New Swedish regulations hit Global Gaming in Q1
Nasdaq Stockholm-listed operator Global Gaming has confirmed its expectations that new online gaming regulations in Sweden would have a negative impact on revenue and profit after tax during the first quarter.
Revenue for the three months through to March 31, 2019 totalled SEK162.1m (£13.0m/€15.0m/$16.9m), down by 18% on the SEK198.6m in the corresponding period last year.
Global Gaming has put this expected decline primarily down to new laws in Sweden, as well as a number of technical problems it encountered in January. Its Ninja Casino brand was responsible for 93% of all revenue in the quarter.
The operator has said that while the new regulations in Sweden are working well and achieving many of the aims set out by the regulator, the market has evolved at a speed that was difficult to predict and all companies active in the country have encountered difficulties trying to adapt to the changes.
Global Gaming also noted a sharp increase in operating expenses, with this figure up from SEK81.9m in Q1 of 2018 to SEK120.8m in the first quarter of this year.
Marketing expenses jumped from SEK63.5m to SEK82.8m, mainly due to ongoing investment in the Ninja Casino brand, while group personnel costs climbed from SEK12.5m to SEK26.3m as total staff numbers increased from 129 to 144.
Other external costs were up from SEK7.8m to SEK11.7m, while Global Gaming saw capitalised development costs hit SEK3m and depreciation SEK1.8m.
As a result of lower revenue and higher spending, Global Gaming reported an operating loss of SEK43.3m, compared to a profit of SEK29.3m in the opening quarter of 2018.
Its loss after tax amounted to SEK41.5m, down from a profit of SEK25.8m last year.
Tobias Fagerlund, who was named as the new CEO of Global Gaming last month, said that while the operating loss is disappointing, he is confident of a positive future for the operator.
“We are fully working on the package of measures that was launched at the beginning of the year, and at the same time are looking at the company’s strategy to take back the initiative and create long-term and sustainable growth,” he said.
“Based on what we know about the second quarter so far, we also see some stabilisation, although it is too early to establish a trend break.”
Fagerlund noted that Global Gaming was able to respond to declining growth in Q1, by introducing a programme of measures to balance revenues and costs, including marketing and increased risk diversification.
“The programme did not get full effect in the first quarter, but we continue to work on the implementation,” he said. “After the end of the quarter, the board has also implemented a management change in order to intensify and expand the efforts.
“Based on preliminary results in April, the decrease in sales has levelled off, and at the end of the month we were able to observe some growth - albeit from new lower levels. It is a highlight in what has so far been a very turbulent year.”