NOVEMBER 10, 2015 CAUTION REGARDING FORWARD LOOKING STATEMENTS - - PowerPoint PPT Presentation
NOVEMBER 10, 2015 CAUTION REGARDING FORWARD LOOKING STATEMENTS - - PowerPoint PPT Presentation
Q3 2015 PRESENTATION NOVEMBER 10, 2015 CAUTION REGARDING FORWARD LOOKING STATEMENTS Cautionary Note Regarding Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities
2
Cautionary Note Regarding Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable securities laws, including, without limitation, certain financial expectations and projections. Forward-looking statements can, but may not always, be identified by the use of words such as “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “would”, “should”, “believe”, “objective”, “ongoing” and similar references to future periods or the negatives of these words and expressions. These statements, other than statements of historical fact, are based on management’s current expectations and are subject to a number of risks, uncertainties, and assumptions, including market and economic conditions, business prospects or opportunities, future plans and strategies, projections, technological developments, anticipated events and trends and regulatory changes that affect us, our customers and our industries. Although the Corporation and management believe the expectations reflected in such forward-looking statements are reasonable and are based on reasonable assumptions and estimates, there can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. Forward-looking statements are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ materially from those expressed or implied in such statements. Specific risks and uncertainties include, but are not limited to: the heavily regulated industry in which the Corporation carries on business; interactive entertainment and online and mobile gaming generally; current and future laws or regulations and new interpretations of existing laws or regulations with respect to online and mobile gaming; potential changes to the gaming regulatory scheme; legal and regulatory requirements; ability to obtain, maintain and comply with all applicable and required licenses, permits and certifications to distribute and market its products and services, including difficulties or delays in the same; significant barriers to entry; competition and the competitive environment within the Corporation’s addressable markets and industries; impact of inability to complete future acquisitions or to integrate businesses successfully; ability to develop and enhance existing products and services and new commercially viable products and services; ability to mitigate foreign exchange and currency risks; ability to mitigate tax risks and adverse tax consequences, including, without limitation, the imposition of new or additional taxes, such as value-added and point of consumption taxes, and gaming duties; risks of foreign operations generally; protection of proprietary technology and intellectual property rights; ability to recruit and retain management and other qualified personnel, including key technical, sales and marketing personnel; defects in the Corporation’s products or services; losses due to fraudulent activities; management of growth; contract awards; potential financial opportunities in addressable markets and with respect to individual contracts; ability of technology infrastructure to meet applicable demand; systems, networks, telecommunications or service disruptions or failures or cyber- attacks; regulations and laws that may be adopted with respect to the Internet and electronic commerce and that may otherwise impact the Corporation in the jurisdictions where it is currently doing business or intends to do business; ability to obtain additional financing on reasonable terms or at all; refinancing risks; customer and operator preferences and changes in the economy; dependency on customers’ acceptance of its products and services; consolidation within the gaming industry; litigation costs and outcomes; expansion within existing and into new markets; relationships with vendors and distributors; and natural events. Other applicable risks and uncertainties include those identified under the heading “Risk Factors and Uncertainties” in Amaya’s Annual Information Form for the year ended December 31, 2014 and in its Management’s Discussion and Analysis for the period ended September 30, 2015, each available on SEDAR at www.sedar.com, EDGAR at www.sec.gov and Amaya’s website at www.amaya.com, and in other filings that Amaya has made and may make with applicable securities authorities in the future. Investors are cautioned not to put undue reliance on forward-looking statements. Any forward-looking statement speaks only as of the date hereof, and the Corporation undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
CAUTION REGARDING NON-IFRS FINANCIAL MEASURES
3
Non-IFRS and Non-US GAAP Measures This presentation contains non-IFRS and non-U.S. GAAP financial measures, specifically Adjusted Net Earnings, Adjusted Net Earnings per Diluted Share, Adjusted EBITDA, and the pro-forma equivalents of such measures for comparative periods, Adjusted Net Debt, Adjusted Net Leverage Ratio, Capital Expenditures, and Unadjusted Unlevered Free Cash Flow. The Corporation believes these non-IFRS and non-U.S. GAAP financial measures will provide investors with useful supplemental information about the financial performance of its business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in
