" Yet another record quarter with greater transparency,
acquisitions performing as planned, and new and clear financial
targets"
- Gustaf Hagman, CEO and co-founder
First quarter: 1 January-31 March
2018[1]
-
Revenue increased by 76% to EUR 77.4 m
(43.9).
-
Organic growth was 40%.
-
Organic growth excluding markets closed in 2017
was 61%.
-
EBITDA was EUR 9.5 m (6.0), corresponding to an
EBITDA margin of 12.3% (13.7%).
-
Adjusted[2] EBITDA
totalled EUR 9.0 m (6.2), corresponding to an adjusted EBITDA
margin of 11.6% (14.0%).
-
The number of depositing customers was 302,014
(172,338), an increase of 75%. The number of new depositing
customers was 146,063 (75,017), an increase of 95%.
-
The number of returning depositing customers was
155,951 (97,321), an increase of 60%.
-
Gross Gaming Revenue from sports betting and
live casino were 6.5% and 15.3%, respectively, of total GGR.
-
Net Gaming Revenue from Royal Panda and Rocket
X[3] accounted
for 14.3% and 5.2%, respectively, of total NGR.
-
NGR from regulated markets was 35.4% (18.3%) of
total.
-
Operating profit (EBIT) was EUR 3.8 m
(5.5).
-
Adjusted EBIT was EUR 7.9 m (5.7), corresponding
to an adjusted EBIT margin of 10.2% (12.9%).
-
Earnings per share before and after dilution
were EUR 0.02 (0.05).
-
Adjusted earnings per share were EUR 0.07
(0.05).
Events during the quarter
-
LeoVegas acquired 51% of the shares in the
company behind the streaming network CasinoGrounds.com for SEK 30 m
(EUR 3.1 m), with a potential, maximum earn-out payment of SEK 15 m
(EUR 1.5 m). LeoVegas completed the acquisition on 1 January 2018.
See page 11 for further information.
-
LeoVegas acquired assets for GBP 65 m (EUR 73.6
m) from Intellectual Property & Software Limited along with
related assets from another two companies that operate several
brands including 21.co.uk, slotboss.com, Bet UK and UK Casino,
which are now jointly referred to as "Rocket X". LeoVegas completed
the acquisition on 1 March 2018. See page 10 for further
information.
-
LeoVegas acquired World of Sportsbetting for EUR
2.6 m, which holds a sports betting licence and a casino licence in
the German state of Schleswig-Holstein, and an approved application
for a sports betting licence through the state of Hessen.
-
LeoVegas carried out a change in listing to
Nasdaq Stockholm on 5 February.
-
LeoVegas is updating the amortisation rate for
intangible assets related to the acquisition of customer databases
in Royal Panda. The rate of amortisation of customer relationships
in Royal Panda is being changed to harmonise it with the Group's
other acquisitions, and to better represent the usage period.
-
LeoVegas has made a provision of EUR 0.5 m for
fines from the UK Gambling Commission (UKGC) for alleged marketing
violations in 2016. See page 9 for further information.
Events after the end of the
quarter
-
New financial targets for the full year 2020
were communicated on 19 April. The new targets are to reach at
least EUR 600 m in revenue and EBITDA of at least EUR 100 m. See
page 9 for further information.
-
Net Gaming Revenue (NGR) in April amounted to
EUR 29.3 m (16.5), representing growth of 77%.
-
In Norway it has been learned that new
legislation is expected to pass during the year which aims to
prevent Norwegian residents from accessing foreign gaming sites.
Details on the proposed legislation have not yet emerged. Revenue
from Norway accounted for 4.6% of the Group's total during
March.
-
LeoVegas published its annual report for 2018 at
www.leovegasgroup.com.
Comment from Gustaf Hagman - Group CEO and
co-founder
High pace into the new
year
We got off to a flying start to the year with the acquisition of
Rocket X, which has a strong footprint in the UK market with a
local multibrand strategy and the market's most effective customer
acquisition model. We followed this up with the acquisition of
gambling licences in Germany, which will enable better local
payment solutions and allow us to market sports betting throughout
Germany.
