Betsson A.B., the online gambling operator, grew first-quarter revenue 38 percent over last year, but higher payouts in its sports book resulted in a slight top-line loss, sequentially.
Group revenue came in at 315.5 million Swedish kronor, with gross profits up 42 percent to 255.7 million Swedish kronor.
Operating income increased 45 percent to 82.4 million Swedish kronor, with margins, 26.1 percent, up slightly despite a 40 percent rise in marketing costs compared to the same period last year.
Casino remained the company's largest product and generated 59.4 percent of total gross profits. It was followed by sports betting, 22.4 percent, poker, 16 percent and other products, 2.1 percent.
Gross profits from casino were up 4 percent versus the fourth quarter of 2008, though poker was flat and sports betting and other products were down 7 percent and 41 percent, respectively.
"The main difference in sports betting was the margin," Pontus Lindwall, the company's chief executive, said during an analyst presentation in Stockholm Wednesday. "Activity was strong, customer were numbers strong, but payouts were higher."
Betsson does not report its sports margins, but Mr. Lindwall said the company will "think about reporting it in the future."
The weaker margin meant first-quarter revenue fell 1.8 percent over the prior quarter, he said.
By market, the Nordic countries accounted for 55.9 percent of gross profits, non-Nordic European Union countries accounted for 12.9 percent and the rest of Europe -- including Turkey -- accounted for 30.9 percent.
Against the previous quarter, gross profits grew 5 percent in the Nordic countries and 6 percent in the non-Nordic region, though in the rest of Europe fell 13 percent.
Mr. Lindwall emphasized the sequential downturn in the rest of Europe segment was correlated with the lower sports margin.
Sales for the current quarter have been "somewhat weaker" than in the first quarter, the company said, attributing the trend to normal seasonal variance.
Betsson ended the quarter with 486.7 million Swedish kronor in cash and cash equivalents.