Redeye - Snowball effect imminent for Cherry?

Cherry reported a Q1 which was in line with our estimates of 95.3 million kronor (estimate 97 million kronor). EBIT resulted in a loss of -8.9 million kronor (estimate: loss of -4.8 million). The negative EBIT was burdened by higher depreciation, marketing and other expenses. The online casino continued its strong performance achieving 58.3 million kronor (expected 57.9).  Yggdrasil also continued to perform well, indicating the potential intrinsic value of this segment, with reported revenues of 1.8 MSEK (expectation 2.0 MSEK). The restaurant casino continued to act as a strong cash-flow generator which reported 35.2 MSEK (estimated 37.0 MSEK). The company continues to position itself for strong growth as a small player in the Nordic pond along with solid prerequisites to achieve profitable growth. The company still trades at a margin of safety relative to our SOTP. Read more in the analysis below.

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About Us

Cherry is a Swedish innovating and fast-growing gaming company established in 1963. The business strategy is to create shareholder value by owning and developing fast growing and profitable businesses within the gaming and casino industry. Today, Cherry operates through five diversified business areas: Online Gaming, Game Development, Online Marketing, Gaming Technology, and Restaurant Casino. The objective is to grow organically in combination with strategic acquisitions of fast-growing companies. Cherry employs some 1,100 people and has about 6,900 shareholders. The company’s class B share is listed on the Nasdaq Stockholm exchange, Mid Cap segment. More information is available at