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 To be the most innovative and creative company within our core verticals and GameTech Effective marketing also explore new product categories and features in the gaming industry 4
50 50% 45 45% 40 40% Poker 35 Betting 35% Casino 30 30% EURbn 25 25% 20 20% 15 15% 10 10% 5 5% 0 0% 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 5 Online Gaming market Mobile share of online, (%)
• Full Year 2018 Agenda genda • Quarterly report highlights • Business update • Business KPIs • Financials • Summary • Q&A 6
EBITDA: Revenue: 41.6 MEUR 327.8 MEUR 61% growth! 51% growth! Strong position to A challenging year 2019 excel in - Compliance focus 2019 - Strategic long term The year of the casino projects delivered Growth with solid profitability 7
350 2018 - Growth Y-Y 51% 300 250 217 200 141 150 100 83 50 37 16 5 0 2012 2013 2014 2015 2016 2017 2018
Quart Quarterly erly report eport Highlights and events 9
Growth: Revenue: +25 % 84.5 MEUR Organic growth: 7% +16.7 MEUR (Ex. UK: 14%) Mobile deposits: EBITDA: Depositing customers 72 % 8.1 MEUR 327 156 9.6 % margin Growth: 29% and ATH 10
84.5 90 80 70 60 50 40 30 20 10 0
Casino Classic 77% ofGGR LiveCasino14% ofGGR Sport 9% ofGGR Locally regulated NGR: 33% 12
Busine Business updat s update 13
Record-high customer activity, with 28% Y-Y Number one casino brand* growth of the Swedish depositing customer Improved product and increased marketing base efforts with Dolph Lundgren Short-term revenue impact related to Strong Q4 with 18% sequential growth 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 14 *Mantab Global brand surveys
UK market – huge long term potential Finland and Denmark had strong quarters Need more time until the UK is completely turned Canada delivered a steady growth 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 Strong performance in all KPI:s issues that impacted the site performance Growth of over 200% during parts of the period. These problems have now largely been solved 15
Decision has been made to conduct a COO – Richard Woodbridge joined in January, strategic evaluation of the portfolio based in Malta companies CCLO – Avshalom Lazar, joins in April The Group’s Pixel.bet brand was granted a New role implemented – CPTO – Mattias licence for online casino and sports betting in Sweden Wedar recruited for the role. Mattias has solid experience in product development and great industry knowledge. LeoVegas enter 2019 with a strong management team 16
Revenues January 2019 28.7 MEUR an increase of 16% compared to January last year 17
Over time, distribute at Revenue EBITDA least 50% of net profit Dividend 2018: 1.20 SEK at least EBITDA margin organic growth above proposed to the AGM to be (assuming online gaming market distributed in two equal 100% regulated markets) payments 18
Busine Business s KPI’s 19
• New ATH in DC’s in Q4 at 327 156 160,000 200,000 which is up 29% Y-Y and 3% RocketX NDCs RocketX RDCs 145 409 181 747 sequentially, reflecting a healthy 180,000 underlying customer trend within 140,000 Royal Panda NDCs Royal Panda RDCs the group 160,000 LeoVegas NDCs LeoVegas RDCs • New depositing customers (NDCs) 120,000 increased 13% Y-Y and 3% Q-Q 140,000 • Returning Depositing Customers 100,000 120,000 (RDCs) increased 46% Y-Y and 2% Q-Q 80,000 100,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 - - 20
• Average deposit per depositing 1,000 300 customer in Q4’18 increased 6% from Q3’18 but decreased 5% Y -Y 900 60% • Average NGR per depositing 250 customer increased 3% Q-Q and 800 decreased 7% Y-Y 50% 700 • The Y-Y decline in player value 200 reflects the compliance efforts made in our largest markets, and a 600 40% mix shift in our customer base 500 150 Deposits per depositing customer NGR per depositing customer 30% Proportion of RDCs in the depositing 400 customer base 100 300 20% 200 50 10% 100 - -% - 21
