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Nektan enjoys record Q2 as revenue hits £8.6m

| By iGB Editorial Team
Company expects its core European business to break even by the end of its current financial year

A 22% year-on-year increase in cash wagers has helped Nektan set a new quarterly revenue record of £8.6m (€9.6m/$11m) for the three months ended December 31, 2018.

The gaming revenue total represents an 83% increase on the £4.7m posted in the second quarter of the supplier's 2017 financial year, as well as a 28.4% jump on the £6.7m generated during the first quarter of its current financial year.

Nektan’s B2C white label managed casino solutions remain the company’s main source of income, with net gaming revenue (NGR) from this area of the business up 31.9% year-on-year to £6.2m.

This was boosted by the launch of new white label casino partners, such as amusement arcade operator Shipley Brothers, and enhancements to the Nektan technology platform including a new Content Management System and Partner Request Console.

However, higher than expected player wins and bonusing led to a 3.1% quarter-on-quarter decline in B2C NGR, down from £6.4m in Q1.

Elsewhere, Nektan’s B2B platform and distribution business was boosted by the launch with four new operators in the second quarter, including BetVictor and 1XBet, increasing its partner portfolio to 10 companies. As a result of more players having access to its platforms, B2B gross gaming revenue rocketed by 700% year-on-year to £2.4m.

This expanded client base helped push amounts wagered to £222.5m across all Nektan's platforms. This represents an increase of 74.1% on £127.8m last year, and 22% on £182.4m in the first quarter of the current financial year.

As a result of its improving performance, Nektan expects its European earnings before interest, tax, depreciation and amortisation (EBITDA) to break even by the end of the financial year on June 30, 2019.

The news will come as a boost to Nektan, which last week revealed wider losses for the year ending June 30, 2018, despite a 51.5% year-on-year hike in revenue.

“This record-breaking quarter for the group has not only highlighted that we have made significant enhancements to our technology, but we are becoming a firmly established business that is on track to be profitable in our core European business by the end of this financial year,” chief executive Lucy Buckley, who took up her role on December 3, said.

Away from Europe, Nektan has also reported progress in the US market, within the tribal gaming and commercial casino sectors for on-premises gaming via mobile devices.

In Q2, Nektan's US subsidiary Respin agreed a deal to launch its on-premise digital gaming platform and games with an unnamed California-based tribal casino. The casino in question expects to go live with real-money gaming on mobile and smart table devices next month.

Respin also secured agreements with Leap Virtual Sports and with Grand Vision Gaming offer their content via Respin’s mobile platform for Class II and Class III gaming.

In December, Respin launched a free-to-play version of its Respin platform for an Oregon-based casino partner, and also confirmed a tier-one casino in California that had originally been due to go live with its technology in Q2 will now launch this month.

Nektan is in advanced discussions to sell 57.5% of its US business to a third party. The mooted deal is worth £2m in cash, with the investor to also provide £300,000 in working capital to Respin.

Should the deal be completed, Nektan said this would help reduce the cash burden on the wider group. The company expects to sale of the stake to be finalised by the end of the third quarter.

Buckley added: “Another significant highlight from the end of the last quarter was the announcement of potential external investment in our US business. Once completed, we believe these developments will put Nektan in its strongest and most secure position to date.”

Image: Ken Teegardin

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