NetEnt, the leading provider of premium gaming solutions for casino operators, released today a January –September 2020 interim financial report. The Stockholm-traded technology supplier reported 17% rise in revenue year-on-year.
Third Quarter Results
NetEnt posted third quarter revenues of SEK521 million, earnings before interest, tax, depreciation and amortization (EBITDA) was SEK310 million, corresponding to a margin of 59.4%. Excluding non-recurring costs EBITDA amounted to SEK313 million, and Q3 2020 earnings after tax amounted to SEK167 million, equivalent to SEK0.68 of earnings per share after dilution.
Theresa Hillman, Group CEO commented that during the third quarter the company continued to deliver on its strategy built on three pillars for growth: expansion in the US, integration of Red Tiger and Live Casino expansion, while seeking to keep costs low and utilizing revenue synergies from the ongoing integration of NetEnt and Red Tiger. The gaming technology provider acquired the leading casino games developer company in September 2019, in a deal worth £220 million.
“Given our new lower cost base, the operating leverage of our business and our strong product pipeline, we expect continued strong growth in earnings and cash flow for the rest of the year and beyond.”Theresa Hillman, CEO, NetEnt
Year-on-year, gross gaming revenue (GGR) from US markets increased by 313% and accounted for more than 10% of the total for the quarter, while GGR from Live Casino posted 109% growth compared to Q3 in 2019, slowing a bit the acceleration of the vertical from the second quarter. While growth in existing clients kept up with the pace, NetEnt noted new sales slowed down.
Third Quarter Partnership Deals
Besides the ongoing integration with the recently acquired game developer Red Tiger, NetEnt signed several important partnership deals in the US during the third quarter. In July, NetEnt became content partner for German sports betting company Tipico, ahead of its launch of operations in New Jersey.
In September, BetMGM and NetEnt signed a deal under the terms of which the sports betting and iGaming brand of the joint venture Roar Digital would feature NetEnt products in its portfolio. Also in September, NetEnt extended its footprint in Pennsylvania, in partnership with Wind Creek Casino.
For the first nine months, the company reported revenues of SEK1.61 billion, EBITDA of SEK838 million corresponding to a margin of 52%, and earnings after tax amounting to SEK338 million, or SEK1.38 earnings per diluted share.
The company outlook for further growth and expansion in Q4 remains positive due to the recently signed deals with Boston-based DraftKings and The Cordish Companies, as well as a plethora of new slot titles coming out the pipeline. NetEnt outlined expectations for continued strong growth in earnings and cash flow for the rest of the year and beyond.