How Does The NetEnt’s Profit Change in Q3?

Article by : Helen Nov 9, 2020

The third quarter became a period when NetEnt made strides in some strategic incentives. The company managed to raise its profit in the third quarter, and thanks to focusing on cost reduction, the year revenue increased by 119.6%.

In the third quarter, the revenue is up to 17.5%. The total revenue is SEK520.9m or $59.6 m, and its biggest part, around SEK503.5m, came from software licensing. The company has got new clients, and it has brought SEK6.9m of set-up fees.

NetEnt’s largest suppliers are the European market, Nordic region, and the UK. 42% of the total revenue in the third quarter came from the European market. At the same time, the UK contribution has decreased by 19%. The US contribution that is 10% of total revenue remained unchanged compared with the previous quarter. It is obvious that the company’s revenue has increased thanks to growth in the Nordics.

The second quarter was no less enjoyable for NetEnt as far as people around the world were under lockdown and sports betting was lo longer available. However, the company had received the pre-pandemic revenue in Q3 because of the live sports returning.

The business has 3 key priorities, such as building live casinos, integrating Ret Tiger, and looking for opportunities in the USA. For Red Tiger, it was one of the best quarters as well because this integration released 11 games. Moreover, Red Tiger started its cooperation with the Finnish operator Veikkaus, and now Veikkaus players have got full access to Red Tiger slots.

Red Tiger has had an impressive portfolio for a number of years, and I have no doubt that it will prove popular with our players.

Jan Hagelberg, Vice President of Casino Games for Veikkaus

NetEnt has also cut a deal with William Hills, BetMGM, Tipico, and DraftKings. For this reason, its revenue in the USA increased by 313% compared to the same period in the past year. The company is going to present Red Tiger games in West Virginia, Pennsylvania, and Michigan. Talking about the live casinos, gross profit in Q3 2020 has increased by 109% compared to the third quarter in 2019. It happened after NetEnt decided to improve its products, and, as Hillman said, growth among existing customers is continuing, but there can be seen lower growth in new sales.

The costs of the company have also changed, so the operating expenses fell to SEK111.5m and the personnel costs declined to SEK99.7m. Compared to the prior year, earnings increased by 57.8%. The company’s amortization charges were SEK105.7m, and pre-tax profit has increased by 117.9%. Despite paying SEK16.9m in taxes, the net profit was SEK167.1m. During the three quarters in 2020, the revenue has increased by 25.8% compared to the previous year. However, taking into account higher depreciation expenses and the fact of selling shares in Netent to Evolution, NetEnt’s profit has grown up 6.7% at SEK337.6m.

The cost of this deal has been estimated at $2.1bl, and, as far as the UK’s Competition and Markets Authority is investigating this deal, the period of settlement date is extended to 20 November. This merging is expected to result in higher operating revenues and operating profit. Evolution reported it continues to release new games, and thanks to improvements and extension of its game library, the revenue is €140.2m, meaning there can be seen an increase of around 48.7%. Hillman said that new game launches using BTG’s Megaways mechanic give a positive outlook on Q4.

Helen

Chief Editor

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