Cherry revenues up 44% as company hails “excellent” 2018
Full-year revenue climbs to SEK3.2bn as company targets new markets
Cherry AB has reported a 44% year-on-year rise in its consolidated revenues for 2018 as acting-CEO Gunnar Lind hailed an “excellent” year for the group.
Full-year consolidated revenues topped SEK3.2bn, surpassing the SEK2.3bn generated during 2017, and the company attributed 8% of this rise in consolidated revenues to currency fluctuations.
Cherry’s profits more than tripled during 2018, increasing to SEK487m from the SEK110m generated during 2017.
Online gaming, which accounted for 80% revenue of group revenues, grew by 49% in Q4 to SEK722m (41% organic growth).
Growth was driven by increased marketing investment and a corresponding jump in active users.
Gunnar Lind, acting CEO of Cherry, said: “Cherry’s development in 2018 can be summarised with one word: excellent. On almost all measurements, our operations delivered in line with our expectations.”
Company EBITDA increased by 89% YoY during 2018, rising to SEK813m from a previous 2017 high of SEK429m, while EBITDA margin increased from 19% to 25%.
Spend on game development increased by 55% during Q4, rising to SEK79m, a rise which the company attributed to higher staffing levels and a “higher external customer mix”.
Company spend on online marketing rose by 87% during Q4 2018 to SEK72m, as the company prepared for the new Swedish regulated market and its forthcoming entry into the US market.
The financial report is Cherry’s final report before the company goes private, following the successful takeover of the business by Austrian private equity firm EE Intressenter earlier this month.
Gaming analysts Regulus Partners said Cherry had delivered “a strong end to a good year, especially in terms of organic growth” but raised concerns about the company’s EBITDA margins being “more fragile than initially apparent” given it pays little local tax.
Qualifying this statement, Regulus said new owners EE Intressenter should reposition Cherry’s cost base to make room for Swedish point of consumption taxes and regulatory changes.