In the autumn of 2017 we set the goal of changing
our listing to Nasdaq's Main Market, and in early February we could
once again ring the stock exchange's bell. The first day for
trading on Nasdaq Stockholm was 5 February 2018, where we
immediately moved into the Large Cap list.
We are continuing our hard work and are
accelerating into 2018 on the momentum we built up last year.
First quarter
Our revenue during the first quarter amounted to EUR 77.4 m (43.9),
representing growth of 76%. Our organic growth was 40%. Organic
growth excluding markets that we closed in 2017 was 61%. EBITDA
adjusted for items affecting comparability was EUR 9.0 m (6.2),
corresponding to an adjusted EBITDA margin of 11.6% (14.0%).
KPIs and
transparency
Transparency is important for LeoVegas. We have therefore decided
to disclose additional Key Performance Indicators as a way to
increase transparency and understanding for us as a group.
We have opted now for the first time to break down
our revenue for the Sports book and Live Casino. Sport accounts for
6.5% of Gross Gaming Revenue (GGR), and Live Casino for 15.3%. We
show these KPIs based on GGR due to calculations of bonuses, but
the figure is basically identical to Net Gaming Revenue (NGR).
We have also opted to separately report on
LeoVentures. LeoVentures today has an adjusted EBITDA of EUR -0.3
m, which is due to the fact that several of its companies are in
the investment phase.
LeoSafePlay
Responsible gaming is one of LeoVegas' foundations since the start
of 2011. Over the past year, LeoVegas has made a push in
Responsible Gaming, which has resulted in more staff and improved
tools based, among other things, on machine learning combined with
the launch of the site www.LeoSafePlay.com. LeoSafePlay is a portal
dedicated to identifying and managing unhealthy gaming
behavior.
LeoSafePlay offers self-assessment tests,
information for families and a free tool (GamBan) to block one's
own access to all gaming sites.
With upcoming regulations in Europe, including in
Sweden, there are a number of regulations on responsible gaming,
and we at LeoVegas embrace these as an important part of
sustainable gaming, and also as a long-term sustainable business.
The fact that gaming companies take responsibility and work with
responsible gaming is good for the industry, and LeoVegas has a
stated ambition and strategy to be at the forefront. A proof of
this is the launch of a new self-exclusion function in the UK,
where customers now automatically will be excluded from all our
brands when they exclude from one of them. Later in the year we
will be able to customize offers and bonuses based on a customer's
risk level.
Acquisitions
Rocket X
The integration work is moving forward very well. We have quickly
been able to work together on a number of matters and are
identifying synergies in our knowledge-sharing and ways of
working.
In connection with the acquisition's closing,
Rocket X was put on the same gambling licence as LeoVegas. This was
an extensive process, and already there we saw proof that we work
very well and effectively together between the teams. I think this
is why it feels like Rocket X has been part of the Group for a
longer time than just a few months.
During the quarter Rocket X contributed revenue
for only one month. For the first quarter this entailed EUR 4.0 m
in revenue and EBITDA of EUR 0.9 m, for an EBITDA margin of
22.5%.
Royal Panda
The work with Royal Panda is also progressing well and is on track.
The period for payment of the earn-out expires in December 2018,
and we see a great willingness for cooperation and interaction
between the various teams.
During the first quarter Royal Panda was fully
consolidated and contributed EUR 10.9 m in revenue, with an EBITDA
margin of 7.8%. The low margin for Royal Panda is attributable to
substantial marketing costs in February and March, which drove
large gains in the number of new depositing customers and also
NGR.
Company culture and
kickoff
LeoVegas' company culture is a major reason why we today are
Sweden's leading GameTech company. It is therefore imperative to
promote this culture within the Group. We are sensitive to the fact
that acquisitions require resources, time and commitment. It is for
this reason that we invested further in our work with the company
culture and gathered our entire Group of more than 700 people to a
kickoff event. It was extremely successful and exceeded our high
expectations, and we are already seeing positive effects from the
event.
Markets
Sweden
Sweden had yet another record quarter for new and returning
customers. This shows that we have a strong and loyal customer base
in one of our core markets. What we can see, however, is that the
value per customer has gone down slightly, which is explained in
part by a higher share of sport customers and an unfavourable
gaming margin for casino.
