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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
Reading Time: 5 minutes

 

“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

Leadstar Media outline big ambitions for My Betting Sites

George Miller

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Leadstar Media outline big ambitions for My Betting Sites
Reading Time: 2 minutes

 

Swedish iGaming affiliate company Leadstar Media has strengthened its position in the British market by introducing a new bookmaker comparison website, My Betting Sites.

The Stockholm-based lead generation experts have been at the forefront of the iGaming space in territories such as the UK, Sweden, and Germany for over three years. 

While they are now expanding beyond Europe and into the Americas and Asia, their attention has not been diverted from their core markets.

“The plan is to accelerate our growth within the markets we are already active in, as well as entering new ones,” said CEO Eskil Kvarnström.

“In the past, we have had to prioritise certain territories, but fortunately we are now in a position where we can continue to be aggressive in the UK and Sweden while hitting the ground running in places like the US and India.”

“We already have the top sites in the UK within certain niches in betting and we intend to do the same with MyBettingSites.com”

My Betting Sites compiles the best bookmakers through detailed reviews and a rating system. Users are able to view the pros and cons for each betting site, as well as all key information such as payment methods, odds providers, game types and company information.

Some of Leadstar Media’s other brands focus more on betting offers or betting tips, but Kvarnström believes it is important that My Betting Sites differentiates and innovates: “There is no point creating the same product over and over again. There are so many elements to iGaming and so many different types of content that bettors want.

“We have taken learnings and data from previous projects and used this to determine what we must do going forward. My Betting Sites is something we know can be a great resource for bettors in the UK and beyond.”

On top of the UK, My Betting Sites has a section for Canada, Kenya, India, and Nigeria. Leadstar would not normally combine the country pages and include them all on the same website, but this is something that Product Director Jacob Ljunggren believes can help drive the brand forward.

“Usually we keep projects in different territories completely separate, but our vision for My Betting Sites is much bigger,” said Ljunggren.

“Long term, we want MyBettingsites.com to be recognised as a global product, and the early signs are very strong, with all of the territories on the site contributing in their own way.”

“We know that some markets will be more straightforward to succeed in than others, but we are up for the challenge and not afraid to try new things.”

With other English-speaking countries such as New Zealand and South Africa in the pipeline, Leadstar is not ruling out including My Betting Sites in their plans for the US market.

Ljunggren continued: “There are no immediate plans to add the United States to My Betting Sites as our focus is on other American projects, but never say never. It would make sense, perhaps later this year.”

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Affiliate Industry

Raketech Updates Covid-19 Impact

Niji Narayan

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Raketech Updates Covid-19 Impact
Reading Time: < 1 minute

 

Online affiliate and content marketing provider Raketech has provided an update on the impact of COVID-19 virus.

Raketech do not anticipate substantial negative effects on the iGaming industry in the long term, even though sports betting revenues most likely will be affected negatively during 2020 due to the many cancelled sports events.

Q1 2020 is so far delivering revenues in line with expectations with January and February amounting to approximately EUR 4.0m in total. During March, Raketech expects to deliver revenues in line with the two previous months, excluding revenues from the newly acquired Lead Republik Ltd.

“Currently we work hard to help our customers, the operators to reallocate their marketing investments from sports to our main product vertical Casino where we continue to see good demand. The situation furthermore confirms that our strategy to increase our global footprint, product offering and vertical spread is the way forward in terms of securing a healthy and balanced business risk set up,” Oskar Mühlbach, CEO of Raketech, said.

Raketech has since a few weeks back allowed its employees to work from home, banned all business travels and required staff who have been travelling in private matters to self-quarantine for a minimum of 14 days.

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Affiliate Industry

Parimatch encourages European affiliates not to underestimate Africa

George Miller

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Parimatch encourages European affiliates not to underestimate Africa
Reading Time: 4 minutes

 

Following Parimatch’s success establishing itself as an exciting and trustworthy brand in Tanzania, the company has set its sights on the wider continent aiming for key launches across affiliate, mobile and sports betting in the near future. As the brand prepares to bolster its position in the market, Parimatch International’s CEO Anton Rublievskyi and CMO Dmitry Belianin discuss the industry’s growth on the world’s second-most populous continent…

“Africa presents an excellent opportunity for affiliates,” according to Dmitry Belianin, CMO Parimatch International, highlighting how the region removes the issues of the overcrowded affiliate market and high cost advertising platforms which have become potential sticking points in Europe. 2020 will see the brand actively develop its status and the status of affiliate market in Africa as Parimatch prepares to expand its footprint on the continent.

