NetEnt lauds regulated market growth with imminent US expansion eyed

NetEnt assures that “hard work and transformational steps taken in the past year are now starting to create value,” as the firm praises regulated market expansion and potential Evolution Gaming combination in the firm’s January-June interim report.

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

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

“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,” noted Therese Hillman, group CEO of NetEnt.

“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.”

Revenue for the second quarter rose 36.7 per cent to SEK 573m (2019: SEK 419m), with full-year to date figures increasing 30.2 per cent from SEK 837m to SEK 1.09bn. 

The firm aligned lockdown restrictions across key jurisdictions of the UK, US, Italy and Germany as key to the increases reported, with a normal pattern anticipated to resume from June onwards.

EBITDA for the quarter finished at SEK 299m, a jump of 48.7 per cent from SEK 201m, with H1 finishing up with a 33 per cent increase to SEK 528m (2019: SEK 397m).

Live casino also continues to be a central focus for the firm, with added traction with operators and players reported as GGR increased 230 per cent in the quarter year-on-year.

“The coronavirus pandemic continues to impact people and companies around the world. There are signs that the rapid changes in consumer behavior 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 underperform for the group as a whole.” 

Last month Evolution Gaming made moves to acquire another member of the igaming establishment with a bid to buy NetEnt, an offer the board of the latter is recommending to shareholders.

The proposed transaction sees Evolution offer 0.1306 shares for each share in NetEnt, valuing each at SEK 79.93 and all shares in the firm to approximately SEK 19.6bn.

The offered consideration per share represents a premium of 43 per cent compared to the closing price of the NetEnt share of series B on Nasdaq Stockholm on June 23, 2020.

Hillman said of the proposal: “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 digitalization of the gaming industry worldwide.”