Mr. Green & Co AB Looks for Global Merger and Acquisition Options after Profitable Second Quarter in 2017
Mr. Green Ltd., the Malta based subsidiary of Mr. Green & Co AB, the Stockholm based online gambling operator, announced their fiscal figures for the second quarter of 2017 on Friday, the 21st of July 2017. According to the reports, the year over year revenues for the company saw a 37 per cent hike over the three month period. Revenues for the quarter were reported at SEK 287.8 million (EUR €30.1 million). Even share prices for the company saw a massive 13 per cent year over year increase.
A spokesperson from the company mentioned that this large growth that was observed in Q2 of 2017 for Mr. Green can be attributed to a number of factors. Firstly, the company had introduced a number of new products over the period that contributed to the large increase in revenues. These included the likes of services such their new sportsbook product, as well as their live casino amenities. The spokesperson for the operator also said that the growth in income was a result of improved customer communication as well as enhanced entertainment value in general.
Per Norman, the CEO of Mr. Green and Co., commented on the occasion. He was pleased to mention that the company had consistently shown steady growth over the last three quarters.
He said, “For the third consecutive quarter, we delivered sales growth that exceeded our target of annual growth of 20 per cent.”
He also highlighted that their growth had surpassed expert predictions and expectations and the company was close to achieving their profitability target of a 20 per cent Earnings Before Interest, Tax, Depreciation and Amortization (EBIDTA) margin.
Normal said, “We also came close to achieving our profitability target of an EBITDA margin of 20 per cent.”
The company’s EBITDA margin also saw a sharp increase from the same time last year as well as compared to the prior quarter. It rose to 18.2 per cent when compared to the second quarter of 2016. The figures from the same time last year were reported at 5.7 per cent. Additionally, the EBIDTA margin for Mr. Green was reported at 12.4 per cent in the previous quarter, Q1 of 2017. This was again attributed mainly to the strong revenue growth and enhanced marketing efficiency. This helped their EBITDA climb to a record SEK 52.4 million for the quarter. This was up by more than four folds compared to the same time last year, when figures were reported at SEK 12.0 million.
Norman continued and said that the success of the company in recent times can be attributed to their digital marketing expansion efforts as well as the keen attention they have been putting in to their customer care efforts.
He said, “Our focus on digital marketing and personalised customer communication is generating results.”
Besides introduction of new digital products, Mr. Green also invested in expansion efforts into a number of Western European countries. They benefited from this as these countries represented more than 41 per cent of the revenue from Q2 of 2017. This also marked a year over year growth of 81 per cent or SEK 118.7 million.
Although not comparable to their profits from Western Europe, revenue from Central, Eastern and Southern Europe also showed significant growth. The figures there showed a year over year improvement of 30 per cent or SEK 70.0 million over the period. This was mainly driven by a healthy growth that was observed in the Austrian market. The revenue in the Nordic regions also saw some growth. It had increased by 10 per cent to SEK 93.7 million over the course of the quarter. This was due to solid growth that was seen in Sweden, Finland and Denmark via the acquisition of Dansk Underholdning Ltd.
While revenues from all corners of Europe seemed to have done very well for Mr. Green Ltd., the fiscal figures from their businesses from rest of the world saw a decline. The fall was attributed to low volumes, which resulted in a year over year drop of 19 per cent to SEK 5.4 million.
The company’s customer acquisition efforts seem to have paid off in the second quarter of the year. Active customers grew by 26 per cent to 116,674 individuals at the end of Q2 of 2017. Deposit amounts also saw a healthy increase. Total deposits from customers climbed 34 per cent to SEK 808.6 million during the quarter.
With the expansions underway, the cost of services also saw an increase. The cost rose by 24 per cent to SEK 87.3 million. This was also mainly because betting duties payable by the operator rose by a steep 46 per cent to SEK 43.7 million over the period of time. Marketing costs were also up in the quarter. They spent SEK 92.5 million for marketing over the three months, this marked a 15 per cent year over year rise. At the same time, personnel costs were reported to have climbed by a full 10 per cent to SEK 35.2 million in Q2 of 2017. Other operating expenses were up by 31 per cent to SEK 41.1 million due to higher consulting costs. Most of this was accounted for by IT charges, mainly relating to the new product launches.
