Q4 Q4-2018 2018 Group CEO Group CFO 2 Leading the way into the - - PowerPoint PPT Presentation

▶
q4 q4 2018 2018 group ceo
SMART_READER_LITE
LIVE PREVIEW

Q4 Q4-2018 2018 Group CEO Group CFO 2 Leading the way into the - - PowerPoint PPT Presentation

Sep 27, 2022 297 likes •701 views

Q4 Q4-2018 2018 Group CEO Group CFO 2 Leading the way into the mobile future 3 Strategy Strong company culture Expand in regulated markets and markets that are soon be regulated and to carry out strategic and complementary acquisitions

slide-1
SLIDE 1

Q4 Q4-2018 2018

slide-2
SLIDE 2 Group CEO Group CFO 2
slide-3
SLIDE 3

Leading the way into the mobile future

3
slide-4
SLIDE 4 4

GameTech Effective marketing Strong company culture

Strategy

Expand in regulated markets and markets that are soon be regulated and to carry out strategic and complementary acquisitions To be the most innovative and creative company within our core verticals and also explore new product categories and features in the gaming industry
slide-5
SLIDE 5 5 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 5 10 15 20 25 30 35 40 45 50 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E EURbn Mobile share of online, (%)

Poker Betting Casino

Online Gaming market
slide-6
SLIDE 6 6

Agenda genda

  • Full Year 2018
  • Quarterly report highlights
  • Business update
  • Business KPIs
  • Financials
  • Summary
  • Q&A
slide-7
SLIDE 7

2019

The year of the casino Growth with solid profitability

7

EBITDA:

41.6 MEUR

61% growth!

A challenging year

  • Compliance focus
  • Strategic long term

projects delivered

Revenue:

327.8 MEUR

51% growth! Strong position to excel in

2019

slide-8
SLIDE 8 5 16 37 83 141 217 50 100 150 200 250 300 350 2012 2013 2014 2015 2016 2017 2018

51% 2018 - Growth Y-Y

slide-9
SLIDE 9

Quart Quarterly erly report eport

Highlights and events

9
slide-10
SLIDE 10

Revenue:

84.5 MEUR

+16.7 MEUR EBITDA:

8.1 MEUR

9.6 % margin

Depositing customers

327 156

Growth: 29% and ATH

Growth:

+25 %

Organic growth: 7% (Ex. UK: 14%)

Mobile deposits:

72 %

10
slide-11
SLIDE 11

84.5

10 20 30 40 50 60 70 80 90
slide-12
SLIDE 12 12

Sport 9% ofGGR LiveCasino14% ofGGR

Casino Classic 77% ofGGR

Locally regulated NGR: 33%

slide-13
SLIDE 13

Busine Business updat s update

13
slide-14
SLIDE 14 14

Number one casino brand* Improved product and increased marketing efforts with Dolph Lundgren Strong Q4 with 18% sequential growth

*Mantab Global brand surveys

Record-high customer activity, with 28% Y-Y growth of the Swedish depositing customer base Short-term revenue impact related to certain dynamics driven by the regulation For example higher amount of bonuses in the first two weeks and modifications in the gaming experience Launched Swish – January 2

slide-15
SLIDE 15 15

Finland and Denmark had strong quarters Canada delivered a steady growth UK market – huge long term potential Need more time until the UK is completely turned around – develops in the right direction UKGC follow up on all operators = will level the playing field

The UK brands managed brands under Rocket X umbrella encountered certain technical issues that impacted the site performance during parts of the period. These problems have now largely been solved Strong performance in all KPI:s Growth of over 200%

slide-16
SLIDE 16 16

Decision has been made to conduct a strategic evaluation of the portfolio companies The Group’s Pixel.bet brand was granted a licence for online casino and sports betting in Sweden COO – Richard Woodbridge joined in January, based in Malta CCLO – Avshalom Lazar, joins in April New role implemented – CPTO – Mattias Wedar recruited for the role. Mattias has solid experience in product development and great industry knowledge. LeoVegas enter 2019 with a strong management team

slide-17
SLIDE 17 17

compared to January last year

28.7 MEUR 16%

Revenues January 2019 an increase of

slide-18
SLIDE 18 18 Over time, distribute at least 50% of net profit Revenue EBITDA
  • rganic growth above
  • nline gaming market
at least EBITDA margin (assuming 100% regulated markets) Dividend 2018: 1.20 SEK proposed to the AGM to be distributed in two equal payments
slide-19
SLIDE 19

