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2016-10-21

NetEnt: Interim report January - September 2016

Quote from Per Eriksson, President and CEO
- "NetEnt's growth strategy keeps delivering results - we grow on new
markets, with new products and with more customers. During the
quarter we launched our games on the regulated market in Romania and
we rolled out our live casino product for mobile. The UK continues to
be an important growth driver but the weaker pound had an estimated
negative effect of about three percentage points on revenue growth
compared to the same quarter last year. Our ambition to achieve
continued strong sales growth in 2016 remains."

Third quarter 2016

· Revenues for the third quarter increased by 27.7% to SEK 357.4
(279.8) million

· Operating profit amounted to SEK 129.4 (105.3) million, an
increase of 22.9%

· Operating margin was 36.2 (37.6)%
· Profit after tax amounted to SEK 119.2 (97.6) million, an increase
of 22.2%

· Earnings per share amounted to SEK 0.50 (0.41) after dilution
· 11 new customer agreements were signed, 8 new customers' casinos
were launched

First nine months 2016

· Revenues for the first nine months increased by 30.3% to SEK
1,054.8 (809.3) million

· Operating profit amounted to SEK 380.0 (279.8) million, an
increase of 35.8%

· Operating margin was 36.0 (34.6)%
· Profit after tax amounted to SEK 354.5 (258.3) million, an
increase of 37.2%

· Earnings per share amounted to SEK 1.48 (1.08) after dilution
· 32 new customer agreements were signed and 22 new customers'
casinos were launched

Important events in the third quarter

· NetEnt launched games with Rank Group in the UK
· NetEnt games were launched with several operators in Romania
· Mobile live casino was rolled out to customers for the first time

Comments by Per Eriksson, President and CEO

Continued strong growth in the third quarter
The third quarter featured continued large demand for our products and
high growth. Revenues amounted to SEK 357 million and operating
profit was SEK 129 million. Compared to the same period last year,
revenues increased by 28 percent and operating profit rose by 23
percent. The operating margin was 36.2 percent and cash flow
generation was strong. Cash flow after investments amounted to SEK
132 million in the quarter, representing an increase of 56 percent
compared to last year. We signed eleven new customer agreements and
launched our games with eight new customers. The number of gaming
transactions in our systems was 8.6 billion in the quarter, an
increase of 31 percent compared to last year.

Sustainability and growth on regulated markets
Promoting responsible gaming is fundamental to NetEnt and a condition
for the licenses that we hold. We are pleased to see that more
countries regulate online gaming. This leads to better sustainability
for the entire industry and also gives us a competitive edge over
smaller competitors. During the quarter we launched our games with
several operators in Romania, which is in line with our growth
strategy to expand on regulated markets. Since our market entry in
Spain last summer, we have launched our games with more than 10
operators and certified over 60 of our games. The Spanish market has
shown strong growth this year, which is starting to be reflected in
our revenues. Great Britain continues to be an important growth
driver but the weaker pound had an estimated negative effect of about
three percentage points on revenue growth compared to the same
quarter last year. In August we launched our games with Rank Group,
one of the largest operators in the UK. In the US, NetEnt continues
to gain market shares on the online casino market in New Jersey and
we hope that Pennsylvania will soon be the next state to open up for
online casino gaming. We also aim to enter the Canadian market and as
a first step we will apply for a license in the province of British
Columbia in the fourth quarter.

New innovative products launched
Mobile gaming continues to be an important growth factor. Revenues
from mobile increased by 83 percent compared to last year and
accounted for 40 percent of revenues in the quarter. In September we
rolled out NetEnt Live Mobile, our latest innovative product that
really enhances the player experience and improves the way that
operators use live casino. We have applied the latest technology in
streaming, sound and video, and as a mobile player, this is about the
closest you can get to a real-life casino experience. Following
successful game releases of Guns N Roses and Jimi Hendrix earlier
this year, in September we launched the third game in the trilogy
NetEnt Rocks, Motörhead, which is off to a really strong start so
far.

Future outlook
We see growing demand for our products and our ambition to achieve
continued strong sales growth in 2016 remains. We increase the number
of employees, develop our platform, adapt the Company to new
regulated markets and integrate more and more customers. As
previously communicated, we foresee higher costs and larger
investments in 2016 than last year - we keep investing to enable
continued strong growth going forward.

Presentation of interim report
On Friday, October 21, 2016, at 9.00 a.m. the interim report will be
presented by CEO Per Eriksson live via audio webcast. The
presentation can be followed in real-time on NetEnt's website at
https://www.netent.com/en/section/invest/.

For additional information please contact:
Per Eriksson, President and CEO, NetEnt AB (publ)
Phone: +46 8 57 85 45 00
per.eriksson@netent.com

This information is information that NetEnt AB (publ) is obliged to
make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency of the
contact person set out above, at 7:30 CET on October 21, 2016.

About NetEnt
NetEnt AB (publ) is a leading digital entertainment company, providing
premium gaming solutions to the world's most successful online casino
operators. Since its inception in 1996, NetEnt has been a true
pioneer in driving the market with thrilling games powered by a
cutting-edge platform. NetEnt is committed to helping customers stay
ahead of the competition, is listed on Nasdaq Stockholm (NET-B) and
employs more than 900 people in Stockholm, Malta, Kiev, Krakow,
Gothenburg, Gibraltar and New Jersey. For more information, please
visit www.netent.com.

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http://news.cision.com/netent/r/interim-report-january---september-2016,...
http://mb.cision.com/Main/13524/2105494/578120.pdf

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