Despite the increases in almost every aspect of their operational costs, Mr. Green recorded a profit for the second quarter of 2017. The figures were reported at SEK 33.0 million for the three month period. This is a massive improvement compared to the same time last year, when the company reported losses of SEK 4.7 million instead.
For the six month period starting from the 1st of January 2017 till the end of June 2017, total revenue for the company grew by 31 per cent to SEK 563.9 million. This marked a year over year gain in profit of 162 per cent to SEK 51.9 million.
Norman reiterated that spring 2017 has been a period of high activity at Mr. Green. He mentioned that they were busy with the acquisition of the Danish online gambling firm, Dansk Underholdning Ltd. He also stated that the company had put in a lot of effort into customer retention over this period and were planning to keep investing in that.
Norman said, “During the spring, we maintained a high tempo in our activities relating to new product launches, integrating the acquisition of Dansk Underholdning and, in particular, taking good care of all our 116,700 new and existing customers.”
He mentioned that Mr. Green is not planning to slow down any time soon. There is a lot in the pipelines for the company and their future strategies will be revealed to us gradually.
He said, “We are not decreasing our pace and will continue to maintain a high tempo to deliver on our Mr Green 2.0 strategy.”
Norman listed a number of initiatives that will be launched by the company in the next six months. Amongst which, he mentioned a new gaming tool, a loyalty program, as well as their launch in the Danish Market.
He said, “Next in the pipeline is the launch of our new Green Gaming tool, the launch of number games in more markets, unveiling a new loyalty programme, introducing an upgraded version of our sportsbook and the launch of Mr Green in Denmark.”
The CEO emphasised that such high levels of activity will inevitably result in increased costs in certain areas, however, that does not mean there will be less effort placed on to customer care. The company hopes to retain the entire base of their existing players while they go in to new markets to acquire more.
Norman said, “As a result of these activities, our marketing costs will increase. We will also continue to create more personalised and relevant customer communication based on digital technology and customer preferences. It will be another very eventful six months for Mr Green.”
Norman also said that the company’s ambition was to be actively involved in the consolidation of the industry and it was well- positioned to implement acquisitions.
He added that while they are looking to bring in quality personnel into their team, they are firstly focusing on their geographic expansion initiatives
He said, “We are analysing candidates from across the value chain, although we are currently primarily concentrating on geographic expansion.”
Comparative Data from Q2 and H1 of 2017 and Q2 and H1 of 2016
Comparative data for the fiscal figures from the second quarters of 2016 and 2017 and the first halves of the two years highlight the massive growth the brand has endured in the last 12 months.
Revenues for Q2 of 2017 were reported at SEK 287.8 million, compared to SEK 211.2 million for Q2 of 2016. This marked a SEK 76.6 million or 26.7 per cent year over year increase compared to the same time last year. Half year figures also showed a growth. Revenues for H1 of 2017 were reported at SEK 563.9 million, compared to SEK 429.7 million that was reported for H1 of 2016. This marked a year over year growth of SEK 134.2 million or 23.8 per cent from last year.
Cost of services for Q2 of 2017 was reported at SEK 87.3 million, while that of Q2 of 2016 was reported at SEK 70.2 million. This showed that the year over year changes in cost of services was SEK 17.1 million or 19.6 per cent. Half yearly figures also showed an increase in cost of services. In H1 of 2017 it was reported at SEK 178.4 million, while the figures for H1 of 2016 were reported at SEK 136.6 million. This reflected a SEK 41.8 million or 23.4 per cent year over year change.
Capitalised costs that can be defined as the expense that is added to the cost basis of a fixed asset on a company’s balance sheet also saw an increase. The figures were reported at SEK 20.7 million for Q2 of 2017, while in Q2 of 2016, it was reported at SEK 14.9 million. This marked a SEK 5.8 million or 28 per cent year over year increase. The capitalised costs for H1 of were reported at SEK 36.9 million, while those of H1 of 2016 were reported at SEK 28.7 million. This marked a year over year increase of SEK 8.2 million or 22.2 per cent.
