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Interim Report Q2 2018: Strong EPS growth and rapid revenue growth in the US

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Second quarter 2018

  • Revenue increased to SEK 48.1 (42.7) million. Revenue from affiliate operations rose to SEK 47.4 (40.3) million.
  • EBITDA increased to SEK 30.5 (25.9) million and was negatively impacted by SEK 0.7 million in expenses attributable to switching its listing to Nasdaq First North Premier.
  • Profit after tax rose to SEK 22.0 (8.0) million.
  • Earnings per share increased to SEK 0.31 (0.13).
  • Total NDC growth increased 21%; largest vertical Casino increased the number of NDCs by 36%.

First half 2018

  • Revenue increased to SEK 92.0 (83.6) million. Revenue from affiliate operations rose to SEK 90.5 (77.7) million.
  • EBITDA increased to SEK 60.9 (51.0) million.
  • Profit after tax rose to SEK 42.1 (15.9) million.
  • Earnings per share increased to SEK 0.60 (0.27).
  • Total NDC growth increased 24%; largest vertical Casino increased the number of NDCs by 45%.

Significant events during the quarter

  • Listing changed to Nasdaq First North Premier.
  • Launch of both a Finance and a Sports Betting vertical.
  • Acquisition of affiliate assets from Webwiser GmbH for an initial purchase consideration of EUR 2.29 million and a maximum additional consideration of EUR 1.25 million with a total consideration corresponding to approx. 3.5 x EBITDA.
  • Gustav Vadenbring recruited as new CFO, beginning in August 2018.
  • The Board decided to apply profit growth per share as an overall financial target.
  • iGaming will be reshaped into affiliate operations in 2018; Net Gaming will become a focused affiliate company as a result.

Important events after the end of the quarter

  • Early redemption of the entire remaining convertible loan.
  • Clinton Cutajar recruited as new CTO, beginning in September 2018.
  • Finance vertical expanded and launched in the Netherlands.
  • Additional investments in US domains expanded according to growth plan.

CEO’s comments: 148% growth in North America 

We continue to grow – affiliate operations increased revenue by 18% to SEK 47.4 (40.3) million during the second quarter of 2018. Organic growth was 8%. We have continued the conversion to gradually change our revenue mix to an increased proportion of hybrid and “rev share” and less CPA. EBITDA growth was 17% and totaled SEK 30.5 (25.9) million.

It is extraordinary satisfying to see that our revenue growth in North America, primarily driven by the US, amounted to +148% in Q218. Together with our history on the US-market since 2003 we have a very strong position in connection with the continuing re-regulation. We continue to invest in new- and exisiting domains following our aggressive growth plans in the region.

During the quarter, we completed a strategic additional acquisition of affiliate assets in an attractive market moving forward: DACH (Germany, Austria and Switzerland). We are continuing to systematically identify high-quality acquisitions that meet our investment criteria and can be implemented at a reasonable value. 

During the quarter two new verticals were launched: Sports Betting and a financial vertical. Both initiatives follow a clear plan for continued organic growth. It is therefore important that we continue to invest in these two areas. We have great hopes that these verticals will become significant in our revenue mix and earnings in the long-term. The financial vertical has expanded geographically to the Netherlands and more markets will be added moving forward. 

We are also pleased to report that during the quarter we successfully switched our listing from the Spotlight Stock Market to Nasdaq First North Premier. In addition, we have enhanced our management team with the additions of CFO Gustav Vadenbring and CTO Clinton Cutajar. 

With strong underlying growth in our largest vertical casino, as well as extra strong developments in the US, we are now heading for the finish line of 2018. We want to continue to generate sustainable long-term profit growth and therefore it is encouraging that our two most important growth tracks are demonstrating robust underlying growth. In the long term we can also add further growth from Betting and Finance to ensure increasing organic growth. Given this growth and in combination with acquisitions, I look forward with confidence to an exciting future. 

Marcus Teilman, President and CEO

For further information, contact Marcus Teilman, President and CEO,
telephone +46 8 410 380 44 or mobile +356 9936 7352
marcus.teilman@netgaming.se

FNCA Sweden AB is appointed Certified Adviser.

This information is information that Net Gaming Europe AB (publ) is required to disclose in accordance with the EU Market Abuse Regulation and, where applicable, the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. The information was provided by the contact person above for publication on 23 August 2018 at 08:30 a.m. (CET).

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