Earnings report 2012 – Quarterly report October – December 2012
Quote from CEO, Per eriksson
Again, Net Entertainment reached a new sales record during the quarter. I am
very proud of what the Company has accomplished during the year. Among other
things, we launched Live Casino, signed agreements with several Tier 1
customers and launched slot games on the Italian market. We will continue to do
significant initiatives in systems, products and the organization. An increased
operating margin from the initiatives the Company has made during 2012, and
that will continue during 2013, are not expected to become visible until
towards the fourth quarter 2013 and thereafter.
Fourth quarter 2012
— Revenues for the fourth quarter increased by 19.5 % to SEK 144.7 (121.1)
million
— Operating profit amounted to SEK 37.2 (42.2) million
— Operating margin was 25.7 (34.9) %
— Profit after tax amounted to SEK 31.1 (36.6) million
— Earnings per share amounted to SEK 0.79 (0.93) before and after dilution
— Five license agreements with new customers were signed and two new
customers’ casinos were launched
Full year 2012
— Revenues for the full year increased by 23.2 % to SEK 526.7 (427.6) million
— Operating profit amounted to SEK 153.1 (129.7) million
— Operating margin was 29.1 (30.3) %
— Profit after tax amounted to SEK 133.3 (115.6) million
— Earnings per share amounted to SEK 3.37 (2.92) before and after dilution
— 16 license agreements were signed with new customers and 13 new customers’
casinos were launched
— Proposed transfer to shareholders is SEK 2.25 (2.00) per share
Important events in the fourth quarter
— Agreement was signed with Paddy Power. Boylesports and Paddy Power were
launched
— Net Entertainment launched slot games on the Italian market
— Live Casino was launched with two beta customers
— The Swedish Tax Agency announced its decision to impose additional taxes on
Net Entertainment, amounting to a total of 92.1 MSEK. Net Entertainment
find that the Tax Agency’s view is unfounded and will appeal the decision
Comments from Per eriksson, President and CEO
Yet again Net Entertainment reached a new sales record during the fourth
quarter and I am very proud of what the Company has accomplished during 2012.
Revenues increased by 19.5 percent (25.9 percent in euros) during the fourth
quarter and the activity among the Company’s customers also reached an all-time
high with 3.6 billion gaming transactions, an increase of approximately 38
percent compared to last year. The fourth quarter is traditionally the
strongest compared to other quarters and the revenues were also positively
affected by the jackpot game Mega Fortune which reached a new world jackpot
record of EUR 17.8 million.
Despite this, the operating margin was lower in the fourth quarter compared to
previous quarters. This a result of the significant initiatives the Company is
making within the organization, within new products and markets. In addition,
several initiatives are still in the early stages, such as Live Casino and the
UK entry.
From an operational perspective the fourth quarter was a milestone as several
of the largest projects to date were completed and launched with our customers.
One of the largest projects was Live Casino where beta testing started with two
customers during November. Initially Roulette is offered; however, development
of Blackjack has already started and is planned to be completed around
mid-2013. So far, the Company has signed eleven agreements for delivery of Net
Entertainment’s Live Casino and launch is expected to occur gradually during
the year. Another significant project was the final certification of the Danish
market.
Mobile games have proved to be a successful initiative and the demand from the
market continues to be high. On average, the gross gaming yield for mobile
games increased by approximately 37 percent per month during 2012; however,
starting from low levels as only ten games have been launched to date. At the
end of 2013 the number of mobile customers is expected to amount to
approximately 40.
Net Entertainment has a strong position on the market, particularly in Europe
where the market share increased from 22 percent to 27 percent in 2012 despite
the fact that the Company has only just started to penetrate the UK market
where the Company today has a low market share. We launched two new Tier-1
customers during the fourth quarter, Boylesports and Paddy Power Games, both
with a high presence in the UK. During January 2013 we also signed an agreement
with 888, also a Tier-1 customer with a focus on the UK.
Regulated markets are something we focus on and several countries in Europe are
moving towards regulation. To date, Net Entertainment has adjusted the
Company’s platform and games for the Italian and Danish regulations and we are
carefully monitoring the potential in other markets that are looking at
regulation. We believe regulation creates opportunities for increased volumes
for Net Entertainment as our customers reach more players. Moreever, regulation
also presents challenges for smaller companies trying to establish themselves
due to the high investments that are required in each country. This benefits
Net Entertainment as we have both the knowledge and financial strength to meet
the challenges of regulated markets. However the Company views each new
regulated market individually based on the authorities’ requirements and
commercial market potential.
2013 will be an intense year. We will continue to make significant investments
in systems, products and the organization. Sales activities will continue to be
focused towards operators in the UK but also towards existing customers for
mobile games and Live Casino. I look forward to new challenges and
opportunities during 2013.
For additional information please contact;
Per Eriksson, CEO Net Entertainment; Phone +46 8 57 85 45 00
per.eriksson@netent.com
About Net Entertainment
Net Entertainment is a premium supplier of digitally distributed gaming systems
used by some of the world’s most successful online gaming operators. The Net
Entertainment casino is a complete gaming solution comprising both a complete
management platform and a full suite of high quality games. Operators are
provided a customized casino that is easily integrated ensuring short time to
market and a cost efficient operation. Net Entertainment is listed on Nasdaq
OMX Stockholm (NET-B). More information about Net Entertainment is available at
www.netent.com.