Betsson credits marketing efficiencies for Q3 revenue growth

Betsson credits marketing efficiencies for Q3 revenue growth

Wednesday, October 24, 2018 Posted by News Team
Betsson
Operator sees revenue climb 21% and posts 63% rise in net income

Betsson has reported a 21% year-on-year increase in revenue for the third quarter of the year, which it said was achieved through improvements to its product offering and more efficient marketing spend. 

Revenue for the three months ended September 30th rose to SEK1.43bn (€137.6m), with the majority coming from the operator’s casino vertical. 

Q3 casino revenue was up 22% to SEK1.07bn, accounting for 75% of group revenue. The bulk of this came through the mobile channel, which generated revenue of SEK686.8m, up 38% from Q3 2017. 

Sportsbook revenue grew 23% from a lower base to SEK338.9m, with 78% (SEK264.9m) coming from mobile bettors. Total turnover for the vertical grew to SEK6.15bn, benefitting from the impact of the FIFA World Cup. 

Revenue from other products fell 37% year-on-year to SEK21.6m, accounting for just 2% of total revenue. 

The Nordic region continued to generate the bulk of Betsson revenue, accounting for 47% of the quarterly total, with a further 31% coming from Western European markets. Central and Eastern Europe and Central Asia contributed a further 17%, with the final 5% coming from other markets around the world. 

Betsson chief executive Pontus Lindwall explained that the growth had been achieved through a combination of product improvements and marketing efficiencies. 

“In the third quarter, re-allocation of marketing investments between different markets, and also in the mix of traditional marketing and affiliate marketing, made it possible to efficiently grow revenue,” he said. “Going forward, we expect marketing investments to increase as online gaming licences are introduced in Sweden.”

Cost of services provided were up 30% year-on-year at SEK417.3m in Q3, which Betsson said resulted from higher commission paid out to affiliates and partners. The company has also set aside  a SEK10m provision relating to the recalculation of retrospective gaming taxes in an unnamed regulated market.

The company also saw currency exchange rate fluctuations negatively impact the cost of services, adding SEK26.4m to the total. Gross profit amounted to SEK1.01bn for the quarter. 

Operating expenses amounted to SEK669.4m, with marketing expenses adding a further SEK246.8m, and personnel expenses SEK197.7m. 

Other external expenses incurred during the quarter included sportsbook-related costs, consultancy fees and software licence fees, as well as SEK3.1m relating to a fine handed out to Betsson’s Corona Ltd subsidiary in the Netherlands. 

Earnings before interest, tax, depreciation and amortisation for the quarter were up 49% to SEK423.5m.

The company’s operating income (earnings before interest and tax) amounted to SEK340.2m in Q3, up 58% year-on-year, despite being negatively impacted by NetPlay TV, which was acquired in Q2 2017. 

The company incurred a further SEK9.5m in financial items, mainly relating to interest costs, and net income (profit) for the quarter amounted to SEK305.1m, up 63% year-on-year. 

For nine months of 2018 to September 30th, group revenue was up 15% at SEK3.98bn, with net income rising 30% to SEK764.5m. 

“We continue to execute on the ‘back on track’ plan which includes a number of product and technology improvements, additional efficiencies and focus on core markets,” Lindwall said. "The fourth quarter has begun with daily revenues higher than the average daily revenue for the full fourth quarter last year.”

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