NetEnt Welcomes Controlled Market Growth Eyeing Impending US Expansion

NetEnt promises that “hard work and transformational steps taken in the past year are now starting to create value,” as the firm praises controlled business growth and future combination of Evolution Gaming in the company’s interim report January-June.

With 19 igaming titles released during the second quarter of the year, with nine coming from NetEnt and ten coming from Red Tiger, new jurisdictional entries were also secured in Switzerland, Croatia and Colombia.

The US also remains a central focus for the developer of online casino content, with Michigan and West Virginia identified as the next access points to be undertaken in the future.

Therese Hillman, group CEO of NetEnt noted: “The US accounted for ten per cent of total group gross gaming revenue, with GGR growth in New Jersey at 148 per cent Y/Y and in Pennsylvania at +100 per cent Q/Q.

“We now see a greater likelihood that more US states will introduce online casino legislation in the coming years. Importantly, we expect to launch our games in both Michigan and West Virginia as the online casino markets in those states are expected to open in the second half of this year, which is earlier than previously expected.”

Second quarter revenue rose 36.7 percent to SEK 573 m (2019: SEK 419 m), with full-year to date figures rising 30.2 percent from SEK 837 m to SEK 1.09bn.

The business aligned lockdown restrictions across key UK, US, Italy and Germany jurisdictions as the key to the announced rises, with a regular pattern expected to resume from June on.

EBITDA for the quarter ended at SEK 299 m, a 48.7 percent leap from SEK 201 m, with H1 finishing with an rise of 33 percent to SEK 528 m (2019: SEK 397 m).

Live casino also remains a core focus for the business, with additional momentum reported with operators and players as GGR increased 230 percent year-on-year in the quarter.

“The coronavirus pandemic continues to impact people and companies around the world. There are signs that the rapid changes in consumer behaviour caused by the pandemic will further speed up the digitalisation of a number of industries, including entertainment such as gaming,” added Hillman.

“Just like in other online industries, the major lockdowns in some of our big markets (UK, US, Italy and Germany) led to a positive effect on revenues in April and May, followed by a more normal pattern in June as those economies gradually opened up.

“Revenues for the second quarter of the year increased by 37 per cent Y/Y to SEK 573m (419m). On a proforma basis, including Red Tiger in the previous year’s figures, the group’s total revenues increased by 15 per cent in euro compared to the same period in 2019.

“Most European markets performed well except for the Nordic countries, which continued to under-perform for the group as a whole.”

Last month Evolution Gaming made moves to acquire another member of the igaming community with a proposal to buy NetEnt, an offer recommended to shareholders by the latter’s board.

The proposed deal sees Evolution selling 0.1306 shares per share in NetEnt, valuing each at SEK 79.93 and all of the company’s stock at about SEK 19.6bn.

The bid valuation per share represents a premium of 43 percent relative to the closing price of series B NetEnt share on Nasdaq Sweden on 23 June 2020.

Of the proposal Hillman said: “On June 24th, 2020, Evolution Gaming announced a public offer to the shareholders of NetEnt. NetEnt’s board of directors has unanimously recommended shareholders to accept the offer.

“I share the view that there are significant synergies in combining the two businesses to create a best-in-class B2B provider that can drive the digitalisation of the gaming industry worldwide.”