Net Entertainment: Interim report January – September 2014

Quote from CEO, Per Eriksson

NetEnt delivers yet another record quarter. We signed seven new customer agreements and we saw a strong underlying growth with existing customers. The game transactions increased by 37 percent compared to last year which further shows that NetEnt’s games and products are market leading. New customers and currency effects also contributed positively to the revenue growth. It is pleasing that our investments within mobile games are performing so well and growing strong. Mobile games represented 16.5 percent of the quarter’s revenues. We continue our strategy to expand into new markets where the preparations to enter North America has started. I also expect that we are live in Spain during the first half of next year.

Third quarter 2014

— Revenues for the third quarter increased by 41.8 % to SEK 217.2 (153.1) million
— Operating profit amounted to SEK 73.4 (44.5) million, an increase of 64.9 %
— Operating margin was 33.8 (29.1) %
— Profit after tax amounted to SEK 67.5 (40.2) million
— Earnings per share amounted to SEK 1.69 (1.02) before dilution and SEK 1.69 (1.01) after dilution
— Seven license agreements with new customers were signed, seven new customers’ casinos were launched

First nine months 2014

— Revenues for the first nine months increased by 35.5 % to SEK 610.6 (450.6) million
— Operating profit amounted to SEK 181.3 (124.2) million, an increase of 46.1 %
— Operating margin was 29.7 (27.6) %
— Profit after tax amounted to SEK 166.1 (113.6) million
— Earnings per share amounted to SEK 4.16 (2.87) before dilution and SEK 4.16 (2.86) after dilution
— 21 new license agreements were signed and 22 new customers’ casinos were launched

Important events in the third quarter

— Two Tier 1 agreements were signed. One agreement with gaming operator and one with Betfair. Betfair was launched during the quarter — During the third quarter, NetEnt announced that Björn Krantz, current Managing Director of Net Entertainment Malta Ltd will lead the expansion into North America and will be replaced by Enrico Bradamante, current Head of Account Management and Deputy Head of Malta operations. Enrico will be part of the senior management team from January 2015.

Comments from Per Eriksson, President and CEO

The third quarter showed strong financial development and revenues increased by 41.8 percent compared to last year. The operating margin was 33.8 percent. New customers in combination with a positive currency development contributed positively but the primary reason to the revenue increase was due to positive underlying growth with NetEnt’s customers. The operating margin showed a positive development as a result of the revenue increase but also due to the vacation period which reduced the resource cost.

NetEnt is driving several new large initiatives where the pace has accelerated in the third quarter. The preparations for an entry in North America have started with New Jersey as the first state in the US where NetEnt will apply for a license. We are also preparing the license application for Spain. I expect that the company is live in Spain during the first half of 2015. We have also focused on upgrading NetEnt’s platform in 2014, work that is expected to continue during 2015. The purpose with the platform development is to secure our high hosting capacity as the company grows its customer base and to allow for a faster and more efficient distribution of new functionality and games to the operators.

Game transactions increased by 37 percent compared to last year which further proves the strong underlying growth and that NetEnt’s games and products are market leading. The mobile games continue to grow and represented 16.5 percent of revenues in the third quarter and we have now launched a total of 34 customers for Live Casino. NetEnt has previously signed agreements with the largest operators in the UK, which is the largest market for online casino in Europe. NetEnt still has a low market share in the UK and we have high expectations on what this market can offer in terms of future growth for NetEnt.

NetEnt won the Digital Gaming Innovator of the Year award in September which was very pleasing and further proof that NetEnt leads and drives the developments on the online casino market. We see high demand for NetEnt’s products which is reflected in the seven new customer agreements that were signed in the quarter and I view the future as very bright for NetEnt.

Full report here

For additional information please contact;
Per Eriksson, CEO Net Entertainment; Phone +46 8 57 85 45 00,

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