A good first quarter for Net Entertainment

Swedish online gambling software provider Net Entertainment AB has released its interim financial results for the first quarter of 2010 showing a 28 percent year-on-year increase in revenues to $12.15 million.

Stockholm-based Net Entertainment revealed that its operating profit for the first three months of the year rose by 21 percent over the same period in 2009 to $4.93 million although the margin dropped 2.3 percent to 40.7 percent.

Net Entertainment recently signed a deal for its CasinoModule solution with Gioco Digitale, a subsidiary of leading online operator Bwin Interactive Entertainment AG, while agreeing an extension with Betsson Malta Limited. It revealed that profits after tax for the first quarter of 2010 dropped slightly to $4.28 million when compared to the same period last year while revenues rose by 41 in ‘local currency’ and 7.7 percent quarter-on-quarter.

“Despite that no large operators were launched during the first quarter, revenues have increased significantly compared to the previous quarter, which emphasises continued strong underlying market growth,” said Johan Ohman, President and Chief Executive Officer for Net Entertainment.

“The weakened Euro towards the Swedish Krona had a negative impact on the increase in local currency during the same period. The increased gaming activity has continued during the second quarter, which, together with a number of not yet launched tier-one operators, creates good conditions for future strong growth.

“The sales success of several new tier-one operators is very pleasing. It is the

result of our focus on quality and high entertainment value. In order to manage the increase of new operators, we continue to develop the company and strengthen the organisation, which creates room to focus on business opportunities and, at the same time, meet the increased demands as the market matures.

“The increased development pace of both the games and the platform has resulted in an increase in capitalized development costs. These are also affected by the development process of adjusting CasinoModule to meet the regulation requirements in Italy, a market that is expected to be important to us in the future.

“In addition, the games are becoming more complex and require a more intense development cycle. Games such as Gonzo's Quest, which was launched during the first quarter, are important to secure our position as a premium supplier. The higher development costs for this type of game are, however, compensated by higher revenues.”