NetEnt Q2 revenues slide on “weak” Swedish environment

NetEnt has pointed to “weak development” in Nordic markets and continued troubles in Sweden as major factors behind a year-on-year revenue dip of 4.1% to SEK 419m (€39.8m) in Q2 2019.

EBITDA reached SEK 201m (€19.1m), SEK 1m lower than in the same period last year, while operating profit also fell to SEK 130m (€12.3m), corresponding to a margin of 31%.

The supplier said operating profit was affected by legal costs as NetEnt took action to defend the IP rights of one of its most important games in a dispute that was settle favourably in May.

NetEnt revenues by quarter

NetEnt CEO Therese Hillman said: “The weak development in the Nordic countries continued in the second quarter, particularly in Sweden, where we have seen fewer players and lower ARPU since the new regulation was introduced at the beginning of the year.

“Looking ahead, we continue to invest in increased game production, a technical platform featuring more functionality, and also live casino, in order to defend, and over the longer term increase our market shares in all our markets,” she added.

NetEnt’s transformation process has continued during the quarter and rising costs included severance pay to senior executives that left the company, as well as recruiting senior business directors from the industry and establishing a UK subsidiary.

Outside of Sweden, revenues from NetEnt’s 23 regulated markets grew by 1.7% during the period, with growth coming mainly from the US, Eastern Europe, Spain and Portugal.

Other significant event during Q2 included the launch of seven slot titles, of which Narcos was the most successful, while the supplier also penned a content agreement with DraftKings in New Jersey.