- perating its business. Although management believes these financial measures are important in evaluating Amaya, they are not intended to be considered in
isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS or U.S. GAAP. They are not recognized measures under IFRS or U.S. GAAP and do not have standardized meanings prescribed by IFRS or U.S. GAAP. These measures may be different from non- IFRS and non-U.S. GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on the Corporation’s operating results. Currency Unless otherwise noted, all references to“$” and “CAD” are to the Canadian dollar, “US$” and “USD” are to the U.S. dollar and “€” and “EUR” are to the Euro. The USD to CAD exchange rates used in certain slides herein are as follows: Q3 2015 – 1.3066; YTD 2015 – 1.2598; Q3 2014 – 1.0889; and YTD 2014 – 1.0942., and as at September 30, 2015 - 1. 3345 B2C Business Historical Measures All historical information and financial measures relating to Amaya’s B2C business prior to Amaya’s acquisition of Amaya Group Holdings (IOM) Limited (formerly known as Oldford Group Limited) and its subsidiaries (collectively, “Rational Group”) on August 1, 2014 presented in, or due to lack of information
- mitted from, the Corporation’s documents filed on SEDAR at www.sedar.com and Edgar at www.sec.gov, including the Corporation’s Management
Information Circular, dated June 30, 2014, for the annual and special meeting of shareholders of the Corporation held on July 30, 2014, the Corporation’s Business Acquisition Report, as amended and restated on July 27, 2015, and this presentation, including all financial information of the B2C business, has been provided in exclusive reliance on the information made available by Rational Group and their respective representatives. Although the Corporation has no reason to doubt the accuracy or completeness of Rational Group’s information provided therein and herein, any inaccuracy or omission in such information could result in unanticipated liabilities or expenses, increase the cost of integrating Amaya and Rational Group or adversely affect the operational plans of the combined entities and its results of operations and financial condition.
CORPORATE / OPERATIONS HIGHLIGHTS
Corporate Highlights
- Completed previously announced divestitures of B2B businesses in Q3 2015.
From proceeds as well as cash generated by B2C business in YTD 2015:
- Repaid US$529 million in gross debt, reducing annualized interest costs by ~US$62 million, or
~US$0.30 per diluted share
- Annualized interest expense now ~US$136 million, excluding hedges; LTM Unadjusted Unlevered Free
Cash Flow of US$332 million
- Repurchased and cancelled 1.46 million common shares for aggregate price of ~$45 million
- Set aside US$59 million for deferred payment of purchase price for Oldford Group (US$108
million in total set aside thus far)
- ~$180 million in available cash and available-for-sale investments above player deposit
liabilities at September 30, 2015
5
Operational Highlights
- Executed on initiatives to grow customer base and cash flow in 2016:
REGULATION
- Received approval to begin operating PokerStars and Full Tilt brands in New Jersey and received
licenses in Romania and Ireland
- Continued to invest in lobbying to achieve regulation of online poker/gaming in ex-EU jurisdictions
MARKETING/R&D
- Launched poker marketing campaigns featuring superstars Cristiano Ronaldo and Neymar Jr and
increased bonuses/promotions to attract new and reactivated poker customers
- R&D investments towards new poker products planned for 2016 launch to bridge the gap between real
money gaming and skilled video gaming/social gaming markets POKER CHANGES
- Announced comprehensive plan to increase engagement and retention of new and casual poker
players CASINO/SPORTSBOOK ROLLOUT
- Continued to roll out more games across platforms and geographies in online casino and online
sportsbook in preparation for launch of external marketing to attract new customers, with plans to cross-sell them into poker
6
FINANCIAL
Financial Highlights1 – Revenue
- Revenues increased 8% in CAD to ~$325 million in Q3 2015 vs Q3 2014
- Casino revenues were ~14% in Q3 2015
- Poker revenues comprised almost entirely the remainder
- Sportsbook revenues were negligible
- IFRS figures do not normalize for VAT or Restricted Jurisdictions
8
1 All 2014 figures are presented on a pro forma basis, which assumes that the acquisition of Amaya’s B2C business occurred as of the first day of such financial period 2 For each jurisdiction in which the Corporation’s B2C business operates, 2015 dollar figures are adjusted to their 2014 constant currency equivalent by using a factor that is derived from the percentage change in the exchange rate of the applicable jurisdiction’s currency relative to USD during the comparative period. The sum of each such equivalent is then compared to IFRS figures for the applicable comparative financial period in 2014. During the quarter, the Corporation estimates the decline in purchasing power of our consumer base was a result of an average 19% decline in the value of its customers’ local currencies relative to USD, which was partially offset by the translation into its CAD reporting currency.
