NetEnt Posts Q3 Results, Reveals a Drop in Revenue
According to the company’s governance, the main culprit for these figures is the “weak developments” in the developer’s home market in Sweden.
Numbers Fell from Q3 2018
The latest report shows NetEnt generated C$60.4 million in revenue during the most recent quarter of 2019, while the final result includes adjustments for the purchase of Red Tiger Gaming. All in all, the third quarter of this year was significantly behind the corresponding period of 2018.
Commenting on these figures, Therese Hillman, Chief Executive Officer at NetEnt said the primary reason for the lower revenues had been attributed to continued weak developments in the Swedish market. She pointed out Sweden had accounted for 7% of the decline, while Norway and the UK also had a negative impact on the company’s performance.
Numbers Going Down
Earnings before interest, tax, depreciation and amortization (EBITDA) also went down when compared to 2018, dropping by 15% to C$26.7 million, while profit after tax dropped by 60% to C$13.2 million. Following the purchase of Red Tiger, the developer made a significant contribution to NetEnt figures: C$4.1 million in revenue, to EBITDA by C$2.7 million, and C$2.6 in operating profit.
Hillman went on to say that the most significant event of the last quarter had been the strategically important acquisition of Red Tiger. She explained that the two complimented one another well, both in terms of geography and product offering, and stated they could attain a stronger market position and realise economies of scale throughout their business.
Driving Growth Remains the Main Objective
NetEnt’s CEO added the main objective of the deal was to drive growth and that was why they estimated the transaction could result in annual synergies of at least C$20.4 million, of which a large part would come from revenue synergies.
The company was very proud of its performance in the United States, as it has witnessed strong growth in New Jersey. During the most recent quarter, NetEnt also launched its operations in Pennsylvania, and it’s estimated that revenues from these states could constantly grow over the next couple of years, making a significant contribution to the firm’s overall results.
NetEnt purchased Red Tiger last month, for a fee of $253.7 million. According to available information, the renowned operator plans to use this acquisition to further strengthen its presence in the UK market.
Hillman also said that with its global distribution, combined brands and customer relations, NetEnt had the right basis to defend, and over the longer-term increase its market shares in online casino. She further added the company expected that its slot games, including Red Tiger’s portfolio, together with Live Casino games would contribute to solid growth in 2020.
NetEnt is a leading provider of premium gaming solutions to the world’s most successful online casino operators, boasting an extensive portfolio of more than 200 high-quality titles.