Global Gaming sees path to profitability as Q1 loss narrows

Global Gaming's revenue fell 64.3% year-on-year to SEK57.8m in Q1 2020 as the operator's Swedish licence cancellation continued to drag down revenue, but slashing of costs – especially marketing expenditure – cut the business's losses.

Of Global Gaming’s SEK57.8m (£4.7m/€5.4m/$5.8m) in revenue for the three months to 31 March 2020, SEK50.7m came from its own gaming operations, down 66.5%. A further SEK7.1m came from its own brands’ presence on other platforms – ie, its now-cancelled white label deal with Finnplay's Viral Interactive – down 34.3%.

Last year, Global Gaming was hit by a serious setback when the Swedish Gaming Authority (Spelinspektionen) revoked its subsidiary SafeEnt’s licences in June last year for commercial online gambling and betting as a result of “serious deficiencies” in business practices, including failings related to responsible gambling and anti-money laundering measures.

In January, the operator was granted permission by the Administrative Court of Appeal in Jönköping to launch a new appeal against the decision.

Global Gaming chief executive Tobias Fagerlund (pictured) said the business is working on rebuilding following the revocation. 

“Global Gaming continues to show that it is serious in rising and getting back from last year’s negative development,” Fagerlund said. “We are continuously strengthening our conditions and it is my absolute conviction that we now are prepared for growth and that we have a very interesting period ahead of us when the market eventually normalises.”

Fagerlund added that the business would now focus more on expanding into new markets.

“Our intention to increase our presence at new markets and with new brands remains,” he continued. “During the quarter we soft launched our new brand Boost Casino on our existing markets and will now increase the speed of this launch.

“When the year comes to its end Ninja Casino and Boost Casino shall be operational in at least three new geographical markets.”

The business paid SEK24.9m in direct operating expenses from gaming activities, down 70.6%, meaning gross operating profit declined less steeply than revenue, at 57.5% to SEK32.9m.

Operating expenses, besides those from gaming activities, also fell rapidly, by 72.6% to SEK33.2m.

While costs fell in most areas, decline was mostly due to Global slashing its marketing spend, by 89.0% to SEK9.1m. Personnel expenses fell 33.8% as Global reduced its number of employees from 137 to 86, while other external expenses declined 13.1%. Depreciation costs remained static at SEK1.8m.

Global Gaming made SEK4.7m in other operating income, compared to a loss of SEK1.8m in 2019.

This resulted in an operating loss of SEK400,000, down 99.1% from Q1 2019’s loss – a period when the operator was still active in Sweden. With no financial income or tax bills of note, the business’s net loss also came in at SEK400,000, down 99.0% year-on-year.

“We are already close to reaching our first goal for the year: to break even during the first six months,” Fagerlund said. “We are serious with our goals of being back to profitability this year.”

The effects of the novel coronavirus (Covid-19) has slowed the launch of Global’s sports betting product.

“We are now also spending a lot of efforts on optimizing our business in order to meet the challenges we and our entire industry will face after COVID-19 and its aftermath,” Fagerlund said. “The biggest short-term commercial impact for us is that we will be forced to postpone our launch of sports betting until later in the autumn instead of now in the summer.

“In the slightly longer term, continuity in our business model, ensuring compliance, technical delivery and the share of costs in relation to the revenues are going to be more important to be successful.”

In addition, Fagerlund said the business’s Maltese subsidiary will change its chief executive “with immediate effect” as part of a series of restructuring moves.