Newgioco Reports First Quarter Profits
Italian operator Newgioco has reported an increase in revenue and a return to profit for the first quarter of 2020 compared to the same period of 2019. The company has attributed the growth it saw to the successful conversion of consumers from more conventional gambling forms such as physical venues to online and mobile gambling. Newgioco also generated a substantial amount of revenue from the adoption of its own sportsbook model.
Newgioco’s net revenue that was generated from its gaming endeavors was $10.2 million during the three months between the 1st of January and the 31st of March this year. This figure is an increase of 9.7% on the $9.3 million that was taken over the same time frame in 2019.
Those wagering money using Newgioco’s services during the first quarter of the year spent $92.4 million in total. This represents a 6.7% increase in the amount that punters bet in the same period last year. Of the money that was wagered, $86.1 million was paid out as winning bets.
Additionally, the gross gaming revenue for the quarter amounted to $6.3 million for the company’s online gambling services, a 46.5% increase on the figure from the previous year. This sum does not include the amount that was paid in tax in Italy, however.
The results that were published by Newgioco indicated that there was a steep drop-off in the land-based channels of its business. Overall, the spending on physical gambling games decreased to $23.6 million, a drop of 53.2% compared to the first quarter of 2019.
The reason that was given for this drop was the outbreak of COVID-19, the novel coronavirus that caused many deaths and a severe economic downturn on the continent. The pandemic caused Newgioco to close all of its brick and mortar gambling locations and, therefore, was responsible for this significant drop in revenue.
Before these venues were forced to close, they did generate some revenue, however. Of the money that was wagered in the physical locations, $18.2 million was paid out by Newgioco as settled bets. left some $5.4 million that was taken as gross revenue from this channel of the business which represents a drop of 10% compared to the previous year.
The amount of money that was spent to maintain its operations by the company was $9 million. This figure is 15.1% lower than the operating costs of the previous year. Additionally, the expenses that Newgioco paid on its sales dropped to $6.2 million from $7.4 million that was spent in the first quarter of 2019. On top of this, the company also managed to slash the costs of the administrative side of the business to $2.8 million from $3.2 million.
The money-saving measures that Newgioco implemented led to the company reporting $1.1 million in profit from its endeavors in the first quarter of 2020. When compared to the same period of last year, this is significant. In the first quarter of 2019, Newgioco posted a loss of $1.3 million.
Other expenses that the company had to pay amounted to $448,405 during this period. When these are accounted for, Newgioco was left with $685,647 before income tax was taken from its profits. This was good news for the business, that felt the sting of a $2.9 million loss for the first quarter of 2019.
Taxes Paid by Newgioco
When it comes to the taxes that were paid by Newgioco over the first quarter of the year, the company paid $1.5 million overall in ADM taxes. There was also $9,804 that was generated from software-related business ventures. Overall, this led to a total net gaming revenue of $10.2 million.
On top of this, Newgioco was also expected to pay a total of $528,038 on the profits it generated in income tax. Overall, this left the company with a total profit of $157,606 for the first quarter of the year. When this is compared to the post-tax loss of $3.1 million in 2019, it is easy to see that the operator will be pleased with the first-quarter results.
This figure then needed to be adjusted due to changes in currency across the business. When this had been considered, the operator was left with a total profit of $45,579. Whilst this may not seem overly impressive for a business of the scale of Newgioco, it is a distinct improvement on the loss of $3.2 million during the first quarter of 2019.
The Executive Responses to the Financial Reports
The executive of the business hailed the results as a successful implementation of a business model that was designed to take the company back into a profitable state. Newgioco made some significant changes to its executive group and its board members in months prior to the first quarter.
The chief executive of the company also praised Newgioco’s innovative approach to sports betting and its approach to the market itself. It has also been revealed that the operator is attempting to get its GLI certification for its business in the American market.
This certification would allow the company to better market its gambling machines to the American market, which it has described as state of the art. Newgioco believes that doing this will allow it to revolutionize the betting market in the US.
It remains to be seen how the outbreak of COVID-19 will impact the operator’s second-quarter results but the executive of the business is no doubt pleased with its financial report for the beginning of the year. The first quarter was encouraging for Newgioco, but the general consensus in the industry is that the second quarter and beyond is where the real economic impact of the pandemic will be felt on businesses.