Betsson reported a record third quarter with increased revenue and active customers, yet profits experienced a sharp decline compared to the previous year. In an interview, Chief Executive Pontus Lindwall discussed the factors impacting margins and expressed optimism about the company's earnings trajectory.
In Q3 2026, Betsson's group revenue hit €326.5 million, marking a 10% increase from €295.8 million, bolstered by the consolidation of Rhino Entertainment Group starting in August. However, earnings before interest and taxes (EBIT) plummeted 31% to €46.1 million, resulting in a reduced margin of 14.1%, down from 22.6%. Earnings before interest, taxes, depreciation, and amortization (EBITDA) also fell by 23% to €63.4 million. Net income decreased sharply to €28.2 million, down from €50.1 million, equating to earnings per share of €0.19, compared to €0.34 a year earlier. Operating cash flow decreased to €54.5 million from €64.8 million.
Lindwall advised investors to pay attention to sequential improvements. EBIT increased 9% from the second quarter, marking two consecutive quarters of growth, and the margin improved from 13.6%. “Maybe the most important thing for an investor is that we increased EBIT sequentially,” Lindwall remarked. However, he refrained from predicting when the company would regain year-on-year profit growth, stating, “It’s hard to tell when we will see profit growth compared with the same quarter last year. I don’t know that yet, but we are certainly moving in the right direction.”
The gross profit declined by €9 million to €181 million, with the gross margin falling to 56% from 64%. Notably, revenue from locally regulated markets surged by 35%, now constituting 78% of total revenue, a rise from 64%. This shift contributed to an increase in gaming taxes by approximately €28 million, reaching a record level.
When asked if Betsson, which has a significant presence in Latin America, is simply a lower-margin company, Lindwall affirmed this perspective, noting, “Yes. We are now growing a lot in Latin America, in a couple of regulated B2C markets. Those come with a different cost structure and, most importantly, a different tax structure.”
Latin America accounted for 36% of Betsson’s revenue, with growth in the region reaching 52%, driven by an increase in active customers, which rose 40% to nearly 1.9 million. On the impact of the World Cup, Lindwall stated, “It lifts volumes a bit, but even more so it lifts the number of active users, and that’s important. So I hope we can manage to keep some, or most, of those customers going forward.”
While Western Europe saw a 14% growth, reaching a record quarter led by Italy, the Rest of the World segment more than doubled, thanks to Rhino's Canadian business. However, Central & Eastern Europe and Central Asia faced a 17% decline due to reduced B2B license income, and the Nordics saw a decrease of 10%.
Casino revenue climbed 14% to an all-time high, representing 77% of total revenue, while sportsbook revenue grew marginally by 1% to €72 million, with the sportsbook margin dipping to 8.1% from 8.8%.
As regulatory challenges increase, B2B revenue fell by 39%, or €30 million, primarily due to decreased income from one major customer. In contrast, B2C revenue grew by 28%. B2B now only makes up 14% of total revenue and saw a slight dip from Q2. Lindwall expressed a desire for stronger B2B growth, mentioning stabilization for the largest customer: “We don’t know what it will look like in the future, but we certainly hope it will continue to build up from here.” He is optimistic that technology acquisitions from Rhino will strengthen the B2B segment moving forward.
Discussing regulatory issues, Lindwall criticized some proposed taxes in Latin America as reflecting a misunderstanding of the industry, stating, “Any kind of tax on turnover doesn’t really work for this industry.” Betsson avoided significant investment in Brazil, thereby mitigating the impact of the country’s near-total ban on online gaming, which Lindwall termed “a shocking decision,” but anticipated change, noting, “No country has managed to shut down internet gaming and get away with it.”
As of the end of September, Betsson held €98.3 million in net cash, down from €220.0 million the year prior, following an expenditure of approximately €59 million on Rhino. Lindwall remains vigilant regarding potential market opportunities, saying, “We could do a sizeable deal. Given the structure of our balance sheet, we wouldn’t be afraid to take on some more debt to do a bigger acquisition.” He also expressed enthusiasm for prediction markets despite regulatory hurdles in most of Betsson’s markets, asserting, “Yes, I would definitely press that button,” if a regulated framework were available in Europe, which could enable them to offer a lower-tax product.
Looking at the beginning of Q4, Betsson reported average daily revenue from the start of October until the 18th was 11% above the average for Q4 2025, despite a sportsbook margin significantly below the eight-quarter average. For the first nine months of the year, revenue totaled €922.1 million, a 3% increase, while EBIT declined by 39% to €122.3 million.
