Enlabs Releases First Half Results

The COVID-19 pandemic in Europe and the following lockdown in Latvia have been blamed for less than stellar returns for the operator in the first half of 2020. Enlabs, a veritable powerhouse of the European gambling market focuses much of its services on Eastern Europe and the Balkan region. Of the areas it operates, Latvia represents a substantial amount of its consumer base. A strict lockdown was imposed in this country as the viral outbreak became an increasing threat to public health. This has, in no small way, contributed to the decline in revenue for the company over the first six months of the year.

The city of Riga, Latvia.

Enlabs has pinned its reduced revenue for the first half of 2020 on the impact of the COVID-19 pandemic that has been affecting Europe. The closure of the Latvian gambling market hit the operator hardest, as a result of the prohibition of all forms of gambling in the country during lockdown. ©Aleksejs Bergmanis/Pexels

During the first half of the year, the revenue for Enlabs fell to €16.6 million, a drop of 9.9% compared to the takings for the same period in 2019. Of this revenue, the majority was generated through gaming endeavors; €15.3 million was generated through gaming, a drop of 9.5%.

Enlabs detailed in no uncertain terms what it deemed responsible for its drop off in profitability. The operator blamed the lockdown of Latvia. At the height of the COVID-19 pandemic, the Latvian government made the decision to shut down many of the services in the country which included all forms of gambling. As a result, Enlabs generated no money at all in its largest market for the last 2 months of the first half.

The operator did manage to offset some of its losses caused by the lockdown by using its platform to offer consumers a wide variety of quiz games. These games were played over 40,000 times in Latvia during the period of un-profitability.

In addition to this, Enlabs also capitalized on the lockdown period to develop its secondary brand that operates in Latvia: Laimz. This platform was launched in June and formed a part of the operator’s new strategy and business model that involves the roll-out of multiple brands into markets to improve its market share and offer more localized services to players.

The effect of the lockdown in Latvia was, understandably, significantly higher in the second quarter of the year. During this three-month period up to the 30th of June, the operator experienced a 35.0% decrease in its revenue. The revenue for the period was just €6.1 million in the country.

In other markets in Europe, Enlabs did not fare quite so badly. In Lithuania, the operator was prohibited from continuing any of its land-based endeavors from the 19th of March but was allowed to continue with its online business. The company was restricted in some ways, however, as it was prevented from continuing the same marketing strategy it had implemented prior to lockdown.

Another challenge that was brought up by the pandemic was the suspension of nearly all sporting events worldwide. This threw a spanner in the works for many in the gambling industry due to the huge amounts of revenue that are typically generated by the sports betting market.

Enlabs again acted in an attempt to offset the losses caused by the suspension of sports. The operator launched its first endeavor in the esports gambling industry. A partnership with EveryMatrix was announced to this end which saw a moderate level of success. Additionally, the company’s Bestpoker subsidiary had a strong first half, which helped to mitigate some of the losses caused by the Latvian lockdown.

The operator was also able to generate a relatively small, but not insignificant amount of money from other sources. During the first half of 2020, Enlabs generated €880,000 in revenue from media sources. These sources include affiliate marketing strategies but this revenue stream did see a decline of 10% compared to the previous year.

On top of this, a further €441,000 was generated by the company that was categorized as other revenue by the company. This same category accounted for €5.7 million of Enlabs’ revenue for the first half of 2019, so this has experienced a sharp decline in the space of a year.

When the costs of running the business are taken into account, Enlabs had to pay €5.2 million in direct fees. These fees are made up of the running costs of its services as well as licensing fees and gaming taxes. The figure of €5.2 million represents an increase of 3.8% year-on-year and resulted in a gross profit for the first half of the year of €11.4 million; a drop of 15.0%.

The company did experience a small decrease in its operating costs. During the first half, Enlabs spent €8.2 million on its operations which lead to pre-tax earnings of €3.2 million, a drop of 39.0% compared to the previous year.

This figure was then subject to €976,000 in depreciation and amortization costs and an additional €16,000 was spent by Enlabs in financial expenses. Additionally, a €21,000 income tax benefit was subsequently factored into the company’s earnings. These factors left the operator’s net profit during the first half the year at €4.3 million, a drop of 54.1% compared the same time frame of the previous year.

Enlabs’ Expansion

Enlabs used the period of standstill in Europe as an opportunity to expand its operations into Latin America. Historically, the brand of the operator has been one that focuses predominantly on the markets of Northern and Eastern Europe. In the first half of the year, Enlabs established its Optibet brand in Peru and Chile, however, and is now building a local team to expand further in these regions.

The company also acquired shares in other companies during the second quarter of the year. In this period, Enlabs bought a 29.9% stake of the Ninja Casino operator Global Gaming. This acquisition saw Enlabs become the operator’s single largest shareholder.

This purchase was described as a strategic investment for the company. It hopes that this significant milestone in its history will help it to reach new heights due to the complementary nature of the business models of Enlabs and Global Gaming. Both of these companies operate in similar markets, and the Ninja Casino brand is one of the most recognizable of all of the brands in the online gaming market.

Enlabs has stated that Global Gaming has an unparalleled propensity for international development that will allow both companies to dominate on a large scale. Enlabs has a proprietary gaming platform and is also licensed to offer multiple forms of gambling. It is also a company that is well versed in sales and marketing as well as a vast amount of sportsbook experience.

This experience will help it to develop the revenue of Global Gaming. Should the plan be successful, both companies will grow as a result, which Enlabs hopes will allow it to offset the reduced profits it has reported for the first half of this year.

Additionally, Enlabs is planning to roll out its Optibet brand into Sweden. This is its flagship offering. This expansion of the product was initially intended to be brought to Belarus, but the political upheaval in the country caused by allegations of rigged elections has caused the operator to reconsider its options.

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