Interim report January–March 2017
Quote from Per Eriksson, President and CEO
– ”We continued to deliver on our growth strategy in the first quarter and revenues increased in line with our earlier comments about the quarter. For the first time, NetEnt’s games were launched on the regulated market in Mexico and the Company announced that the first game for Virtual Reality (VR) will be developed in 2017. For the rest of 2017, we see conditions for continued solid growth supported by new games, increasing market shares in the UK, mobile growth, many new customers to be launched and our ongoing expansion in North America.”
First quarter 2017
- Revenues for the first quarter increased by 15.2% to SEK 398 (345) million
- Operating profit amounted to SEK 136 (128) million, an increase of 6.3%
- Operating margin was 34.2 (37.1)%
- Profit after tax amounted to SEK 124 (122) million, an increase of 1.8%
- Earnings per share amounted to SEK 0.52 (0.51) before and after dilution
- 15 new customer agreements were signed, a new record, and six new customers’ casinos were launched
Important events in the first quarter
- Games were launched with Codere on the regulated market in Mexico
- NetEnt announced that it will develop its first VR game and revealed two new branded game titles for 2017: Planet of the Apes and Emojis®
- The Live Casino product offering was strengthened with the launch of Common Draw Black Jack for mobile
Comments by Per Eriksson, President and CEO:
A good start to 2017
The first quarter of 2017 featured continued growth and exciting product news for NetEnt. Compared to the very strong quarter of last year, revenues increased by 15.2 percent (13.0 percent in euro terms) to 398 SEKm, which corresponds to our earlier comments about the quarter. Operating profit increased by 6.3 percent to 136 SEKm and the operating margin was 34.2 percent, compared to 37.1 percent in the same quarter of last year. Costs increased in the quarter in line with previous communication about the future, mainly due to higher office rents and IT costs. The number of gaming transactions in our games amounted to 9.8 billion in the first quarter, representing an increase of 11 percent compared to the first quarter of last year. During the quarter, we signed 15 new customers, which is the highest number ever, and launched 6 new customers. We follow our growth strategy focusing on regulated markets and the expansion continues both in Europe and outside of Europe. In January, we launched our games on the regulated market in Mexico with Codere, one of the leading operators. The UK continues to contribute significantly to our growth and the potential is still significant, considering our relatively low market share in what is by far Europe’s largest gaming market. Mobile games also remain an important growth factor and accounted for 47 percent of revenues in the quarter.
Exciting product news
At ICE, the gaming industry trade fair in London, we revealed several exciting product news. We announced that we will develop our first game for the fast-growing Virtual Reality (VR) market, based on our previous game success Gonzo’s Quest. I am convinced that VR will play an important role in future gaming and I am really pleased that NetEnt is at the forefront of this development. We also revealed two new branded game titles for 2017 – Planet of the Apes and Emojis® – well-known brands that we expect to turn into truly unique and thrilling games. For Live Casino, we showcased our new mobile product, Common Draw Black Jack, which is strengthening our mobile offering. We also revealed an entirely new bonus function called Live Rewards, set to be launched in the second quarter.
The proposed new gaming legislation in Sweden supports a sustainable gaming industry
In March, the gaming commission presented its proposal for new gaming legislation in Sweden. Overall, the proposal seems to set commercially viable conditions for industry participants while at the same time opening up for new, substantial tax income for the government. We welcome such a new legislation. A modern gaming legislation that leads to a high channelization to regulated gaming forms creates a more secure environment for both players and the industry. We intend to apply for a B2B-license as an industry supplier. Over the years, NetEnt has invested and built up an organization and the expertise to obtain and maintain gaming licenses. NetEnt has licenses and certifications in many European countries such as Denmark, UK, Malta, Portugal, Romania, Bulgaria, Italy, Belgium, Estonia and Spain. Regulated markets are an important part of our growth and sustainability strategies and no other gaming supplier is present on so many regulated markets like we are.
Future outlook
For the rest of 2017, we see conditions for continued solid growth supported by new games, increasing market shares in the UK, mobile growth, many new customers to launch and our ongoing expansion in North America. We continue to hire more employees and develop our platform. We strengthen the organization to increase our production capacity, enter more regulated markets and integrate a large number of new customers. With this in mind, we foresee an ongoing need to invest during 2017. We do this to enable continued solid growth with increasing economies of scale for NetEnt going forward – the future outlooks remains bright.
Presentation of earnings report
On Thursday, April 20, 2017, at 9.00 a.m. the interim report will be presented by CEO Per Eriksson live via webcast. The presentation can be followed in real-time on NetEnt’s website at https://www.netent.com/en/section/invest/.
For additional information please contact:
Per Eriksson
President and CEO
Phone: +46 8 5785 4500
per.eriksson@netent.com
This information is information that NetEnt AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7:30 CET on April 20, 2017.