Gamesys Group, a UK-listed online gaming company, commends its expanded grey-market activities in Japan to boost its bottom line.
Gamesys (formerly Jackpotjoy Group) released its earnings report on Wednesday for the three months ended September 30, during which revenue increased 23 percent to £ 92.4 m while adjusted earnings fell 8 percent to £ 25.5 m and net revenue from continuing operations dropped more than half to £ 3.4 m.
The results come with a number of asterisks, including selling the Mandalay bingo brands to competitor 888 Holdings this summer, as well as adding some more of the original online Gamesys gambling products to the list. The latest Gamesys add-ons only contributed in that brief period to Q3’s final four days but nevertheless increased sales by £ 2.3 m.
The main Jackpotjoy division, consisting of the UK-facing Jackpotjoy brand, Spain’s Botemania business, and the Gamesys brands (Virgin Games, Virgin Casino, Heart Bingo, and Monopoly Casino), reported revenue up 5% to £ 52.2 m, but costs rose significantly higher, resulting in the division’s adjusted earnings falling 16% to £ 18.2 m.
The online casino unit of Vera&John, which recently withdrew from the tax-heavy UK market, saw its sales grow to £ 40.2 m by 57 percent, while profits fell to £ 10.2 m by 22 percent. The success of Vera&John was mainly due to its push into’ grey’ markets like Brazil, Germany and Japan.
Vera&John’s effect on Japan’s shores can not be understated, as the segment accounted for 28 percent of Gamesys ‘ total revenue in the first nine months of 2019 compared to just 12 percent in the same timeframe last year. The contribution of the UK market fell by 10 points to 47% over the same period, while the new regulated market in Sweden fell by more than half to 4%.
Gamesys Chairman Neil Goulden hailed Vera&John’s growing “international footprint” to raise the “stand-out quarter” of the group, while CEO Lee Fenton also praised Vera&John’s “outstanding performance” as well as Jackpotjoy UK’s “return to growth” (although the Q3 growth of the latter segment was less than 1 percent).
Investors were unmoved by the end of Wednesday’s trading, pushing the share price down 2 percent to £ 6.91, although that was well above its mid-day low of £ 6.63.