Q 2 - 2 0 1 9 2 0 1 9 - 0 8 - 1 4 PRESENTERS GUSTAF HAGMAN STEFAN - - PowerPoint PPT Presentation

Q 2 - 2 0 1 9

2 0 1 9 - 0 8 - 1 4

PRESENTERS GUSTAF HAGMAN

G R O U P C EO

STEFAN NELSON

G R O U P C FO

2

Q2 2019 HIGHLIGHTS

3

R E V E N U E G R O W T H D E P O S I T I N G C U S T O M E R S

E B I T D A

R E G U L A T E D S H A R E

N D C S

94.4 MEUR

+7.0 MEUR

+8%

O R G A N I C G R O W T H 8%

( E X . U K 2 6 % )

48%

3 9 % I N Q 2 2 0 1 8

334 961

+8%

138 758

+3%

15.1 MEUR

16.0% MARGIN

REVENUES SINCE LAUNCH (MEUR)

4

94,4 94,4

10 20 30 40 50 60 70 80 90 100

2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 2019-Q1 2019-Q2

PRODUCT MIX – Q2 2019

5

74%

• f GGR

17%

• f GGR

9%

• f GGR

C A S I N O C L A S S I C L I V E C A S I N O S P O R T

B U S I N E S S U P D A T E

6

BUSINESS UPDATE

7

S U S T A I N A B L E G R O W T H A N D S T R O N G P R O F I T A B I L I T Y

Focus on product innovation and customer experience Operational excellence and synergy creation More balanced geographic revenue mix Challenging external environment

Q 2 - 2 0 1 9

MARKET COMMENTS – NORDICS

8

37.6

MEUR NGR Growth Y-o-Y

• Sweden - revenues have developed positively every

month during the quarter

• Other Nordic markets deliver solid growth

Sweden

• LeoVegas is the single largest casino brand and gaining

market share

• Focus on customer experience, knowledge about

regulated markets and strong brand position contribute to the positive development

40%

• f NGR

N O R D I C S H I G H L I G H T S

2%

Q 2 - 2 0 1 9

MARKET COMMENTS – REST OF EUROPE

9

43.2

MEUR NGR

1%

Growth Y-o-Y

• UK continues to be challenging and offsets the total

growth for the region, efforts ongoing to stabilise the business

• Good financial performance in other core markets
• utside UK

Spain

• Granted license in Spain and already live in July

Switzerland

• LeoVegas has chosen not to apply for a license in the

recently re-regulated Swiss market

• Switzerland accounted for 2.2 MEUR in revenues in

the second quarter

47%

• f NGR

R E S T O F E U R O P E H I G H L I G H T S

MARKET COMMENTS – REST OF WORLD

1 0

• 63% growth in Q2-2019
• Rest of World now at 13% of Group NGR

R E S T O F W O R L D Q 2 - 2 0 1 9

12.2

MEUR NGR

63%

Growth Y-o-Y

13%

• f NGR
• Strong quarter for all ROW markets
• Live in Brazil in July
• Looking at new potential market entries

H I G H L I G H T S

Dersim Sylwan appointed as new Chief Marketing Officer (CMO)

• Dersim has over 11 years of experience in the gaming

industry and becomes an appreciated addition to the management team Louise Nylén leaving as Deputy CEO. Her role will not be replaced Migrated tech stack to Google Cloud

• Scaling the technical infrastructure environment

without having to invest in hardware

• Reduces maintenance costs
• Increased speed in setting up and adapting to new

markets and regulations New product features launched

• Improved search functionality
• Multiplay for mobile
• New exclusive games

BUSINESS UPDATE

1 1

T E C H

M A N A G E M E N T

FINANCIAL TARGETS 2021

1 2

2 0 2 1 L O N G T E R M T A R G E T S 100 MEUR in EBITDA 600 MEUR in revenue

The target includes organically generated growth as well as revenue from potential future acquisitions

