NetEnt Q2 revenue up 36% as US growth hits record high

NetEnt has revealed that Q2 2020 revenue grew by 36% year-on-year as second quarter figures reached SEK573m (£50.2m).

Company EBITDA increased to SEK299m (£26.2m) during Q2 to mark an annual rise of 48%, with a corresponding rise in EBITDA margin to 52.3%.

Excluding SEK13m (£1.1m) in transaction costs related to its forthcoming merger with Evolution Gaming, NetEnt’s EBITDA was SEK312m (£27.3m) and EBIT rose to SEK207m (£18.1m), corresponding to an adjusted EBITDA margin of 54.6% and an adjusted EBIT margin of 36.1%.

NetEnt revenue for H1 2020 also rose sharply, buoyed by two quarters of consecutive growth, rising 30% year-on-year to SEK1,090m (£95.6m).

EBITDA for the period increased to SEK528m (?), corresponding to a margin of 48.4%, with a similar rise in company EBIT and EBIT margin over the same period.

NetEnt’s live casino offering continued record expansion, with an annual GGR increase of 230% during the quarter.

The company said it plans to expand the number of tables in its Malta live studio and expects to roll out the Network Branded Casino product to more operators over the coming period.

In Q2, revenue from locally regulated markets accounted for 53% of NetEnt’s total GGR.

The Stockholm-listed supplier enjoyed a bumper second quarter in the US, with GGR growth of 148% year-on-year in the New Jersey market and quarterly growth in Pennsylvania of 100%, having gone live in the state.

Speaking about the potential of the US market, NetEnt CEO Therese Hillman said the operator saw a “greater likelihood” of more US states introducing online casino legislation over the next few years.

“Importantly, we expect to launch our games in both Michigan and West Virginia as the online casino markets in those states are expected to open in the second half of this year, which is earlier than previously expected,” said Hillman.

“Further, I am convinced that Red Tiger’s games will be much appreciated by players in the US, and we are focusing to secure market entry into the US for Red Tiger later on this year,” Hillman added.

Hillman also suggested the acquisition of Red Tiger served as a catalyst for increased productivity and company development throughout the business.

“Hard work and transformational steps taken in the past year are now starting to create value,” said Hillman.

“We remain fully committed to continue on this path and with growth engines such as USA, Red Tiger and live casino, I feel that we are well positioned to continue delivering profitable growth and strong cash flows for the rest of this year and onwards,” she concluded.

Last month, NetEnt shareholders accepted a £1.6bn takeover offer from live casino giant Evolution Gaming, with the deal set to complete on 2 November.

Regulus Partners analyst Paul Leyland said: “While we see the headline logic for Evolution’s acquisition of NetEnt we have two key concerns.

“First, although NetEnt has the scale, it lacks the momentum of a consistently high-quality developer, which could prove dilutive to Evolution’s consistently high-quality product and performance.”