LatAm now Betsson’s largest market amid European decline in Q2

Pontus Lindwall, CEO at Betsson [pictured above] said the business saw progress in most areas throughout the quarter, and spoke highly of its sportsbook growth.

“Betsson’s second quarter featured continued good growth with all-time high revenue and further investments to support our expansion,” said Lindwall. “The group’s organic growth was 13%, mainly driven by Latin America, Central and Eastern Europe and Central Asia, where we see long-term growth potential as these markets still have a low share of online gaming.

“The sportsbook business showed a strong development in the quarter – gross turnover increased by 20% and the margin was 8.3% (8.5%) – leading to all-time high revenue.”

Latin America is now Betsson’s largest market. In Q2, it accumulated revenue of €45.7m, up significantly by 86.2% year-on-year. Revenue from Central and Eastern Europe and Central Asia rose by 23.4% to €61.1m.

Betsson said these were all-time record revenues for both regions.

Elsewhere, revenue from the Nordics was down by 5.7% to €51.2m. Betsson attributed this decline to the 2020 European Championship taking place during Q2 2021, providing “favourable results” and “high activity levels”.

The decline in revenue in Western Europe to €24.8m was credited in part to Betsson’s withdrawal from the Dutch market, to comply with licence measures outlined by the Dutch regulator, meaning that there was no revenue from that segment for the quarter.

Referring to Germany, Lindwall said that the country’s market is “marked by low levels of channelisation, due to extensive restrictions, high taxes and an unclear licensing process.” Lindwall said, due to this, Betsson applied for just one online casino licence in Germany, through its subsidiary Zecure Gaming Ltd.

The quarter’s overall revenue was 7.8% higher than in Q2 2021. Casino revenue accounted for €122.2m of this, up by €1.6m yearly, while sportsbook revenue rose by 22.4% and made up the remaining €61.6m.

The total cost of services for the year added up to €67.5m – more than €10m higher than in Q2 2021 – and brought the gross profit to €118.8m, a yearly increase of 2.6%.

The total operating expenses for the quarter came to €89.6m, leaving the operating income at €29.2m. This was 22.7% lower than in the second quarter of 2021.

Marketing incurred the highest expenses throughout the quarter, totalling at €30.5m, followed by personnel costs and other external expenses at €29.8m and €25.8m respectively.

Following financial income and expenses, which added €2.2m to the total, and tax, which saw a loss of €2.8m, the net income totaled at €28.6m – down 14.1% yearly.

Cash flow from operating activities came to €37.8m, which included €1.1m that came from changes in working capital. This was 32.8% less than the previous year, however Betsson said that was due to a positive effect from the collection of VAT in Q2 2021.

Net debt is -€19.8m, which now puts Betsson in a net cash position, as opposed to Q2 2021 where net debt was €14.6m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter totalled at €39.3m, down 16% year-on-year.

Meanwhile, cash flow from investing activities resulted in a loss of €14.8m. This mainly consisted of investments in Betsson and earn-out for Latin American sportsbook Inkabet, which Betsson acquired last year.

Sportsbook turnover also hit an all-time high, totalling at €991.3m, a yearly rise of 20.5%. This was despite the fact that several high-profile sporting events occurred in Q2 2021.

For the year to date, Betsson’s revenue stands at €356.4m – a rise of 7.9% year-on-year. Gross profit is €225.8m, down by 3.5%. Total EBITDA stands at €72.7m, a loss of 11.6%.

Total net income also fell, by 13.4% to €49.4m. Operating income for the year is currently €52.8m, while operating expenses are €173m.

The number of registered customers drew close to 25 million in Q2, while the number of active customers dropped by 0.7% to 1.2m compared to the previous quarter.

In June, Betsson issued a number of bonds adding up to €90m under a three-year contract, at an interest rate of 6.5%. The bonds are set to mature in 2025.