Online gambling technology supplier NetEnt is weathering the COVID-19 pandemic just fine thanks to UK and US market growth.
In a first-quarter earnings preview released Wednesday, the Stockholm-listed NetEnt said its revenue totaled SEK518m (US$51.2m) in the three months ending March 31, nearly 24% higher than the company reported in the same period last year.
Earnings were up nearly 17% to SEK229m and would have risen higher were it not for SEK26m in restructuring costs associated with the integration of software provider Red Tiger Gaming, which NetEnt acquired last September. Those costs, as well as earn-out obligations related to the acquisition, pushed after-tax earnings down by nearly one-third to SEK82m.
NetEnt CEO Therese Hillman said most of Q1’s growth came from the US and UK markets, which offset continued “negative” results in Sweden and Norway. Sweden’s share of NetEnt’s overall revenue has fallen to just 6%, while the US now accounts for 7% thanks to strong growth in New Jersey’s online casino market and the launch of regulated online casino in Pennsylvania.
The UK remains NetEnt’s largest market with a 19% share of the company’s overall revenue – thanks in part to a recent deal with UK bookmaker Betfred – while Italy ranked second with 8% despite that market’s recent challenges.
Locally regulated markets now account for half of NetEnt’s business. Earlier this month, NetEnt launched in Switzerland via deals with Grand Casino Luzern and Grand Casino Baden, while this week saw NetEnt proclaim its imminent launch in Colombia via a deal with Rush Street Interactive.
Had Red Tiger been under the NetEnt umbrella in Q1 2019, the most recent quarter’s annual revenue growth would have been 12%. NetEnt completed its integration of Red Tiger’s operations during Q1, resulting in around 120 redundancies. This boosted NetEnt’s expectations of the acquisition’s potential annual ‘synergies’ to SEK250m, counting revenue synergies.
Hillman has high hopes for NetEnt’s growing live casino offering, which enjoyed “new record levels in the number of players every month since December.”
Hillman briefly addressed the pandemic’s potential impact on NetEnt’s operations, saying the company’s financial performance “has not been negatively affected” so far. Hillman cautioned that it was “difficult to predict the effects” on the company’s business, the overall economy and the gaming sector in particular.