Norway
Norway has historically and periodically blocked payment solutions
that are linked to gaming sites. Now there is also a proposal to
introduce additional barriers to using game sites. There are still
no details when and how this will be introduced. Norway currently
has no local licensing system, and instead of banning, I hope
Norway will move towards a local regulation similar to the
developments we see in Sweden. The Group's revenues from Norway
were 4.6% in March. Regardless of the outcome, development in
Norway does not affect LeoVegas' financial targets. LeoVegas has
long been very clear in welcoming gaming market regulation and the
Group's strategy is to expand in regulated markets and markets that
are developing against regulation.
Italy
It was roughly one year ago that we acquired Winga.it and its
gambling licence for the Italian market. During the autumn of last
year we switched out the Winga brand to LeoVegas. The next step in
our expansion for LeoVegas is to migrate the technical platform in
Italy to our proprietary platform, Rhino. This will take place
during the second quarter, at which time we will be able to fully
offer our award-winning mobile gaming experience. This, combined
with a strengthening of our commercial team in Milan, gives us
favourable conditions to invest on a large scale in Italy.
Canada
Canada is a market of great interest and is showing strong growth
for LeoVegas. During the quarter we began using our ambassador,
hockey legend Mats Sundin, in our market communication in
Canada.
UK
Following our recent acquisitions, the UK is our largest market
measured by revenue and accounted for 25.6% of NGR during the first
quarter. The effectiveness of our marketing in the UK was also the
best ever during the quarter.
LeoVegas has high ambitions for compliance with
laws and regulations and we have continuously improved our
procedures and processes. We have had discussions with the UK
Gambling Commission, UKGC, on suspected cases of breaches of the
British gaming rules. A clear majority of cases are attributable to
affiliate marketing. Our assessment is that the UKGC will issue
fines for these violations and we have made a provision for the
full amount.
We have also improved our routines, which has led
us to close off non-compliant affiliates. This means that I feel
great assurance in the work we do, both in the short and long term,
but also in the face of continued expansion into new regulated
markets. It's good that UKGC puts increased demands on us in the
gaming industry. It is an advantage for serious actors who both
have the will and ambition to work in a regulated market.
New financial targets for
2020
In 2015 we set a target to reach EUR 300 m in revenue by 2018. Our
new revenue target represents a doubling to EUR 600 m by 2020, not
including any major acquisitions. Parallel with this we are aiming
for EBITDA of at least EUR 100 m, which implies adjusted earnings
per share of at least SEK 8 by 2020.
The new targets confirm our continued focus on
strong growth combined with a sound view of profitability. The
targets create transparency about where we are headed, both
internally and externally.
LeoVegas' long-term dividend policy remains
intact, which is to distribute at least 50% of profit, and the
proposal to the Annual General Meeting on 29 May is to pay a
dividend of SEK 1.20 per share.
Comments on the second
quarter
April has begun strong with Net Gaming Revenue (NGR) of 29.3 MEUR
(16.5), corresponding to a growth rate of 77 percent. Marketing in
relation to revenue for the Group in the second quarter of 2018
will be higher than the average for 2017, which was 42.3%. Due to
the marketing opportunities surrounding the World Cup, the total
amount of marketing is more difficult than usual to anticipate in
advance. LeoVegas will act opportunistically with marketing on the
opportunities we see.
I am looking forward to the second quarter, in
which Rocket X will be included for the entire quarter and an
exciting summer of sport will get under way with the World Cup in
June followed by the Swedish Open tennis tournament in Båstad, for
which we are now a Principal Partner.
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: +46 (0) 8
5065 3942, UK: +44 (0) 330 336 9411, US: +1720 543 0214
code: 8226344 or join at the
web https://edge.media-server.com/m6/p/o7um9xoi
This information is information
that LeoVegas AB (publ) is obliged to make public pursuant to the
EU Market Abuse Regulation 596/2014. The information was submitted
for publication, through the agency of the contact person set out
below, at 2nd of May 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] Adjusted
items are stripped of items affecting comparability related to
acquisitions, the listings, sales of assets and non-cash items
related to acquisitions. For a complete definition, see page
24.
[3] Rocket X is
consolidated as from 1 March 2018, and Royal Panda is consolidated
as from 1 November 2017.
First quarter 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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