Stockholm-listed casino game developer NetEnt’s revenue increased slightly year-on-year to SEK1.79bn (£143.3m/€170.4m/$186.1m) in 2019 as the company’s acquisiton of Red Tiger Games helped offset “weakness” in Sweden and Norway, but the supplier's profit declined.
The supplier’s SEK1.79bn in revenue was made up almost entirely of royalties, which came to SEK1.71bn, down 1.0% year-on-year. Setup fees brought in a further SEK56.2m in revenue, up 10.2%, and other revenues increased almost seven-fold to SEK26.2m.
The supplier’s chief executive, Therese Hillman, said that revenue grew in the United States but declined in Sweden and Norway.
Red Tiger, which was acquired by NetEnt in September 2019, contributed SEK 126m in revenue.
“Since the acquisition, Red Tiger has exceeded our expectations and now forms a vital part of our ongoing improvement efforts within the NetEnt Group,” Hillman said.
NetEnt’s operating expenses also increased, however, by 7.1% to SEK1.26bn. Personnel expenses declined 8.4% to SEK491.1m but remained NetEnt’s largest expense. Other operating expenses rose 3.9% to SEK446.7m.
Depreciation and amortisation costs, also counted as operating costs in NetEnt’s earnings report, increased 51.8% to SEK326.5m, leaving an operating profit of SEK528.7m, down 12.0%.
Red Tiger’s financial income came to SEK 73.0m, up 17.4%. However, this was outweighed by financial expenses, which more than tripled to SEK128.5m, resulting in pre-tax profit declining 24.1% to SEK472.1m.
After tax, which came to SEK44.3m, NetEnt recorded a full-year profit of SEK428.9m, down 25.7%. After exchange rate differences, primarily from a weaker Swedish Krona compared to the British Pound, NetEnt’s total income for the period attributable to shareholders came to SEK566.9m, down 3.1%.
For the fourth quarter of 2019, NetEnt’s revenue came to SEK512.0m, the highest quarter ever for the company and up 10.0% year-on-year.
Geographically, Great Britain contributed to 19% of NetEnt’s game win (player bets minus wins), from which royalty fees are calculated, while Sweden contributed 7%. Other Nordic countries brought in 13% of NetEnt’s game win, other non-Nordic European countries 44% and the rest of the world 19%.
Slot games made up 94% of game win and table games 6%. Although NetEnt did not disclose its total game win, Hilman said the figure increased 4.9% in euro currency terms.
NetEnt did not break down game win by region or type of game for the full year.
Operating expenses came to SEK351.4m, also up 10.0%. This was made up of SEK122.2m in personnel costs, SEK100.7 in depreciation and amortisation costs and SEK128.5m in other operating expenses.
This resulted in an operating profit of SEK160.6m, up 9.8%. However, after a net financial loss of SEK33.6m, pre-tax profit came to SEK127.0m and overall profit to SEK112.6m, down 10.2% year-on-year.
Hillman said the Red Tiger acquisition ensured NetEnt is well-primed for 2020.
“Backed by our ongoing focus on efficiency and the acquisition of Red Tiger, we are entering the new year in a stronger position,” Hillman said. “Our global distribution and two strong brands give us the right basis to increase our market shares in online casino. We see good conditions for NetEnt to deliver growth in 2020, supported by our combined game portfolio and Live Casino.”