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LeoVegas AB: Quarterly report 1 april – 30 june 2019

Vlad Poptamas

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Reading Time: 4 minutes

 

“LeoVegas is delivering good growth with high profitability in a difficult-to-navigate environment. Q2 2019 was our best quarter ever, and we continue to take market shares.” – Gustaf Hagman, VD och koncernchef

Second quarter 2019: 1 april–30 june 2019[1]

  •  Revenue increased organically by 8% to EUR 94.4 m (87.4).
  •  EBITDA was EUR 15.1 m (15.0), corresponding to an EBITDA margin of 16.0% (17.2%).
  •  The number of depositing customers was 334,961 (309,987), an increase of 8%.
  •  The number of returning depositing customers was 196,203 (175,500), an increase of 12%.
  •  Earnings per share were EUR 0.07 (0.07) before and after dilution.

Events during the quarter

  •  LeoVegas was granted a gaming licence in Spain. Two weeks after the licence was granted, LeoVegas was launched in Spain.
  •  LeoVegas’ technological infrastructure was migrated to Google Cloud.
  •  A number of product innovations were launched, including improved search functions, multiplay on mobile devices and exclusive games.

Events after the end of the quarter

  •  Preliminary revenue of EUR 29.7 m (27.1) in July, representing growth of 9%.
  •  LeoVegas has opted to not apply for a gaming licence in the recently re-regulated Swiss market. Switzerland accounted for EUR 2.2 m of revenue during the second quarter.
  •  Dersim Sylwan recruited as new Chief Marketing Officer and will assume his position by 1 January 2020 at the latest.
  •  Louise Nylén leaving as deputy CEO. Her role will not be replaced.
  •  Notice of Extraordinary General Meeting on August 28 regarding incentive program. The notice is posted on the company’s website.

Comment from Gustaf Hagman – Group CEO

First half of 2019
During the first half of 2019 we generated good underlying growth and profitability despite a difficult-to-navigate external environment in several of our largest markets.

Second quarter results
Revenue during the second quarter amounted to EUR 94.4 m (87.4), an increase of 8%. Organic growth in local currencies was 8%. Growth was favourable during the period in most of our markets. However, the UK continued to be challenging. Excluding the UK, organic growth was 26%. At the same time, in Sweden we have found a new base to grow from following regulation of the market, and our revenue developed in a positive direction month-on-month during the quarter.

Compared with a year ago, LeoVegas has a more balanced geographic revenue mix. This means that we are not as sensitive to challenges that may arise in a specific market, which in turn means that we have lower business risk in the Group.

EBITDA totalled EUR 15.1 m (15.0) during the second quarter, corresponding to an EBITDA margin of 16.0% (17.2%). Greater focus on efficiency and cost control has had the intended effect, and we continue to review our external agreements and optimise our own organisation. This work is helping to create necessary economies of scale and is countering the effect of that we are paying more gambling taxes. As previously communicated, our marketing investments also decreased compared with the first quarter of the year. A contributing factor to this is more restrained marketing in Sweden during the quarter. In addition, the postponement of a few campaigns from the second to the third quarter has affected costs and contributed to operating profit, which will have a reverse effect during the third quarter.

To further benefit from the expertise that has been added through acquisitions and be more efficient, we have restructured the country organisations for the UK and Italy. We have moved country-specific functions into our central teams and eliminated roles that have become redundant as a result of acquisitions. This is one of many initiatives we have taken to increase efficiency and optimisation within the Group.

Sweden
Sweden has now been a regulated market for more than six months, and the development is beginning to indicate what kind of market we will have over the long term. We are satisfied with our performance in Sweden and believe that we are taking market shares. LeoVegas is today the single largest casino brand in Sweden. Our focus on product and customer experience, our knowledge about regulated markets and our strong brand position contribute to the positive development. On top of this, the launches of GoGoCasino and Pixel.bet have been successful, and the brands are appreciated by our Swedish customers.

As a large and long-term player both in Sweden and globally, we at LeoVegas want to participate in changing the perception of the industry. There is a strong need today to educate and inform the general public, opinion-shapers and politicians about our industry, what we stand for and the work we are doing – not least in responsible gaming and sustainability. This is important for ensuring that we work together to secure that the new regulation is a success with high participation in the licence system, i.e. that there is a high level of channelization, and with extensive consumer protections.

Expansion
Only two weeks after we received our licence in Spain, we went live as the first newly licensed operator. This shows the strength and speed of LeoVegas and further demonstrates that our experience from regulated markets benefits us. Spain is a step in our continued expansion, and we have also recently carried out launches in other Spanish-speaking countries, such as Chile and Peru, as well as in Brazil.

Technology
During the quarter we migrated our technology to Google Cloud. The move will allow us to better scale our technical infrastructure environment without having to invest in hardware. Within the product innovation area, we have, among other things, launched improved search functionality, multiplay on mobile devices and new, exclusive casino games for LeoVegas customers.