Busine Business s KPI’s

19
slide-20
SLIDE 20
  • 20,000
40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 RocketX RDCs Royal Panda RDCs LeoVegas RDCs 20 145 409 181 747
  • New ATH in DC’s in Q4 at 327 156
which is up 29% Y-Y and 3% sequentially, reflecting a healthy underlying customer trend within the group
  • New depositing customers (NDCs)
increased 13% Y-Y and 3% Q-Q
  • Returning Depositing Customers
(RDCs) increased 46% Y-Y and 2% Q-Q
  • 20,000
40,000 60,000 80,000 100,000 120,000 140,000 160,000 RocketX NDCs Royal Panda NDCs LeoVegas NDCs
slide-21
SLIDE 21
  • Average deposit per depositing
customer in Q4’18 increased 6% from Q3’18 but decreased 5% Y-Y
  • Average NGR per depositing
customer increased 3% Q-Q and decreased 7% Y-Y
  • The Y-Y decline in player value
reflects the compliance efforts made in our largest markets, and a mix shift in our customer base 21
  • %
10% 20% 30% 40% 50% 60%
  • 100
200 300 400 500 600 700 800 900 1,000 Deposits per depositing customer Proportion of RDCs in the depositing customer base
  • 50
100 150 200 250 300 NGR per depositing customer
slide-22
SLIDE 22 22
  • 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
  • Game margin and Hold are
correlated with each other, and periods with lower margins are
  • ften associated with lower Hold
  • Game margin in Q4’18 saw a small
decline versus Q3 to levels slightly below the historical average, reflecting low margin levels in the Live Casino segment
  • Hold in Q4’18 decreased to 30%
from 31% in Q3 3.70% 3.66% 3.71% 3.66% 3.71% 3.70% 3.89% 3.74% 3.72% 3.20% 3.40% 3.60% 3.80% 4.00% Casino Classic margin 2.42% 2.61% 3.21% 3.11% 2.89% 2.77% 2.91% 2.54% 2.51% 2.00% 2.20% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% Live Casino margin 1.56% 6.83% 6.76% 9.54% 9.51% 6.79% 7.75% 8.05% 8.22%
  • %
2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Sports book margin 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% LeoVegas margin Royal Panda margin Rocket X margin 25% 27% 29% 31% 33% 35% 37% 3.40% 3.45% 3.50% 3.55% 3.60% 3.65% 3.70% 3.75% 3.80% 3.85% 3.90% Hold % Game margin % Game margin, % Hold, %
slide-23
SLIDE 23
  • Deposits for LeoVegas Group
reached a new all-time-high, with a 23% increase in Q4’18 versus the prior year and 9% sequentially from Q3
  • NGR increased 21% in Q4’18 versus
the prior year and 5% sequentially versus Q3
  • October was the weakest month in
Q4 and December was the strongest month
  • The deposit and NGR growth in Q4
is primarily an effect of a solid increase of our depositing customer base, which has more than offset the Y-Y decline in player value 23 276.6 MEUR
  • 10
20 30 40 50 60 70 80 90 100 NGR
  • 50,000,000
100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 Deposits 82.0 MEUR
slide-24
SLIDE 24
  • Marketing spend increased by 14%
from Q3’18 to 32.0 MEUR in Q4’18, which is partly related to increased investments in Sweden ahead of regulation and a higher NDC intake
  • verall
  • The Customer Acquisition Cost (CAC)
increased 10% Q-Q, but decreased 4% Y-Y
  • The sequential uptick in CAC is partly
related to a higher share of Casino NDCs compared to the prior quarter 24 32.0 220
  • 5.0
10.0 15.0 20.0 25.0 30.0 35.0
  • 50
100 150 200 250 300 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 Marketing cost MEUR Customer Acquisition Cost (CAC) EUR Marketing spend MEUR
slide-25
SLIDE 25 25

