Five things we learned from Betsson’s Q4 and FY22 results

“We are the best,” said Betsson CEO Pontus Lindwall in his closing remarks on the presentation call following the operator’s record financial year. While it may be a bold claim, Lindwall has overseen a period of sustained and sustainable growth at the helm of the operator, repaying the faith of the shareholders who moved to retain the Swede in the role after former chair Patrick Svensk attempted to unceremoniously dump Lindwall in September 2021.

In the time since, Betsson has moved from strength to strength, with a core focus on geographic expansion, developing tech and concerted marketing efforts bundling to make its 60th year of operations look to be a positive one.

And the 59th year saw the firm return a 18% year-on-year (YoY) jump in full-year revenue to €777.2m, driven by a stunning Q4 thanks to the winter World Cup in November and December.

EBITDA increased by 12% to €172.4m for 2022 while EBIT jumped 11% to €131.2m, as the business ended 2022 with an operating cash flow of €178.7m.

Key markets such as Latam and Central and Eastern Europe and Central Asia (CEECA) continue to be shining lights for the Stockholm-listed operator, while issues in Germany and some bite back in the Nordics is something to keep an eye on.

Speaking to EGR, Lindwall details the reasons behind this strong rise, along with his thinking for key markets in Betsson’s immediate and long-term future.

Kick on  

Alongside the first-ever winter World Cup, Betsson highlighted its improved tech offering as one of the dual pillars for its Q4 success, and ultimately record-breaking 2022. Having acquired 80% of B2B sportsbook supplier KickerTech in October 2022, Betsson wasted no time in deploying part of its new arsenal.

In the group’s report, the firm said KickerTech had allowed Betsson to add “new customers, further capabilities in building advanced odds models, trading technology and sportsbook features”.

Lindwall said the addition of KickerTech took some pressure away from the Betsson sportsbook platform and that the firm’s B2B offering, combined with its 40% share in player account management (PAM) provider Strive Gaming, had put the firm in good stead.

Lindwall revealed there is no current plan or option in place for Betsson to take full ownership of KickerTech and detailed what the addition of the business had brought to the Betsson ecosystem.

He said: “It is a good setup in the way that we still have the previous owner engaged with the company. They are there for support and knowledge around the product and the history [of KickerTech].

“The acquisition gave us a sportsbook with a little bit of different flavour than the Betsson sportsbook. It gives us more flexibility to offer sportsbooks to certain markets and it brings down the pressure on the Betsson sportsbook in terms of adapting to new markets.”

Lagos, we have lift off

 In one of the lesser looked at segments of Betsson’s results, the firm reported a 17.3% YoY jump in revenue from its rest of the world arm to €4m, of which the majority was derived from its operations in Nigeria via Betbonanza.

In Q2 2022, Betsson increased its stake in the Nigerian operator from 25% to 60% as part of the core strategy around expanding its geographic remit. Betsson is also live in Kenya via its Betsafe brand.

With the significant YoY uptick in revenue, and the increased interest in the African market, which has seen 888 launch a joint venture in four markets and Entain go live in Zambia via its bwin brand in recent months, Lindwall confirmed he would continue to monitor operations on the continent.

The CEO noted that there are no current plans to increase the firm’s stake in Betbonanza after snapping up a majority share last year, but remained committed to the market’s development.

He said: “Betbonanza is doing quite well. Obviously, compared to our other geographic regions, it is still a small region for us but a region where we see great potential for the future.

“Technology wise, it is going to get better and the interest is already there. It is a region that is interesting but had a different way of operating.

“It is a different product, and we are on a bit of a learning curve there but we are still seeing good traction. We are optimistic and will continue to invest in the market,” Lindwall added.

Show off

 As US B2C operators continue to drag themselves kicking, screaming and burning cash to profitability, Betsson remains somewhat of an outlier in the market since the fall of PASPA in 2018.

Betsson remains live in just one state, Colorado, with its Betsafe brand being used as a showcase for the firm’s B2B capabilities.

While other European firms such as Kindred are now looking to reassess its US-facing spend, and giants such as bet365 struggle to achieve cut-through despite its global presence, Betsson is happy to reap some smaller rewards while reinvesting capital that could otherwise have been burned up into more profitable regions.

Lindwall does not hold back in his assessment of the US and is bullish in his comments around expenditure put out by those looking to carve out a slice.

He also reiterated there is no plan to move into additional US states and is happy with his small spot in the Centennial State.

Lindwall said: “It’s not our biggest operation that we have in the group and obviously it is more or less a showcase for our US-facing offering which is the Betsson sportsbook dressed as Betsafe.

“We are in discussions with potential clients to work with us on the sportsbook side and we will see if they can materialise, but we have never had any ambition to become big on the B2C side in the US.

“We think the market has been overheated and that some of the investments made there have not been financially sound. We have seen other markets where we see a better deployment of our resources and decided to invest there instead,” he added.

Growth spurts

Two of those markets that Lindwall refers to are Latam and Central and Eastern Europe and Central Asia (CEECA), with both continuing to prove Betsson’s decision to spread it geographic wings was a good one.

During Q4, Latam revenue amounted to €52.3m, a YoY rise of 101.6%, while CEECA returned a 52.8% increase on revenue to €85.4m. CEECA took a 38% share of the group’s total revenue for the quarter while Latam represented 24%.

On face value this looks impressive, but Betsson was also impacted by Brazil’s failure to regulate online sports betting last year and also cited lower margins in its casino product in Estonia. No market is foolproof, but Lindwall remains resolutely confident in the two darlings of Betsson’s arsenal.

He confirms capital is always being readjusted from market to market, and with difficulties in Germany due to headwinds and the firm still waiting on a Dutch licence, these monies are finding their way into growth areas.

Lindwall tells EGR: “It’s very rare that everything happens as planned. There are delays for certain reasons. Our main confidence in [Latam and CEECA] remains, and we are seeing strong growth.

“They are huge markets with huge potential so there should be no reason to be worried about them moving forwards.”

Keep ‘em coming

Finally, as the macroeconomic environment continues to bite and investors look even more granularly into where costs can be cut, layoffs have become synonymous with the first seven weeks of 2023. The gambling sector has been no stranger to this strategy, with the likes of Bally’s, DraftKings and 888 all swinging the scythe in recent weeks. In the wider tech sector, Amazon, Meta, Twitter and Tesla have all handed out redundancies to staff as the streamlining process continues.

The tech boom of 2020 and 2021 saw companies onboard staff at a rapid rate, like squirrels hoarding nuts for winter, but now the sunlit uplands of supposed profitability have yet to materialise, those staff are the first to face the chop.

However, Betsson increased its headcount between 2021 and 2022, finishing the year with 2,023 employees compared to 1,955 in 2021, plus 224 full-time consultants.

When pushed on how the company had seemingly bucked the trend, Lindwall said that the group was still in a steady phase of expansion, and it simply needed to onboard more staff to support the growth.

The CEO said: “We took on a little bit of headcount last year due to growing how we did. It was necessary in order to keep the quality but also to facilitate that growth.

“We still have a lot of open positions in the company, and the discussions around layoffs which we have seen in the industry and other tech industries has not been on our agenda at all. And I don’t see them coming either,” he added.