Net Gaming Focuses On Limiting Covid-19 Impact

[image credit : Net Gaming]

Online gaming affiliate business Net Gaming Europe has said expects the novel coronavirus (Covid-19) pandemic to have a “limited” impact on business, with a quarter-on-quarter drop in revenue forecast for the first three months of 2020.

Net Gaming said revenue for the three months to 31 March 2020 is likely to come in at €3.1m (£2.8m/$3.4m), down 5% from the final quarter of 2019.

Almost 90% of Net Gaming’s revenue is expected to be generated from its casino and poker verticals, with this split 73% to casino and 16% to poker. Net Gaming said that both segments performed well in the period with increasing traffic and no negative effect from coronavirus.

“The demand for casino and poker traffic currently shows a positive trend, which is expected to continue throughout the second quarter of 2020,” Net Gaming explained.

Net Gaming noted that it only has limited exposure to betting, with just 9% of its revenue in Q1 to be generated from the vertical. As such, it only expects a limited impact from the postponement and cancellation of major sports events around the world due to coronavirus.

The affiliate said it expects part of this revenue, which would have been recorded in the first half of 2020, to be postponed until the second half of the year or 2021, depending on when events are rescheduled.

Focusing on geographical performance, Net Gaming said 61% of total revenue in Q1 is will be generated from Europe, compared to 18% in North America and 21% from other countries.

Revenue share agreements, Net Gaming said, are expected to constitute around 60% of revenue for the period, while cost per acquisition is set to represent 40% of total Q1 revenue.

Looking at spending, the business said operating costs for the first three months of the year are set to remain relatively constant compared to Q4 2019. However, it did note that direct costs related to the betting vertical were limited in Q1, with only a few employees working directly with betting assets at present due to the widespread sporting shut-down.

Net Gaming said that lower revenue is expected to push earnings before interest, tax, depreciation and amortisation down 11% quarter-on-quarter to €1.7m, with a margin of 55%.

Operating cash flow for Q1 is forecast to amount to around €1.7m, with a cash conversion to adjusted free cash flow of 86%, while cash and cash equivalents has been estimated to be €2.6m.

Robert Andersson President of Net Gaming, said, “Covid-19 has disrupted societies across the globe. We are continuously evaluating the current situation and continue to adapt our organisation to the ever-changing circumstances.

“A majority of Net Gaming’s revenues are generated from casino and poker, which have developed strongly in March. The length of current disruptions to sports events globally remains hard to predict.

“However, Net Gaming expects limited financial impact from sportsbetting and remains committed to its long-term strategy of further growth within the betting vertical.”

In terms of the other measures that Net Gaming has taken to limit the impact of coronavirus, the business said it has enacted a contingency plan to minimise any disruption and to guarantee the safety for its staff and partners.

This has included allowing employees to work from home and replacing physical meetings with virtual alternatives. According to Net Gaming, this has meant that productivity has remained intact while there have been no effect on overall operations.

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