Interim Report Q3 2018: 21% organic growth, driven mainly by the US

Third quarter 2018

  • Revenue increased to SEK 51.5 (40.2) million. Revenue from affiliate operations increased to SEK 51.1 (38.4) million.
  • EBITDA increased to SEK 32.3 (25.6) million.
  • Profit after tax was SEK 20.5 (-31.7) million.
  • Earnings per share increased to SEK 0.27 (-0.51).
  • Total NDC growth was 35%; largest vertical Casino increased NDCs by 52%.
  • Cash flow from operating activities was SEK 33.8 (5.9) million.

Period 1 January– 30 September 2018

  • Revenue increased to SEK 143.5 (123.8) million. Revenue from affiliate operations increased to SEK 141.7 (116.2) million.
  • EBITDA increased to SEK 93.2 (76.8) million.
  • Profit after tax was SEK 62.6 (-15.8) million.
  • Earnings per share increased to SEK 0.88 (-0.26).
  • Total NDC growth was 28%; Casino vertical increased NDCs by 48%.
  • Cash flow from operating activities was SEK 81.9 (75.7) million.

Significant events in the quarter

  • New financial targets launched, focusing on organic growth, earnings per share growth and lower debt.
  • CFO Gustav Vadenbring and CTO Clinton Cutajar appointed as part of continuing recruitment of key personnel to support growth plans.
  • Early redemption of the entire remaining convertible loan.

Significant events after the quarter

  • iGaming operations are being been phased out and reshaped into affiliate operations. Net Gaming is now a focused affiliate company.
  • The Board proposes a change of presentation currency from SEK to EUR with effect from 1 January 2019 in order to provide a clearer picture of the Company’s underlying operations. The Company has convened an EGM. 

CEO’s comments: NDC growth of 52% within Casino

Net Gaming is now a completely focused affiliate company within iGaming. It is therefore energising to see our affiliate revenues increasing by 33% to SEK 51 (38) million during Q3 2018, with organic growth* accounting for 21% (15%) of the increase. EBITDA increased by 26% to SEK 32.3 (25.6) million, while the operating margin fell slightly to 62.8 percent (63.7), having been negatively affected by costs associated with the list change and paid media which we are phasing out. A further acknowledgement of the momentum of our underlying operations is that total NDC growth increased by 35% Y/Y and cash flow from operating activities amounted to SEK 33.8 million. 

Casino – strong underlying growth 
Our Casino vertical now accounts for a massive 89% of our total revenue. Casino revenue grew by 38% Y/Y in the third quarter, while underlying NDC growth was 52% Y/Y. Our casino revenue in Europe shows good organic growth of 17%. We have approximately 1% of the European casino affiliate market and believe that we have very good opportunities to achieve long-term organic growth in Europe by measure such as increasing our focus in the UK and the DACH region.  

United States – organic growth of 108% 
We continue to expand strongly in the US, where organic growth was 108% in the third quarter. We are well positioned there, particularly thanks to our assets and brands such as Pokerlistings.com, which has a history going back 15 years. We are implementing our growth plan for the United States and investing in existing and new assets in the US market with the aim of becoming a long-term major player within iGaming affiliation there. We estimate our market share in casino and poker online affiliation at approximately 1%. We want to be proactive and start our US drive at an early stage so that we are ready when more states bring in regulation, thereby attracting more partners (operators) that we can cooperate with and refer end customers to. I am personally convinced that the United States as a whole could become the largest global iGaming market by far within just a few years. In the Nordic region, we have come a long way in the transition from land-based to online gaming (at present, more than 40% of all gambling in the Nordic region is online), while the share for iGaming in the US is currently just a few percent. 

Laying the foundation for Betting  
During the third quarter, we continued to build up and invest in new assets within our new Betting vertical. With methodological and structured work, we believe that growth opportunities over time are very good. It is important to emphasise that we need to apply patience with the betting vertical and understand that it takes some time before structural work and investments bear fruit. 

Organic growth, strong cash flows and low debt 
As we have already communicated in the third quarter of 2018, strong organic growth and low debt are the foundation stones for how we want to build and develop Net Gaming. As part of this, and on the basis of our strong cash flows and growing cash, we aim to be able to pay off the majority of our outstanding bond loan from our own funds when it matures.

Growth focus together with strict cost control 
We continue to work in a structured way, according to the growth plan and with a clear focus on good internal efficiency, strong cost control and profitability. We are clearly facing exciting times ahead, and my instinct is positive and confidence is strong when I think about the future! 

Marcus Teilman, President and CEO  

* Our definition of organic growth is revenue excluding acquisitions and divestments in the last 12 months, adjusted for exchange rate movements. 

For further information, please contact 

Marcus Teilman, President and CEO
Mobile: +356 9936 7352
 
E-mail: marcus.teilman@netgaming.se 

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

FNCA Sweden AB is the 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 22 November 2018 at 08.30 CET. 

About Us

Net Gaming’s business idea is to invest in fast growing iGaming companies primarily within lead generation. Net Gaming’s strategy for value creation is to build on the acquired company’s identity and corporate culture, and to act as a catalyst for change and growth.

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