New European regulations hit Net Gaming in first half

New European regulations hit Net Gaming in first half

iGaming affiliate business Net Gaming Europe has put a decline in revenue and profit in the first half of the year down to the impact of new regulations across the European market.

Published 19th August 2019

Revenue amounted to €7.6m (£6.9m/$8.4m) in the six months to June 30, 2019, down from €8.9m last year.

External expenses were down to €1.3m, but personnel costs jumped from €1.6m to €2.0m and other operating expenses climbed from €1,000 to €33,000.

Operating profit fell from €5.9m to €4.2m, while profit before tax slipped from €4.5m to €3.4m and Earnings before tax, depreciation, interest and amortisation EBITDA from €5.9m to €4.6m.

Net Gaming said the impact of new regulations were felt by operators in Q2, with revenue for the three months to June 30 down 24% year-on-year to €3.5m.

The business also noted an accelerated transition from cost per acquisition to revenue share, saying that this will have an adverse effect in the short term, but strengthen growth over time.

EBITDA for Q2 was down 32% to €2.0m and profit after tax fell 41% to €1.2m. Operating profit was also down from €2.0m to €1.9m, while profit for the period slipped from €2.1m to €1.2m.

Marcus Teilman, president and chief executive of Net Gaming, said: “As expected, we were affected by continuing political regulation effects in the European market in the second quarter.

“Our ambition is to continue focusing our efforts on increased geographical distribution of our revenue, partly through acquisitions and partly through organic growth in both existing and new geographical markets.

“Continuous minimisation of the company’s risk by spreading political risk over several geographical markets is a strategy we will be pursuing going forward.”

Teilman also highlighted Net Gaming’s acquisition strategy, which saw it buy Sweden-facing in Q2 and UK digital brand after the end of the quarter.

“With the acquisitions, we are increasing the pace within the betting vertical, while adding two new revenue pillars in regulated markets we believe to have good long-term development potential,” he said.