"A quarter with record earnings and new initiatives in
sustainability and technology lays the foundation for continued
strong growth"
- Gustaf Hagman, CEO and co-founder
Second quarter: 1 April-30 June
2018[1]
-
Revenue increased by 76% to EUR 87.4 m
(49.7).
-
EBITDA was EUR 15.0 m (6.1), corresponding to an
EBITDA margin of 17.2% (12.4%).
-
Organic growth excluding markets closed in 2017
was 38%.
-
NGR from regulated markets was 38.8% (25.1%) of
total NGR.
-
Net Gaming Revenue (NGR) from Royal Panda and
Rocket X[2] accounted
for 15.6% and 12.8%, of total NGR and strong margins.
-
The number of depositing customers was 309,987
(173,034), an increase of 79%.
-
Adjusted earnings per share were EUR 0.13
(0.05).
Events during the quarter
-
New financial targets for the full year 2020
were presented on 19 April. The goal is to achieve revenue of at
least EUR 600 m and EBITDA of at least EUR 100 m.
-
On 7 May it was announced that Stefan Nelson
will be the new CFO, starting on 22 August 2018.
-
LeoVegas took a further step in responsible
gambling by registering with GAMSTOP, a central system in the
British market that helps customers restrict their gambling with
online gambling companies licensed in Great Britain. LeoVegas has
also integrated all of the Group's brands with LeoSafePlay.
-
LeoVegas launched a new front-end platform. The
technology gives LeoVegas new and improved opportunities to
continue offering the best, fastest and most innovative mobile
gaming experience.
-
Sports book 2.0 was launched on LeoVegas.com
with a new design and new, improved gaming experience. On 7 June
2018 Swedish parliament voted in favour of new gambling
legislation. The new legislation will take effect on 1 January 2019
and is in line with the previous proposal.
Events after the end of the
quarter
-
Net Gaming Revenue (NGR) in July amounted to EUR
26.4 m (18.3), representing growth of 45%.
-
LeoVegas made changes in its Group Management to
optimise work with the strategic agenda in sustainability and the
continued journey of growth, entailing stronger focus on
responsible gaming and LeoSafePlay.
-
In Italy the government has proposed a ban on
advertising for gambling, which would take effect in June 2019. At
present the situation is unclear, and it is expected that the
situation may change further by June 2019.
Comment from Gustaf Hagman - Group CEO and
co-founder
A quarter with focus on
sustainability and technology
The second quarter was one of LeoVegas' most intense quarters ever.
We not only launched a new sports book and design in time for the
FIFA World Cup - we also adapted to the GDPR, stricter demands for
compliance, and the forthcoming regulation in Sweden. These are
just a few examples of projects that we have been working
intensively with. On top of this, we have worked hard and completed
a number of initiatives that will be important over the long term
for the Company's continued growth, for sustainability, and for a
new technical platform.
Development during the
quarter
Revenue totalled EUR 87.4 m (49.7) during the second quarter, an
increase of 76%. Organic growth was 27%. Organic growth excluding
markets that were closed in 2017 was 38%. EBITDA totalled EUR 15.0
m (6.1), corresponding to an EBITDA margin of 17.2% (12.4%).
Royal Panda and Rocket X are developing according
to plan, with a strong EBITDA margin of 30.0% for Royal Panda and
21.8% for Rocket X.
We generated a record profit during the quarter,
and the main explanation is lower marketing costs. Our data-driven
marketing model works in such a way that we invest only if we see a
sufficiently high return in our marketing channels. During the FIFA
World Cup, many gaming companies that work primarily with sports
betting significantly increased their advertising budgets, and as a
result the long-term customer value of our marketing was deemed to
be uncertain. Our models indicated not to advertise in certain
channels, and accordingly we quite simply refrained. This in turn
resulted in slightly lower growth but at the same time
significantly higher EBITDA. I am very happy about the strong
earnings in the quarter.
In addition, owing to the launch of our new
front-end platform, certain links to our marketing partners needed
to be redone. The same thing happened when we upgraded our back-end
platform three years ago. This was a known risk and affected our
customer inflow for a limited period.
This - together with the enactment of the GDPR and
a generally stronger focus on compliance, where we stopped working
with a large number of affiliates in the British market - affected
our customer inflow and growth during the quarter. As we now enter
the third quarter, we are well prepared. Our new platform has been
launched, we have made good progress with our compliance efforts,
and the World Cup is over. The third quarter will thereby be a
quarter with focus on growth and on further driving our business
forward.
