NetEnt revenues fall 10% in Q3 as Sweden performance fails to improve
Drop in Swedish high-value players accounts for 7% of supplier’s revenue decrease with Norway and UK adding to negative impact
NetEnt today reported a 10% pro forma drop in Q3 revenue to £35.8m as Sweden’s recently-regulated market continues to cause problems for online gaming firms.
Sweden accounted for 7% of the supplier’s revenue decrease, while tax troubles in Norway and the UK worsened the impact.
EBITDA dropped to £15.8m, down from £18.3m in the prior corresponding period.
NetEnt CEO Therese Hillman was asked by analysts this morning why Sweden has shown no signs of improvement in September – a traditionally strong month due to seasonality – and said the company was faced with a new reality.
NetEnt CEO Therese Hillman
She said: “We are disappointed that Sweden is performing worse than Q2. We expected it to flatten out from already low levels, so we are disappointed with the developments.
“With this new reality we need to take action and work even more on the efficiency. It is disappointing how it affects us, but we need to look at the markets that are delivering, because you can get really depressed if you start looking only at Sweden.
“The number of players is in line with last year, but we also see a huge drop in high-value players.
“Players are still getting marketed by operators without a licence. Channelisation is going down and I don’t think it is 92% within casino. I think it is getting worse.
“I feel that Q1 was boosted by one-time bonuses but now we are seeing that this is the regulation put in place and this is what happens.
“I don’t want to make excuses but that is how I see it right now. This year has been very, very challenging,” she added.
The 10% revenue decline excludes the £223m acquisition of rival slots firm Red Tiger, which NetEnt believes will inspire growth heading into 2020.
Red Tiger was consolidated from the beginning of September 2019, contributing revenues of £2.4m. NetEnt revenues were down 1% when factoring its contribution in.
Hillman said: “Red Tiger is a young company that is efficient and fast-paced, and we can learn from each other and drive cost synergies faster.
“The acquisition is a catalyst for delivering on the plan that we already had in place for NetEnt.”
NetEnt’s share price was down 17% at the time of writing.