Positive Q1 results from Netent

05.05.2008

The Swedish online gambling turnkey provider and games developer Net Entertainment is off to a good start to 2008, with positive Q1 results showing improvements in sales, profits and margins.

Highlights of the interim report released this week include:

• Net sales increased by 27 percent to SEK 42.8 million.

• Operating profit increased by 35.1 percent to SEK 16.9 million.

• Profit after tax increased by 34.4 percent to SEK 15.4 million.

• Net profit margin was 36.1 percent, up 2 percent on previous quarter.

• Operating margin was 39.6 percent.

• 4 new license agreements for the firm's CasinoModule system were signed.

• The company received a pilot order for its CasinoCafé 'kiosk' system.

Johan Öhman, CEO of the company said: "Net Entertainment achieved strong development in the first quarter, with a 27 percent increase in net sales over the same period in 2007 and a 17.7 percent increase over the previous quarter.

"Profitability continues at a healthy level and the operating margin rose to 39.6 percent for the quarter. Growth is being driven by the generally strong growth in the market, successful new games and new customers opening a number of casinos in the quarter.

"Net Entertainment continues to make good sales progress and four new licence agreements for CasinoModule were entered into during the quarter. One of the agreements is with leading Internet operator, Bet-at-home.com. In addition, a pilot order for CasinoCafe was secured."

Ohman went on to reveal that during the quarter, Net Entertainment has pursued its recruitment drive in order to strengthen the organisation and reduce its dependence on consultants. The company has also started the development of contracts in the Ukraine in a bid to accelerate the pace of development and to increase cost efficiency.

The company plans to switch to the Swedish small cap exchange, hopefully in the thrid quarter of this year, and Ohman revealed that Net Entertainment's Board of Directors is to file an application to move its exchange listing to the OMX Exchange in Stockholm. The transition to a different exchange will increase investor awareness in Net Entertainment stock and likely its liquidity.

Ohman predicts that the online gaming market will continue experiencing positive growth, benefiting the company through the organic growth of its current licensees.

"Our highly competitive product portfolio and continuing focus on the development of new, innovative games also present us with excellent opportunities for entering into agreements with new customers," he said. "I am convinced that our healthy order book, strong product portfolio and brisk pace of development provide us with excellent opportunities for continued profitable growth."

Ohman revealed that the second quarter indications point to a strong start for Net Entertainment, too, with strong developments in the sales pipeline.