FINANCIAL FINANCIALS

slide-26
SLIDE 26
  • In Q4’18 EBITDA was 8.1 MEUR, with
a margin of 9.6%
  • Cost of sales as a percentage of
revenue increased slightly due to somewhat higher payment costs as well as a one-time reallocation of Royal Panda costs
  • Marketing in relation to revenue
increased to 37.9%, an increase from Q3, driven by increased investments in Sweden ahead of regulation
  • Personnel expenses as a percentage
  • f revenue increased in Q4, reflecting
investments in compliance-related staff, a initiated shift from consultants to own tech personnel and LeoVentures
  • Other operating expenses also
increased, which was partly driven by certain specific non-recurring costs of 0.9 MEUR 26 24.2% 14.0% 12.4% 15.1% 10.5% 11.6% 17.2% 11.4% 9.6% 36.2% 42.9% 41.9% 40.7% 43.4% 39.0% 34.9% 35.6% 37.9% 7.6% 8.8% 9.7% 9.7% 9.4% 11.5% 10.6% 12.8% 9.4% 9.5% 11.7% 12.4% 8.5% 9.8% 9.8% 10.1% 12.1% 13.6% 22.5% 22.6% 23.7% 26.0% 26.9% 28.0% 27.2% 28.1% 29.3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA 10.0 6.2 6.1 8.4 7.1 9.0 15.0 9.0 8.1 14.9 18.8 20.8 22.6 29.5 30.2 30.5 28.0 32.0 3.1 3.8 4.8 5.4 6.4 8.9 9.3 10.0 11.6 3.9 5.1 6.2 4.8 6.6 7.6 8.8 9.5 7.9 9.3 9.9 11.7 14.4 18.2 21.7 23.8 22.1 24.7
  • 10.0
20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA
slide-27
SLIDE 27 8.1 1.4 6.7 4.1 2.6 0.5 20.2 0.1 22.1
  • 5.0
10.0 15.0 20.0 25.0
  • Adjusted measures are presented in
  • rder to provide a more fundamental
picture of the performance of the Group
  • Net income was 22.1 MEUR, which
includes several items affecting comparability and some significant large non-cash items
  • In the adjusted measure the non-cash
items relating to amortisations for acquisitions that are removed total 4.1 MEUR in the period
  • An additional consideration has been
revalued according to IFRS 3, resulting in a 21.0 MEUR (undiscounted) positive non-cash impact in the period
  • Adjusted Net Income was 6.1 MEUR
in Q4 18 27 16 MEUR in total non-cash items related to acquisitions and a revaluation of the Royal Panda earn-out that are excluded in adjusted profit measures Adjusted Net Income 6.1
slide-28
SLIDE 28 47.6 2.6 4.7 0.6 4.7 0.3 3.1
  • 0.03
0.01 56.7 Cash beginning
  • f period
EBIT Adjustments for non-cash items Change in working capital Loan financing Acquisition of PP&E Acquisition of intangible assets Acquisition of subsidiaries Dividend payment Share issue from warrants program Currency effects Cash end of period Cash flow MEUR Cash flow from operating activities 7.9 MEUR 28
  • Cash increased by 9.2 MEUR in the
quarter
  • Cash flow from operating activities
before changes in working capital increased by 7.3 MEUR driven mainly by the underlying EBITDA result
  • Changes in working resulted in
cash inflow of 0.6m for the period. Working capital fluctuates between periods, but over time tends to support operating cash flow
  • Cash at the end of the quarter was
56.7 MEUR
slide-29
SLIDE 29 29

Summary Summary

slide-30
SLIDE 30 30
slide-31
SLIDE 31

Q& Q&A

31
slide-32
SLIDE 32

APPENDIX APPENDIX

32
slide-33
SLIDE 33 33
  • Being data driven is key –proactive actions
  • Algorithms to detect unsound player behaviour
  • Building the next generations responsible gaming

system based on machine learning

  • Sustainable business
slide-34
SLIDE 34
  • Deposits from mobile devices
reached a new ATH level in Q4 18 at 72%
  • For the LeoVegas platform mobile
devices accounted for 73% of deposits 34 67.0% 67.4% 66.6% 69.7% 69.0% 69.3% 68.5% 71.2% 72.2% 50% 55% 60% 65% 70% 75% 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 Mobile share
slide-35
SLIDE 35 35
  • Casino Classic was 77% of GGR in Q4
18, which is a slight decrease from Q3 at 78%
  • Live Casino was 14% of GGR, up
from 13% in Q2
  • Sportsbook was 9% of GGR in Q4 18,
  • The reason the split by product type
is shown as GGR (Gross Gaming Revenue) instead of NGR (Net Gaming Revenue) is due to that bonuses in casino cannot be separated between Classic and Live GGR Casino Classic 77% GGR Live Casino 14% GGR Sports book 9%
slide-36
SLIDE 36 36 Country Tax structure 0.5% on Sports turnover and 1.5 KEUR per license 15% on GGR 20% on GGR Country Tax structure 23% VAT on Casino 19% VAT on Casino, 5% on sports turnover 40% tax on GGR Country Expectation 18% on GGR Q1’19 29% on GGR expected 2020 *No local license regime is in place Sports 1% on Turnover Casino 25% and Sports 22% on GGR Italy Ireland Denmark UK Malta Ireland Germany Austria Sweden The Netherlands
slide-37
SLIDE 37 Market size increase Marketing channels
  • pen up
Decrease in marketing clutter Increase or decrease in competition Changing competetive position of Svenska Spel Supply chain absorbtion of tax Decrease in bonus costs 10 20 30 40 50 60 70 80 90 100 10 20 30 40 50 60 70 80 90 100 Positive / Negative Impact Probability 37 Marketing clutter More channels Competition Supply chain Bonus costs Market size may decrease as competitors scale back marketing to protect margins in marketing open up changes as small companies leave, but large UK operators could enter, incumbents launch casino absorbs its share of the gaming tax just as in the UK market will decrease due to legislation and as competitors scale back to protect margins may increase Svenska Spel / ATG will change its competitive position
slide-38
SLIDE 38 38
  • 50.0
100.0 150.0 200.0 250.0 300.0 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 Deposits
  • 10.0
20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 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 NGR
  • 20,000
40,000 60,000 80,000 100,000 120,000 140,000 160,000 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 NDCs
  • 20,000
40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 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 RDCs