Betsson revealed on Friday that Latin America has surpassed other regions to become its largest market in the second quarter, contributing 36% to the company's total revenue of €310.2 million for the period. This shift is underpinned by a significant year-on-year revenue surge of 32%, amounting to €112 million, with CEO Pontus Lindwall noting particularly strong activity in sports and casino segments, particularly in Argentina, Peru, and Colombia.
Lindwall expressed satisfaction with this development, explaining, "We didn’t say from day one that this will be our biggest region in the future, but we tend to invest in markets where we see good traction and good possibilities for profitability, and LatAm is one such market." He highlighted that he anticipates greater structural growth from Latin America compared to Western Europe, where the company earned €64.2 million, comprising 21% of total group revenue for the quarter, marking an 8.3% increase from the previous year.
Conversely, in the Nordic markets, revenue experienced a 17% decline as Betsson reduced its marketing expenditure in Sweden and Denmark. Lindwall remarked on the intense competition and high customer acquisition costs in these markets, contemplating the regulations and challenges posed by unlicensed operators. He stated, "When we compare the effectiveness of our money, we prefer to invest in other markets than the Nordics."
Betsson continues to adopt a strategy focused on expansion through mergers and acquisitions (M&A). In their Q2 earnings call, Lindwall announced a new €75 million credit facility designed for working capital and future acquisitions. He stated, "Our strategy is to grow both organically and [through] M&A. This gives us some extra room for M&A." Historically, Betsson has concentrated on acquiring businesses that complement their existing operations and establishing a presence in new markets.
In terms of specific markets for potential expansion, Lindwall noted that he sees more opportunities in Latin America, especially in countries where Betsson currently does not operate.
During this quarter, despite a solid revenue performance largely spurred by the first half of the World Cup, a decline in business-to-business (B2B) revenue negatively impacted profitability. This downturn was attributed to reduced activity from one of their larger clients. On the positive side, active customers in its business-to-consumer (B2C) segment surged by 31.9%, totaling 1,825,487, although customer deposits dropped 7% compared to Q2 2022, amounting to €1.38 billion.
Gross profit for Betsson fell by 8% year-on-year to €177.5 million, reflecting a gross profit margin of 57.2%. Regulated revenues saw a rise of 17%, now accounting for 75.5% of total group revenue.
Lindwall also noted improvements made on the technical and product side to support operations during the World Cup, enhancing site capacity to accommodate up to five times the usual traffic. He expressed satisfaction with the sportsbook's performance, remarking, "We made a lot of UX enhancements and made it easy for customers to find things to bet on." Additionally, he mentioned early investments in artificial intelligence tools aimed at improving operational efficiency, stating, "I believe it’s [early] stage still, but we use AI basically across the board in the operations of the company. So it’s broadly used but I think there is way more to come."
