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NetEnt: Year-end report 2019 and quarterly report October – December 2019

George Miller

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NetEnt: Year-end report 2019 and quarterly report
Reading Time: 4 minutes

 

Quote from Therese Hillman, Group CEO

“Since December, we have seen all-time highs in the number of players for our Live Casino, which supports our belief in growing revenues from this segment. Since the acquisition, Red Tiger has exceeded our expectations and now forms a vital part of our ongoing improvement efforts within the NetEnt Group. We see good conditions for NetEnt to deliver growth in 2020, supported by our combined game portfolio and Live Casino.”

Fourth quarter 2019

  • Revenues for the fourth quarter amounted to 512 (465) SEKm
  • EBITDA of 261 (204) SEKm, corresponding to a margin of 51.0 (43.9)%
  • EBIT of 161 (146) SEKm, corresponding to a margin of 31.4 (31.4)%
  • Earnings after tax of 113 (137) SEKm. Earnings per share of SEK 0.47 (0.57) before and after dilution
  • Red Tiger contributed 96 SEKm to revenues and 70 SEKm to EBITDA

Full year 2019

  • Revenues for the full year amounted to 1,793 (1,782) SEKm
  • EBITDA of 855 (816) SEKm, corresponding to a margin of 47.7 (45.8)%
  • EBIT of 529 (601) SEKm, a margin of 29.5 (33.7)%
  • Earnings after tax of 429 (577) SEKm. Earnings per share of SEK 1.79 (2.40) before and after dilution
  • The results include SEK 59 million of acquisition-related transaction costs and amortization, and SEK 29 million of acquisition-related financing costs
  • Red Tiger was consolidated in September and contributed 126 SEKm to revenues and 93 SEKm to EBITDA
  • Proposed ordinary cash return to shareholders of SEK 1.00 (2.25) per share

Important events in the fourth quarter

  • NetEnt released 13 (6) slot games, of which Ozzy Osbourne was the most successful
  • Red Tiger released 9 (6) slot games, of which Dynamite Riches was the most successful
  • The platform service NetEnt Connect was introduced in December, with Red Tiger as first supplier
  • Within Live Casino, a new Auto-Roulette studio was launched

Growth through acquisition

Revenues for the last quarter of the year increased by 10.0 percent to the highest level ever, SEK 512 million (465 SEKm), of which SEK 96 million came from Red Tiger, which was acquired in September. Pro forma(1) in euro terms, our total revenues including Red Tiger decreased by 4.8 percent compared to the corresponding period of 2018. Growth was held back by continued weakness in mainly Sweden and Norway, while our revenues in the US continued to grow significantly. During the period January 1 to February 10, 2020, total gamewin proforma(1) in euro terms for the NetEnt Group including Red Tiger increased by 4.9 percent compared to the same period of the previous year.

Operating income and cash flow in the fourth quarter

Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to SEK 261 (204) million in the quarter, of which SEK 70 million was contributed by Red Tiger. The EBITDA margin was 51.0 (43.9) percent. Red Tiger was acquired with the objective to create shareholder value through increased growth and profitability for the new group. The transaction was enabled by NetEnt’s strong balance sheet, which went from a net cash to net debt position, and our long-term goal is to deliver enhanced shareholder returns with a balanced capital structure. Hence, the proposed cash return to shareholders for 2019 is SEK 1.00 (2.25) per share, which supports the company’s cash flow generation and allows for debt to be reduced. This payout level is in line with the company’s dividend policy.

High level of activity and deeper integration with Red Tiger

We released more games than ever in the fourth quarter – 13 (6) from NetEnt and 9 (6) from Red Tiger – and continued to sign deals with and launch customers at a high pace. In addition, the quarter was marked by deepening integration with Red Tiger to realize both revenue- and cost synergies. Red Tiger adds complementary competence to the NetEnt group and we are running a number of common projects at full speed to deliver a significantly enhanced customer offering and player experience. Our first combined game with jackpot mechanics, Piggy Riches, was released in January and has so far been the best release ever for Red Tiger. During 2020, we will be releasing several new jointly developed games. In December, we launched our content aggregation service, NetEnt Connect, with Red Tiger as the first supplier. In 2019, we reduced the number of employees at NetEnt (excluding Red Tiger) while at the same time we stepped up our game production and efforts to develop our Live Casino offering. We continue to focus on cost control and efficiency throughout the NetEnt Group and the integration of Red Tiger forms a vital part of this process.

All-time high in player numbers for Live Casino

We continue according to plan to improve our product and organization within Live Casino, and in December we launched a new Auto-Roulette studio. Feedback on the product enhancements made during 2019 has generally been positive and since December, we have seen all-time highs in player numbers for our Live Casino. We are now expanding the studio in Malta and will soon be offering physical tables to our customers for the first time, as an alternative to our tables with blue screen technology, which should contribute to increased revenues from Live Casino in 2020.

Future outlook

We recently unveiled a number of product news at the ICE exhibition in London, such as a new jackpot concept called Starburst Power Pots, as well as branded games in collaboration with Gordon Ramsay, Street Fighter and Fashion TV – again showing our commitment to creating a world-class player experience.
I would like to take this opportunity to extend my thanks to our employees, customers and shareholders for their support during 2019. Backed by our ongoing focus on efficiency and the acquisition of Red Tiger, we are entering the new year in a stronger position. Our global distribution and two strong brands give us the right basis to increase our market shares in online casino. We see good conditions for NetEnt to deliver growth in 2020, supported by our combined game portfolio and Live Casino.

(1) Comparable figures from the previous year include Red Tiger.

