Five things we learned from Betsson’s Q2 2022 results

Betsson’s shares rose 10% on the back of “all-time high” revenue powered by success in Latam and Central and Eastern Europe and Central Asia (CEECA). While other operators have struggled with tough comparatives, Betsson’s strong push in those regions have more than covered for struggles in Western Europe, primarily in the Netherlands, where the firm is still awaiting its operating licence, and in Germany. This geographical diversity coupled with a strong sportsbook performance – up 20% year-on-year – helped Betsson record revenue of €186.3m for the quarter. Speaking to EGR, Betsson AB CEO Pontus Lindwall discusses the company’s first step into Africa, the success of its Latam push and possible macro-economic factors down the line. Into Africa As part of its aim to continue diversifying its revenue streams, Betsson acquired Nigerian operator betbonanza during Q2. The Stockholm-listed firm had been a shareholder in the operator and felt it was the right time to fully acquire it. The move, Lindwall said, is not a conscious decision to become a “pan-African” company, however the purchase does see the first steps into the continent. He stated: “That region is not an easy market to operate, but we’re learning and it’s going to become a large market in the future so we took this opportunity to gear up a bit.” He said that each opportunity would be looked at on a case-by-case basis, as opposed to rapid expansion, adding “we evaluate every opportunity when we get them and they were trending in the right direction so we decided to increase our shareholding”. Striving for success Betsson increased its ownership in Strive Gaming from 35% to 40% during the quarter, leading some to think that the business could be brought in-house, however Lindwall insists that is not the case. He said that Strive Gaming “operates independently to us” and Betsson intends it to remain that way. Strive Gaming hosts Betsson’s sportsbook operations in Colorado and the company states that it has the functionality to transition the product to other regions with Latam a possibility. As for further expansion in North America, aside from the planned launch in Ontario, Lindwall said there is no intention to offer its B2C operation elsewhere in the region. He did, however, confirm that the company is working on a B2B offering and Betsson is in “many discussions with potential clients” in North America. Luxurious Latam Latam has been a success story in H1 2022, with Betsson first reporting figures for the region in its Q1 2022 report. YoY revenue for the region was the strongest contributor to Q2 in terms of growth, with revenue up 86.2% to €45.7m and helping to offset European struggles. Having recently launched in provinces in Argentina, it was confirmed that the next port of call will be to launch in Mexico. With constant developments to the sportsbook offering and with its customer acquisition activities and sponsorships, Lindwall said: “I have great expectations for the year to come.” Reaffirming Betsson’s commitment to this part of the world, Lindwall added: “In May, our sponsorship with AC Milan was renewed, which means that Betsson now also becomes exclusive sponsor for the club in Latin America.” The operator is also the regional partner for the women’s Copa America. Looking forward to the Netherlands Betsson is still awaiting a decision on its Netherlands licence, which was hoped to have been completed before the end of the Q2 reporting period. As such, no revenue was recorded in the country for a third quarter. With the process well underway however, it is being looked at as an opportunity for the firm to rebuild itself in the country. Looking ahead to the impending awarding of the licence, Lindwall said: “We will have to fine-tune our ambitions in each market depending on what kind of potential for revenues and profits we see there. “Obviously, we have been big in the Netherlands before and we have some good assets in our brands that we want to commercialise.” He did add that, unlike other firms who have been affected by recent legislation in the country, Betsson is not dependent on the country as it performs stronger in other countries. Macro factors While Betsson seemed largely unaffected by “macro and geopolitical factors” that could interfere with business down the line, Lindwall did say that the firm would continue to monitor the situation and try to mitigate them should they have an impact. Touching on inflation and the possibility of an impending recession, Lindwall remarked: “I think we are in the right industry because we have gone through several bad periods in the past. “From that perspective, where stock markets go down and large corporations lose their profits, we have managed to hang in there. I believe that we have quite a broad consumer product, which is entertainment and I think people need entertainment even in those kinds of problematic times.” He also reiterated his support for his colleagues in Ukraine: “The war in Ukraine is a tragedy, of course. And it’s really sad. And that one has a special impact on us in the way that we have people working in Ukraine. So we are very close to what’s going on there.”