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LeoVegas AB Q4: Quarterly report 1 October – 31 December 2019. LeoVegas reiterates its long-term financial targets, remove short term financial targets and raises the dividend

George Miller

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LeoVegas AB Q4: Quarterly report 1 October – 31 December 2019. LeoVegas reiterates its long-term financial targets, remove short term financial targets and raises the dividend
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“We have entered 2020 with good underlying growth and profitability, and an ever-stronger balance sheet”
– Gustaf Hagman, Group CEO

FOURTH QUARTER 2019: 1 october–31 december 2019[1]

  • Revenue increased by 3% to EUR 87.1 m (84.5).
  • EBITDA was EUR 14.5 m (8.1), corresponding to an EBITDA margin of 16.7% (9.6%)
  • Adjusted EBITDA was EUR 9.2 m (8.1), corresponding to a margin of 10.6% (9.6%).
  • The number of depositing customers was 351,613 (327,156), an increase of 7%.
  • The number of returning depositing customers was record-high 207,982 (181,747), an increase of 14%.
  • Adjusted earnings per share were EUR 0.06 (0.06).

Events during the quarter

  • LeoVegas investment company LeoVentures sold the subsidiary Authentic Gaming to Genting. The sales price was EUR 15.2 m on a debt-free basis and generated a capital gain of EUR 11.4 m.
  • LeoVegas carried out strategic measures in the UK and has called off a move to new offices in Malta. These initiatives will lead to annual cost savings of approximately EUR 3.7 m. Restructuring costs of EUR 6.1 m are reported under items affecting comparability for the fourth quarter. At the same time, an impairment loss of EUR 10.2 m has been recognised for the Royal Panda investment.

Events after the end of the quarter

  • Preliminary revenue of EUR 30,1 m in January (28.7), representing growth of 5%.
  • In light of a more pronounced focus on profitability in an increasingly dynamic business environment LeoVegas has decided to remove the financial targets to reach sales of EUR 600 m and EBITDA of EUR 100 m by 2021. At the same time, the company has reaffirmed its long-term financial target to achieve organic growth that outperforms the online gaming market and an EBITDA margin of no less than 15%.
  • LeoVegas’ Chairman, Mårten Forste, hired as new COO in Malta.
  • The Board of Directors proposes a dividend of SEK 1.40 per share (1.20), an increase of 17%, to be paid out – as in the preceding year – on two occasions during the year.

 

COMMENT FROM GUSTAF HAGMAN – GROUP CEO

sustainability and long-term growth
During 2019 we worked hard to reduce complexity in the Group, be more efficient and adapt to the changes taking place in the gaming industry. In parallel with this we have enhanced the attraction of our product through new functionality and greater personalisation. We have launched new brands, focused more on Casino, and expanded to new markets. Towards the end of the year we intensified the integration of our previous acquisitions, which is expected to contribute to cost savings and increased economies of scale.

Our investments in sustainability have been particularly meaningful, where LeoVegas is one of the leading operators. For example, today we have some 70 employees who work exclusively with responsible gaming and compliance.

an industry in change
2019 was a year characterised by change in our industry, with external challenges coupled to higher demands for compliance, higher gambling taxes and undertainty surrounding future regulation. In the near term this is presenting challenges to navigate in an increasingly complex world, but it also presents long term competitive advantages for a company like LeoVegas, which has a scalable organisation, proprietary technology and focus on sustainable growth along with an increasingly broader revenue base spread across several markets and brands.

We have entered 2020 with a good starting point, with an increasingly efficient organisation and many ongoing initiatives surrounding product innovation and brand expansion. Owing to the increasingly dynamic business environment and a more pronounced focus on profitability, we have decided to remove our financial targets for 2021 while we reiterate our long-term financial targets of organic growth in excess of the market and an EBITDA margin of at least 15%.

At the same time, our underlying profitable growth and favourable financial position have created the foundation for the Board’s proposal to raise the dividend for 2019 by 17% to SEK 1.40 per share.

fourth quarter 2019
Revenue for the fourth quarter amounted to EUR 87.1 m (84.5), representing organic growth of 3%. Growth during the period remained good in most of our markets. Excluding the UK market, organic growth in local currencies was 11%. We are especially pleased with our performance in Sweden, where we continue to take market shares.

EBITDA for the fourth quarter adjusted for items affecting comparability during the period totalled EUR 9.2 m (8.1), corresponding to an EBITDA margin of 10.6% (9.6%). We thereby improved our underlying profit by 13% compared with a year ago despite a higher burden from gambling taxes and increased regulatory complexity, which confirms that our focus on efficiency and cost control is yielding the desired result.

A couple of weeks ago we communicated a number of strategic decisions coupled mainly to the UK and our ambitions to create a less complex and more scalable organisation. These initiatives gave rise to one-off restructuring costs that affected fourth quarter earnings by a total of EUR 6.1 m and are expected to lead to annual cost savings of approximately EUR 3.7 m. The savings consist mainly of platform and product costs, a more efficient organisation and more optimized premises.

During the fourth quarter we recognised a capital gain on the sale of Authentic Gaming, which was sold in October. The capital gain was EUR 11.4 m. EBIT for the fourth quarter was also affected by an impairment loss of EUR 10.2 m related to goodwill in Royal Panda.

markets
We had favourable performance in most of our markets during the full year 2019. Three of our major markets, Sweden, the UK and Germany, underwent major changes during the past year. In Germany, the removal of a key payment services provider affected our revenue during the fourth quarter. Development improved gradually during the quarter in pace with customers finding alternative payment methods. We are now growing again sequentially month-on-month in Germany. We are confidently waiting for clarity regarding what future regulation will look like in Germany. Based on the most recent information, the German federal states are now in agreement to regulate the market at the national level at the end of 2021.

