Cherry posts online loss as marketing spend rockets
Swedish operator increases marketing spend by 150%, causing profits to tumble
The online gaming division of Swedish operator Cherry has posted a loss of SEK10.9m in H1 2013 after the company invested almost SEK20m in a marketing push.
Despite Q2 turnover increasing 29% year-on-year to SEK29.4m and H1 turnover rising 32% to SEK56.8m, the group fell short of the SEK2m profit it posted last year.
Company CEO Emil Sunvisson cited the launch of its new SpilleAutomater.com brand and the re-launch of CherryCasino.com as reasons to remain optimistic, claiming the company to be in a “construction phase”.
“We prioritize development of our products and growth of the customer bases, before profitability,” he added.
Sunvisson said the online division was “burdened” by high bonuses and marketing costs, with Cherry looking to capitalise on the launch of new brands in the quarter. Marketing spend increased by more than 150% to SEK18.8m in the quarter, dwarfing the corresponding figure last year of SEK7.5m.
However, the spend has boosted new sign-ups by 65%, with more than 37,000 new players adding to the company’s player base which now totals in excess of 260,000.
The rise in sign-ups has contributed towards deposit amounts, which has risen for the 10th consecutive quarter. SEK62.3m was deposited in Q2 2013, a 16.2% increase on Q1.