Interim Report January – March 2010
CONTINUED STRONG GROWTH
-Revenues for the first quarter increased by 28.0 % to SEK 87.9 (68.7) million
-Operating profit increased by 21.0 % to SEK 35.7 (29.6) million
-Operating margin was 40.7 (43.0) %
-Profit after tax amounted to SEK 31.0 (31.9) million
-Earnings per share amounted to SEK 0.78 (0.81)
-Two new license agreements were signed for CasinoModule™, including bwin in
Italy, and three new customers’ casinos were launched
IMPORTANT EVENTS IN THE FIRST QUARTER
Growth continued to be strong in the first quarter. Revenues increased by 41.0
percent in local currency compared to the first quarter 2009 and 7.7 percent
compared to the previous quarter. The strengthened Swedish currency has held
back revenue growth in SEK and has had a significant effect on financial items.
Gioco Digitale, a wholly owned subsidiary of bwin, the world’s largest listed
online operator, signed an agreement for delivery of CasinoModule to both
Gioco Digitale and to bwin’s Italian site bwin.it.
The regulatory frame work for the Italian market was published in late March,
which is later than expected. The integration has been ongoing during the
quarter and continues together with the licensing process for existing games.
COMMENTS FROM JOHAN ÖHMAN, PRESIDENT AND CEO
Despite that no large operators were launched during the first quarter,
revenues have increased significantly compared to the previous quarter which
emphasizes the continued strong underlying market growth. The weakened Euro
towards the Swedish Krona had a negative impact on the increase in local
currency during the same period. The increased gaming activity has continued
during the second quarter which together with a number of not yet launched Tier
1 operators creates good conditions for future strong growth.
The sales success of several new Tier 1 operators is very pleasing. It is the
result of our focus on quality and high entertainment value. In order to manage
the increase of new operators, we continue to develop the company and
strengthen the organization, which creates room to focus on business
opportunities and at the same time meet the increased demands as the market
matures.
The increased development pace of both the games and the platform has resulted
in an increase in capitalized development costs. These are also affected by the
development process of adjusting CasinoModule to meet the regulation
requirements in Italy, a market that is expected to be important to us in the
future. In addition, the games are becoming more complex and require a more
intense development cycle. Games such as “Gonzo’s Quest”, which was launched
during the first quarter are important to secure our position as a premium
supplier. The higher development costs for this type of game are however
compensated by higher revenues.
While regulation of the Italian gaming market continues, it is somewhat delayed
by the pace of the Italian gaming authority (AAMS). Net Entertainment is well
positioned and the procedure of meeting the authorities requirements are
commencing according to plan. We have so far signed agreements with the two
largest gaming operators in Italy, who together control approximately half the
market. The casino operation is expected to launch after the first half of the
year.
During the quarter the agreement with Bonnier was extended, who launched its
online casino “vinnarum.com”. Bonnier’s entry onto the market for online gaming
is interesting and we will likely see more media companies and other operators
enter as further markets are regulated.
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 core
product, CasinoModule, is a complete gaming platform comprising high quality
games and a powerful administration tool. Operators are provided a customized
solution that is easily integrated ensuring short time to market and a cost
efficient operation. Revenues consist of royalties based on revenues generated
by the company’s products and setup fees when new agreements are signed. Net
Entertainment is a pure development company and thus does not conduct any
gaming operations of its own. The company’s brand is internationally recognized
and associated with innovation, service, and quality.
All technical development is carried out at the Group’s Stockholm office and
all commercial operations: sales, marketing, and product management are carried
out from the Malta office. The company also has an office in Gibraltar.
The parent company is listed on NASDAQ OMX Stockholm since January 2009. Prior
to this, the Company’s share was listed on the Nordic Growth Market (NGM)
Equity.
For additional information please contact;
Johan Öhman, CEO Net Entertainment; Phone +46 8 57 85 45 00
johan.ohman@netent.com
Bertil Jungmar, CFO Net Entertainment; Phone +46 8 57 85 45 00
bertil.jungmar@netent.com