STOCKHOLM, Nov. 7, 2019 /PRNewswire/ --
"We delivered EBITDA growth of over 40%, which clearly shows
that our efficiency efforts are generating positive
results."
- Gustaf Hagman, Group
CEO
Third quarter 2019: 1 july- 31
september 2019[1]
- Revenue increased by 12% to EUR 88.2
m (78.6).
- Organic growth in local currencies was 13%.
- EBITDA increased with over 40% and amounted to EUR 12.7 m (9.0), corresponding to an EBITDA
margin of 14.4% (11.4%).
- The number of depositing customers was 334,042 (318,189), an
increase of 5%.
- The number of returning depositing customers was 199,023
(177,637), an increase of 12%.
- Earnings per share were EUR 0.05
(0.13) before and after dilution.
Events during the quarter
- LeoVegas was launched in Japan.
- LeoVegas opted to not apply for a gaming licence in the
recently re-regulated Swiss market, and therefore the business was
closed on 1 July.
- A key payment service provider has chosen to stop offering its
service for certain gaming-related payments on the German market,
which affected revenue and new customer acquisition during the
quarter.
Events after the end of the quarter
- Preliminary revenue of EUR 26.5
m (26.1) in October, representing growth of 1%. October was
affected by an exceptionally low game margin. With a normalized
game margin, revenues had amounted to approximately EUR 28.5 m and a growth rate of 9 percent.
- LeoVegas was initially granted a two-year gaming licence in
Sweden - a decision that was
appealed. The administrative court has now ruled in the company's
favour, increasing the licence period from two to five years.
- LeoVegas has received a sanction by the Netherlands Gambling
Authority. The decision is in line with the sanctions previously
issued for other gaming companies.
- The LeoVegas Group's investment company LeoVentures has entered
into an agreement to sell the subsidiary Authentic Gaming to
Genting. The sales price is EUR 15 m
on a debt-free basis.
COMMENT FROM GUSTAF HAGMAN -
GROUP CEO
Third quarter 2019
We continued to show progress during the third quarter in a
difficult-to-navigate environment and generated double-digit growth
in both sales and operating profit. Greater regulatory complexity
in several of our main markets has given rise to certain short-term
challenges but is also raising the barriers to succeed in the
sector which benefit established companies.
LeoVegas today has a much more even distribution of revenue
across several markets and brands where half of our revenue is
derived from locally regulated markets, which contributes to
greater stability and lower business risk. Meanwhile, we continue
our efforts to execute our strategy of innovation, expansion and
profitability.
Revenue during the third quarter amounted to EUR 88.2 m (78.6), representing organic growth of
13%. Growth was favourable during the period in most of our
markets, including Sweden where we
are gaining market shares, but also in key markets such as
Finland, Denmark and Italy. The UK is profitable at Group level but
remains challenging, where Royal
Panda in particular had poorer performance during the
quarter. Excluding the UK, the Group's organic growth was 27%. In
total we invested less than planned in marketing during the
quarter, which is coupled to our data-driven and ROI-based
marketing model. We chose to not apply for a licence in
Switzerland, where we stopped
accepting business on 1 July based on commercial rationale.
Meanwhile in Germany we are facing
challenges related to the elimination of a key payment solution,
which is affecting both our revenue and new customer acquisition
during the quarter.
EBITDA for the third quarter totalled EUR
12.7 m (9.0), corresponding to an EBITDA margin of 14.4%
(11.4%). We grew EBITDA by more than 40% during the quarter despite
a higher burden from gambling taxes and greater regulatory
complexity compared with previous years. Our focus on efficiency
and cost control continues to generate the desired results. As a
concrete example of our efficiency enhancement, our staffing has
remained essentially unchanged for the past year despite greater
business complexity, adding more markets and more brands, while we
continue to generate good underlying growth. We continue to
renegotiate our supplier agreements in gaming, payments, marketing
and technology. Through scalability and efficiency we are creating
scope to invest in growth combined with improved profitability.
