NetEnt Needs to Take Action, Say the Latest Results

Publish: 03.08.2018

Last week, one of the leading online games developers NetEnt published the company’s Q2 results, revealing a 6% year-on-year revenue increase, while its earnings before tax recorded a slight growth of 1.2%.

Following the releases of these figures, NetEnt’s share price on the Stockholm Exchange dropped by nearly 17%.

A Slowdown Is Evident

Commenting on the results in the second quarter of the year, which weren’t as the developer expected, the recently appointed Chief Executive Officer Therese Hillman stated the company was taking action and added that a slowdown in the UK market contributed to somewhat disappointing growth.

Hillman said she couldn’t be too confident that the revenue outlook would improve significantly over the next two quarters of 2018. She also pointed out that NetEnt was taking action where it wasn’t doing enough before.

NetEnt: A Slowdown Is Evident

The new CEO noted the UK was an extremely challenging market and stressed the slowdown had made a huge difference. At the moment, NetEnt’s share of the market in the country was around 10%, although the number of players has been on the rise.

Hillman hopes that a better game portfolio in the second part of the year will bring better results. She firmly believes live casino growth and other growth initiatives aimed will have a serious impact on the market.

Therese Hillman was named the new Chief Executive Officer in May, following the departure of the company’s long-time executive Per Eriksson in March. She has been a part of the company since January 2017, when she was appointed as the group’s Chief Financial Officer.

She has ambitious plans, which include strengthening the company’s customer offering and saving up resources for new projects. She also stated her ambition was to record a higher revenue growth this year. To do so, NetEnt will need to be stronger in markets with increased competition such as the UK and Nordics.

Making a Difference

Hillman added the firm continued to review its cost structure to improve scalability across the business and pointed out they had started to see a slower pace of cost growth.

She particularly emphasised the impact the FIFA World Cup had made on the overall performance in June and July, especially after not so positive figures during May.

Commenting on the recent NetEnt’s results and its slowdown, a strategic consultancy focused on International gambling and related industries Regulus Partners, said the situation would be difficult to overcome.

Regulus Partners stated that NetEnt’s key Northern European markets were maturing, making growth harder to come by, especially for operators and suppliers with already large market shares and limited unique selling propositions.

In addition to this, Regulus Partners blame the rapid growth in mobile-led businesses, which they feel has disaggregated the supply-chain.

According to them, the best operators are always on a lookout for the best content from all available sources. It is necessary to be more agile, more innovative, more relevant, and more efficient than your competition to position yourself in the market.

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