For many in the gambling sector, 2017 has proved a challenging year. Changing regulatory approaches in various markets across the globe have seen a demand for operators to be agile in response, while new technologies, increased competition and new market opportunities globally all factor into the picture. While there have been numerous complexities for legitimate operators to overcome, there have also been plenty of new opportunities to capitalise on.
That’s a story that is reflected in results published by NetEnt this week, the Stockholm-based slots and casino software developer. One of the industry’s biggest players, NetEnt had by their own admission been expecting strong performance in 2017. While the company fared well, their results failed to live up to these earlier expectations.
The company reported revenue for the final quarter of 2017 earlier in the week, which came in at SEK419m – approximately $52.5 million, and a rise of some 4.7% on the same period the year before. However, the company saw operating profit fall by 3.9%, with a slight 1.5% rise in after tax profit in the period, which came in at SEK152m.
Looking across 2017 as a whole, the company’s operating revenue was up by 11.7%, clocking in at SEK1.6bn, while both operating and after-tax profits were up by around 9.5%.
It’s hard to look at these figures in isolation and read this as a picture of a company falling short, and to give NetEnt their credit, they’re still celebrating these achievements. However, there have been a number of specific challenges to the NetEnt business over the period, which the company’s chief executive Per Eriksson suggested was responsible for about a 3% dampening factor on revenues in the final quarter of the year.
NetEnt was forced to pack up operations in three of their important markets, namely Poland, Czech Republic and Australia, following on from a change in the regulatory climate there. The cost of these exits, not to mention the immediate impact on revenues, are reported to have been amongst the main issues facing the company over the period.
There’s also the added issue of these being unforeseen challenges, with very little in the way of a heads up to operators like NetEnt ahead of time. While the position in these three markets and others remains uncertain, NetEnt opted to consolidate around its move to a bigger headquarters in Malta, as well as strengthening their offering for live casino fans.
Despite the challenges, Eriksson told his investors that the company would be looking at “increasing our commercial focus and optimizing our organization to make sure that revenues grow more than costs” over the coming twelve months.
This includes plans for a minimum of 20 new games in 2018, following on from the success of their Mobile Live Blackjack game in Q4, which helped drive mobile share of revenue to 54%.
While the results hadn’t been quite what NetEnt expected this time last year, there is no denying 2017 has proved another strong year for the slots developer. With hotly anticipated titles in the pipeline, including a Narcos slot, courtesy of a licensing arrangement with Netflix, there are clearly more exciting opportunities for NetEnt in the near future. Similarly, as one market closes to legal, regulated gambling, another opens, and there are plenty of new markets ready with operators for NetEnt to secure.
With 37 new licensing agreements reached over the period, there is no sign of appetite for NetEnt games drying up anytime soon. With opportunities abound for 2018, NetEnt will be hopeful of at least achieving their projections, barring any further unexpected twists, over the coming twelve months.