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
$000’s
2015 2014 2015 2014
CAD Revenues
324,663 299,520 981,534 924,189
Consolidated revenues on CAD and IFRS basis
13% 63% 17% 7%
Q3 2015 IFRS revenue breakdown (CAD)
Americas European Union Other Europe Rest of world
Financial Highlights1 – Constant Currency
9
1 All 2014 figures are presented on a pro forma basis, which assumes that the acquisition of Amaya’s B2C business occurred as of the first day of such financial period 2 For each jurisdiction in which the Corporation’s B2C business operates, 2015 dollar figures are adjusted to their 2014 constant currency equivalent by using a factor that is derived from the percentage change in the exchange rate of the applicable jurisdiction’s currency relative to USD during the comparative period. The sum of each such equivalent is then compared to IFRS figures for the applicable comparative financial period in 2014. During the quarter, the Corporation estimates the decline in purchasing power of our consumer base was a result of an average 19% decline in the value of its customers’ local currencies relative to USD, which was partially offset by the translation into its CAD reporting currency. 3 Normalizing as defined by the Corporation means, in the case of VAT, adding back the particular dollar amount at issue to the referenced financial measure, and, in the case of the Extraordinary Events, excluding the particular dollar amount at issue from the referenced financial measure for such Extraordinary Events for all periods referenced 4 The Extraordinary Events included (i) the temporary suspension of real-money operations in Portugal as of July 2015 in anticipation of a new regulatory and licensing regime, (ii) the impairment of real-money
- perations in Greece as a result of the severe economic slowdown in that country and the capital controls and banking restrictions imposed by its government in 2015, and (iii) the suspension of operations in
approximately 30 other jurisdictions following Amaya’s acquisition of the Rational Group in 2014. For Q3 2014, revenues attributable to Portugal, Greece and the other suspended jurisdictions were approximately US$9 million, the significant majority of which were from Portugal and Greece.
