BUSINESS

NetEnt’s addiction to dealmaking pays off handsomely in Q3

TAGs: netent

netent-online-gambling-revenueOnline casino technology provider NetEnt hailed its entry into multiple new markets for boosting the company’s third-quarter performance.

On Thursday, the Stockholm-listed NetEnt reported revenue of SEK449m (US$49.2m) in the three months ending September 30, 11% higher than the same period last year. Earnings improved 16.7% to SEK227.5m on an absurd 50.6% margin, while after-tax profit rose 9% to SEK155m.

NetEnt CEO Therese Hillman (not pictured), who assumed command after former chief exec Per Eriksson was unceremoniously sent packing in March, hailed the release of NetEnt’s new Jumanji game for getting Q3 off to a strong start, while a focus on lowering overhead and increasing the pace of game output helped sustain that momentum.

The quarter saw NetEnt launch games with Canada’s British Columbia Lottery Corporation and Norway’s state-owned Norsk Tipping. NetEnt also launched with its first Lithuanian-licensed operator and made its US market debut courtesy of the Hard Rock Atlantic City’s online casino in New Jersey.

These new market entries will go a long way toward righting NetEnt’s ship after a disappointing 2017, which saw the company forced out of Australia, Poland and the Czech Republic following new online regulations. The combined effect of these market exits was a 3% fall in NetEnt’s overall revenue.

NetEnt signed nine new customer agreements in Q3 and the pace of deal-making hasn’t slowed in Q4, including pacts with Sweden’s Svenska Spel and Finland’s Veikkaus. NetEnt also signed its second New Jersey client (Churchill Downs Inc) and this week brought word of NetEnt’s first Pennsylvania-focused tie-up with casino operator Penn National Gaming.

September saw the launch of NetEnt’s new in-house affiliate business, in which the company offers free-play games directly to customers, then steers more daring customers to NetEnt’s real-money partners. NetEnt’s social casino product also got a new desktop version for US customers.

NetEnt’s customers handled 10.9b (+7.2%) transactions in Q3. Mobile devices accounted for 61% of transactions, nine points higher than the same period last year. Slots accounted for 91.6% of Q3 game win versus 8% for table games and 0.4% for ‘other’ products. Hillman said the company has plans to add tables to its fledgling live casino product later this year and throughout 2019.

Locally regulated markets accounted for 35% of NetEnt game win, up three points year-on-year. Sweden provided 14% of game win, while other Nordics claimed a 17% share and the UK a 14% slice, while the rest of Europe improved five points to 42%.

NetEnt warned that the January 1, 2019 launch of Sweden’s regulated online market comes with an 18% revenue tax for Swedish-licensed operators, which will in turn have a negative effect on NetEnt’s 2019 revenue.

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