Betsson fends off Swedish challenges to post Q1 growth
Swedish operator Betsson has reported year-on-year growth across revenue and profit in the first quarter, despite having to contend with new regulations in the Swedish market.
Revenue in the three months through to March 31, 2019, came in at SEK1.33bn (£106.4m/€124.4m/$139.3m), up 10% on SEK1.21bn in the same period last year.
Betsson cited growth across its casino and sportsbook operations in Western, Central and Eastern European, as well as its Rest of the World business, as the main drivers behind this increase.
Total casino revenue climbed by 10% to SEK1.012bn, while sportsbook revenue jumped 13% year-on-year to SEK297.8m from a turnover of SEK6.34bn. Betsson also revealed that mobile is now responsible for 68% of all revenue, compared to 60% in Q1 of 2018.
Although the operator saw cost of services rise from SEK345.6m to SEK431.5m, partly due to a SEK16.6m negative impact of currency exchange fluctuations in the quarter, savings were made elsewhere.
Operating expenses dropped from SEK652.9m to SEK643.9m as the operator felt the benefits of its ‘Back-On-Track’ program, while marketing costs also fell from SEK244.4m to SEK241.2m and personnel costs from SEK209.5m to SEK198.8m.
Other external expenses – primarily sportsbook related costs, consultants and software licences – fell to SEK162.1m, while capitalised development costs dropped from SEK55.1m to SEK48.3m and amortisation of capitalised development was down from SEK55.8m to SEK54.9m.
The combination of higher revenue and mainly lower costs meant Betsson was able to post gross profit of SEK899.1m, up 4% on SEK864.3m in the opening three months of 2018.
Earnings before interest, tax, depreciation and amortisation increased 22% year-on-year to SEK345.8m, with a higher margin of 26.0%, while operating income also climbed 21% to SEK255.2m with a margin of 19.2%. Net income improved by 22% to SEK229.3m.
CEO Pontus Lindwall spoke positively about the results, but did note that both revenue and operating profit was negatively impacted by new regulations in Sweden. The country moved to regulate online gaming from January 1.
“The market has experienced a challenging start, however we believe it is too early to draw any long-term conclusions,” Lindwall said.
“During the first half of the first quarter, there were high costs for welcome bonuses to customers as well as a difference in the dynamics of the customer behaviour.
“During the second half of the quarter, the situation stabilised, primarily regarding customer volumes and number of new customers. In addition, there are ongoing discussions regarding rules for marketing volumes and content in Sweden.”
Lindwall added that while Betsson still sees its native Sweden as an important market in the long-term, it now also sees the advantage of having a geographical spread that enables scalability.