Cherry lowers ComeOn! forecast for 2017

An industry advisory from Cherry AB Wednesday revised its full-year forecast on subsidiary ComeOn! while reporting on the company’s third quarter preliminary earnings.

In terms of the development of its ComeOn! subsidiary, Cherry revised its full-year forecast for 2017 from revenue of approximately MSEK 2,500 to around MSEK 2,200, and profit (EBITDA) from about MSEK 480 to around MSEK 400 saying the process of integrating the subsidiary has not gone according to plan due to erroneous marketing decisions.

Those decisions, the company said, contributed to higher cost and weaker earnings than forecast and as of 26 October 2017, a new management team had been appointed with “extensive experience” from establishing ComeOn! as a market leader.

“Naturally, I am disappointed that ComeOn! has not developed as well as we previously assessed,” Anders Holmgren, chief executive officer of Cherry AB commented, pointing the finger squarely at the previous management’s “poor focus on business”.

Holmgren detailed an 11 percent increase in pro forma revenues for Cherry’s Online Gaming business area, with ComeOn! as its largest unit, but remains convinced that the company is capable of delivering stronger growth with increased profit.

“We have a clear idea of what immediate actions are required, including cost reductions and focus on growth. The other business areas in the Cherry Group continue to develop well, with good cost control and well-balanced investments,” Holmgren said.

The Cherry Group’s consolidated revenues for the third quarter are estimated at around MSEK 567 (Q3/2016: MSEK 214) and EBITDA for the period is estimated at MSEK 112 (Q3/2016: MSEK 31). The EBITDA margin for the period is estimated at about 20 percent.

Key performance highlights per business area for the third quarter ending 30 September 2017 include:

Online Gaming revenues of MSEK 448.5 (Q3/2016: MSEK 142.8) and EBITDA of MSEK 67 (Q3/2016: MSEK 18.1)

Performance-based Marketing revenue of MSEK 44,6 (Q3/2016: MSEK 15.9) and EBITDA of MSEK 33.4 (Q3/2016: MSEK 6)

Eliminations, Game Lounge revenues from Cherry MSEK -5.4 (Q3/2016: MSEK -2.3)

Restaurant Casino revenues of MSEK 40.9 (Q3/2016: MSEK 39.5) and EBITDA amounting to MSEK4.8 (Q3/2016: MSEK 4.2)

Game Development revenues of MSEK 44.1 (Q3/2016: MSEK 21.0) and EBITDA amounting to MSEK 18.7 (Q3/2016: MSEK 9.2)

Eliminations, Yggdrasil revenues from Cherry MSEK -5.5 (Q3/2016: MSEK -3.0)

Gaming Technology revenues of MSEK 10.4 and EBITDA of MSEK -0.3

Eliminations, XCaliber revenues from Cherry MSEK -10.3