Year-end report 2016 and quarterly report October – December 2016

Quote from Per Eriksson, President and CEO
- ”2016 was another exciting year for NetEnt with new record levels in revenues, earnings and cash flow. The fourth quarter developed well – revenues increased by 23.9 percent and the operating margin improved to 39.0 percent. Great Britain continues to offer great growth potential for us and in December, it became our largest geographical market for the first time. Looking ahead in 2017, we see conditions for continued solid growth, supported by a strong pipeline of new games, UK, mobile, new customers to launch as well as our expansion in North America.”

Fourth quarter 2016: 

  • Revenues for the fourth quarter increased by 23.9% to SEK 400 (323) million
  • Operating profit amounted to SEK 156 (122) million, an increase of 28.1%
  • Operating margin was 39.0 (37.7)% 
  • Profit after tax amounted to SEK 150 (116) million, an increase of 29.6%
  • Earnings per share amounted to SEK 0.62 (0.48) after dilution 
  • 13 new customer agreements were signed, 12 new customers’ casinos were launched

Full year 2016:

  • Revenues for the full year increased by 28.5% to SEK 1,455 (1,132) million
  • Operating profit amounted to SEK 536 (402) million, an increase of 33.4%
  • Operating margin was 36.8 (35.5)%
  • Profit after tax amounted to SEK 504 (374) million, an increase of 34.9%
  • Earnings per share amounted to SEK 2.10 (1.56) after dilution
  • 45 new customer agreements were signed and 34 new customers’ casinos were launched
  • Proposed cash distribution to shareholders of SEK 2.25 (1.33) per share
  • At the end of 2016, NetEnt had 31 signed customers that had not yet been launched

Important events in the fourth quarter: 

  • Retail deal signed with Gauselmann for gaming machines market in Italy 
  • Retail agreement entered with Paddy Power for gaming machines in Great Britain
  • NetEnt games launched on the regulated markets in Bulgaria and Portugal 
  • Contract signed with Codere regarding online games distribution in Mexico

Comments by Per Eriksson, President and CEO:

Another record year for NetEnt
2016 was another exciting year for NetEnt with new record levels in revenues, earnings and cash flow. The year featured many new customers, new regulated market entries and successful game launches for NetEnt. Revenues for the full year increased by 28.5 percent to 1,455 SEKm. Operating profit and profit before taxes amounted to SEKm 536 and SEKm 546 respectively, and the operating margin improved to 36.8 percent. We believe in corporate social responsibility as a condition for long-term sustainability of our business, and focus on growing on regulated markets. During the year, we became members of the World Lottery Association (WLA), a member-based organization that promotes the interests of state-authorized lotteries around the world. Following new licenses and certifications, our games were launched on the regulated markets in Romania, Bulgaria and Portugal. We signed a total of 45 new customer agreements, the highest number ever, and we launched our games with 34 new customers. During the year, we made several larger investments – we continued to enhance our platform and developed a mobile solution for Live Casino Roulette, which we think will support future growth for us in this segment. The game trilogy NetEnt Rocks was very successful and Guns N’ Roses was named best game of the year at the EGR Operator Awards in London. We also launched a range of other innovative, best-in-class games such as Aloha, Drive, Warlords and Little Red Riding Hood, all of which became great successes among customers and players. In addition to offering the best games in the industry, we also manage all gaming transactions for our customers through so-called hosting. Our games are available 24/7, all year around. In 2016, we managed almost 36 billion transactions in our systems, which is 19 times more than the total number of transactions on the New York Stock Exchange during the same period.

High growth and good profitability in the fourth quarter
The fourth quarter developed well, revenues increased by 23.9 percent in SEK and by 18.5 percent in EUR compared to the very strong fourth quarter of 2015. The operating margin improved to 39.0 percent, mainly due to better scalability in the business. Great Britain continues to offer great growth potential for us and in December, it became our largest geographical market for the first time. Mobile games continue to be an important growth driver and accounted for 43 percent of revenues in the quarter. We signed new retail deals for gaming machines with Gauselmann in Italy and Paddy Power in the UK. We also took our first step into Latin America by extending our partnership with Codere to include the regulated online casino market in Mexico.

Future outlook
For the first quarter of 2017, we expect revenues to be in line with the fourth quarter of 2016. For the rest of 2017, we see conditions for continued solid growth supported by a strong pipeline of new games, growing market shares in the UK, mobile growth, new customers to launch, as well as our expansion in North America. We increase the number of employees, enhance our product offering and integrate more customers on new regulated markets. With this in mind, we foresee higher costs and an ongoing need to invest during 2017. These are all projects that will enable continued solid growth for NetEnt going forward.

Presentation of earnings report
On Thursday, February 16, 2017, at 9.00 a.m. the earnings report will be presented by CEO Per Eriksson live via webcast. The presentation can be followed in real-time on NetEnt’s website at https://www.netent.com/en/section/invest/ .

For additional information please contact:
Per Eriksson
President and CEO
Phone: +46 8 5785 4500
per.eriksson@netent.com

This information is information that NetEnt AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7:30 CET on February 16, 2017.

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