Marketing costs are defined as the total cost associated with delivering goods or services to customers. This can include anything from cost of promoting the goods or services to the distribution of the product to points of sale. Marketing costs for Mr. Green saw a hike for both the second quarter of 2017 and the first half of the year. Marketing costs for Q2 of 2017 were reported at SEK 92.5 million, compared to SEK 80.3 million, which was reported in Q2 of 2016. This marked a year over year change of SEK 12.2 million or 13.2 per cent. The figures fir H1 of 2017 were reported at SEK192.6 million compared to SEK 157.4 million that was reported for H1 of 2016. This marked a year over year change of SEK 35.2 million or 18.3 per cent.
Personnel Costs are defined as the total remuneration, in cash or in kind, payable to an employee in return for work done. Total personnel cost for Mr. Green Ltd. for Q2 of 2017 was reported at SEK 35.2 million compared to SEK 32.1 million from Q2 of 2016. This reflected a SEK 4.1 million or 11.7 per cent year over year increase. The costs for H1 of 2017 were reported at SEK 68.3 million compared to SEK 61.9 million that was reported in H1 of 2016. This marked a year over year change of SEK 6.1 million or 9.4 per cent.
Other operating expenses also saw an increase. Figures reported for Q2 of 2017 were SEK 41.1 million compared to SEK 31.5 million for Q2 of 2016. This marked a year over year change of SEK 10.4 million or 25.3 per cent. Additional operating costs for H1 of 2017 were reported at SEK 74.9 million, while that of H1 of 2016 was reported ay SEK 60.3 million. This reflected a SEK 14.6 million or 19.5 per cent year over year increase.
EBITDA for Q2 of 2017 was reported at 52.4 million, compared to SEK 12.0 million that was reported at Q2 of 2016. This marked a 77.1 per cent or SEK 40.4 million in year over year change. Figures for H1 of 2017 were reported at SEK 86.6 million compared to SEK 42.2 million for H1 of 2016. This reflected a year over year increase of 51.3 per cent or SEK 44.4 million.
Profit for the second quarter of 2017 was reported at SEK 33.0 million, compared to a SEK 4.7 million loss that was reported for the same period from the year before. This marked a 114 per cent year over year growth.
The company managed to pull in a profit of SEK 19.8 million in the first six months of 2016 but that grew several folds in the next 12 months. Profits for H1 of 2017 were reported at SEK 51.9 million. This marked a year over year growth of 61.9 per cent.
At the end of H1 of 2016, 30th of June 2017, the company held cash and cash equivalents of SEK 463.6 million compared to SEK 219.4 million from a year ago.
Mr. Green Ltd.
Mr Green Ltd. is an online gambling company that offers sportsbook and online casino services. The company is licensed and regulated by the Malta Gaming Authority (MGA) and has their head office in Sliema, Malta. Mr Green & Co AB is the parent company of the group, which is based in Stockholm, Sweden. The company is also listed on Nasdaq Stockholm’s main list. The online casino of Mr. Green was founded in late 2007 and launched a year later in 2008 by the three Swedish entrepreneurs.
In 2008, when Mr. Green was first launched it was one of the only operators that offered their customers games from several suppliers as well as a built- in seamless wallet solution. Today Mr. Green offers about 700 games from IGT, NetEnt, Nextgen, Quickspin, Microgaming, Quickfire, Bally Technologies, Yggdrasil, Play ‘N Go, Edict and Evolution Gaming.
Mr. Green is known to invest generously in their Green Gaming Programme. When a new customer signs up, gaming limits and rigorously investigated and set up.
In 2015, Mr Green acquired Italian operator, Mybet Italia, and was approved by the country’s gaming regulator, AAMS, to take over Mybet Italia’s operations. In 2017, Mr Green acquired the Danish online gaming company, Dansk Underholdning Ltd. They plan on expanding into the Danish market later on this year. In addition to its operations in Italy, Mr Green Ltd. was also awarded a UK Operator Licence in July of 2015, which further shows the company’s aim to increase the proportion of revenues from locally regulated markets.
Since being founded the company has gone on to collect several prestigious industry awards. In 2017 alone, the personnel from the company took home the EGR award for Nordic Operator of the Year, the EGR Award for Online Gaming Operator of the Year and IGA Award for Online Gaming Operator of the Year.