Don’t call it a comeback: Part 1

| By contenteditor
When Pontus Lindwall stepped back into the Betsson CEO role in 2017, the company was struggling, with growth slowing and costs rising. Fast forward to 2019 and it has just reported record revenue for the final quarter of 2018, and looks to be in better health than ever. Here he explains how he successfully got the business back on track. 

When Pontus Lindwall stepped back into the Betsson CEO role in 2017, the company was struggling, with growth slowing and costs rising. Fast forward to 2019 and it has just reported record revenue for the final quarter of 2018, and looks to be in better health than ever. Here he explains how he successfully got the business back on track.

“It’s been a fantastic year,” Pontus Lindwall says, looking back on Betsson’s 2018 performance. “It’s been a year of transformation for the company. We’ve been working really hard internally to improve our performance and increase efficiency, and I think we’ve come a long way on that. 

“Obviously we’ve had three quarters out of four with a really good financial performance as well, including all-time highs and strong EBIT margins, so also from that perspective it’s been a great year.”

Lindwall is now in his third stint as Betsson chief, having served as its chief executive from 1998 to 2011, after the business was spun off from his previous employer, Cherry. He then returned when his 2011 replacement, Magnus Silfverberg, departed for a role at decision support solutions provider Bisnode, and served as interim CEO from July 2015 to February 2016, when Ulrik Bengtsson was appointed to the role. Following Bengtsson’s abrupt departure in September 2017, he took charge of the business once again. 

However, the business he took over in 2017 was far removed from the one he had left the year before. Months after he returned to the CEO role, the operator reported a 26% decline in net income for the third quarter of the year.

“Despite a good finish to the quarter, we are not satisfied with the overall growth in the quarter and Betsson has taken action to improve performance,” Lindwall said at the time.

He cited the poor performance of the UK-facing NetPlay TV as a key reason behind the company’s struggles, and suggested the business needed streamlining in order to ensure that the decline in profit did not continue. Industry commentators have since suggested that the company’s M&A activity between 2011 and 2017 had caused the business to lose focus, as well as adding multiple complications to an already-complex business running a multi-brand strategy across a number of markets.

In that six-year period Betsson acquired nine businesses, shelling out €451.5m in total, taking on board operations running in a diverse range of platforms and managed by different teams.

Lindwall admits that just one acquisition is a major undertaking for any business. “On a general note, when you acquire companies and add pieces to the business it takes a lot of effort, in terms integration,” he says. “There are a lot of things that need to be done. If that takes up energy within the organisation it’s natural that you have less focus on the core business.”

He says that this informed a key part of his strategy to get the business back on track. The so-called ‘back on track’ plan saw Betsson shelve all M&A projects for the duration, in order to shift the focus on the company’s inner workings. Around 160 employees were also laid off, which Jesper Svensson, CEO of the operator’s Malta subsidiary, attributed to the company’s rapid acquisition strategy. Despite this, Lindwall says acquisitions will remain a key part of Betsson’s strategy going forward, supporting its organic growth. 

Back on track
The back on track strategy was launched shortly after he took over as CEO in 2017, beginning with an analysis of the company. “We found things that we wanted to change in many different areas,” Lindwall notes. 

He says it wasn’t entirely clear where the problems lay, and what needed done to solve them: “When you do [projects] like that, [there are] some things you’re convinced that if you change it, it’ll get better, in other areas it’s more a feeling.”

It’s worth noting that the history of the igaming industry is littered with companies that grew rapidly through mergers and acquisitions, then struggled to piece all the parts into a coherent whole. Bwin.party is probably the first that comes to mind, though others such as Betclic Everest Group and even The Stars Group – before the change in management, when it was still under the Amaya brand – had a tough job ensuring everything clicked into place.

Key to ensuring Betsson did not fall into the same trap as some of its peers was a focus on its core platform, one that Lindwall describes as “really powerful”. However, he adds, the operator is not slavishly devoted to having everything running off a single, central system. 

“We’d rather look at what is best for the customers,” he says. “A local platform in a certain market may have functionality we don’t have.”

Another key feature of the companies that have failed with integrations and managing M&A-related growth is the time it takes for the benefits of their turnaround strategy to be felt. For Betsson, this was not the case. 

“After two months we could see the first signs of improvement, then things kept improving,” Lindwall says. “I think we can say we are back on track now.”

However, he adds, the back on track plan is not yet complete; it will continue to be implemented until the end of Q1 2019, at which point it will be shut down. There will, of course, be other initiatives that will start immediately as it ends, but Lindwall says it is important to have clear breaks between different strategic projects.

“[When] you run a project that is quite intense, it’s fair to give the participants a firm start and end date and period for evaluation,” he says. “Even though the project is made up of hundreds of initiatives and not all of them will be finalised. It’s nice to shut down the project, evaluate, look at what was good, what wasn’t, then restart other projects.”

In the second part of iGamingBusiness.com's interview with Pontus Lindwall, published tomorrow, the Betsson chief executive discusses the next steps to further improve the performance of certain acquired assets, and plans for expansion into new markets.

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