At least 15% EBITDA margin assuming 100% regulated markets Long-term organic growth that outperforms the online gaming market

To pay a dividend, over time, of at least 50% of profit after tax

CURRENT TRADING – START OF Q3

Preliminary revenues July 2019

29.7 MEUR

an increase of

9%

compared to July last year

1 3

B U S I N E S S K P I S

1 4

CUSTOMER BASE

R E T U R N I N G

D E P O S I T I N G C U S T O M E R S

N E W

D E P O S I T I N G C U S T O M E R S

• New depositing customers (NDCs)

increased 3% Y-Y but decreased 20% Q-Q from the record-high number in Q1

• Returning Depositing Customers

(RDCs) increased 12% Y-Y and remained flat Q-Q

• Total depositing customers (DC’s)

increased 8% Y-Y but decreased 10% Q-Q

C O M M E N T S

138 758

• 20 000

40 000 60 000 80 000 100 000 120 000 140 000 160 000 180 000 200 000 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19

196 203

• 20 000

40 000 60 000 80 000 100 000 120 000 140 000 160 000 180 000 200 000 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19

1 5

D E P O S I T S ( E U R ) P E R D E P O S I T I N G C U S T O M E R

AVERAGE SPEND PER CUSTOMER

• Average deposit per depositing

customer in Q2 increased 18% from Q1 and remained flat on Y-Y basis

• Average NGR per depositing

customer increased 22% Q-Q but decreased 1% Y-Y

• Significant increase versus prior

quarter primarily reflects a changed mix in the player base with a higher share of RDCs, and much lower bonus costs – especially in Sweden

• Long-term trend of lower share of

high-value players is expected to continue

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C O M M E N T S

• %

10% 20% 30% 40% 50% 60% 70%

• 100

200 300 400 500 600 700 800 900 1 000 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Deposits per depositing customer RDC share of depositing customers

GAME MARGIN AND HOLD

G A M E

M A R G I N

% A N D H O L D

I N

% M A R G I N C A S I N O C L A S S I C M A R G I N S P O R T S

B O O K

M A R G I N L I V E C A S I N O

• The game margin in Q2 saw a minor

decrease versus Q1 to 3,69%, in line with the historical average

• Hold in Q2 increased to 32% from 31% in

Q1 to above-average levels

• Game margin is defined as house

winnings divided by the total amount of bets, i.e. what percentage the LeoVegas Group on average wins on a bet

• Hold is defined as NGR divided by

deposits

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C O M M E N T S

DEPOSITS AND NGR

• Deposits reached a new all-time-

high, with an 8% increase versus the prior year

• NGR increased 8% versus Q2 the

prior year, and 9% sequentially versus Q1

• The NGR and deposit trends reflect

a steadily growing depositing customer base versus the prior year, with the average player value being the primary growth driver versus Q1

N G R M E U R D E P O S I T S M E U R

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C O M M E N T S

287,8

• 50

100 150 200 250 300 350 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19

92,9

• 10

20 30 40 50 60 70 80 90 100 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19

CUSTOMER ACQUISITION COST

• Marketing spend decreased to

28.1 MEUR in Q2, reflecting lower marketing investments in Sweden, reduced affiliate costs and some postponed campaigns from Q2 to Q3

• The Customer Acquisition Cost

(CAC) increased 7% Q-Q but declined 11% Y-Y, reflecting an

• verall good marketing efficiency, a

higher share of organic traffic and previous quarters marketing investments paying off

• The current assessment is that

marketing costs in Q3 will be higher than in Q2, both in absolute terms and in share of revenues

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C O M M E N T S M A R K E T I N G ( M E U R ) A N D C A C ( E U R )

• 50

100 150 200 250 300

• 5,0

10,0 15,0 20,0 25,0 30,0 35,0 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Ma Marketing cost ME MEUR Cu Custom