USD $MILLIONs Three Months Ended
- Sep. 30,
FX Impact
- (Negative)
YoY % Change Nine Months Ended
- Sep. 30,
FX Impact
- (Negative)
YoY % Change 2015 2014 2015 2014
B2C Poker
216 261 (57) 4.5% 698 804 (183) 10%
B2C Total
252 263 (62) 19% 778 810 (197) 20%
B2C Business USD Revenues on Constant Currency/Normalization Basis
- B2C business revenues increased ~19% in Q3 2015 vs Q3 2014 on a constant currency2
basis and normalizing3 for VAT and Extraordinary Events4 related to real money operations in Portugal, Greece, and certain additional smaller markets
- Significant impact on USD revenues due to ~19% decline in value of customers’
deposits vs the US dollar
Financial Highlights – FX impact on net gaming revenues
10 10
- Decline in global currencies vs USD impacts on net gaming revenues (“NGR”)1 in major markets
- Direct translation impact in segregated markets in which gameplay occurs in Euros
- Indirect impact in non-segregated markets in which gameplay occurs almost entirely in USD
- NGR excluding VAT in many major markets either grew or declined less than local currency decline vs USD
1 NGR excludes certain other real money gaming revenues and other non-real money gaming revenues, which increased on a absolute US dollar basis in Q3 2015 vs Q3 2014
Region Market Currency YoY % change in NGR in USD* YoY % change in currency value vs USD YoY % Change of NGR on Local Currency basis* SHARED LIQUDITY MARKETS European Union EU countries in Eurozone Euro 7%
- 16%
27% European Union UK British Pound 10%
- 7%
18% European Union Denmark Danish Krone
- 4%
- 16%
15% European Union Hungary Hungarian Forint 20%
- 16%
43% European Union Norway Norwegian Krone 7%
- 24%
41% European Union Poland Polish Zloty 1%
- 16%
21% European Union Romania Romanian Leu
- 2%
- 16%
17% European Union Sweden Swedish Krona 2%
- 18%
24% Other Europe Belarus Belarusian Ruble
- 19%
- 37%
27% Other Europe Russia Russian Ruble
- 23%
- 42%
34% Other Europe Switzerland Swiss Franc 73%
- 5%
83% Other Europe Ukraine Ukranian Hryvnia
- 10%
- 42%
56% Americas Brazil Brazilian Real
- 8%
- 35%
41% Americas Canada Canadian Dollar
- 25%
- 17%
(9)% Rest of World Australia Australian Dollar
- 23%
- 21%
(2)% SEGREGRATED MARKETS European Union Italy, France, Spain Euro
- 18%
- 16%
(2)% * Excluding Portugal and Greece, and impact of VAT
Financial Highlights1 – Adjusted EBITDA
- Adjusted EBITDA increased 8% in Q3 2015 from Q3 2014
- Growth driven by increased revenues
- Headwinds included:
- Forex
- Approximately $10 million in taxes, notably VAT and gaming duties in the United Kingdom and Bulgaria, not
imposed in Q3 2014
- Loss of contribution from Portugal and Greece
- Q3 2015 adjustments included ~$38M in one-time and non recurring charges:
11
1 All 2014 figures are presented on a pro forma basis, which assumes that the acquisition of Amaya’s B2C business occurred as of the first day of such financial period. Adjusted EBITDA is a non-US GAAP and non-IFRS measures. Please refer to the appendix of this presentation for reconciliation.
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
$000’s except percentages
2015
% of Revenues
2014
% of Revenues
2015
% of Revenues
2014
% of Revenues
Adjusted EBITDA
141,249
43.5%
130,536
43.6%
420,724
42.9%
378,517
41.0%
- ~$9 in back taxes related to obtaining Romanian license
- ~$3M related to termination of employment agreements
- ~$8M in deferred employee bonuses
- ~$2M in New Jersey license application costs
- ~$6M in non-recurring portion of lobbying & legal expenses in the U.S.,
Russia, and elsewhere
- ~$1.5M in donations (primarily Nepal Earthquake)
- ~$7M in non-recurring professional fees related to corporate
development activities, regulatory and government relations, and SOX implementation
- ~$1.6M in office shutdown costs and license transfer fees
Financial Highlights1 – Adjusted EPS
- Adjusted Net Earnings per Diluted Share increased 16% in Q3 2015
from Q3 2014
- Share count denominator used is 208 million shares (assumption used in 2015
guidance)
12 12
1 All 2014 figures are presented on a pro forma basis, which assumes that the acquisition of Amaya’s B2C business occurred as of the first day of such financial period. Adjusted Net Income and Adjusted EPS are non-US GAAP and non-IFRS measures. Please refer to the appendix of this presentation for reconciliation.
