Betsafe integration issues hit Betsson numbers
Revenues up 14% after NGG acquisition but operating income falls by more than 20% year-on-year.
Technical and process issues relating to the migration of Betsafe onto its primary platform have hit Betsson’s third-quarter figures, the Swedish operator revealed in its interim report for the three months ended 30 September.
Revenues for the third quarter rose 14% year-on-year to SEK529.5m, however operating income of SEK120m represented a 21.4% drop in comparison with the corresponding period in 2011.
Explaining that the operator would now be starting from “a lower base than expected” in the fourth quarter with regards to the brand acquired last year for 60m, chief executive Magnus Silfverberg (pictured) noted that “[Betsafe’s] growth rate was down for the quarter, but in October it has started moving in the right direction.”
The integration issues have largely affected the casino vertical, where gross profit was flat quarter-on-quarter, and Silfverberg explained in an analyst call this morning: “Some of the issues were technical-related and some were process-related; things like campaign and payment management.
“The people managing the brand needed to work within a new back-end system and with new back-end processes. However we have learned a lot from the migration of Betsafe, and now when we work on migrating Nordic Gaming Group (NGG) we know what not to do,” added the CEO.
“We have a plan [for NGG] which is completely different and based on the experience we have had [with Betsafe]. We will not integrate right away but will evaluate and see first if that is the right thing to do.”
The Betsafe and NGG brands are largely focused on the Nordics, a region which contributed 80% of Betsson’s gross profit in Q3 compared to 75% in the corresponding period last year. The remainder of the business is largely in the European Union, while the product split remains largely weighted towards casino (69%).
Sportsbook gross turnover reached SEK2.9bn compared to SEK1.8bn in Q3 2011, with just over half of the 6.8% year-on-year growth attributable to April’s acquisition of Nordic Gaming Group.
While NGG has historically been sportsbook-focused, Betsson took over the development of the operator’s Maxino online casino offering, launching the brand during the third quarter.
The acquisitions of Betsafe and NGG mean B2C activities now contribute 72.5% of group activity, and the operator intends to devote its B2B attention to existing partners rather than eyeing up new deals.