Strong second quarter growth for NetEnt

Swedish online gambling software developer NetEnt has posted another impressive quarterly, with Q2-2015 highlights flagged as:

* Revenues increased by 32.3 percent to SEK 271.2 (205.0) million;

* Operating profit of SEK 92.7 (56.7) million, an increase of 63.3 percent;

* Operating margin was 34.2 (27.7) percent;

* Profit after tax came in at SEK 86.5 (52.5) million, an increase of 64.9 percent;

* Earnings per share of SEK 2.17 (1.33) before dilution and SEK 2.16 (1.32) after dilution;

* Nine licence agreements with new customers were signed, eight new customers’ casinos were launched.

* Launched with bwin.party, Gamesys, PokerStars and Danske Spil;

* Entered cross-license patent agreement with IGT for North America;

* Granted local gaming licenses in Spain and launched with several customers;

* First two client agreements signed in New Jersey, with bwin/Borgata and Caesars Interactive Entertainment;

* Launched first game in William Hill’s betting shops across the UK;

* Net cash position of SEK 219.3 million.

The company also released its H1-2015 numbers, flagging the following:

* Revenues for the first six months up by 34.6 percent to SEK 529.5 (393.4) million;

* Operating profit of SEK 174.5 (107.9) million, an increase of 61.7 percent;

* Operating margin was 33.0 (27.4) percent;

* Profit after tax of SEK 160.7 (98.6) million, an increase of 63.0 percent;

* Earnings per share amounted to SEK 4.03 (2.49) before dilution and SEK 4.02 (2.48) after dilution;

* 20 licence agreements were signed with new customers and 15 new customers’ casinos were launched.

CEO Per Erickson commented: “The strong growth continued in the second quarter and we took several important steps towards entering new markets such as the US and Spain. We also launched operations with William Hill retail, meaning that for the first time our popular games are available in betting shops across the UK.

In the second quarter… the margin increase was driven by growing revenues and economies of scale, offsetting continuing investments in new staff, product development and new markets.

“During the quarter we handled 6.5 billion transactions in our systems, representing 26 percent growth compared to last year. The trend of increasing mobile gaming continues; we see strong growth in our mobile games and they accounted for 23 percent of total game win in the quarter, up from a share of 13 percent in the same quarter 2014.

“Our growth strategy is to expand on regulated markets and we had a very eventful second quarter with regards to new customers and new markets. We continue to take market share in the UK, which has become our third largest market in revenue terms and a key factor behind our strong growth overall. Live Casino is an important product where we continue to see growth and market share gains. In May we launched the product on the Italian market.

“The conditions for future growth continue to be good in Europe, especially in Britain and Spain. Longer term, we see great potential in North America and Asia. We also expect solid growth from mobile for many years to come.

“Retail is a new distribution channel for us that could become important in the future. Around 95 percent of all casino gaming still takes place offline and it is strategically important for us to capitalize on the trend of increasing convergence between offline and online.”

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