• mer Acquisition
• n Cos

Cost (CA CAC) C) EUR CAC

F I N A N C I A L S

2 0

2 1

E B I T D A ( A D J . ) M E U R

EBITDA OVER TIME

• EBITDA in Q2 was 15.1 MEUR,

reflecting an EBITDA margin of 16.0%

• Adjusted and reported EBITDA

were the same during the period

• IFRS 16 accounting principle added

0.9 MEUR to EBITDA in Q2

C O M M E N T S

6,2 6,2 8,4 7,1 9,0 15,0 9,0 8,1 7,1 15,1

• 2,0

4,0 6,0 8,0 10,0 12,0 14,0 16,0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19

EBITDA BUILD UP Q2’19 VS. Q1’19

• Gaming duties increased by 1.3 MEUR compared to Q1-19
• Marketing spend decreased by 4.7 MEUR from Q1-19, reflecting lower investments in Sweden, lower affiliate costs and a few postponed marketing

campaigns from Q2 to Q3

• Personnel expenses as a percentage of revenue decreased in Q2, but increased slightly in absolute terms, reflecting a initiated shift from consultants to
• wn tech personnel and certain temporary costs reflecting organisation optimisation efforts
• Slight increase in operational expenses, partly reflecting certain temporary costs and adverse FX rates
• Lower capitalised development costs versus the prior period

EBITDA margin: 8.3%

2 2

C O M M E N T S

7,2 15,1 8,1

• 1,3
• 1,0

4,7

• 1,7
• 0,7
• 0,3

EBITDA Q1-19 Increased revenus Increased gaming tax Increased cost of sales Decreased marketing Increased operational expenses (incl. other income) Increased personnel costs Decreased capitalised development costs EBITDA Q2-19

EBITDA margin: 16.0%

EBITDA TO NET INCOME

Q 2 2 0 1 9 P & L F R O M E B I T D A T O N E T

I N C O M E , M E U R

2 3

• Adjusted measures are presented in
• rder to provide a more fundamental

picture of the performance of the Group

• D&A costs include IFRS 16 related

depreciation of 0.9 MEUR

• Adjusted EBIT for the period was

12.6 MEUR, when excluding amortisations relating to previous acquisitions

• Net income for the period was

7.4 MEUR

• In the adjusted measure the non-cash

items relating to amortisations for acquisitions that are removed total 4.1 MEUR in the period

C O M M E N T S

15,1

• 2,5

12,6

• 4,1

8,5

• 0.5
• 0,6

7,4 EBITDA D&A Adjusted EBIT Amortisation for acquisitions (non-cash) EBIT Financial expenses Tax Net income

CASH FLOW

C A S H

F L O W M E U R Q 2 2 0 1 9

2 4

• Cash flow from operating activities

before changes in working capital amounted to 14.8 MEUR, driven by the underlying EBITDA result

• Changes in working capital resulted

in cash outflow of 1.0 MEUR for the period

• Income taxes paid of 4.5 MEUR
• Bank loan amortisation of

10.0 MEUR and paid semi-annual dividend of 5.7 MEUR

• Cash at the end of the quarter was

49.3 MEUR

C O M M E N T S

59,3 8,5 6,3

• 1,0
• 4,5
• 10,0
• 0,8
• 0,3
• 2,0
• 0,5
• 5,7

49,3 Cash beginning of period EBIT Adjustments for non-cash items Change in working capital Net income taxes paid Loan financing Lease liabilities Acquisition of PP&E Acquisition of intangible assets Currency effects Dividend Cash end of period Cash flow from

• perating

activities1 14.8 MEUR

1) Before changes in working capital and Net income taxes paid

S U M M A R Y

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SUMMARY

2 6

• Revenues of 94.4 MEUR (8% growth) and an

EBITDA of 15.1 MEUR (16% margin)

• Sweden performing well and we are gaining

market share

• Live in Spain and Brazil
• Dersim Sylwan appointed as new Chief

Marketing Officer (CMO)

• LeoVegas has chosen not to apply for a

license in the Swiss market

• July revenues of 29.7 MEUR

Q & A

2 7