NetEnt puts Red Tiger in its tank, can't offset Sweden slowdown
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Online gambling technology supplier NetEnt put a Red Tiger in its tank but even that couldn’t offset ongoing struggles in certain Nordic markets.
This week, the Stockholm-based NetEnt reported revenue of SEK512m (US$52.9m) in the three months ending December 31, 2019, up 10% from Q4 2018 and a new company record. Earnings improved 28% to SEK261m as margins gained seven points to 51%.
However, operating expenses were up 10% and financial expenses soared to SEK33.6m from just SEK4.1m one year earlier. The net result was pre-tax profit falling 10.5% to SEK127m and after-tax profit down 17.5% to SEK112.6m.
Some of those financial expenses were related to NetEnt’s acquisition of online casino supplier Red Tiger Gaming, which officially became part of NetEnt at the start of last September. Red Tiger contributed SEK126m to Q4 revenue, without which NetEnt’s revenue would have fallen 4.8% year-on-year.
The unaided revenue decline was blamed on “continued weakness in mainly Sweden and Norway,” which was partially offset by ‘significant’ growth in the expanding US regulated online market.
Non-Nordic European markets accounted for 44% of NetEnt’s Q4 revenue, with the UK ranked second at 19%, tied with ‘Rest of World’, while ‘Other Nordic’ markets contributed 13% and Sweden added 7%.
Full-year 2019 revenue was basically flat at SEK1.79b while expenses grew 7%, pushing operating profit down 12% to SEK528.7m and after-tax profit down more than one-quarter to SEK428.9m.
Excluding Red Tiger, NetEnt signed 33 new license deals in 2019, while launching product with 32 new customers (down from 38 in 2018). The company released 13 new slots games in Q4, of which the Ozzy Osbourne product proved the most successful.
NetEnt celebrated all-time higher player numbers for its nascent Live Casino product, the success of which has convinced the company to expand its Malta-based live studio. NetEnt launched a new Auto-Roulette studio in December and will “soon” offer physical tables to its customers, joining its blue screen technology tables.
