European regulations hit Net Gaming Europe in Q3
Published 18th November 2019
Revenue for the three months to 30 September came in at €3.5m (£3.0m/$3.9m), down 24% from €4.9m in the same period last year.
Europe was the primary source of revenue for Net Gaming, despite the business experiencing issues as a result of new regulations in certain markets. North American revenue share fell from 23% in Q3 of 218 to 14% this year, but Net Gaming saw growth for the rest of world, with revenue share up to 16%.
Net Gaming was also harmed by a faster transition from cost per acquisition (CPA) to a revenue share model. CPA now accounts for 39% of revenue, down from 70% in Q3 last year, whereas revenue share doubled from 30% to 60%.
Operating expenses were up slightly year-on-year, with Net Gaming spending 9.4% more on personnel. Other external costs were also up from €773,000 to €832,000, due to higher consultancy expenses related to the development of sites in North America and Europe.
Lower revenue and higher spending meant operating profit slipped 47.0% from €3.1m to €1.6m. Earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 41% to €1.9m.
Profit before tax fell 44.6% to €1.2m, with profit after tax down 44% to €1.1m. In addition, Net Gaming noted profit from continuing operations slipped from €2.0m to €1.1m.
For the first nine months of the year, revenue was €11.0m, down by 20% from €13.8m at the same point in 2018. EBITDA for the year-to-date fell 30% from €9.2m to €6.4m, while profit after tax was also down 31% from €6.3m to €4.3m.