Cherry poised to appoint new permanent CEO

16 August 2018

Cherry confirmed this (Thursday) morning that it is set to conclude its search for a new permanent CEO by the end of this month after the operator reported impressive second-quarter growth due to an “effective” marketing strategy.

Chairman of the board Morten Klein, speaking on an earnings call, hailed the leadership of acting president and CEO Gunnar Lind, who stepped into the role in May after Anders Holmgren was arrested on suspicion of insider trading.

“He’s done an excellent job and provided strong management, but we want him back on the board,” Klein said.

“We will appoint a permanent CEO and the candidates will include external and internal candidates. I expect interviews to be concluded in the next two weeks.”

Cherry’s group revenue rocketed by 41% to SEK753m (£65m/€72m/$82m), with earnings before interest and deductions spiking by 78% to SEK165m in the three-month period through to the end of June. Profit also surged from SEK15m to SEK91m year-on-year.

“Investments in marketing were significant and effective,” said Lind, reflecting on a quarter in which he said Cherry focused on the marketing of existing and new brands and of games developed in-house by Yggdrasil and Highlight Games.

Yggdrasil added in a separate announcement this morning that its total operating revenues increased by 65% in the second quarter to SEK66.7m, with 13 new licence agreement signed in the three months through to the end of June.

Earlier this month, Cherry secured a majority shareholding in Highlight Games by splashing out £5.4m to increase its stake by 22.9% to 60.4%. “We have high hopes for Highlight,” Lind added.

“Online gaming is expanding and strengthening its position in key markets, while the business area’s new brands are also rapidly building awareness and establishing a good customer base.”

As a proportion of the online gaming business area’s revenue, marketing increased from about 33% to 37% quarter-on-quarter to SEK222.5m, largely due to activations surrounding football’s Fifa World Cup, which began in June.

Explaining the increase, chief financial officer Christine Rankin said that the marketing efficiencies on offer in the second quarter had persuaded the company to increase its budget.

Klein said: “You have to remember that we have a strong position, especially in Sweden, and when you see some marketing working, you should be in a position to increase [investment].”

Lind echoed the point by adding: “As long as we see something work very well, then we will push a bit extra. It’s about keeping our position in the market.”