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Lockdown Leads to Lucrative Profits for Netent
By Shane Addinall Jul 21, 2020 IndustryNetEnt is unaffected by market challenges as it continues to thrive despite the Coronavirus lockdown. In the last 6 months, the company has seen substantial revenue growth and there are positive indicators that this trend will continue.While the Coronavirus lockdown has dealt a blow to various markets, gaming and online casinos in particular continue to grow and thrive.
NetEnt in particular has had an incredibly positive second quarter as they have shown growth of over 30% year-on-year.
“Overall, the second quarter was strong for both NetEnt and Red Tiger, resulting in record revenues, earnings and cash flow for the Group. On a proforma basis, the Group’s total revenues increased by 15% in euro compared to the same period in 2019.”
“Supported by revenues from the US market, NetEnt (excluding Red Tiger) returned to solid organic growth in the quarter. The US accounted for 10% of total Group gross gaming revenue (GGR), with GGR growth in New Jersey at 148% Y/Y and in Pennsylvania at +100% Q/Q. The underlying EBITDA margin was 54.6% and important steps were taken to fully integrate Red Tiger and to support profitability going forward,” said CEO, Therese Hillman.
NetEnt has not only entered the regulated markets in Switzerland, Columbia and Croatia in 2020, but it also released 19 new games (9 from NetEnt and 10 from RedTiger).
Possible Merger in Play
Evolution Gaming made a public play to acquire NetEnt to the tune of SEK 19,6 billion on the 24th of June 2020, and the Board of NetEnt has unanimously recommended that shareholders accept the offer.
Should the merger go ahead, the company will have an even stronger hold on the market and be in the best position to storm the US online gaming market.
In response to talks around the possible partnership, Hillman said:
“I share the view that there are significant synergies in combining the two businesses to create a best-in-class B2B provider that can drive the digitalization of the gaming industry worldwide.
The coronavirus pandemic continues to impact people and companies around the world. There are signs that the rapid changes in consumer behavior caused by the pandemic will further speed up the digitalization of a number of industries, including entertainment such as gaming. Just like in other online industries, the major lockdowns in some of our big markets (UK, US, Italy and Germany) led to a positive effect on revenues in April and May, followed by a more normal pattern in June as those economies gradually opened up.”
The pandemic has given companies a much-needed reason to pivot and reposition themselves in the market in order to survive. Once lockdown restrictions have been lifted, the world, and its priorities, may be very different from what they once were. Those who are willing and able to adapt have the best possible opportunity to thrive another day.
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