Financial targets
We reiterate our ambitious financial targets to achieve EUR 600 m in revenue and EBITDA of EUR 100 m by 2021. We want to clarify that the targets are based primarily on organic growth, but also include revenue from potential future acquisitions.

Comments on the third quarter
Revenue for the month of July was EUR 29.7 m (27.1), representing growth of 9%.

LeoVegas has opted to not apply for a licence in the recently re-regulated Swiss market, and as a result we are no longer accepting business in that market. Switzerland accounted for EUR 2.2 m in revenue during the second quarter.

Our current assessment is that the Group’s marketing costs will increase during the third quarter compared with the second quarter, both in relation to revenue and in absolute figures.

Final words
We have once again presented a quarter with organic growth combined with good profitability. The investments made in 2018 and efficiency improvement work carried out thus far in 2019 are beginning to generate returns in the form of greater scalability of operations. Despite this, we are not content and are working continually to be even better. The external market environment in several key markets is currently more turbulent and difficult to predict than previously, which is creating new challenges and requirements, but at the same time it is presenting major opportunities for us to grow and take market shares. We continue to focus on becoming the global casino company number 1 – we are King of Casino!

Vlad Poptamas is a Junior Content Editor at European Gaming Media and at PICANTE Media and covers a large variety of industries among which the gaming industry. Vlad has a background and possesses skills that enable him to do creative content writing and editing.

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DAW Sets Out Wish List for Re-regulation of German Gambling Market

Niji Narayan

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DAW Sets Out Wish List for Re-regulation of German Gambling Market
Photo Source: kayak.com
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The Deutsche Automatenwirtschaft (DAW), the umbrella organisation for Germany’s gaming machine associations, has created a wish list for the re-regulation of the country’s gambling market.

DAW explained that the current regulations for commercial gambling undermine the objectives of the State Treaty on Gambling, in particular when it comes to channeling players towards the legal market.

It said establishments should be permitted to offer multiple game verticals, and that updated regulations should maintain the state lottery monopoly on draw-based games.

New regulations must ensure that legal providers can offer a competitive and economically viable alternative to unlicensed operators, the DAW said.

“The amendment of the State Treaty on Gambling is a great opportunity to counteract the undesirable developments – above all the rapid growth of the black market – with a holistic approach. Only a coherent regulation of all forms of gaming, including the use of commercial slot machines based solely on quality standards, and a strengthening of legal providers can curb the black market and effectively protect consumers,” Georg Stecker, chief executive of DAW said.

DAW calls on state lawmakers to introduce uniform standards for responsible gaming training and player protection measures across all sectors. These controls, it says, must be constantly developed and regularly evaluated by professionals to ensure they are fit for purpose.

A nationwide biometric system that would ensure voluntary restrictions on players’ gambling should also be rolled out. It also believes a certification system for all gaming halls and outlets offering slot machines should be implemented, to help consumers distinguish legal from illegal offerings. In addition, the association argues in favour of a qualification system for gaming machine professionals.

Finally, the DAW argues in favour of regulations governing the exterior design of gaming establishments. It says these should ensure there are no inducements to gamble for minors and vulnerable people, while allowing the operator to inform and educate players about the range of games on offer.

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Gambling in the USA

Full House Resorts Partners with Wynn Resorts in Indiana and Colorado

Niji Narayan

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Full House Resorts Partners with Wynn Resorts in Indiana and Colorado
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Full House Resorts Inc. has entered into two new agreements with WSI US LLC, a wholly-owned subsidiary of Wynn Resorts, allowing online/mobile sports wagering throughout Indiana and Colorado.

“We are excited to partner with Wynn Resorts, allowing them to conduct mobile sports wagering throughout Indiana and Colorado. Wynn Resorts is renowned for its unparalleled focus on guest service and as the premier operator in the gaming industry. We are thrilled to see them bring their unique vision to the online space, beginning with the residents of — and many visitors to — Indiana and Colorado,” Daniel R. Lee, President and Chief Executive Officer of Full House Resorts said.

With the new agreements, the Company has now utilised all of its allowed sports wagering opportunities in Indiana and Colorado.

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Eastern Europe

EGT Romania Obtains Type Approvals for AWP and Global Solution

Niji Narayan

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EGT Romania Obtains Type Approvals for AWP and Global Solution
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EGT Romania has obtained two Type Approvals for the local gambling industry: Type Approval for AWP and Type Approval for Global Solution. Both products complemented the display of unmatched technologies and trends at the Entertainment Arena Expo 2019.

AWP is a product that has always attracted operators and players. Now, with Type Approval, the AWP Fruits Collection 2 game mix, a 48-game fruit compilation supported by the powerful Exciter III platform, is available on slot machines from both previous generations of Vega Vision and new Premier P-24/24 Up, P-27/27 St Slim, award-winning products over time for their performance and design.

Now, Global Solution has obtained Type Approval with the Red Collection GS Multigame. Players can experience the game mix on the P-24/24 Up FL slot machine, supported by Exciter III, the most stable and high-performance gaming platform developed by EGT engineers.

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