Betsson hails Q1 progress as revenue grows 6.5%

Betsson chief executive Pontus Lindwall described the operator’s first quarter performance as “strong in all areas” after it reported year-on-year revenue growth and achieved a hat-trick of key milestones in the period.

Lindwall (pictured) also gave an optimistic assessment of the impact of novel coronavirus (Covid-19) on the business, saying the supplier has proved to be resilient to market fluctuations and “delivered in both good times and tough times”.

Revenue for the three months to 31 March was up 6.5% to SEK1.42bn (£113.8m/€129.8m/$140.2m), aided by growth across the Central and Eastern Europe and Central Asian (CEECA) and Rest of World reporting segments.

CEECA revenue was up 71.1% to SEK424.7m, with Rest of World revenue growing 45.9% to SEK103.6m.

This mitigated declines in the Nordic region, where revenue fell 16.9% to SEK482.7m and Western Europe, down 5.6% at SEK406.5m.

Customers deposited SEK5.74bn across and products and brands during the quarter, a 21.1% increase, though active customer numbers fell marginally, dropping 0.8% to 680,938.

The bulk of activity took place via mobile devices, with revenue for the channel growing 8.8% to SEK987.2m, or 69.6% of the group total.

Betsson’s B2B operations, through which it provides technology for Realm Entertainment, operator of sites such as Bets10, MobilBahis, CasinoMaxi and CasinoMetropol brands, contributed revenue of SEK230.2m, more than doubling year-over-year. This growth came despite currency fluctuations wiping out SEK17.9m of B2B revenue.

Looking at revenue by vertical, casino accounted for the vast majority (71.5%) of Betsson’s Q1 revenue, at SEK1.01bn, while sportsbook’s contribution rose 29.2% to SEK384.9m. Revenue from other products declined 7.5% to SEK18.5m.

Lindwall noted that the sports betting vertical performed well during Q1, even if momentum had been checked by the suspension of sporting leagues and competitions around the world as a result of Covid-19.

“However, we now see a shift to sports such as table tennis and esports, it is an interesting increase in breadth which could be long term positive,” he said. “We have added further events to our offering and believe that when sporting events gradually re-enter the betting market, our sportsbook offering will be even more powerful than before.”

The quarter also saw significant strategic progress, with a trio of “milestones” achieved during the period. This saw Betsson add a new mobile-first brand, Jalla Casino, to its portfolio in Sweden, and acquire Gaming Innovation Group’s (GiG) B2C business, providing scope for expansion in Croatia and Spain.

It also signed its first purely sportsbook B2B deal, with Claymore Group’s Ibet brand. This was originally expected to see a Betsson-powered sportsbook rolled out in May, ahead of the Uefa Euro 2020 football championship. As this tournament has been postponed to 2021, the roll-out will now be completed when the sports calendar resumes.

Cost of services for the quarter rose 9.8% to SEK473.7m during the quarter, leaving a gross profit of SEK943.9m, up 5.0%. Operating expenses, meanwhile, grew 6.1% to SEK683.2m, largely down to growth in personnel costs and other external expenses, and offset in part by SEK62.2m in capitalised development costs.

This resulted in operating profit growing 2.1% to SEK260.6m, while pre-tax profit fell to SEK241.8m after financial expenses grew to SEK18.8m. As a result of Betsson’s tax payments declining to SEK12.3m, the operator’s net profit for the quarter rose marginally to SEK229.5m.

The operator also provided an update on the impact of Covid-19 on the business. It noted that with a broad geographical presence, a diverse product mix, not to mention a strong and sustainable financial position, it was in “very good shape” to manage market fluctuations and take advantage of growth opportunities.

It has shifted staff to remote working in mid-March, to protect the health and safety both of employees and people in the communities where it operates.

Across March and April, Betsson said it had seen an “influx” of new customers, and increases in casino and esports activity, mitigating the impact of sporting suspensions on the sportsbook vertical.

The operator predicted that industry consolidating is likely to be accelerated by the pandemic, meaning companies with stable finances were well-placed to snap up businesses under financial strain.

“The transition from offline to online gambling is likely to be accelerated as numerous land-based casinos, betting shops and similar have been forced to suspend business, making consumers look at online alternatives for entertainment,” Betsson added. “These trends increase Betsson’s organic growth opportunities and create opportunities for strategic acquisitions at attractive prices.”

Lindwall said he was confident the business would emerge from the “extraordinary situation” even stronger.

“Our successful strategy continues, I am proud of this quarter’s performance and look forward to the future with confidence.”