Cherry's Q1 revenues increase 49%

Online casino operator Cherry has reported a 49% year-on-year increase in online gaming revenues for Q1 2015, but continues to make a loss due to heavy marketing and bonus spend.

Online gaming revenues were SEK 58.3m (£4.5m) for the three-month period, compared to SEK 39.1m (£3m) in Q1 2014, but EBITDA declined 4.6% year-on-year as the Scandinavia-facing company reported losses of SEK 4.5m (£347,000).

The losses were the result of an increased marketing spend, up 36% to SEK 26.2m (£2m), which primarily focused on the firm’s CherryCasino and SpilleAutomater brands.

“We spent quite a lot on marketing to gain market share,” Fredvik Burvall, Cherry’s CEO, told eGaming Review. “But over time when the revenue grows we will be able to reach profitability.

“We will continue to invest heavily in marketing, but we will look to spend the money a little more wisely going forward. The focus is to reach profitability as soon as possible. We don’t give any forecasts, but the target is to be profitable this year,” he added.

Cherry will be encouraged by the growth of its B2B games provider Yggdrasil, which saw revenues climb 156% to SEK 2.3m (£177,000), following a series of new operator deals. Burvall said he expects rapid growth to continue, with Yggdrasil recently signing a supply agreement with Betsson.

“This year we expect to launch all the games on the new iSENSE 2.0 platform, which will enable operators to run the games on desktop and mobile. When they launch our games across all the devices, the games will go out to a lot more customers,” he said.

Burvall added that the company will continue to look at acquisition opportunities, saying that the company is in a good position to capitalise on the move towards consolidation in the casino vertical.

Cherry is also expected to launch a sportsbook in the second quarter, after reaching an agreement with provider SBTech in December.