Global Gaming doubles 2018 revenue despite Q4 slow-down
Ninja Casino operator Global Gaming has reported a 100.0% increase in revenue for 2018, despite admitting that it had missed its internal revenue and earnings targets in the fourth quarter of the year.
Full-year revenue grew to SEK915.9m (£74.9m/€87.2m/$99.2m), up from SEK458.0m in the prior year, which was accompanied by a 90.1% increase in operating expenses for the gaming business, to SEK362.7m. As a result gross profit for the year soared 107.0% to SEK553.2m.
Global Gaming’s rapid growth saw group operating costs rise significantly, which was largely down to SEK294.5m in marketing expenses, up from SEK85.8m in 2017. Total expenses rose to SEK404.6m, leaving an operating profit of SEK148.6m.
After taxes of SEK23.5m, Global Gaming’s net profit for 2018 amounted to SEK125.1m, up 15.5% year-on-year.
For the fourth quarter of 2018, ended December 31, 2018, Global Gaming reported a 35.4% increase in revenue to SEK236.4m. The operator’s Ninja Casino brand accounted for 89% of revenue during the period, with 77% of customers gambling via mobile.
It said that Q4 revenue had been adversely affected by a number of technical projects carried out during the quarter, including migrating core functions from Curacao to Estonia, launching Ninja Casino in the Estonian market and migrating to a new technical platform. This, Global Gaming said, had impacted revenue, alongside increased marketing and personnel expenses resulting from the businesses’ rapid growth.
Gaming-related expenses grew to SEK93.8m, with gross profit up 34.3% at SEK142.6m. However, operating costs rose to SEK124.6m, largely as a result of marketing expenditure of SEK93.8m and personnel costs of SEK25.9m. This left a pre-tax profit of SEK18m, and a net profit of SEK16.1m, a 57.5% year-on-year decline, once tax of SEK1.9m had been paid.
The fourth quarter performance has prompted Global Gaming to implement a strategy to balance revenue and costs. This will see cost-saving and streamlining measures introduced, while its marketing strategy will be reviewed.
In Sweden, this will see a shift away from brand-driven marketing to a more targeted and conversion, focused approach, using channels such as social media. This, Global Gaming said, was possible as a result of Ninja Casino having already developed strong brand awareness in the market.
The operator’s chief executive Joacim Moller said that the dynamics of the Swedish market were evolving as a result of regulation.
“We still have good traffic coming to our sites, but the introduction of self-exclusion (Spelpaus), mandatory limits and more have affected gambling behaviour, and we follow developments carefully to adapt to the changing landscape in the Swedish gaming market,” he said.
He added that early performance in Sweden had been impacted by a technical issue affecting limit-setting controls on the site, which resulted in involuntary limits being set for all players while this was fixed.
Moller also noted Global Gaming’s advertising had come in for a lot of scrutiny. In December the Swedish Consumer Ombudsman filed a lawsuit against the operator’s Malta-based Elec Games C1 subsidiary, alleging breaches of advertising regulations. Global Gaming has responded by arguing that this focuses on past activity, under out-of-date legislation that has been replaced by the new Gaming Act.
Moller argued that the discussion around excessive gambling advertising has to look at direct marketing, via email and text, carried out by operators, as well as the use of bonus promotions across all markets.
"It has been our promise to the players not to drown them in offers and therefore we have never collected data to be able to make offers when [users] won or had not played for a while,” he said. “We also never market free games or bonuses.”
He noted that research had suggested such offers affect gambling behaviour, and that new limits to offers and bonuses would be important if consumer protection was to be strengthened.