Betsson reports record-breaking second quarter results
Betsson has reported another record-breaking quarter with strong financial performance and high customer activity.
The company’s success is attributed to its diversified revenues in various products and markets, leading to robust cash flows and a strong balance sheet supported by continuous growth initiatives. Geographically, all regions experienced revenue growth, with Central and Eastern Europe and Central Asia showing notable progress.
Recent strategic moves, including the acquisition of leading Belgian sports betting operator betFIRST and a partnership with French casino operator Groupe Partouche to offer online casino games in regulated markets, position Betsson competitively in the Belgian market. The company’s sponsorship of the renowned Argentine football club Boca Juniors, featuring the Betsson logo on the team’s iconic match shirt, has boosted brand visibility and accelerates expansion in Argentina and Latin America.
EBIT soared dramatically
In Q2 2023, the company’s revenue surged by 27 percent, and operating profit (EBIT) showed signficiant growth, increasing by 82 percent compared to the same period last year to EUR 43.0 million (19.4 percent margin), and organically, it rose by 145 percent to EUR 57.8 million. Net income was EUR 36.6 million, corresponding to EUR 0.28 per share.. Both B2C and B2B sectors achieved new revenue records, and the EBIT margin increased to an impressive 23 percent. The reported corporate tax for the quarter was EUR -4.3 million, representing 10.5 percent of profit before taxes, with the effective tax rate subject to fluctuations depending on the tax base in the countries where Betsson has subsidiaries.
Betsson Q2 2023 Comparison of EBIT QOQ. (Source – SiGMA)
Dividend, trading update and customer deposits
Dividend: At the AGM a dividend was approved of EUR 59.7 million, EUR 0.436 (0.367) per share, with the first installment paid in June, while the remaining half will be distributed through a redemption program concluding in October.
Trading Update: The average daily revenue until 16 July 2023 is up 20.2 percent from the full third quarter of 2022, and adjusted for currency effects and acquisitions, it is 30.5 percent higher; the sportsbook margin has also been above the average margin during this period, with betFIRST included for the entire period from 1-16 July 2023.
Customer Deposits: During the quarter, customer deposits in all operational subsidiaries’ gaming solutions increased by 46.7 percent to reach EUR 1,240.6 million, while the number of registered customers grew by 12.6 percent to reach 28.1 million by the end of the second quarter; however, the number of active customers decreased by 10.2 percent to a total of 1,119,803 during the same period.
Comparison of Betsson customer deposits QOQ 2022/2023. (Source SiGMA)
Market development and revenue by region
The financial report highlights revenue growth and performance in various regions: Nordics, Western Europe, CEECA (Central & Eastern Europe and Central Asia), Latin America, and ROW (Rest of the World). Notably, the acquisition of betFIRST in Belgium and strategic partnerships in France strengthen Betsson’s market presence. The sponsorship agreement with Boca Juniors enhances brand recognition in Argentina and the region. The report also mentions the growth in Nigerian operations, contributing to the positive revenue in the ‘rest of the world’.
Betsson Q2 2023 Revenue by region. (Source – SiGMA)
Casino, sportsbook, poker and bingo
Casino products expanded significantly, with 305 new games, 21 of which were exclusive to Betsson’s brands. There was a strong focus on the live casino segment with continuous investment made to improve customer experience and solidify market position. The casino product achieved remarkable milestones in the second quarter, witnessing all-time highs in gross turnover and revenue. With a 47.4 percent increase in gross turnover and 35.1 percent increase in revenue, the casino segment contributed significantly, accounting for 70 percent of the Group’s revenue. Mobile casino revenue played a pivotal role, amounting to EUR 138.0 million and comprising 84 percent of the total casino revenue.
Sportsbook recorded significant growth, with a substantial increase of 32.4 percent in gross turnover, amounting to EUR 1,312.3 million compared to the second quarter of the previous year. The sportsbook revenue also saw a commendable rise of 12.7 percent, reaching EUR 69.5 million. Although sportsbook contributed 29 percent of the Group’s revenue, there was a slight decrease from the previous year’s 33 percent. The sportsbook margin remained stable at 8.2 percent (compared to 8.3 percent in the previous year), with the eight-quarter rolling average margin standing at 7.8 percent. Notably, mobile sportsbook revenue played a dominant role, accounting for 85 percent of the total sportsbook revenue, amounting to EUR 58.5 million.
Poker, bingo and other products recorded revenues of EUR 2.3 millon, a downturn of 8.9 percent. This represents 1 percent of total revenues.
Betsson 2023 revenue by product. (Source – SiGMA)
Group revenue, expenses and looking ahead
Group Revenue saw an increase of 27.2 percent to EUR 236.8 million. Revenue growth was reported at 42.6 percent.Significant growth in revenue from locally regulated markets amounted to an increase of 32 percent to EUR 85.9 million, contributing to 36.3 percent of the total Group revenue. License revenue from system delivery to B2B-customers rose to EUR 65.0 million, accounting for 27 percent of Group revenue, primarily driven by improved performance in casino and sportsbook products and the acquisition of KickerTech Malta Ltd, which added new customers and enhanced sportsbook capabilities. Mobile revenue accounted for a substantial portion of the total revenue, reaching EUR 196.4 million, making up 83 percent of the overall revenue.
Expenses decreased, resulting in a gross profit of EUR 147.5 million (66.5 percent margin). Operating expenses were EUR 104.5 million, with marketing expenses focused on Latin America. Personnel expenses increased due to salary revisions and geographic expansion, while other external expenses rose due to investments in product development and technology. Costs related to new market entries, including the US, amounted to EUR 12.5 million. Amortization and depreciation totaled EUR 11.3 million, and other operating expenses increased mainly due to foreign currency effects.
Looking ahead to the second half of the year, CEO Pontus Lindwall said that he is very confident going forward this year. The company will carry on focussing on geographic expansion to ensure long-term profitable growth and sustain competitiveness in the dynamic online gambling industry. Betsson will announce Q3 2023 on 26 October and the year-end report will be released on 15 February 2024. Betsson AB (publ) (BETS-B.ST) is trading at SEK121.04 (0.27%)