As previously communicated, we are addressing the challenges in the UK by migrating all of our brands in the UK to our proprietary technical platform. In parallel with this we are refining our brand portfolio and closing Royal Panda in the UK. Altogether these measures are leading to a more focused and efficient operation and opening up economies of scale within the Group. Revenue for the remaining operations in the UK, consisting of 13 brands, grew 15% over the third quarter and showed good profitability. Royal Panda will now focus entirely on fast-growing markets outside the UK.

In the Swedish market we are stronger than ever. It is clear that we are benefiting from our strong brand, focus on responsible gaming and experience from regulated markets. In addition, GoGoCasino has exceeded our expectations and was successful in the strategy of filling an empty space in the Swedish casino market. December was record-strong and we ended the year with revenue as well as the number of customers at record high levels. During 2020 we expect to see the authorities taking a harder line against unlicensed actors, which will improve channelisation and consumer protection in the Swedish market.

Comments on first quarter 2020
Revenue for the month of January amounted to EUR 30.1 m (28.7), representing growth of 5%.

Royal Panda in the UK, which was closed in January, is not expected to generate any significant revenue during the first quarter. During the fourth quarter Royal Panda generated revenue of EUR 1.1 m in the UK.

With good momentum in many of our markets and a number of growth initiatives, we are looking forward to the remainder of 2020. We continue to work hard to deliver profitable growth at the same time as we are working to live up to our vision, to be “King of Casino”.

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: 9682129 or join at the web https://edge.media-server.com/mmc/p/g9y6w2q8

Affiliate Industry

PartnerMatrix helps clients leverage real-time data via new API development

George Miller

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PartnerMatrix helps clients leverage real-time data via new API development
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PartnerMatrix introduces new API development which helps casino and betting websites to have a better understanding of their affiliate marketing programs. The real-time data API feature allows Affiliate Managers to track users’ actions in real-time, without delay or inaccuracy, view instant reports and access full users’ history and flow.

PartnerMatrix’s API based solution provides transparent and instant data both for operators and affiliates, helps build trustworthy relationships, discourages possible frauds, and improves the day-to-day operations. The first client to leverage the new feature is Prisma Gaming, which is set to integrate it across its B2C brands and clients.

The API integration gives gaming operators a better understanding of the results of their campaigns. The real-time data supplies a wealth of information which helps Affiliate Managers in making well-informed decisions about their ongoing promotional activities. Operators can quickly decide if they should continue promotion, invest more in a campaign, or end it if the results aren’t rising to the expectations.

Levon Nikoghosyan, PartnerMatrix CEO, comments: “Currently, affiliate software providers offer reports via FTP integrations on both operator and affiliate side. However, it can take up to one day to receive the data results. PartnerMatrix’s API integration allows instant reporting, which can lead to more transparency, trust and cooperation between iGaming affiliates and operators.”

Part of EveryMatrix Group, PartnerMatrix was created under the vision of one system to reach millions of players, currently catering to over 100 casino and betting operators, including Dafabet, Nextbet, Gigapotti, MaxBet, ShangriLa or TotoGaming, with 24 new clients joining in the last 12 months.

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Affiliate Industry

XLMEDIA to Offload Finnish Casino Assets

Niji Narayan

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XLMEDIA to Offload Finnish Casino Assets
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Publishing firm XLMedia has instructed Akur Capital to commence a process to sell the majority of its Finnish-facing Casino assets, along with certain other publishing sites.

This proposed disposal is in line with the company’s stated strategy of refining its publishing portfolio and refocusing on regulated and high-potential markets, to deliver more sustainable and predictable growth.

Any disposal proceeds from a successful conclusion over the coming months will be used, along with current balance sheet headroom, to expedite the Company’s strategy through the acquisition and development of content-rich, highly engaging sites in regulated and high growth markets.

“XLMedia has set out a clear transformation strategy to deliver the next phase of growth. We have already made significant progress with reshaping the organisation, reducing our cost base, strengthening the leadership team and building our core people skills and technological expertise,” Stuart Simms, CEO of XLMedia, said.

“The sale of our Finnish-facing casino assets will reduce the reliance on unregulated markets and accelerate the delivery of our strategy, providing additional capital for the acquisition of attractive assets in regulated and high growth markets, such as the burgeoning US sports market. I look forward to updating our key stakeholders over the coming months,” Stuart Simms added.

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Affiliate Industry

Rightlander Expands its Reach to Portugal and Bulgaria

Niji Narayan

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Rightlander Expands its Reach to Portugal and Bulgaria
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Affiliate compliance specialist Rightlander has launched its product and service portfolio in Portugal and Bulgaria.

Operators in these two countries will now have access to the full spectrum of Rightlander.com products including affiliate landing page tracker, PPC partner bidding tool, responsive affiliate finder, live enforcement and quick start.

“Rightlander’s priorities are largely driven by our clients’ requirements and we provide data to several large companies dealing in multiple regulated or soon to be regulated territories. Portugal’s igaming market grew to €69.8m in the first quarter of 2020 and the gambling industry in Bulgaria continues to grow and become more and more interesting for international companies so it was only a matter of time before we included these markets into our offering,” Ian Sims, founder of Rightlander, said.

Rightlander’s distributor compliance database searches every website and generates a list of all locations to which the trademarks of an operator are referred and/or related.

It follows each link on the website towards its final destination, takes a screenshot and stores it in a personal library. This is designed to enable operators to have full oversight of the affiliates that link to their brands.

The platform also helps operators to schedule compliance breach incidents that will be immediately alerted when they occur allowing them to respond and fix instantly.

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