Q&A: Fredrik Burvall, CEO, Cherry AB

Online gaming revenues soared by 118% for Cherry AB during the first quarter of 2016, a positive start to the year for a company that seems to just keep on growing.

Q1 highlights included the revamp of its Europe-facing online casino Cherrycasino.com, featuring a new sportsbook, and the acquisitions of Moorgate Media Ltd and NorgesSpill.com.

With the purchase of ComeOn confirmed in April, and more acquisitions in the pipeline, it appears Cherry’s growth is set to continue.

Cherry AB CEO Fredrik Burvall spoke to EGR about the factors behind their online growth, plus the impact regulatory changes could have for the future.

eGaming Review (EGR): Online gaming revenue increased by 118%, what were the significant factors behind this growth?

Fredrik Burvall (FB): It’s a combination of strong organic growth and acquisitions we made in 2015, including GameLounge, Almor, Moorgate Media and NorgesSpill. We also launched a new site for CherryCasino and migrated the Almor site SunnyPlayer.com to our platform, offering more games to our players. We launched a sportsbook on CherryCasino and also now have lotteries on SpilleAutomater alongside the casino. The business is still primarily casino focused, but over time we hope sportsbook will make some impact as well.

EGR: How much of a boost is the sportsbook to growth?

FB: Very small at the moment, I would say less than 5%. We are primarily casino focused, but we have launched additional products such as lottery and sportsbook which will be rolled out on more brands over time. With Euro 2016 approaching, for example, we don’t want our customers to leave for another competitor. We want them to stay and utilise the offers we have. We’re going to be able to provide the customers with what they want through a strong sportsbook solution.

With Almor, we launched a sportsbook on Sunmaker.com and we believe the German-speaking market is quite into sports betting, and know that in the Nordic countries it’s a high percentage playing both casino and sportsbook. We can also see from our ongoing acquisition of ComeOn that they have over 30% of revenue coming from sportsbook, so certainly there’s room for improving that area within our own brands and platforms. In addition, we get people in the Cherry family who really know sports betting well, so we believe that the combination of the skills we have in-house and the skills from the ComeOn founders and management will be able to improve our sportsbook offering. We are also both offering the same sportsbook solution through SBTech, which certainly makes things easier.

EGR: What impact will the ComeOn purchase have on the group’s future financial performance?

FB: Until we start consolidating it into the business, it will not have an impact on revenue and EBIT as such, but certainly it will impact earnings per share through the 49 percent minority shareholding. The intention is to buy 100% of ComeOn and we are already now discussing how to do things better together as a combined group.

EGR: The number of new customers also rose during the period, why do you think this is?

FB: It’s through traditional marketing, TV, radio and online, but also we’re putting quite a lot of effort into search engine optimisation (SEO) to get more organic growth from all brands. In addition, we are performing very well in the affiliate area, which is kind of a safe way of growing because you share the profit out from the customers.

I think it is combination of us getting much better at SEO, improving our product offering with sportsbook and lotteries, and doing quite well with our marketing.

EGR: With changes to regulation in the EU, are you concerned this could have an impact on further growth, and impact profits?

I believe that you need to have volume in order to be in the markets that are regulated because there will be some costs attached. It might have an impact, but there’s still room to make money and I believe things will balance out as the increased tax will be shared with suppliers, and you also get a lot of more marketing opportunities which will grow the market and increase revenues. A good example is Denmark, where the revenue increased significantly. For Cherry, I think there is an opportunity in most markets with good regulations.

EGR: Finally, what impact do you believe your recent results will have on the industry?

We’re here to make a mark on the industry and look forward to continue spreading the joy of playing – both online and at the pub!