Year-end report 2019

Stabilised earnings level after challenging year

Fourth quarter 2019

• Revenue amounted to EUR 3,285 (4,712) thousand.
• EBITDA amounted to EUR 1,915 (3,254) thousand.
• Profit after tax was EUR 610 (1,525) thousand. 
• Earnings per share after dilution amounted to EUR 0.008 (0.020).
• New Depositing Customers (NDC) declined by -18%.
• Cash flow from operating activities amounted to EUR 1,765 (3,738) thousand.

Full year 2019

• Revenue amounted to EUR 14,302 (18,556) thousand.
• EBITDA amounted to EUR 8,359 (12,499) thousand.
• Profit after tax was EUR 4,934 (7,791) thousand. 
• Earnings per share after dilution amounted to EUR 0.065 (0.107).
• New Depositing Customers (NDC) declined by -19%.
• Cash flow from operating activities amounted to EUR 8,157 (12,286) thousand.

 Significant events in the quarter

• Re-launch of Pokerlistings.com with a Casino section for further expansion in North America.
• Launch of CasinoGuideNJ.com, a niche casino comparison site focusing on New Jersey.
• During Q4, the Company continued to implement cost efficiency measures in the organisation and to review roles such as Brand Managers in order to create clearer control, focus and responsibility for each individual site’s results.
• The Company repurchased bonds at a nominal amount of SEK 67 million in order to optimise the Company’s capital structure.

Significant events after the quarter

• After the end of the quarter, the Company has launched BettingGuideNJ.com, the second of several planned niche sites in the United States. With CasinoGuideNJ.com and the re-launch of Pokerlistings.com, these are investments that create good conditions in the US market.

CEO’s comments: US launches and continuing Betting growth

The end of 2019 saw us stabilising our EBITDA in the fourth quarter, despite sequentially lower revenues. Sales for the quarter declined to EUR 3,285 thousand and EBITDA amounted to EUR 1,915 thousand, which meant a sequential improvement. Cash flow from operating activities was strong at EUR 1,765 thousand, with cash conversion of 83%. It is also positive that NDC development has continued to stabilise over the last six months, which is important for the future as we increased the proportion of revenue share in 2019 and want to capitalise on this going forward.

During Q4, we made a strategic decision to invest in fewer but stronger products, and as a result, we have appointed a number of Brand Managers in order to create clearer control, focus and responsibility for each individual site’s results. This initiative is at an early stage, but we are already seeing results and several sites are moving in the right direction, with increased traffic and conversion rates.

Revenue share 64%
The major change in the business model to an increased proportion of revenue share has had a negative impact on our revenue in 2019. The main purpose of changing the business model is to build a more stable revenue base with a larger share of recurring revenue. During Q4, we have now reached a revenue share level of 64% of revenue, which we feel is a relatively balanced and sustainable level. We now see that most of this changeover has been completed. We estimate that the increased proportion of revenue share reduced our revenue by EUR 1,100 – 1,500 thousand, which contributed to 25-35% of the revenue decline in 2019.

Continuing growth in Betting
In 2019, we took the first real step into our new vertical – Betting. Our betting vertical also continued to develop positively during Q4 and the share of revenue from betting was 11%. Globally, betting accounts for about 50% of the iGaming market, so for us this is a natural growth path to further develop. We see good opportunities to continue to drive growth through both existing and new products in the segment.

Pokerlistings.com expands to casino
To capitalise further on the great potential we see for Pokerlistings.com, we launched a new casino section under this brand in Q4. It has been launched on the Company’s proprietary technology platform and a betting section is also expected to be launched on Pokerlistings.com in Q1 2020. The casino section has developed positively so far and we will invest further in Pokerlistings.com in 2020, as we see this brand an important growth driver in the US.

Improved capital structure prior to refinancing
During Q4 2019, we repurchased our bonds at a nominal amount of SEK 67 million. These repurchases, which reduce our gross debt and interest expenses, are an initiative prior to the upcoming refinancing of our outstanding bond loan, which matures in September 2020. Thanks to strong cash conversion, we increase our cash position each month, which is important in the lead-up to this refinancing process. The Board has appointed financial and legal advisers to evaluate various refinancing alternatives and the process has begun.

2019 – a challenging year
2019 has been incredibly challenging and characterised by regulatory effects in the European market. In no way am I pleased with our earnings development, but I am firmly committed to returning to growth in all parts of the business during 2020. I believe that our EBITDA level bottomed out in 2019 and that it will increase in the coming year. During the year, we underwent an important change through the launch of our new technical platform and our establishment of a competent and more forward-looking organisation. In 2020, I look forward to being able to take advantage of all the interesting growth opportunities we have identified.

Marcus Teilman, President and CEO

For further information, please contact:
Marcus Teilman, President and CEO
Mobile: +46 708 175 777
E-mail: marcus.teilman@netgaming.se

Gustav Vadenbring, CFO
Mobile: +356 9967 6001
E-mail: gustav.vadenbring@netgaming.se

The appointed Certified Adviser is FNCA Sweden AB, info@fnca.se, +46 8 528 00 399.

This information is information that Net Gaming Europe AB (publ) is required to disclose under the EU Market Abuse Regulation. The information was provided by the contact person above for publication on 20 February 2020 at 08.00 CET.