NetEnt to cut costs as slow growth continues into Q1
Supplier also appoints a new chairman of the board following the departure of Vigo Carlund
NetEnt this morning reported revenue growth of 9.2% to SEK 430m (£36.2m) for Q1 2018, as the supplier also appoints a new chairman to replace Vigo Carlund.
Interim CEO Therese Hillman attributed the quarter’s continued slow growth to currency exchange fees and said margins fell 1pp thanks to a one-off severance payment to former CEO Per Eriksson.
The firm also saw costs increase 11% during the quarter and has since embarked on a cost-cutting campaign, including renting out two floors in its Stockholm and Krakow office buildings.
The supplier reported 34% regulated revenues, up 2% year-on-year, with Hillman saying she expected regulated revenues to grow to up to 50% following Sweden’s re-regulation in January 2019.
In North America, NetEnt said it is in the process of applying for a licence in Pennsylvania and is planning to go live in Canada’s British Colombia in Q3 2018.
The company will also go live in Norway with monopoly operator Norsk Tipping in coming weeks. Hillman said the move would boost the supplier’s position in Norway which had not been satisfying in Q1.
In an analyst note this morning, Regulus Partners said NetEnt’s growth stall was “likely to be in part self-inflicted, especially given the sudden departure of the previous CEO and the search for a more ‘growth focussed’ replacement”.
In other NetEnt’s chairman of the board, Vigo Carlund, has stepped down from his position for personal reasons.
Board member Fredrik Erbing has been selected as the new chairman after having spent four years on the board.
Carlund sat on the board for 15 years and was chairman for 11.