didn’t include contributions from Georgian operator Europe-Bet, which Betsson acquired last July. Betsson said Europe-Bet accounted for SEK 94m of overall Q2 revenue and SEK 23m of operating income.
Europe-Bet contributed to solid growth in other metrics, with the number of active accounts rising 58% to 563k. Mobile revenue rose one-third to SEK 383m, accounting for 41% of overall sales.
In addition to sports margins and currency fluctuations, Betsson CEO Ulrik Bengtsson also cited unspecified regulatory changes that depressed returns from certain markets. Bengtsson said Betsson had made improvements to its sports and casino products that will “have effect in future quarters” and claimed that Q3 had started off with daily revenue “significantly above” Q2’s average figures.