NetEnt revenues up 15% on record customer sign-ups
Q1 revenues hit £35m but profit margins slip due to growing office and IT costs
NetEnt this morning reported a 15% rise in Q1 revenues to SEK 398m (£35m) on the strength of a record number of new customers and growth in regulated markets.
The supplier’s operating profits also grew 6% year-on-year to SEK 136 (£12m), although this was a slightly lower increase compared to Q1 2016 due to higher office rents and IT costs.
“The first quarter of 2017 featured continued growth and exciting product news for NetEnt,” said CEO Per Eriksson.
“During the quarter, we signed 15 new customers, which is the highest number ever, and launched six new customers.
“We follow our growth strategy focusing on regulated markets and the expansion continues both in Europe and outside of Europe.”
During the quarter NetEnt launched in the regulated Mexico market with Codere, while Eriksson said the provider saw “significant potential” in the UK considering the firm’s relatively low market share in “what is by far Europe’s largest gaming market”.
Eriksson added: “Mobile games also remain an important growth factor and accounted for 47% of revenues in the quarter.”
Going forward, Eriksson hinted profit margins could remain slightly lower, given a need to invest in new employees and increased product capacity.
“We do this to enable continued solid growth with increasing economies of scale for NetEnt going forward – the future outlooks remains bright,” he added.
NetEnt shares were down 5% to SEK 68.5 in early trading.
The Stockholm-listed supplier also welcomed the ongoing reregulation process in Sweden. Eriksson added: “Overall, the proposal seems to set commercially viable conditions for industry participants while at the same time opening up for new, substantial tax income for the government. We welcome such a new legislation.
“A modern gaming legislation that leads to a high channelization to regulated gaming forms creates a more secure environment for both players and the industry. We intend to apply for a B2B-license as an industry supplier.”