NetEnt: Interim report January-March 2015

FIRST QUARTER 2015

— Revenues for the first quarter increased by 37.1% to SEK 258.3 (188.4) million.
— Operating profit amounted to SEK 81.8 (51.2) million, an increase of 59.8%.
— Operating margin was 31.7% (27.2%).
— Profit after tax amounted to SEK 74.2 (46.1) million, an increase of 60.9%.
— Earnings per share amounted to SEK 1.86 (1.17) before dilution and SEK 1.86 (1.16) after dilution.

IMPORTANT EVENTS IN THE FIRST QUARTER

— 11 new license agreements were signed, including Danske Spil in Denmark, Codere in Spain and Gamesys in the UK
— Seven new customers’ casinos were launched
— Casino games were launched with Rational Group´s Full Tilt
— Local licenses were obtained in the UK

COMMENTS FROM PER ERIKSSON, PRESIDENT AND CEO

“We have made a very strong start to 2015, reaching new record levels for both revenues and profits. Our innovative gaming solutions as well as our strong expansion on new and existing markets are among the reasons for the high growth and good profits.

In the first quarter we increased revenues by 37.1% in SEK and 29.8% in EUR compared to the corresponding quarter last year. The operating margin was 31.7%, which is a substantial improvement from last year. Profit after tax increased by 60.9% to SEK 74.2 million. We achieved this strong increase despite our continuing investments in new staff and an enhanced mobile offering. During the quarter we handled a full 6.5 billion transactions in our systems, representing an increase of 30.8% from last year. Mobile gaming continues to grow fast and accounted for 20.6% of total game win in the first quarter – almost a doubling from the level in Q1 2014.

Our growth strategy is to expand on regulated markets and in March we entered a license agreement with Denmark´s largest gaming operator, Danske Spil, which is owned by the Danish government and is part of World Lottery Association (WLA). The agreement enables faster expansion in the country while it is also strategically important for us to grow globally in the large WLA-segment. In Spain, the online market for slot games has recently been regulated and in March we signed an agreement with Codere, one of the largest gaming operators in Spain with large land-based operations in Spain and Latin America, and that has recently started to offer casino games online. As we have previously stated, we are hoping to obtain a Spanish license this year, after which we could launch our games and see the first revenues. In the UK, new regulation was introduced in the autumn of 2014 and at the end of March we were granted local licenses from the UK Gambling Commission. During the quarter we continued to increase our market share with existing customers in the UK and our expansion in this market was a key contributing factor to the strong revenue growth for the Company in Q1. We signed a new agreement with Gamesys, a leading British online gaming operator with well-known brands such as Jackpotjoy and Virgin Games. In Italy the process continues to cease deliveries to operators that have not started the license application process in the country and, as previously communicated, our revenues could be negatively impacted in the short term. The licensing process in New Jersey continues according to plan with the aim to offer our products and services to this market in the second half of 2015.

We are constantly developing our offering to be at the forefront in terms of technology, innovation and quality. In surveys with customers we can see that they also consider NetEnt to be at the cutting-edge and that we have the best reputation in the industry. As of the second quarter of 2015 all newly released games – for both desktop and mobile – will have been developed in in HTML5, which is expected to bring some synergies going forward. In the first quarter we increased our portfolio of world-class games with the release of Spiñata Grande, Steam Tower and Tornado Farm Escape. We also announced a new and exciting project with Universal, in which we will develop a video slot game based on the music of the iconic rock band Guns N’ Roses. In February we won the awards for Slots Provider/Supplier Product of the Year for both online and land-based at the International Gaming Awards in London.

I look forward to the rest of 2015. We have strong momentum – our customer offering is world-leading and we are well prepared to seize new business opportunities on the growing digital casino market.”

For additional information please contact:

Per Eriksson, CEO NetEnt; Phone +46 8 57 85 45 00, per.eriksson@netent.com

Full interim report

More News​