Online casino technology supplier NetEnt posted modest 2018 financial gains despite some negative activity in its fourth quarter.
The Stockholm-listed NetEnt released its Q4 and FY18 fiscal report card on Tuesday, which showed revenue rising 9.5% to SEK465m (US$50.2m) in the three months ending December 31, 2018. Earnings gained 5% to SEK204m, but operating profit slipped nearly 6% to SEK146m and after-tax profits fell 11.6% to SEK137m.
The final quarter of 2018 saw NetEnt announce a global restructuring that included 55 staff redundancies and the write-down of a virtual reality project. But NetEnt also inked new customer contracts with Sweden’s Svenska Spel and ATG, Finland’s Veikkaus, a live casino deal with UK bookmaker William Hill, plus US intrastate deals with Churchill Downs Inc. (New Jersey) and Penn National Gaming (Pennsylvania).
For 2018 as a whole, revenue was up 9% to SEK1.78b, earnings improved 10.2% to SEK816m, operating profit edged up 3.2% to SEK601m and after-tax profits rose 5.4% to SEK577m. The year closed with 31 new customer agreements and the launch of 38 new customers’ casinos.
Therese Hillman, who succeeded former CEO Per Eriksson last spring, said December’s reorganization had put NetEnt on a path to “a more decentralized structure with clearer areas of priority and accountability.” The company hopes to release up to 35 new games this year, compared to just 21 in 2018.
Locally regulated markets’ share of NetEnt’s overall revenue was up four points to 37% in 2018, a figure that would have topped 50% had Sweden’s new regulated market been in place before January 1, 2019.
However, NetEnt’s overall game-win in euros is down 5% since the start of the year, primarily due to lower volumes in Sweden’s regulated market. NetEnt cautioned that it was still too early to predict the “mid- to long-term effects” of the new Swedish regulation.
NetEnt also noted that its expected online launch in Pennsylvania’s intrastate online gambling market has been delayed due to the US Department of Justice’s new opinion on the scope of the Wire Act. NetEnt acknowledged the current uncertainty but “at this stage we do not see any reason to reconsider our US growth plans.”