NetEnt Strategy and Results Revealed, with Expert Observation from CEO Hillman

Published November 9, 2019 by Lee R

NetEnt Strategy and Results Revealed, with Expert Observation from CEO Hillman

The Red Tiger acquisition is shaping the way companies will adapt to market dynamics.

NetEnt's interim report from January to September 2019 is in, and Group CEO Therese Hillman had some pointed observations regarding the qualities of each quarter.

The Red Tiger Benefit

Hillman called the most strategically important event of Q3 the acquisition of Red Tiger. Hillman said the teams complemented each other particularly well in the areas of geography and product offering. The gains of the relationship include “attaining a stronger market position and realizing economies of scale throughout the business,” with the growth that the arrangement will drive set provide annual synergies of an estimated 150 SEKm.

Q3 Performance

As for third quarter performance, NetEnt's Q3 revenues amounted to 443 (449) SEKm; and EBITDA of 196 (227) SEKm(1), corresponding to a margin of 44.3 (50.6)%.

EBIT for Q3 totaled 112 (172) SEKm, corresponding to a margin of 25.3 (38.3)% for NetEnt.

Excluding the Red Tiger acquisition, Q3 EBIT amounted to 125 SEKm for a margin of 30.1 (38.3)%.

Profit after tax was 97 (155) SEKm; and earnings per share SEK 0.32 (0.65) before the deal.

Post dilution, the consolidated Red Tiger at the beginning of September contributed to NET ENT revenues by 30 SEKm, to EBITDA by 20 SEKm and to EBIT by 19 SEKm.

The Year So Far

For the year's first nine months, more performance figures included a nine month draw of
1,281 (1,317) SEKm; and EBITDA turned in of 594 (612) SEKm(1), for a margin of 46.4 (46.5)%.

The EBIT of 368 (455) SEKm represents a healthy margin of 28.7 (34.6)%; Profit after tax 337 (441) SEKm; earnings per share of SEK 1.32 (1.83) before and after dilution. The Red Tiger consolidation has contributed an added 30 SEKm in revenue, to EBITDA by 20 SEKm and to EBIT by 19 SEKm.

Other figures reported include acquisition-related amortization to 9 SEKm, and 25 SEKm in additional acquisition-related costs, with 34 SEKm of financing-related expenses prepaid and allocated over the term of the bank loans (four years).

CEO's Strategic Outlook

Despite the continued challenging situation Hillman acknowledged for the company's larger markets, Hillman lauded the Red Tiger consolidation in a consolidating market to secure long-term growth and profitability, providing the foundation for longer term increase in casino market share to complete the profile on her company's near term outlook.

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