IN-DEPTH 6 January 2017
Cherry's Morten Klein: "We are 100% prepared for the future"
Business Development and Partnership Officer at Cherry AB Morten Klein talks Gambling Insider through an excellent 2016, and how the company is positioning itself as it approaches a year rich with opportunities
By Gambling Insider
How would you summarise Cherry’s performance in 2016?
We are absolutely delighted with what was an extremely strong set of Q3 results. It is particularly pleasing to see that Cherry is growing considerably faster than the market, and this is evidence that we have assembled one of the most innovative and hard-working teams in gaming.
It is tough to pick out a few highlights, but the headline group revenue growth of 39% is clearly very impressive, as is the triple-digit growth of Yggdrasil and 167% growth of Game Lounge, which is now positioned as a new business area within the company.
What major challenges have you faced in the past year, and do you expect to face the same challenges in 2017?
I think the main thing here is the regulation going on in Europe. We have seen for many years the advancement of regulation in more and more countries. Over the last few years we have been preparing for this. Cherry iGaming and Yggdrasil Gaming are business areas that are prepared to enter newly regulated markets across all of Europe, and I think many companies are afraid of new licensing regimes – we are not. It will open a lot of new opportunities for a company like Cherry.
Cherry iGaming continues to record impressive results, with revenue growing by 39% for Q3 2016. What are the principal factors behind this success?
The growth Cherry iGaming has posted is reward for a well-executed strategy that is now coming to fruition. Late last year, we brought in Jonas Wåhlander as CEO for the Cherry iGaming business area. Jonas had not previously worked in the gaming space, but he brought a wealth of digital experience with him and it has proved to be an inspired appointment. He has done a fantastic job during his first year, alongside the whole Cherry iGaming team.
We have also invested heavily in product and technology and we can now offer players a genuinely best-in-breed gaming experience. It is worth noting that our organic online growth is particularly strong, it accounted for 100% of Cherry iGaming growth in Q3. Our core KPIs, including active customers and total deposits, are very strong and that is a good indication of the strength of our position.
Cherry recently acquired Betman and 49% of ComeOn Malta. What benefits can Cherry gain from its acquisition activity?
We have a strategy to grow both organically and through acquisition. In terms of our acquisition strategy, we are not buying companies that generally want to sell. We have talked with more than 500 businesses, and are always looking for operations that we think can give us something. We are most interested in companies that do not want to sell, as we think an important aspect is to take care of the people in those businesses. We are not just buying a company, we are also taking on the people in that company, and our strategy is to keep those people involved.
With any acquisition, I would say that a key part of it is selling Cherry to the people of the company we are buying. This has been crucial to the success of our acquisitions.
I have been a part of many acquisitions Cherry has undertaken – Cherry has a long history and positive history here. When Cherry bought my company in 2010, I didn’t want to sell, but I have fallen in love with the way Cherry works, and I bring that experience with me when talking to new companies.
We look to meet teams that want to grow, that we can help to grow together. It is important that they can learn from us and we can learn from them.
Having joined the Cherry board in 2011, have any major changes occurred across your association with the company?
In 2006, Cherry was working as a land-based operator of restaurant-casinos in Sweden, as well as casinos on vessels. After 2011, we chose a direction to make Cherry a special company, and not just another gambling company. We started to work on our own platform and affiliate system in 2013, and began looking at potential companies to acquire, a long process of nearly two years, as we want to find good companies to work with. I would say we are 100% prepared for the future.
Having acquired Interclick through your subsidiary Game Lounge this year, can you explain the importance of affiliates to Cherry’s business model?
A major pillar of Cherry’s overall growth strategy is ensuring we have strong positions across a wider part of the gaming value chain. Affiliation is an important part of this and Game Lounge’s growth has been fantastic. The European gaming industry is more competitive than ever, and with marketing costs on the rise, it is vital that we have a range of methods to bring new players to our brands. Game Lounge continues to play a central role in our acquisition strategy.
To talk about Interclick, you see a lot of opportunities to acquire good companies in the affiliate business, as there are many companies that have built up experience alone across ten to fifteen years. This acquisition will prove very positive for Game Lounge as they will take on the assets from Interclick and use their approach to advance the value of assets.
Yggdrasil has also made great strides in Q3 2016 – why do you think the development studio is doing so well?
Yggdrasil is rightly emerging as the industry’s most respected and creative provider. In CEO Fredrik Elmqvist, we have one of gaming’s brightest minds and it has been clear from the series of innovative releases we’ve seen from Yggdrasil this year that it is redefining what it means to develop games in this sector.
Yggdrasil understands that there is far more to slots provision than simply creating great games. It has invested heavily in promotional tools and you only have to look at the long list of major operators that have signed up to see how popular this approach is.