During the second quarter we also won three
prestigious awards at the EGR M&I Awards: "Brand of the Year",
"Affiliate Marketing of the Year" and "Innovation in Mobile &
Tablet". We are proud and thrilled about all three of these
distinctions - most notably "Brand of the Year", which recognises
our determination and drive to work with innovation and development
of our brand.
Sustainability
The LeoVegas Mobile Gaming Group conducts responsible and
sustainable business. Part of this involves increasing transparency
surrounding the routines and regulations that we and other actors
in the business work according to. Our vision entails changing the
mindset in the gaming business. Going forward we have an ambition
to work together with others in the business to initiate a
long-term, joint effort to change the perception of the industry's
operations. Responsible business will contribute to sustainable
growth, and this is the clear goal for the LeoVegas Mobile Gaming
Group.
Compliance
The online gaming business in Europe is currently undergoing a
fundamental change. A growing number of markets are choosing to
embrace local regulation. The compliance requirements for operators
are both growing and becoming more complex. This elevated focus on
compliance is having a short-term effect on growth. In long term,
however, we see this as an opportunity - since only professional
and responsible operators will be able to work in this
environment.
For some time LeoVegas has been engaged in talks
with the UK Gambling Commission (UKGC) on improvements that
LeoVegas can make in compliance. It is a productive discussion on
how we will improve with respect to compliance in certain
areas.
GDPR
The EU General Data Protection Regulation (GDPR) took effect on 25
May, and the greatest impact for us was in our retention work. As a
result of the GDPR, some customers have opted out of accepting
offers from us. The fact that we cannot communicate as broadly with
our customers is a new reality that we must adapt to. In this
regard we are convinced that our award-winning product and
investments in our brand give us a good position for continued
growth.
Responsible gaming and
LeoSafePlay
Responsible gaming is one of LeoVegas' most important focus areas,
and we have now laid the foundation for creating the next
generation's system for responsible gaming. Our data-driven
approach is the foundation of our way of working, and the system is
based on machine learning. This makes it possible in the most
effective way to identify players who have or are showing signs of
unsound gaming behaviour.
New financial targets for
2020
During the quarter we presented new financial targets that
underscore our continued focus on strong growth combined with a
sound view of profitability. The goal is to achieve revenue of at
least EUR 600 m and EBITDA of at least EUR 100 m.
Technology
During the second quarter we launched our new front-end platform.
The advantages of the new platform are many and show that LeoVegas
is the leading GameTech company. Among other things, the technology
improves our ability to continue to offer the best, fastest and
most innovative mobile gaming experience. It will also enable us to
be more effective in our product development due to the faster
speed at which we can put new functions into production.
The new platform is also improving LeoVegas' work
with search engine optimisation (SEO). The value of improved SEO is
that customers are routed directly to Leovegas.com via search
engines instead of via third parties. LeoVegas expects to gradually
increase its organic traffic and thereby become less dependent on
affiliates for customer acquisition via search engines.
Sports book 2.0 and new design
for LeoVegas.com
Our new sports book is our largest release in the sport vertical
since we launched sports betting in spring 2016. We have taken
technical ownership of large parts of the sport client and have
introduced an entirely new design that is more intuitive and more
attractive. With effective filtering and a strong focus on
relevance, our customers get the right offering presented in a
simple way.
Our new product design is a modern rendition of
our brand and highlights all verticals.
In parallel with the launch of sports betting for
LeoVegas.com, Rocket X will also launch sports betting under its
Bet UK brand. Rocket X has chosen SB Tech as its provider. The
Group will thereby be working with three different providers in
sports betting: Kambi, Betconstruct, and SB Tech. This gives us
great flexibility to be able to offer the best experience and adapt
our offering to local preferences. Over time we see that it will be
fully possible to use more providers for the same brand and thereby
achieve the best possible sports betting experience for our
customers.
Changes in Group
Management
To optimise our work on driving the Company's strategy with
responsible gaming and growth, we have made changes to our Group
Management team.
As previously communicated, LeoVegas' CFO, Viktor
Fritzén, will take on a new role as Senior Advisor. Viktor will
focus his work on strategic matters surrounding growth and value
creation. Our new CFO will be Stefan Nelson, who joins us from a
director role at SEB Corporate Finance and will take office on 22
August. Stefan has a solid background with 20 years of experience,
including as an equities analyst for the gaming sector. This,
combined with a breadth of experience in M&A, will make Stefan
a key team member for our future endeavours.
