Record revenue for Net Ent in 2013 as investments begin to pay off

Sweden’s Net Entertainment has reported a 20 per cent increase in revenue to a record high SEK630.7m for the full 2013 year, with growth expected to continue into 2014 as a result of the company’s investments over the past two years.

Net Entertainment signed 27 new customer agreements during the year, of which five were with tier 1 operators such as bet365. The company launched twenty new casinos for its customers during the period.

“Year 2013 has been a fantastic year and Net Entertainment has started to see the effect from several investments that were carried out during 2012 and revenues reached record levels,” said the company’s president and CEO Per Eriksson.

Net Entertainment’s investment in its mobile platform saw 13 customers launch during Q4, with the channel now representing 9 per cent of the company’s gross gaming yield in casino. Two new agreement for delivery of mobile games were signed during the period.

“Mobile games will continue to grow for Net Entertainment and will continue to gain a significant role within the casino industry in the future,” continued Eriksson. “In 2014 we will continue to invest in more games and improve the product further to ensure we maintain our market leading position within this segment.”

The company has also begun the roll-out of its latest addition to its product portfolio, with agreements signed in 2013 with a total of thirty operators for its live casino offering, of which 14 have so far launched. During Q4, eight deals for live casino were signed, with five customer launching operations.

“The market for live casino is growing rapidly and I am convinced that we will see good results from the product as more customers launch and marketing among the operators increase,” said Eriksson.

Q4 and Full Year 2013 Results

Revenue during the final quarter of the year rose 25 per cent to SEK180.1m due to increased volumes from existing customers as well as set-up fees related to several new agreement that were signed during the quarter.

At the end of the quarter, the company held agreements with fifteen new customers that have not yet launched operations, including Sky Bet and bet365.

Operating expenses were up 16 per cent to SEK124.6m as a result of the company’s expansion into live casino and the UK market, as well as the strengthening of its organisation. Personnel expenses rose 12 per cent to SEK51.9m, while other operating expenses climbed 9 per cent to SEK43.9m.

Despite this, operating profit increased by 49 per cent to SEK55.6m for the quarter, with profit for the period up 65 per cent year-on-year to SEK56.1m.

For the full year, revenue increased by 20 per cent to SEK630.7m, with profit for the period climbing 23 per cent to SEK167.1m.

“Regulation of online gaming is expected to continue during 2014 and if the prerequisites are right for the company there is a high probability that we will enter more regulated markets in coming years,” said Eriksson. “We follow the developments in the US and discussions are taking place with both operators and suppliers and we are waiting for the right time, the right states and the right conditions before establishing the company on the US market.

“Net Entertainment has an eventful year ahead with many exciting projects and challenges. I am convinced we will strengthen our position further on the market and maintain good growth with good profitability.”

The company added that it sees solid underlying growth in its products and has several investments that have been carried out in 2012 and 2013, which from a revenue perspective are expected to become visible during 2014 onwards.

Net Entertainment has proposed a dividend of SEK3.00 per share, compared to SEK2.25 a year ago, equivalent to SEK118.7m in total.

As at December 31st the company held cash and cash equivalents of SEK105.8m compared to SEK81.2m a year ago.

Shares in Net Entertainment AB (Co. Data) (OMX:NET-B) are currently trading up 0.31 per cent at SEK160.00 per share in Stockholm this morning.