4.00% 3.89% • Game margin is defined as house 3.90% 3.74% 3.72% 3.70% 3.66% 3.71% 3.66% 3.71% 3.70% 37% winnings divided by the total 3.80% 3.85% amount of bets, i.e. what 3.80% 3.60% 35% percentage the LeoVegas Group on 3.75% Casino Classic margin Game margin % 3.40% average wins on a bet 33% 3.70% Hold % 3.20% 3.65% 31% • Hold is defined as NGR divided by 3.60% deposits 29% 3.55% Game margin, % 3.50% • Game margin and Hold are Hold, % 27% 3.45% correlated with each other, and 3.40% 25% 3.40% 3.21% 3.11% periods with lower margins are 3.20% 2.89% 2.77% 2.91% often associated with lower Hold 3.00% 2.61% 2.80% 2.54% 2.51% 2.42% 2.60% • Game margin in Q4’18 saw a small Live Casino margin 2.40% 2.20% decline versus Q3 to levels slightly 2.00% below the historical average, reflecting low margin levels in the 5.00% LeoVegas margin Live Casino segment Royal Panda margin 4.50% Rocket X margin 4.00% • Hold in Q4’18 decreased to 30% from 31% in Q3 3.50% 12.00% 9.54% 9.51% 6.79% 7.75% 8.05% 8.22% 3.00% 10.00% 6.83% 6.76% 8.00% 2.50% 6.00% 4.00% 1.56% Sports book margin 2.00% 2.00% -% 22
• Deposits for LeoVegas Group 100 reached a new all-time-high, with a 300,000,000 276.6 MEUR 23% increase in Q4’18 versus the NGR prior year and 9% sequentially from Deposits 90 82.0 MEUR Q3 250,000,000 80 • NGR increased 21% in Q4’18 versus the prior year and 5% sequentially 70 versus Q3 200,000,000 • October was the weakest month in 60 Q4 and December was the strongest month 50 150,000,000 • The deposit and NGR growth in Q4 is primarily an effect of a solid 40 increase of our depositing customer 100,000,000 base, which has more than offset 30 the Y-Y decline in player value 20 50,000,000 10 - - 23
• Marketing spend increased by 14% from Q3’18 to 32.0 MEUR in Q4’18, 300 35.0 32.0 which is partly related to increased Marketing spend investments in Sweden ahead of MEUR regulation and a higher NDC intake 30.0 250 overall Customer Acquisition Cost (CAC) EUR 220 • The Customer Acquisition Cost (CAC) 25.0 increased 10% Q-Q, but decreased 200 4% Y-Y Marketing cost MEUR • The sequential uptick in CAC is partly 20.0 related to a higher share of Casino 150 NDCs compared to the prior quarter 15.0 100 10.0 50 5.0 - - 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 24
FINANCIALS FINANCIAL 25
• In Q4’18 EBITDA was 8.1 MEUR, with 100.0 100% a margin of 9.6% 90% 90.0 22.5% 22.6% 23.7% 26.0% • Cost of sales as a percentage of 26.9% 27.2% 28.0% 28.1% 29.3% revenue increased slightly due to 80.0 80% somewhat higher payment costs as 23.8 9.5% 24.7 well as a one-time reallocation of 11.7% 70.0 70% 12.4% 8.5% 9.8% 10.1% 22.1 9.8% Royal Panda costs 21.7 12.1% 7.6% 13.6% 8.8% 9.7% 60.0 60% 8.8 9.7% 18.2 9.4% • Marketing in relation to revenue 10.6% 11.5% 7.9 12.8% increased to 37.9%, an increase from 9.4% 7.6 9.5 50.0 9.3 50% 14.4 Q3, driven by increased investments 6.6 11.6 11.7 8.9 in Sweden ahead of regulation 10.0 36.2% 40.0 40% 6.4 9.9 4.8 9.3 42.9% 40.7% 6.2 34.9% 5.4 • Personnel expenses as a percentage 41.9% 43.4% 5.1 39.0% 30.0 30.5 3.9 30% 4.8 35.6% 37.9% of revenue increased in Q4, reflecting 3.8 3.1 30.2 32.0 investments in compliance-related 28.0 29.5 20.0 20% 24.2% 22.6 staff, a initiated shift from 14.9 20.8 18.8 consultants to own tech personnel 17.2% 15.1% 10.0 10% 14.0% and LeoVentures 12.4% 15.0 11.6% 11.4% 10.5% 9.6% 10.0 8.4 9.0 9.0 8.1 7.1 6.2 6.1 - 0% • Other operating expenses also Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 increased, which was partly driven by 2016 2017 2017 2017 2017 2018 2018 2018 2018 2016 2017 2017 2017 2017 2018 2018 2018 2018 certain specific non-recurring costs of Cost of sales Cost of sales 0.9 MEUR Personnel costs net of capitalised development costs Personnel costs net of capitalised development costs Operating expenses including other income Operating expenses including other income Marketing expenses Marketing expenses EBITDA EBITDA 26
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