Q3 Q3 2017
Presenters GUSTAF VIKTOR HAGMAN FRITZÉN Group CEO and Co-founder Group CFO 2
The Leo Passion Leading the way into the mobile future 3
The growth company LeoVegas Effective marketing GameTech-Mobile focus and technology leadership A fantastic company culture –new passion and attitudes 4
• Acquisition of Royal Panda Ag Agenda • Financial Targets • Quarterly highlights • Business update • Business KPIs • Financials • Summary • Q&A 5
Acqu quisition Royal Panda 6
Royal Panda During the past two years we have searched for companies that fit in with our overall expansion strategy, which is to grow in regulated markets and markets soon-to-be regulated Royal Panda Royal Panda in Q3’17 Why Royal Panda? Inline with our expansion 60 employees Revenues: EUR 9.8 m strategy Head office in Malta YoY growth 61% Strengthen our position in License in UK and Malta Estimated EBITDA of EUR the UK 3.2 m. 1 Casino and Sportsbook Adding another premium UK accounted for 50% of In-house developed brand to LeoVegas Group revenue technology platform Global and scalable brand 65% of revenues generated Core market: UK Efficient marketing and from Mobile devices affiliate strategy Great team Cultural fit 7 1. Certain costs for the month of September are approximate figures in order to calculate estimated EBITDA.
Royal Panda Purchase price Earn-out – 12 months EUR 60 m + up to an additional EUR 60 m In order for Royal Panda to be entitled to the maximum earn-out the need to met certain The total purchase consideration can thus milestones within 12 months amount to a maximum of EUR 120 m At least EUR 50 m in Net Gaming Revenue (NGR) EBITDA of at least EUR 15 m At least EUR 34 m of NGR must be derived from the UK EBITDA from the UK must amount to at least EUR 5 m 8
Royal Panda Financing LeoVegas has a strong cash position that will been used for the initial purchase price In addition - debt financing of EUR 100 m Of this EUR 100 m, EUR 40 m consists of a Revolving Credit Facility (RCF) The financing has a term of three years Amortisation will commence in the second quarter of 2019 in the amount of EUR 10 m quarterly The interest rate on financing is approximately 2% The financing arrangement ensures that LeoVegas will have the continued ability to capitalise on consolidation in the industry 9
Fi Financial Ta Targets 10
Financial targets With the acquisition of Royal Panda, the LeoVegas Group removes the 2018 short-term financial targets since they did not include acquisitions LeoVegas has not changed its long term financial targets: Long-term organic growth above online gaming market Long-term at least 15% EBITDA margin assuming 100% regulated markets LeoVegas dividend policy is to distribute a minimum of 50% of net profit over time 11
Quart Quarterl erly re report Highlights and events 12
MEUR 40,0 60,0 20,0 30,0 50,0 10,0 - Revenue since start 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 55.6 2017-Q3
Q3 2017 Highlights Growth: Revenue: 55.6 MEUR +40 % +15.9 MEUR Organic growth: 33% Mobile deposits: Deposits: Adjusted EBITDA: 70 % 193.1 MEUR 8.4 MEUR +56 % 15.1 % margin 14
Current Trading – Start of Q4 NGR 1-23 October 14.9 MEUR an increased of 70 % compared to 1-23 October last year 15
Bus Business up update 16
Aiming for listing on Nasdaq Stockholm in H1 2018 LeoVegas has since the IPO on Nasdaq First North Premier prepared for listing on Nasdaq Stockholm Proof of quality to external parties, such as investors, authorities and partners For institutional investors we will become more accessible and attractive as a company and investment LeoVegas aims to change list to Nasdaq Stockholm during H1 2018 17
LeoVentures’ role in LeoVegas Mobile Gaming Group Maintaining LeoVegas Mobile Gaming Group´s position as innovative, entrepreneurial and with an increased focus on ventures For LeoVegas Mobile Gaming Group to attract and maintain the best innovations and ideas To create value in existing and new ventures To maintain a strong entrepreneurial culture and momentum IM IMP Le LeoVentures LeoVegas co-founder Robin Ramm-Ericson taking on the role as Managing Director for LeoVentures 18
LeoVentures – investments Le Leading the way into the mobile future Entrepreneurs that come to us with innovative ideas and understanding of early trends with a strong future in Internal ideas, innovations and/or technology spin-offs Innovative companies that we come across, likes and see an Fu Future potential opportunity for to be scaled up and accelerated 19
