Interim report January – March 2013
Quote from CEO, Per Eriksson
Net Entertainment continues to show good growth and profitability during the
first quarter. The Company signed six new agreements and the number of contract
within Live Casino and mobile games continue to increase. In addition, the
Company continues to invest in the organization, systems and product
development for future growth on a market with great opportunities.
First quarter 2013
— Revenues for the first quarter increased by 16.7 % to SEK 148.8 (127.5)
million
— Operating profit amounted to SEK 41.0 (40.1) million
— Operating margin was 27.5 (31.4) %
— Profit after tax amounted to SEK 32.9 (34.6) million
— Earnings per share amounted to SEK 0.83 (0.88) before and after dilution
— Six license agreements with new customers were signed, three new customers’
casinos were launched
Important events in the first quarter
— Agreements were signed with Bonza Gaming and 888. Bonza Gaming was launched
— Five agreements signed with existing customers for delivery of Live Casino.
In total, four customers launched by the end of the quarter
— Continued strong growth in Italy which was Net Entertainment’s second
largest market in the first quarter
— Five agreements signed with existing customer for delivery of Mobile Touch™
Comments from Per Eriksson, President and CEO
The first quarter showed continued good growth and a stable development for the
Company’s product launches. Revenues increased by 16.7 percent (22.2 percent in
euros) to SEK 148.8 (127.5) million during the quarter, primarily thanks to
increased volumes from the Company’s existing customers but also from set-up
fees from new customer agreements. In January we also saw a somewhat positive
impact from the jackpot game Mega Fortune which reached new record levels with
a jackpot amounting to SEK 17.8 MEUR. The number of game transactions also
reached a new record of 3.9 billion transactions in the first quarter which is
an increase of approximately 30 percent compared to last year.
Net Entertainment continues to strengthen its position by offering the best
games and technical expertise on the market. I am proud that Net Entertainment
signed six new customer agreements during the quarter, including operator 888
and Bonza Gaming for Facebook in the UK. Under the terms of the agreement with
Bonza Gaming, Net Entertainment will deliver a wide range of slot games and
other casino gaming for real-money gaming on Facebook. Online operator 888 is
one of the most well reputed operators in the world and the agreement means
that Net Entertainment will deliver some of the Company’s online and mobile
games to 888 on a global basis. The platform integration with 888 is ongoing.
During the quarter Net Entertainment signed five new agreements with existing
customers for Live Casino and has therefore signed 16 contracts in total of
which four are live. The customer integrations are complex and have taken
somewhat longer than expected. Within mobile games the demand is high and the
Company continues to see very positive results. Today Net Entertainment has
signed 39 contracts for mobile of which 25 are launched.
We continue to follow our strategy, preparing for future growth and continue to
do investments in customers, products and systems. Several initiatives,
including Live Casino and the entry in Great Britain are still in very early
stages and hinder our profitability short-term. The operating profit for the
first quarter amounted to 27.5 percent (31.4), which lies in the upper range of
our expectations, primarily a result of lower recruitment pace, fewer
consultants and somewhat higher set-up fees due to a customer integration that
started earlier than planned. In addition, depreciation was also somewhat lower
than expected.
In February the gaming exhibition ICE took place where several of Net
Entertainment’s games attracted great interest, including Live Casino and the
new slot game South Park which will be launched on the market later this year.
The Company entered the Italian market about a year ago and it is with great
pleasure I can confirm that Italy was Net Entertainment’s second largest market
in the first quarter. The Company actively works to further strengthen its
position on the British market, which is the largest in Europe. Net
Entertainment has several Tier 1 customers signed that focuses on the British
market. The Company has signed agreements with 888 and Paddy Power where a few
games have been launched and more are on the way. As we have previously stated,
the integration phase for our games with these large global operators is
complex.
Discussions are ongoing in a number of countries in Europe and the US. We are
looking at what opportunities can open up in the US, but do not underestimate
the challenges that such an effort would mean. We continuously monitor the
potential on new markets that is about to regulate and carefully evaluate when
and how Net Entertainment can take action.
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. Net
Entertainment offers a complete gaming solution comprising both a complete
management platform and a full suite of high quality games. Operators are
provided a customized solution 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.