NetEnt benefits from new game launches as Q3 revenue grows

NetEnt benefits from new game launches as Q3 revenue grows

Friday, October 26, 2018 Posted by News Team
Profit for the quarter rises to SEK155m

NetEnt has reported an 11% rise in revenue in the quarter ended September 30th, with the supplier benefitting from the release of new titles and launching its products with high-profile partners. 

Revenue grew to SEK449.3m (€43.2m), aided by the release of titles such as Mirror Mirror, Swipe & Roll, Berry Burst and Double Stacks, as well as the roll-out of the company’s latest branded title, based on the Hollywood hit Jumanji, in July.

The supplier was also boosted by high-profile clients launching its games, including Hard Rock in New Jersey, Norwegian state gaming operator Norsk Tipping and the British Columbia Lottery Corporation.

The vast majority (91.6%) of revenue was generated from its portfolio of slot games, with table games contributing an additional 8%, and other products the remaining 0.4%. Live casino revenue grew during the period, though from a low base. 

Mobile is firmly established as the most lucrative channel, contributing 61% of total revenue, up from 51.9% in Q3 2017. 

During the quarter nine new game license agreements were signed, with 14 new customers launching NetEnt products during the period. By September 30th, the company has 23 customer agreements that had not yet been launched. 

“The third quarter was marked by a strong start thanks to the successful release of the game Jumanji,” NetEnt chief executive Therese Hillman said. “We have remained focused on strengthening our customer offering, cutting lead times, and freeing up resources for new commercial activities.”

Aside from new product and client launches, Q3 also saw NetEnt beta-launch a proprietary affiliate business, in which customers can access free-play variants of its games, as well as moving into the social casino market. This has seen the launch of a desktop variant of its Facebook app in the US.

“Both these new intiatives are well aligned with our strategy to move closer to the end users in the value chain,” Hillman explained.“We need to keep delivering the best casino games from a player perspective and make our brand visible, at the same time as we develop even closer partnerships with operators through new types of collaborations. 

“Customers and players wish to have more games from us, and we aim to release a significantly higher number of new games in 2019 and going forward.”

Operating expenses for the quarter grew 11% year-on-year to SEK277.2m, with the increase blamed on the hiring of more live casino staff and depreciation linked to currency effects and new product launches. 

Despite this earnings before interest, tax, depreciation and amortisation rose to SEK227m, while operating profit was up to SEK172.0m. The company posted a profit after tax of SEK155m, up 9.8% year-on-year. 

For the first nine month of the year, revenue grew 8.7% to SEK1.32bn, with operating profit rising 12.3% to SEK440.6m.

Despite the company’s revenue growth, Hillman said that NetEnt would look to increase the pace of its earnings growth. 

“Therefore, we continue to make efforts to lower overhead costs and to optimize the organization for commercial drive and increased pace of output, and I see room for improvement next year in several areas,” she said. 

“Now I look forward to the last quarter of the year, as we have a full release schedule with five new slot games, including our largest game production this year, Vikings, which is based on the well-known HBO series."

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