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
$000’s except percentages and per share figures
2015 2014 2015 2014
Adjusted Net Earnings
90,543 79,830 260,915 218,709
Adjusted Net Earnings per Diluted Share
$0.44 $0.38 $1.25 $1.05
Financial Highlights1 – Cash Flow
- ~$1.04 billion generated from cash flow from operations and proceeds from
sales of B2B business over last 12 months (LTM):
- ~$695 million in long term debt repaid
- ~$144 million set aside for deferred payment portion of Oldford Group purchase price
- ~$45.5 million used to buy back AYA common shares for cancellation
- ~$40 million used for capital expenditures
- Adjusted Net Debt stood at US$2.36 billion at September 30, 2015
- LTM Adjusted EBITDA was US$461 million
- Annualized interest expense is ~US$136 million, excluding hedging
- LTM Unadjusted Unlevered Free Cash Flow generated was ~US$332 million
- ~$180 million in available cash and investments above player deposit
liabilities at September 30, 2015
13 13
1 Adjusted Net Debt, Adjusted EBITDA and Unadjusted Unlevered Free Cash Flow are non-US GAAP and non-IFRS measures. Please refer to the appendix of this presentation for reconciliation.
2015 Guidance Update –
Revenue & Adjusted EBITDA
14 14 Previous Guidance Revised Guidance Revenues $1.446 - $1.564 billion $1.289 – $1.339 billion Adjusted EBITDA $600 - $650 million $552 - $572 million
- Revised guidance primarily due to:
- More significant negative impact from the general strengthening of the U.S. dollar relative to certain foreign
currencies, primarily the Euro, and the 19% decline in the purchasing power of our customer base
- Recent strategic decision to delay the rollout of significant aspects of our new online sportsbook offering
across geographies while we enhance the consumer product experience
- Temporary cessation of our operations in Portugal and Greece
Revenues (in millions) Adjusted EBITDA (in millions) USD USD>CAD at 1.26 USD USD>CAD at 1.26 Adjusted EBITDA Margin Previous Guidance - Based on midpoint of range 1,194 1,504 496 625 41.5% Strategic delay of sportsbook rollout net of taxes (53) (67) (35) (44) Current expected 2015 foreign exchange impact (263) (331) (116) (146) Previously anticipated 2015 foreign exchange impact 120 151 48 60 Portugal and Greece (17) (21) (7) (9) Incremental customer deposits as a result of foreign exchange impact 62 78 49 62 Cost savings 11 14 Revised Guidance - Based on midpoint of range 1,043 1,314 446 562 42.8%
1 The Corporation estimates that its customers compensate for the reduced purchasing power of their local currencies relative to the USD caused by foreign exchange fluctuations by depositing greater
amounts in their respective local currencies.
2015 Guidance Update –
Pro Forma Adjusted Net Income and Adjusted Net Leverage Ratio
15 15
1 Pro Forma Adjusted Net Earnings as defined by the Corporation means Adjusted Net Earnings that is pro forma as if the divestiture of the entire B2B business occurred at December 31, 2014. Pro
Forma Adjusted Net Earnings is a non-IFRS and non-U.S. GAAP measure. Diluted Share count used is 208 million.
2 Adjusted Net Leverage Ratio as defined by the Corporation means Adjusted Net Debt divided by Adjusted EBITDA. Adjusted Net Debt as defined by the Corporation means total financial leverage
minus cash (with cash including funds in excess of working capital requirements set aside for the deferred payment that is in Restricted Cash in the Q3 Financials) plus current investments less customer deposits liabilities, and after giving effect to the divestiture of the entire B2B business (which was anticipated as it related to the previous guidance). This does not assume potential cash from the exercise of warrants with maturity dates extending beyond 2015. Adjusted Net Leverage Ratio and Adjusted Net Debt are non-IFRS and non-U.S. GAAP measures.
