Net Entertainment Nine Month Revenues Top 2008 Total29th October 2009 9:35 am GMT
Continuing its impressive run of results, Net Entertainment AB said Thursday that revenues for the third quarter of 2009 increased by 44% to SEK75.8 million (€7.3 million) on existing customer growth and the addition of four new operators, pushing the company's nine-month revenue total ahead of its 2008 full year result.
Two new customer agreements were signed for the company's CasinoModule product during the quarter including Expekt.com, while four new customers' casinos were launched including Finland's Paf and Sportingbet, further increasing the company's revenue base. Net Entertainment still has a further eleven contracted customers for CasinoModule that have yet to launch operations, including Expekt.com.
Despite the revenue growth, the company said that the strengthening of the Swedish Krona in relation to the Euro, combined with the unseasonable summer months, had a negative impact on revenues during the period.
Total operating expenses for the quarter increased by 50% to SEK45.9 million due to the company's increased rate of development through staff recruitment and the broadening of its product portfolio, as well as costs associated with the company's previously announced IT projects and the delivery and launch of its CasinoCafe product.
CasinoCafe was launched for Delta Invest with a first roll-out to approximately 20 shops, with further launches occurring gradually during the remainder of the year and into 2010. The company said that the roll-out had been slower than anticipated due to technical challenges.
On the back of the strong revenue growth, Net Entertainment reported an operating profit of SEK30.0 million, up 35% year-on-year. Despite financial items worth SEK8.9 million attributable to the return and exchange rate affect on cash and cash equivalents, and financial receivables and liabilities, the company was able to post a marginal improvement in profit for the period of SEK20.8 million, or SEK0.53 per share, compared to SEK19.9 million last year.
For the nine month period, revenues increased 50% to SEK214.4 million, already higher than the total revenues recorded in 2008, with profit for the period climbing 42% to SEK52.8 million.
"Growth during the third quarter was primarily a result of a large increase in player activity from existing customer base and the addition of four new operators, including Paf and Sportingbet," said Johan Öhman, Net Entertainment's President and CEO.
"Due to the strengthened Swedish krona, we did not benefit from the increased player activity to a full extent, as the majority of invoicing is carried out in Euros."
Öhman said that the planned introduction of licensing procedures in Italy, France and Denmark would significantly benefit Net Entertainment and allow the company to increase its market share.
"A large focus is being dedicated to address new business opportunities but also to capitalise on the functionality introduced in CasinoModule which enables the operators to offer our games to a larger share of the player base," he said. "By reaching more active players, revenues from the existing customer base can increase on top of revenues from organic growth.
"The activities carried out during the year to strengthen the organisation and our offer has proceeded well and the IT-projects previously announced are basically completed. As a result the company is well prepared to continue its success and to take on new challenges," added Öhman.
The company said that it launched its first operator unique game in August, which allows operators to differentiate its own casino offering, in turn generating higher royalty levels for Net Entertainment.
As at September 30th the company had cash and cash equivalents of SEK96.7 million, of which SEK40.1 million relates to funds held on behalf of licensees.
Shares in Net Entertainment AB (Co. Profile) (NASDAQ OMX:NETB) have fallen 5.88% to SEK60.00 per share following the announcement.