Sweden
LeoVegas was initially granted a two-year gaming licence in
Sweden - a decision that was
appealed. The Administrative Court has now ruled in our favour,
entailing that the licence period has been changed from two to five
years. At the same time, our returning customers in Sweden are at all-time-high, which is proof
that our focus on the product and customer experience coupled with
a commitment to responsible gaming is paying off in a regulated
environment.
We estimate that channelisation of online casino in Sweden is far below the Swedish Gambling
Authority's goal of 90%. We therefore look positively upon the fact
that the Gambling Authority to a greater extent has begun
prioritising measures to curb unlicensed actors. This is needed to
ensure that the market's regulation is successful and results in
greater consumer protection.
Markets
Thus far during the year LeoVegas has launched operations in five
new markets, where Japan is the
most recent addition. We want to especially highlight the launch in
Spain, which so far has exceeded
our expectations. The online growth in Spain is considerable, and we are highly
confident that Spain can become
one of our key markets.
During the quarter LeoVegas was issued a fine by the Netherlands
Gambling Authority, in line with the fines that were previously
issued to other gaming companies. The amount has been expensed in
its entirely in the income statement. We are in compliance with the
current regulations and will appeal this decision. We remain
confident that we will be awarded a licence once the market is
opened - mostly likely at the start of 2021.
LeoVentures
LeoVentures has entered into an agreement to sell the subsidiary
Authentic Gaming for EUR 15 m on a
debt-free basis. The buyer is Genting, one of the world's largest
land-based operators. Authentic Gaming generated approximately
EUR 1 m in revenue during the third
quarter, while the effect on EBITDA was neutral. The transaction
shows how we can successfully invest in, grow and realize value in
our portfolio companies. In connection with this sale we have also
concluded our strategic evaluation of LeoVentures and will continue
to develop the remaining portfolio companies Pixel.Bet and
Casinogrounds.
Comments on the fourth quarter
Revenue for the month of October totalled EUR 26.5 m (26.1), representing growth of 1%. The
gaming margin in October was lower than normal, with a number of
large winners, while Germany is
affected by payment limitations. Underlying growth during October
remained solid, which is confirmed by a positive start in November.
With a normalized game margin in October, revenues had amounted to
approximately EUR 28.5 m, with a
growth rate of 9 percent.
Our current assessment is that marketing costs will increase
during the fourth quarter over the third quarter, both in relation
to revenue and in absolute figures. This is in line with the
seasonal pattern, where LeoVegas normally invests the most in
marketing during the fourth quarter.
Finally, I want to remind about the half-yearly dividend payment
of SEK 0.60 per share to our
shareholders on 6 December.
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 50 69 21 80, UK: +44 (0) 20 71 92 80 00, US: +1 63 15 10 74
95, Confirmation code: 9566914 or join at the web
at https://edge.media-server.com/mmc/p/cgmbbfh8
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 08:00 CET on November 7,
2019.
For further information, please contact:
Gustaf Hagman, President and
CEO
+46 (0) 8 410 367 66, gustaf.hagman@leovegasgroup.com
Stefan Nelson, CFO
+46 (0) 8 410 367 66, stefan.nelson@leovegasgroup.com
Philip Doftvik, Director of Investor Relations and Corporate
Finance
+46 73 512 07 20, philip.doftvik@leovegasgroup.com
About LeoVegas mobile gaming group
LeoVegas' vision and passion is to be "King of Casino". LeoVegas
is the premier GameTech company and is at the forefront of using
state-of-the-art technology for mobile gaming. 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 sports betting, and operates two global and
scalable brands - LeoVegas and Royal
Panda - as well as a number of local brands in the UK.
LeoVegas is a global group in which LeoVegas AB (publ) is the
parent company. LeoVegas AB (publ) does not conduct any gaming
operations; rather, operating activities are conducted by
subsidiaries within the Group. 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.
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LeoVegas AB Third
quarter 1 July â€" 30 September 2019
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