European regulations hit Net Gaming Europe in Q3

European regulations hit Net Gaming Europe in Q3

Net Gaming Europe has reported a year-on-year drop in revenue, earnings and profit for the third quarter, with the online gaming affiliate business putting this down to struggles related to new regulations in certain European markets.

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.