 

About NetEnt:

NetEnt AB (publ) is a global gaming company, providing premium gaming solutions to the world’s most successful online casino operators. In addition to the company’s NetEnt brand, our portfolio also includes Red Tiger Gaming. Since our start in 1996, we have been a true pioneer in driving the market with innovative games powered by a cutting-edge platform. NetEnt is committed to creating the future of gaming, is listed on Nasdaq Stockholm (NET–B) and employs around 1 100 people in Malta, Stockholm, Sofia, Kiev, Krakow, Gothenburg, Gibraltar, Isle of Man, London and New Jersey. For more information, please visit www.netent.com.

Industry News

Stakelogic launches it’s latest innovation: Super Stake

George Miller

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Stakelogic launches it's latest innovation: Super Stake
Reading Time: 2 minutes

 

Players place side bet to double their stake and enable an additional feature that delivers an insanely high payout within a set number of spins.

Super Stake is the latest online slot innovation that was developed and launched by the popular game studio, Stakelogic.

Super Stake allows players to place a side bet which effectively doubles their stake. By doing so, an additional feature is enabled that delivers an insanely high pay-out once in every 35 or so spins.

Here is an example of how it works:
The player stakes £1 per spin and activates Super Stake, so a side bet of £1 is also placed. The player is effectively wagering on two separate games – the base game and the feature game.

When the Super Stake feature is triggered, it will trigger one of the game’s bonus features to deliver incredibly large prize pay-outs. In The Expendables MegawaysTM, for example, when the Super Stake feature is triggered, 175 Wild symbols land across all five reels or all royals will be removed from the reels.

Super Stake will be rolled out across the following Stakelogic slots:

  • The Expendables MegawaysTM
  • Gods of Death
  • Dragons and Magic
  • Runner Runner MegawaysTM

Stakelogic has built a reputation for developing game-changing features, including Quattro which allows players to play up to four games simultaneously. This innovative approach to slot development, plus the striking design and complex math used in its games, has allowed Stakelogic to stand out from its rivals.

Stephan van den OetelaarCEO of Stakelogic, said: “Super Stake is another ground-breaking slot feature from Stakelogic and we believe it will be an absolute game changer for operators and players.

Super Stake takes the excitement and anticipation of playing online slots to the next level, with the players waiting for that monster win to land at any moment.

We believe it will be hugely popular with players and will ultimately drive play time on our titles, boosting revenues for our operator partners.”

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Industry News

GPA Calls on GAA to Ban Gambling Ads During Live Matches

Niji Narayan

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GPA Calls on GAA to Ban Gambling Ads During Live Matches
Reading Time: < 1 minute

 

The Gaelic Players Association (GPA) has called on the Gaelic Athletic Association (GAA) to ban gambling ads during live matches.

The GPA has made formal contact with Croke Park on the issue and says “the GAA would become the first sporting organisation in the world to take such a step” if it were to back the proposal.

The GPA is seeking that no gambling advertisements be broadcast in commercial breaks during live coverage of Gaelic games and though it is questionable whether the GAA would be able to dictate to broadcasters on a matter such as this, the GPA believes the governing body would have enough heft to do so.

A GPA statement read: “Gambling promotion during GAA games presents a heightened risk to the welfare of all members of the GAA but particularly children and those most vulnerable to the perils of this destructive addiction.

“The proliferation of online betting and the availability of betting advertising around Gaelic Games has helped develop a worrying cultural issue with gambling in the GAA.

“We believe that the GAA, through its relationships with its broadcast partners, has the ability to prevent the broadcast of gambling ads during matches.

“Removing this intrinsic link between inter-county games and betting advertising reduces the risk of vulnerable members of the association developing issues with problem gambling.”

“We’re urging all delegates to support the views of the players at Congress and will share this information with them ahead of the weekend,” Paul Flynn, chief executive of GPA, said.

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Industry News

A new German gambling comparison website is offering to refund players if they do not get paid by online casinos

George Miller

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A new German gambling comparison website is offering to refund players if they do not get paid by online casinos
Casinos.de only works with trusted operators and offers a refund to players if their cash is withheld by a recommended casino for no good reason.
Reading Time: 2 minutes

 

The Casinos.de site is offering this first-of-a-kind “deposit guarantee” in an effort to become an established brand and authority in the German market.

The site, whose domain was purchased for a six-figure sum, offers comparisons between casinos that are trusted operators and which have been carefully vetted for reliability and quality of service.

If a player does not receive their winnings from a recommended casino and there is no good reason for withholding the cash, then up to €500 from their first deposit will be refunded by Casinos.de

The website offers expert guides to playing online and helps people choose an online casino based on factors such as region, preferred deposit method, or by a favourite game.

Casinos.de is owned by Blexr, a performance marketing company based in Malta and Barcelona, which specialises in lead generation. It invested €450,000 to obtain this domain name in an effort to build a web property with integrity for the German market.

Blexr’s co-founder Paudie O’Reilly said offering a guarantee over player deposits was a “very unique approach to the market and the first of its kind”.

He added: “Given the need for trust amongst our users, we are saying to German players that we will put our money where our mouth is.

“If for some reason you do not get treated as you should at a casino we recommend, we’ll give you your money back. We are that confident in our offering that we can commit to this deal and follow through with our promise.”

The site launched in January and Mr O’Reilly said it was the first step towards claiming a majority share of the German market.

“We created www.casinos.de to give a sense of security to German players who really value a trustworthy name.

“They tend to be very data and computer savvy and show concerns about the legitimacy of websites. We knew upon entering the market that we would need to offer German users something that contained premium qualities, along with trust and legitimacy.”

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