Another strong year for Net Entertainment

Net Entertainment, the Swedish online gambling software provider, has released its results for the fourth quarter and full year of 2014, boasting record levels of revenues, operating profit, cash flow and proposed transfers to shareholders.

Highlights of the report include:

Fourth quarter:

* Revenues increased by 33.8 percent to SEK 241.1 (180.1) million;
* Operating profit up 44.5 percent y-o-y at SEK 80.3 (55.6) million;
* Operating margin improved at 33.3 percent (30.9 percent);
* Profit after tax amounted to SEK 77.1 (53.5) million;
* EPS of SEK 1.93 (1.42) before dilution and SEK 1.93 (1.41) after dilution.

Results for the full year included:

* Revenues increased by 35 percent to SEK 851.7 (630.7) million;
* Operating profit up 45.6 percent at SEK 261.7 (179.7) million;
* Operating margin was 30.7 percent (28.5 percent);
* Profit after tax amounted to SEK 243.2 (167.1) million
* EPS of SEK 6.10 (4.23) before dilution and SEK 6.09 (4.21) after dilution;
* 31 new licence agreements were signed and 28 new customers’ casinos were launched;
* Proposed transfer to shareholders is SEK 5.00 (3.00) per share.

The company reported key events of the fourth quarter including:

* Ten new licence agreements were signed and six new customers’ casinos were launched;
* For the first time ever, NetEnt developed a new game entirely in HTML5 for both desktop and mobile, a slot game based on the classic Universal Pictures movie The Invisible Man. Previously, desktop games have been developed in Flash and this is a change that is expected to bring economies of scale going forward;
* Within the partnership with platform supplier GameAccount Network, NetEnt games were launched with Eurobet on the regulated Italian market.

CEO and president Per Eriksson said that revenue growth for the full year, even adjusted for currency changes, is the highest yet for Net Entertainment, with a continuing strong operating margin. He observed that the main driver of the increase in revenues and earnings was solid underlying growth among customers.

“The number of game transactions also posted new records. In the fourth quarter, the NetEnt platform handled on average more than 2 billion transactions per month and for the full year 2014 the number of transactions increased by 32 percent to 21.4 billion,” he revealed.

In 2014 the company 23 new games for desktop and 13 new games for mobile, with the latter channel continuing to grow strongly, prompting management to increase mobile investment. In the fourth quarter, mobile games accounted for 17.3 percent of NetEnt’s total game win, compared to 9 percent in the same period in 2013.

Eriksson said that good progress has been made in penetrating the UK and Italian markets, with the company cooperating with licensing and regulatory regimes by phasing in a policy of refusing to re-licence operators in those countries who do not have the appropriate regulatory authority, despite the negative impact this might have on company revenues.

Arrangements are well in hand for activity in the North American and Spanish markets.

In the live dealer vertical, Net Entertainment signed 24 new customer agreements and 28 customers launched the product. The global market for Live Casino is expected to grow on average by 19 percent per year until 2018.

At the end of 2014, the company held agreements with 18 new customers that had not yet launched, including Rational Group and bwin.party.