Interim Report for the period 1 Januaray - 30 September 2018

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Third Quarter 1st Jul to 30th Sep 2018 (2017)

• Net Sales was SEK 5.4 million (18.2 million)

• Cost of Sales decreased to SEK -3.8 (-17.3 million

• Gross Profit increased to SEK 1.6 million (0.919 million)

• Administrative expenses decreased to SEK -7.5 million (-8 Million)

• Other Income SEK 15.9 million (0)

• Profit for the period increased to SEK 10.1 million (-7.1 million)

• Gross Gaming Revenue rate (GGR%) increased to 3.35% (3.13%)

• Net Gaming Revenue rate (NGR %) increased to 1.38% (1.28%)

Highlights 1st Jan to 30th Sep 2018

• Net sales amounted to SEK 25.5 million (56 million)

• Cost of sales decreased to SEK -19.1 million (-45.7 million)

• Gross Profit amounted to SEK 6.4 million (10.6 million)

• Administrative expenses amounted to SEK -22.5 million (-22.4 Million)

• Other Income SEK 15.9 million (0)

• Profit for the period improved to SEK -0.1 million (-11.7 million)

• Gross Gaming Revenue rate (GGR%) increased to 3.34% (3.18%)

• Net Gaming Revenue rate (NGR %) increased to 1.54% (1.24%)

Events during the Quarter

• New Terms & conditions for the Gaming brands have been applied.

• Other income of SEK 15.9 million due to deductions in player account balances

• Cost reductions of SEK 0.25 million monthly achieved

• Strong growth achieved in newly launched markets

• Revenue decreased in July and August due to payment solutions exiting the market

• Chinese speaking market stabilised in late August after the Group had experienced sharp decline since March-2018.

• Launched two more payment solutions aimed at the Chinese speaking market.

• Established on the Indonesian speaking market in August-18

• Launched Sportsbook towards Japanese and Vietnamese speaking players in September-18

• Started preparations to launch towards Thai speaking customers

Events after the Period

• The board of GoldBlue decided upon a rights issue of 14,2 MSEK. The rights issue is 100

percent guaranteed by a guarantee consortium and signed subscription notes from

larger owners.

• Sportsbetting was launched in October towards Indonesian speaking customers.

• Thai speaking market was launched in early November.

• AnalysisGuiden published an analysis on Goldblue AB.

• Goldblue AB attended and did a presentation at Stora Aktiedagen in Gothenburg.

Message from CEO

Dear Shareholders,

After a turbulent half year with disturbances around important payment solutions for Chinese speaking customers and a delayed integration of our Sportsbook which together made a very negative impact on our revenue, we have in the months between July to September delivered the following:

• Reduced costs by SEK 0.250 million monthly by restructuring operations and re-negotiating contracts with some of our suppliers.

• Achieved strong growth on newly launched markets.

• We integrated two payments gateways to service our Chinese speaking customers and have now managed to replace the payments we lost with other providers.

• New user interface was released towards our Vietnamese, Indonesian and Japanese speaking customers. Further work continues so we can release

it towards our Chinese speaking customers and is expected to be terminated in Q1 2019.

• We launched towards the Indonesian speaking market.

• Sportsbetting was released in September towards Vietnamese and Japanese speaking customers and in October towards Indonesian speaking customers.

• Started preparations for launching towards Thai speaking market.

• We integrated two payment gateways towards Thai, Vietnamese and Indonesian speaking customers.

It was important for us to continue to move forward with our new market launch plan for 2018, as per information shared further in this interim report as well as in my monthly updates, we are experiencing good month to month growth in our Vietnamese and Indonesian speaking markets.

Our Japanese operations remain stable through this period; however, we are not satisfied, and we want higher growth in this important market for the group. In order to achieve that growth, we have launched in September our new user interface and Sportsbetting towards that market. In the coming months we will release more slots and live casino content as well as new payment methods for the Japanese market which will help us accelerate growth. We will also strengthen the marketing.

With regards to our Chinese speaking market, in our last interim report we showed a large decline in revenues and business activity due mainly to two factors, the exit from the market of important payment solutions we had partnered up with and the fact that our Sportsbook was delayed meaning we couldn’t offer our customers Sportsbetting during the World Cup. We remain committed to this market, we believe there is now a positive turn happening in the market powered by new payment suppliers entering the market. We have taken advantage of the new entries and partnered up the new suppliers. We have integrated a number of those already and have started to see positive improvements within the Chinese speaking market and believe we will experience steady growth in the coming months, even more so with the release of Sportsbetting and new content before the end of 2018 which will further help the continued recovery of the market.

Our Vietnamese speaking market has enjoyed the most aggressive growth in Q3, benefiting from upgrading to the new UI in July and sports in early September this meant that in Q3 the following KPI’s developed as:

Registrations grew 15% per month in Q3.

• First time depositors’ rate (FTD%) stable at 14% in Q3.

• Unique depositors growing on average 37% per month in Q3.

• Deposit’s growing 53% on average per month in Q3.

The launch of our Indonesian speaking market in August was also very positive, by comparison it outperformed in its first two months the launches of our Japanese and Vietnamese speaking markets.

Our growth in both markets is very promising, we expect that once we are able to start working with affiliates (expected within Q4), we will see more aggressive growth particularly as we go signing up partners to our affiliate program. We believe our next six to nine months will be dedicated at reducing operational costs, continuing to focus on making our organisation efficient and slim, continuous improvement and automation within our platform which is key for scaling our business and most important of all by focusing on delivering growth on all markets which will be achieved by adding new products to our portfolio in our brands and by focusing on more efficient marketing and marketing spend so we can reach to and attract the maximum number of customers possible.

Our assessment, when we analyse our competitors, is that here is a shift in the market for a higher quality product, with more thinking on the customer journey and user satisfaction, better design and more power and recognition to branding and brands. In a way similar to what we see in western countries, where big name brands create customer awareness and recognition. With that in mind and taking into consideration that we were to enter new markets in 2018, the group initiated a project where a review of branding, customer processes and customer best practices were analysed.

From there and in time to the new market launches we reviewed, re-designed and re-branded “Happistar” with new logo, brand guide-lines and mission to its customers. In addition we reviewed our customer processes and updated our terms and conditions accordingly, bringing clearer more efficient processes and rules around such areas as multiple and duplicate accounts, bonuses offered to players, player inactive and dormant accounts, this change of terms and conditions, which is to be applied to all of the groups gaming brands, resulted in the company receiving an extraordinary income of SEK 15.9 million, which is accounted for under our Income Statement section for the period as “Other Income”.

For the past few weeks we have also prepared a rights issue where we aim to raise SEK 14.2 million. This funding is needed to strengthen our marketing budget for new and existing markets as well as for funding ongoing operations until we reach profitability.

First half of 2018 was a set back to our business particularly after a strong 2017, however in the end of the 3rd quarter we saw a strong combination of positive signs for recovery, such as high growth in our newly launched markets together with a return of Chinese payment solutions as well as customers returning back to our sites. These are strong positive signs for a growth fuelled 2019 and onwards.

Warm regards,

Andre Rodrigue
CEO, GoldBlue AB (publ)


This information is a translation of “Delårsrapport För Perioden 1 Januari till 30 September 2018”
that GoldBlue AB (publ) submitted for publication at 08:45 CET on 23rd November 2018.

Jihua Liu
IR & Press

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