Previous Guidance Revised Guidance Pro Forma Adjusted Net Earnings1 $367 - $415 million, or $1.76 - $2.00 per Diluted Share $345 - 365 million, or $1.66 to $1.75 per Diluted Share Adjusted Net Leverage Ratio2 4.0 - 4.5 as at December 31, 2015 5.19 – 5.37 as at December 31, 2015
- Revised guidance primarily due to:
- Reduction of Adjusted EBITDA guidance for full year 2015
CORPORATE / OPERATIONS
Aggregate Customers/Active Users
- B2C business added an aggregate of 1.85 million real-money and play-money
customer registrations during the quarter
- Registered customers ~97 million as of September 30, 2015 (~9% YoY growth)
- The aggregate number of unique1 customers who played a real money online offering
during the quarter was approximately 2.2 million, of which approximately 94% played on PokerStars
- ~3% decline from Q3 2014 driven by temporary cessation of operations in Portugal and Greece
17 17
1 Unique as defined by the Corporation means a customer who played on only one of the platforms and excludes any duplicate counting.
Estimated Online Poker Market Share*
18 18
* Company estimates are of global real money online poker market share, in terms of cash game and tournament players based on various industry data sources including PokerScout, Sharkscope and various gaming regulators. Full Tilt market share only included as of January, 2013 following acquisition by Rational Group and relaunch of brand, which had previously shut down in June 2011
54% 55% 56% 64% 68% 71% 45% 50% 55% 60% 65% 70% 75%
2010 2011 2012 2013 2014 YTD 2015
- PokerStars comprised ~68%, Full Tilt ~3% in YTD 2015
- Market share increase in 2015 driven by introduction of PokerStars’ Spin & Go’s
tournament variant in H2 2014; tournaments increased ~40% on PokerStars from Q3 2014 to Q3 2015
- Tournaments majority of our online poker gross gaming revenue
PokerStars Registrations/ Deposits (Q3 2015 vs Q3 2014)
- Strong YoY quarterly growth in player
registrations
- Primarily due to global marketing initiatives and
increase in bonuses and promotions
Excluding Extraordinary Events:
- Unique depositors to real money platform
increased ~3%
19 19
0% 10% 20% 30% 40% 50% 60% 70% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
PokerStars Mobile Growth
Mobile % Total New Accounts Mobile % Total Average Monthly Real Money Poker Uniques
PokerStars Real Money Online KPIs (Q3 2015 vs Q3 2014)
Excluding Extraordinary Events:
- Quarterly real money active uniques increased ~3% to 2.07 million in Q3 2015
- Real money gaming revenue¹ for all verticals per real money active unique
increased ~13% to ~$148 due to:
- Addition of online casino
- Shift in game mix to Spin & Go’s
20 20
¹ CAD. Excludes revenues from play money/social offerings, events and live rooms, and certain other income
PokerStars Online Poker Update
- Efficient marketing and significant increase in bonuses and promotions resulted in growth in
customer registrations and real money active uniques
- PokerStars has announced comprehensive plan to increase engagement and retention among
new and casual players and make poker more enjoyable. Goals include:
- Ensuring all players compete on a more level playing field, including by stopping data mining and limiting
third-party software tools
- Eliminating hunting of new and casual players through automated table selection or player targeting
- Increasing retention by enabling new real money players to learn the game over longer period of time,
improve win rates, and reduce speed of loss
- Improving consumer experience and speed-of-play, including through reducing high volume play
- Enhancing bonuses and promotions, and visibility of rewards program
21 21
PokerStars Poker Roadmap
22 22
Q3 2015 Upcoming Quarters Product/Platform
- Cristiano Ronaldo and Neymar Jr. marketing
campaign launch and related poker engagement promotion
- VIP Steps – redesigned presentation of VIP
system to improve visibility of our loyalty program
- 3d party software restrictions