Louise Nylén has taken on a newly created role as
Deputy CEO. She has previously served as Chief Marketing Officer
for LeoVegas. Richard Woodbridge has been hired as our new Chief
Operating Officer and will have overarching responsibility for
operations at LeoVegas' offices in Malta. Our current COO, Marcus
Nylén, will stay on in that role until Richard takes office and
when Richard starts, will leave Group Management in order to focus
on LeoVegas' expansion. Richard Ljungman is leaving his role as
Chief Commercial Officer and will leave Group Management to be able
to focus entirely on responsible gaming and LeoSafePlay.
Markets
NGR from locally regulated markets was 39 percent of total and is
the highest we've ever had. We are very pleased that the share of
regulated markets is growing and is in line with our expansion
strategy.
Sweden
On 7 June the decision was finally made to introduce a licence
system in Sweden. The new legislation will take effect on 1 January
2019 and is something we highly welcome.
Italy
Italy is one of Europe's largest gambling markets. More than 3
million people in Italy play online every month, and it is a growth
market that we believe strongly in. During the quarter we migrated
the Italian operation to LeoVegas' technical platform, Rhino, which
gives our Italian customers the real LeoVegas experience! Italy's
government has now proposed a ban of all gambling advertising. We
firmly believe that such a ban would benefit unlicensed actors, and
a debate has now ensued about this, where LeoVegas is engaged and
is trying to educate politicians about what we as licensed
operators are doing in the areas of sustainability and responsible
gaming. The outcome of the proposal is highly uncertain at present,
and we are monitoring developments closely.
Comments on the third
quarter
July has started out with Net Gaming Revenue (NGR) of EUR 26.4 m
(18.3), representing growth of 45%, which is lower than what we
expected considering that the customer base has developed quite
well.
During the third quarter we expect marketing in
relation to revenue to be at roughly the same level as during the
second quarter.
Our work during the second quarter has given us a
stable foundation to continue to improve. This gives us a boost in
the third quarter and good opportunities to create long-term growth
and work towards our financial targets.
Presentation of the report -
today at 09:00 CET
To participate in the conference call, and thereby be able to ask
questions, please call one of the following numbers: SE: SE: +46
(0) 8 5664 2753, UK: +44 (0) 330 336 9128, US:
+1 646 828 8144, Confirmation code: 5362090 or join
at the web https://edge.media-server.com/m6/p/zupwii5n
This information is information
that LeoVegas AB (publ) is obliged to make public pursuant to the
EU Market Abuse Regulation 596/2014 and in accordance with the
Financial Instruments Trading Act (1991:980). The information was
submitted for publication, through the agency of the contact person
set out below, at 1 of August 2018 CET on 08:00.
For
further information, please contact:
Gustaf Hagman, Group CEO: +46 (0) 8 410 367 66,
gustaf.hagman@leovegas.com
Viktor Fritzén, Group CFO: +46 73-612 26 67,
viktor.fritzen@leovegas.com
Philip Doftvik, Head of Investor Relations and Corporate Finance:
+46 73 512 07 20, philip.doftvik@leovegas.com
About the LeoVegas mobile gaming
group
LeoVegas' passion is "Leading the way into the
mobile future". LeoVegas is Sweden's premier GameTech company
and is at the forefront of using state-of-the-art technology for
mobile gaming. In 2017 the company passed the threshold for being
classified as a unicorn, i.e., a start-up valued at more than USD 1
billion. A large part of this success can be credited to an extreme
product and technology focus coupled with effective and data-driven
marketing. Technology development is conducted in Sweden, while
operations are based in Malta. LeoVegas offers casino, live casino
and sport gaming, and operates two global and scalable brands -
LeoVegas and Royal Panda - as well as a local, multibrand operator
collectively referred to as Rocket X. The company's shares are
listed on Nasdaq Stockholm. For more about LeoVegas, visit
www.leovegasgroup.com.
[1] Throughout
this report, figures in parentheses pertain to the same period a
year earlier.
[2] Rocket X is
consolidated as from 1 March 2018, and Royal Panda is consolidated
as from 1 November 2017.
LeoVegas - Second quarter 1 April -
30 June 2018
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: LeoVegas AB via Globenewswire
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