Interim Report Q3 2019

Continued good margin and strong cash generation

Third quarter 2019

  • Revenue amounted to EUR 3,467 (4,919) thousand.
  • EBITDA amounted to EUR 1,867 (3,160) thousand.
  • Profit after tax was EUR 1,141 (2,034) thousand. 
  • Earnings per share after dilution amounted to EUR 0.015 (0.027).
  • New Depositing Customers (NDC) declined by 14%.
  • Cash flow from operating activities amounted to EUR 1,567 (3,454) thousand.

Period 1 January– 30 September 2019

  • Revenue amounted to EUR 11,017 (13,844) thousand.
  • EBITDA amounted to EUR 6,444 (9,245) thousand.
  • Profit after tax was EUR 4,324 (6,266) thousand. 
  • Earnings per share after dilution amounted to EUR 0.057 (0.088).
  • Total NDC growth declined by 19%.
  • Cash flow from operating activities amounted to EUR 6,392 (8,547) thousand.

Significant events in the quarter

  • Stronger betting vertical through the acquisition of MaxFreeBets.co.uk, a leading betting brand in the regulated UK gaming market.
  • Upgrades of the CasinoSpielen.de and CasinoGuide.co.uk websites to our new technical platform, which enables faster loading times, increased user-friendliness and scalability in geographical expansion and the launch of new digital brands.

Significant events after the quarter

  • Re-launch of Pokerlistings.com with a Casino section for further expansion in North America.
  • Launch of CasinoGuideNJ.com, the first of several niche websites in the US.
  • After the end of the quarter, the Company repurchased bonds at a nominal amount of SEK 37 million in order to optimise the Company’s capital structure.

 

CEO’s comments: Major step forward within Sportsbetting and our path forward is clear!

We are feeling the continuing regulation effects in Europe. In Q3, revenue amounted to EUR 3,467 thousand and EBITDA to EUR 1,867 thousand, which is in line with our expectations and the previous quarter’s figures, where we now have seen a stabilisation for future growth. Cash conversion remained good, with an operating cash flow of EUR 1,567 thousand. NDC development has shown a slight sequential upturn, partly due to acquisitions, but the trend is still positive for the future now that we have a larger proportion of revenue share.

Despite our weak revenue development, traffic to Net Gaming’s sites has shown a double-digit increase compared with the previous year. However, the growth in traffic does not compensate for the decline in conversion rates from several of our sites. Conversion is a strong focus area for us and we expect the appointment of Brand Managers for our most important brands to bring a turnaround in the period ahead. We have also seen a lower value per NDC during the year, partly due to regulation effects, but also an effect of our accelerated transition to revenue share.

Revenue share 60%
Our shift to revenue share continues according to plan. Revenue share was an impressive 60% in Q3, which is double the percentage in the same period the previous year. The rapid transition benefits us in the long term and gives us a more stable revenue base, but has clearly had a negative impact on our revenue in recent quarters.

Betting – major step forward
During the quarter, we made a strategic acquisition within betting, with regulated revenue from the UK, which increases our geographical distribution of revenue. Betting now accounts for about 8% of our total revenue and we see good long-term opportunities for continuing growth within this vertical.

First niche website launched in the US
We work actively to identify activities to drive growth, primarily organically, but also by evaluating strategic acquisitions. We have just launched the first niche website in the United States, CasinoGuideNJ.com, and will continue to launch more niche websites in the US market in the near future.

Bond buyback
Our strong operating cash flows and good cash position have enabled us to repurchase our bond at a nominal value of SEK 37 million. The buyback gives us reduced interest expenses and lower gross debt. We work actively to evaluate our balance sheet and optimise the Company’s capital structure.

Clear path forward
Our main focus is to grow in regulated markets with a high proportion of revenue share. We want to “dig deeper” in existing markets, strengthen our existing websites and invest even more in our strongest brands. We do this by reallocating resources and building a more forward-looking organisation by measures such as the appointment of Brand Managers for our main brands. Our market share in our main market Europe in casino affiliation is about 1.5% and we have spent just over 15 years building up core competence, structural capital and brands on which we can capitalise. We are therefore convinced that we can further increase our market share step by step.

We will continue to feel the regulation effects in the short term, and we are obviously not at all satisfied with the figures we have achieved in recent quarters. But looking on the bright side, we are convinced that we have an exciting journey ahead of us in an underlying growing market where we will be a leading player working at a fast pace and with a clear desire to take the lead.

Marcus Teilman, President and CEO

 

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

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 14 November 2019 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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