- Development of innovative poker variant
aimed at mobile users
- Beta launch of innovative poker
variant aimed at mobile users
- Roll out of VIP Club changes
and product features to improve poker ecosystem
- New engagement tool: Instant
bonus functionality
Geography
- German SH license (June)
- New Jersey
- Portugal
- Develop and roll out new products created towards mobile users and video
gamers
- Increase the engagement of our players through additional promotional tools
and protection of our ecosytsem
PokerStars Online Casino Update
- ~14% of revenues in Q3 2015 (6% in Q1, 11% in Q2)
- EBITDA* margins of >60%
- Profits supporting increased poker bonuses and promotions, sportsbook rollout, and
increased expenses including additional personnel and IT costs, gaming duties and lobbying for regulation of online poker/gaming
- External marketing to begin in 2016, margins anticipated to remain >40%
- Partial casino offering now available in jurisdictions comprising ~53% of real
money active uniques
- Cannot offer real money online casino in >40% of jurisdictions for compliance reasons
- Full games offering not yet available on mobile; web casino testing
commenced to small number of users
- >300,000 customers played real money casino in Q3 2015
- Sequential decline driven by losses of Portugal and Greece markets, 6th and 7th largest
casino markets in Q2 2015
23 23
* EBITDA defined here means earnings before interest, income taxes, depreciation and amortization
PokerStars Casino Roadmap
24 24
During Q3 2015 Upcoming Quarters Game Type
- Video Poker
- Continued expansion of
slots portfolio
- In-house jackpot system (video
poker followed by slots)
- Innovative table game variant
Platform
- Initial launch of slots on
mobile
- Live casino on Mobile
- Web Casino alpha testing
- Web Casino launch
- Standalone casino mobile app
- New mobile content providers to
boost mobile games portfolio
Geography
- Slots launched in Spain
- Mobile Italy
- Live Casino Italy
- X-sell core channels to be completed: (BJ, RLT, Live, Slots) x (Desktop, Mobile)
- Rollout of web casino will enable initiation of casino as customer acquisition channel
PokerStars Online Sportsbook Update
25 25
- Limited availability to PokerStars active customers during Q3 2015
- >100,000 real money active uniques in Q3 2015
- ~13% cross-sell, double-digit cross-sell in top three markets (UK, Germany, Spain)
- Positive early stage KPIs
- Strong retention on month-to-month basis
- Turnover up ~180% from start to end of quarter
- Margin of ~8%
- Net revenues negligible due to soft launch and CRM bonuses/promotions,
notably in UK
- EBITDA* loss due to launch costs (in house team, third party supplier costs)
* EBITDA defined here means earnings before interest, income taxes, depreciation and amortization
PokerStars Sportsbook Roadmap
26 26
Q3 2015 Upcoming Quarters Game Type & Features
- Progressed from 10 Sports, up to
26 sports including Poker and eSports Betting
- Cricket
- Horse Racing
- New Product: Enhanced Odds
Innovation
Platform
- HTML5 Design enabled launch
across desktop, web and mobile
- New Brand & Domain
- Sports Mobile App added to
channels for access.
Geography
- Addition of Hungary (July) and
Germany (August)
- Romania
- Italy
- Portugal
- France
- Denmark
- Others
- Continue to close product gap, primarily through the addition of more sports
- Optimisation to improve site performance (load and session times), user
experience and user interface
OUTLOOK
Outlook
28 28
- New Jersey launch
- Additional regulation anticipated
- Changes to poker ecosystem and VIP rewards scheme
- R&D: Launch of new poker products, standalone casino, new sports
brand and domain
APPENDIX
Adjusted EBITDA/EPS Reconciliation
30 30