“Since the African market is at an early stage of development, the affiliate model has not yet developed,” explained Belianin. “We are now working on this to attract existing affiliates outside the African market by sharing our experiences and case studies, and also providing training. Affiliates that have been involved in working with the African region are already seeing excellent results and their performance is even better than in some European regions. As the sector expands, we encourage all affiliates to work with reliable brands in the market, such as Parimatch.”

Africa has been of key importance for the company over the last five years, not just with affiliates but across mobile, sports and live betting, during which it has been establishing and strengthening its brand in Tanzania. Having navigated the unique rulings and intricacies of the region, Parimatch aims to develop further in 2020 determined to bring its international expertise in building a trusted brand into play wherever it develops across Africa.

While some companies have struggled to gain real traction with local audiences, the Parimatch name is already recognised in Tanzania thanks to a strong commitment to its brand and a strategic rollout of unique activities.  Mirroring their own global success with brand ambassadors such as Conon McGregor and Mike Tyson, Parimatch International has achieved significant growth in Tanzania by partnering with prominent cultural and sports influencers. “Our initial retail activity proved successful, however, we realised that in order to further scale the business we needed to focus on the online platform and invest more in this part of our offering,” said Belianin. “A major development for our brand in Tanzania was the signing of Diamond Platnumz as our ambassador. He is one of the most popular singers in Tanzania and a well-known personality. We also hold sports events, arrange match viewings and collaborate with other companies in various business areas. Of course, we plan to broaden our expansion in the African market, but we are approaching this selectively and carefully.”

Echoing this sentiment, CEO of Parimatch International, Anton Rublievskyi, stated: “Before building a brand in a new market, you need to make sure that all processes are in place, the product is competitive and that payment solutions for depositing and cashing out are working efficiently.

In Tanzania, we are promoting our brand through working with Diamond Platnumz, who has written a song for Parimatch which is now live on all local radio stations, as well as running advertising and influencer marketing campaigns. Currently we operate in Tanzania only, but this year we do have plans for expansion in Africa.”

In 2019, Lasha Gogiberidze, former Chief Executive Officer at Parimatch Africa advocated Africa’s position as an ‘excellent demonstration of a market primed to drive the next step’ in the future of both technology and the betting industry. In this new decade, aside from affiliates the next big focus in terms of gaming and technology are unequivocally mobile and live betting according to Belianin and Rublievskyi.

“With the development of mobile devices and technologies, the demand for live betting is growing rapidly,” argued Belianin. “We track customer preferences, and have found that the audience in the region enjoy user-friendly and fast products. Gaming applications with an easily accessible interface and simplified jackpots are popular in Africa. Companies that have adapted their products to this demand have shown steady growth.”

Rublievskyi concurred: “The development of mobile devices and connectivity in Africa is key to the accessibility and popularity of online betting platforms. Of course, we closely monitor the rate of digital transformation across the continent and therefore understand that the demand for retail space is gradually decreasing. Our task is to adapt the product to customer preferences, so we focus on developing convenient mobile apps for players and are moving towards the live betting market.”

In terms of ongoing strategy, Parimatch International is developing a new version of its platform for the African industry which Belianin believes will “fundamentally change the competitive landscape of the Tanzanian market”.

“Parimatch International is a multinational team, and we are working hard to expand our offer within Africa,” he said. “Although we cannot announce the markets in which we plan to launch our product in 2020 just yet, we can say we will be launching in several countries with large markets and great potential for a successful introduction of our online betting format.”

Belianin concluded: “We want to bring our innovative new product to customers in 2020. We also plan to launch several large-scale special projects focused on CSR and Tanzania’s sport industry. Similarly, Parimatch International will strengthen ties with local sports leagues and teams in the near future so in terms of Africa in this new decade, we’re definitely ‘Fired Up to Win’!”

About Parimatch International:

Parimatch International is a part of the Parimatch holding, responsible for the international markets, such as Africa, Asia, and Latin America.

The company uses the newest version of the Parimatch products, which offer an exciting form of entertainment that enhances customers’ enjoyment of sports and gaming.

The commitment to sports as entertainment is reflected in the sponsorship partnerships: UFC, Conor McGregor, Mike Tyson, and Diamond Platnumz are amongst them.

Parimatch International invests in the building of strong and agile business culture and constantly empowers employees’ development.

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