Leading iGaming developer NetEnt has implemented changes to further strengthen competitiveness and increase efficiency. Last year, the company obtained rival company Red Tiger. Ever since, there have been fluctuations in both earn-out and revenue. The new integration aims to stabilize the situation.
Strengthening the Stand
Let’s remind ourselves. The Swedish company has already hinted at the current integration. Ever since the acquisition, NetEnt showed ambition to further integrate Red Tiger.
According to NetEnt, the acquisition “exceeded expectations and offers significant potential synergies”. Moreover, it “increased efficiency and economies of scale”.
Now, in 2020, NetEnt is implementing a reconstruction to speed up the full integration within the NetEnt group. As a result, several functions are relocated and 120 full-time positions were fired in Stockholm and Malta.
The measures, although seemingly drastic, are in line with NetEnt’s strategy to continuously improve all parts of the business. The firm looks to strengthen competitiveness and increase value creation in the company.
Additionally, NetEnt has great expectations of these changes. Namely, the Swedish gaming giant anticipates that the restructuring will result in annual savings of approximately SEK 150 million. The representative stated that the first change in the results will be noticeable in the first half of 2020.
Not Easy, but Necessary
The restructuring costs of approximately SEK 25 million, NetEnt will report as non-recurring items. It will likely negatively affect operating profit for the Q1 2020.
Moreover, NetEnt added that he effects of COVID-19 are hard to predict. The rapidly changing conditions are making predictions even more difficult. Nevertheless, the global pandemic has not yet affected NetEnt’s operations. Revenues are in line with market expectations during Q1 2020. The firm expects them to be in the range of approximately SEK 490-500 million.
Therese Hillman, Group CEO of NetEnt, provided her commentary on the changes.
“We are now entering the next phase of the integration with Red Tiger, whose sellers are also shareholders of NetEnt. The integration will unleash the full potential of our shared capabilities.”
Hillman added that the alteration would devise “significant efficiency gains in games development”. Furthermore, she expects them to “strengthen [their] position as the market leader in online casino”.