$000's except per share figures Q3 2015 Q3 2014 YTD Q3 2015 YTD Q3 2014 Net income (loss) from continuing operations (52,743) 25,340 (10,155) 60,643 Financial expenses 67,289 4,886 180,669 4,109 Current income taxes 1,269 2,639 5,440 2,639 Deferred income tax expense (recovery) 10,845 (7,738) 18,958 (11,437) Depreciation of property and equipment 2,601 1,379 7,023 1,994 Amortization of intangible assets 39,032 24,203 111,943 25,346 Amortization of deferred development costs 150 73 441 204 Stock-based compensation 4,637 1,493 14,234 3,028 Pro-forma B2C EBITDA (9,430) 236,089 EBITDA 73,080 42,845 328,553 322,615 Termination of employment agreements 2,714 658 10,545 809 Non-recurring professional fees 6,666 11,067 Loss (Gain) on disposal of assets (18) 4,135 205 4,135 Loss (Gain) on sale of subsidiary (6,742) 16,319 (6,742) (29,334) Loss (Gain) from investments 36,922 (679) 33,241 (1,687) Acquisition-related costs 118 12,130 277 20,446 Impairment 9,039 1,587 9,039 Other one-time costs 28,509 5,485 41,991 7,050 Pro-forma B2C one-time costs 40,604 45,444 Adjusted EBITDA 141,249 130,536 420,724 378,517 Current income tax expense (1,269) (2,639) (5,440) (2,639) Depreciation and amortization (net of amortization of purchase price allocation intangibles) (3,337) (2,304) (8,403) (4,192) Interest (net of interest accretion) (46,100) (30,945) (145,966) (32,092) Pro-forma B2C current income taxes, depreciation, amortization, and interest (14,818) (120,885) Adjusted net income 90,543 79,830 260,915 218,709 Diluted shares as at September 30, 2015 208,000,000 208,000,000 208,000,000 208,000,000 Adjusted Net Earnings per Diluted Share $ 0.44 $ 0.38 $ 1.25 $ 1.05
Unadjusted Unlevered Free Cash Flow (US$)
31 31
LTM Operating Cash flow from continuing operations 363,964 Capex Deferred development costs (18,565) Additions to property and equipment (10,536) Acquired intangible assets (3,111) Total CAPEX per FS (32,212) Unlevered Free Cash Flow 331,751
Adjusted Net Debt Reconciliation
32 32
* Adjusted Net Debt is a non-US GAAP and non-IFRS financial measure and is defined by Amaya as total financial leverage minus cash (with cash including funds in excess of working capital requirements set aside for the contingent consideration (i.e., the deferred purchase price payment for the B2C business) plus current investments less customer deposits, each as presented in the Amaya’s unaudited interim consolidated financial statements for the period ending September 30, 2015), and after giving effect to the divestitures of our B2B businesses. Based on US Dollar to Canadian dollar exchange rate at September 30, 2015 of 1.3344985
Debt & Player Liabilities Interest USD First Lien USD Loan
LIBOR +4.00% with 1.00% LIBOR floor
2,046,745 First Lien EUR Loan
EURIBOR plus 4.25% with 1.00% EURIBOR floor
323,446 Second Lien USD Loan
LIBOR +7.00% with 1.00% LIBOR floor
210,000 Non-convertible debenture (TSX:AYA.DB.A)
7.50%
22,480 Customer Deposits 442,280 Cash & Investments Cash
- 247,495
Cash - Restricted Cash - Deferred Payment Amount
- 107,660
Investments
- 330,222
Adjusted Net Debt * 2,359,574
Fully Diluted Capital Structure (as of September 30, 2015)
33 33
Common Shares/ Common Shares Equivalent
Basic Common Shares Outstanding 132,782,033 Securities Convertible into Common Shares
Common Share Purchase Warrants - weighted average exercise price of $5.14 15,497,316 Convertible Preferred shares* 50,403,556 Stock Options** – weighted average exercise price of $20.10 10,559,122
Fully Diluted Shares Outstanding 209,242,027
* At September 30, 2015, there were 1,139,249 convertible preferred shares outstanding, each with an initial principal price per preferred share of C$1,000 and convertible, at the holder's option, initially into approximately 41.67 common shares of the Corporation based on the conversion price of C$24 per common share, in each case, subject to dilution adjustments and including a 6% annual accretion to the conversion ratio, compounded semi-annually, over a 3 year period up to August 1, 2017. Calculation included herein is based on a conversion ratio of 44.20417 as of September 30, 2015. ** 3,774,707 stock options were exercisable as at September 30, 2015, with a weighted average exercise price of $9.81
34