Casino content giant NetEnt saw revenues fall 10 per cent year-on-year in the third quarter, a drop CEO Therese Hillman said was largely due to “weak developments” in the Swedish market.
NetEnt’s revenues for the third quarter amounted to SEK443m. After adjustments for the acquisition of Red Tiger and currency changes, revenues fell 10 per cent compared to the third quarter of 2018, Hillman said.
“The primary reason for the lower revenues was attributed to continued weak developments in the Swedish market. Sweden accounted for seven per cent of the decrease, but Norway and UK also had a negative impact on revenues,” she said.
Earnings (EBITDA) fell around 15 per cent compared to Q3 2018, to SEK196m (€18.3m). Profit after tax was SEK97m (€9.1m) in the three-month period, a 60 per cent fall.
Red Tiger was consolidated from the beginning of September and contributed to NetEnt revenues by SEK30m (€2.8m), to EBITDA by SEK20m (€1.87m)and to EBIT by SEK19m (€1.78m).
In a statement released this morning, Hillman wrote: “The most significant event of the quarter was the strategically important acquisition of Red Tiger. The two companies complement one another well, both in terms of geography and product offering, and together we believe we can attain a stronger market position and realise economies of scale throughout our business.
“The main objective of the deal is to drive growth and we estimate that the transaction can result in annual synergies of at least SEK150m, of which a large part will come from revenue synergies.”
The CEO also highlighted good performance in NetEnt’s US markets, particularly strong growth in New Jersey and “a great start in Pennsylvania” during the quarter. “Revenues from these two US states could continue to grow for many years to come to potentially account for a greater share of our total revenues in the future,” she said.
“With our global distribution, combined brands and customer relations, we have the right basis to defend, and over the longer term increase our market shares in online casino,” said Hillman. “We expect that our slot games, including Red Tiger’s portfolio, together with Live Casino will contribute to solid growth for NetEnt in 2020”.