Responsible Gaming – Leo Safe play Further improvements Leo Safe Play website Launch of www.leosafeplay.com The website makes information about gambling habits more accessible and clear for our customers We have also launched a new algorithm that proactively alerts us about customers who show tendencies toward unsound gaming This enables us to more swiftly and effectively address these customers in a more proactive way 20
Regulated revenues LeoVegas’ strategy is to enter regulated markets and markets that are soon to be regulated Regulated revenues in Q3’17 were 25% of total Q3 Q3 2017 25% % of NGR GR from regulated markets UK Italy 12% 5% Denmark 8% 75% 21
Legal update Australia A change to the gaming legislation in Australia was voted through parliament on August 9 th LeoVegas has stopped accepting bets from customers in Australia since September 10, 2017 Australia was 5.7% of NGR in Q3’17 Australia has been closed for new customer since Dec 2016 22
Bus Busine iness KPI KPI’s 23
Q3’17 drivers Q2’17 back-drop Q3’17 22.6 MEUR in NDCs 33% Q-Q 20.8 MEUR in marketing growth marketing Deposits 15% Q-Q Revenue 12% Q-Q growth growth 73 014 NDCs in Q2’17 RDCs 6% Q-Q growth 24
Customer base Depositing customers, new and returning Active customers and depositing customers COMMENTS 120 000 Actives customers • Returning Depositing New depositing customers (NDCs) 600 000 Customers (RDCs) growth Returning depositing customers (RDCs) Returning depositing customers (RDCs) 105 770 was slightly below trend at New depositing customers (NDCs) 5%, mainly due to the lower NDC intake in H1’17 100 000 97 210 • LeoVegas no longer accepts 500 000 bets from Australian customers since 10 September 2017, excluding 80 000 Australia the RDC growth 400 000 would have been 7% • New depositing customers 299 639 60 000 (NDCs) increased 33% 300 000 sequentially • The growth in NDCs is very broad-based with all markets seeing material 40 000 200 000 increases • Active customers increased mainly due to the increase in 20 000 the depositing customer 100 000 base - - 25
Average spend per customer Deposits EUR per depositing customer NGR EUR per depositing customer COMMENTS • As the proportion of RDCs in Deposits per depositing customer 1 000 300 the mix has a material effect Propotion of RDCs in the on the average deposit per depositing customer base depositing customer – it can 900 60% be seen how the proportion 250 of RDCs correlates with 800 average deposit per 50% depositing customer 700 • In Q3’17 there was a large 200 increase in NDCs, which had its share of depositing 600 40% customers larger, which in turn decreases the average 500 150 deposit per depositing customer 30% NGR per depositing customer 400 • Average deposit per 100 depositing customer stayed 300 20% at historically high levels as LeoVegas customer mix has 200 shifted towards countries 50 with higher average spend 10% 100 • Average NGR per depositing customer followed the - 0% - average deposit upwards for the same reasons 26
Marketing and customer acquisition cost Marketing spend and NDCs indexed to Q2’17 in relation to marketing per NDCs COMMENTS • Marketing spend increased by Marketing Indexed to Q2'17 9% from Q2’17 to 22.6 MEUR 97 210 NDCs Indexed to Q2'17 in Q3’17, which is the highest level in LeoVegas’ history Marketing / NDC (CAC) • NDCs increased by 33% in the +33% same period • The Customer Acquisition 22.6 MEUR Cost (CAC), illustrated in the 20.8 MEUR 73 014 chart as marketing in relation to NDCs, in Q3’17 decreased 18% compared to Q2’17 -18% • The growth in NDCs is very broad-based across countries • ROI in Q3’17 has been very +9% strong 2017-Q2 2017-Q3 27
Deposits Deposits MEUR and Q-Q growth in deposits % Deposits MEUR by region COMMENTS • In Q3’17 deposit grew 56% 90,0 Deposits 250,0 30% compared to Q3’16 Sweden Q-Q growth rate in deposits • On a sequential basis Other Nordics deposits increased 15%, 80,0 which is the highest UK sequential growth rate since 25% Rest of Europe Q3 of 2016 200,0 70,0 Rest of World • Growth rates per regions: • Sweden 36% • Other Nordics 127% 60,0 20% • UK 41% • Rest of Europe 113% 150,0 • Rest of World -5% 50,0 • Deposits increased by 69.4 15% MEUR from Q3’16 to Q3’17 of 40,0 which the regions accounted for: 100,0 • Sweden 21.3 MEUR 30,0 • Other Nordics 23.2 MEUR 10% • UK 7.8 MEUR • Rest of Europe 17.6 MEUR 20,0 • Rest of World -0.6 MEUR 50,0 5% 10,0 - - 0% 28
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