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LeoVegas AB: First quarter: 1 January-31 March 2018
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” Yet another record quarter with greater transparency, acquisitions performing as planned, and new and clear financial targets” – Gustaf Hagman, CEO and co-founder
First quarter: 1 January-31 March 2018
Revenue increased by 76% to EUR 77.4 m (43.9).
Organic growth was 40%.
Organic growth excluding markets closed in 2017 was 61%.
EBITDA was EUR 9.5 m (6.0), corresponding to an EBITDA margin of 12.3% (13.7%).
Adjusted EBITDA totalled EUR 9.0 m (6.2), corresponding to an adjusted EBITDA margin of 11.6% (14.0%).
The number of depositing customers was 302,014 (172,338), an increase of 75%. The number of new depositing customers was 146,063 (75,017), an increase of 95%.
The number of returning depositing customers was 155,951 (97,321), an increase of 60%.
Gross Gaming Revenue from sports betting and live casino were 6.5% and 15.3%, respectively, of total GGR.
Net Gaming Revenue from Royal Panda and Rocket X accounted for 14.3% and 5.2%, respectively, of total NGR.
NGR from regulated markets was 35.4% (18.3%) of total.
Operating profit (EBIT) was EUR 3.8 m (5.5).
Adjusted EBIT was EUR 7.9 m (5.7), corresponding to an adjusted EBIT margin of 10.2% (12.9%).
Earnings per share before and after dilution were EUR 0.02 (0.05).
Adjusted earnings per share were EUR 0.07 (0.05).
Events during the quarter
LeoVegas acquired 51% of the shares in the company behind the streaming network CasinoGrounds.com for SEK 30 m (EUR 3.1 m), with a potential, maximum earn-out payment of SEK 15 m (EUR 1.5 m). LeoVegas completed the acquisition on 1 January 2018. See page 11 for further information.
LeoVegas acquired assets for GBP 65 m (EUR 73.6 m) from Intellectual Property & Software Limited along with related assets from another two companies that operate several brands including 21.co.uk, slotboss.com, Bet UK and UK Casino, which are now jointly referred to as “Rocket X”. LeoVegas completed the acquisition on 1 March 2018. See page 10 for further information.
LeoVegas acquired World of Sportsbetting for EUR 2.6 m, which holds a sports betting licence and a casino licence in the German state of Schleswig-Holstein, and an approved application for a sports betting licence through the state of Hessen.
LeoVegas carried out a change in listing to Nasdaq Stockholm on 5 February.
LeoVegas is updating the amortisation rate for intangible assets related to the acquisition of customer databases in Royal Panda. The rate of amortisation of customer relationships in Royal Panda is being changed to harmonise it with the Group’s other acquisitions, and to better represent the usage period.
LeoVegas has made a provision of EUR 0.5 m for fines from the UK Gambling Commission (UKGC) for alleged marketing violations in 2016. See page 9 for further information.
Events after the end of the quarter
New financial targets for the full year 2020 were communicated on 19 April. The new targets are to reach at least EUR 600 m in revenue and EBITDA of at least EUR 100 m. See page 9 for further information.
Net Gaming Revenue (NGR) in April amounted to EUR 29.3 m (16.5), representing growth of 77%.
In Norway it has been learned that new legislation is expected to pass during the year which aims to prevent Norwegian residents from accessing foreign gaming sites. Details on the proposed legislation have not yet emerged. Revenue from Norway accounted for 4.6% of the Group’s total during March.
LeoVegas published its annual report for 2018 at www.leovegasgroup.com.
Comment from Gustaf Hagman – Group CEO and co-founder
High pace into the new year
“We got off to a flying start to the year with the acquisition of Rocket X, which has a strong footprint in the UK market with a local multibrand strategy and the market’s most effective customer acquisition model. We followed this up with the acquisition of gambling licences in Germany, which will enable better local payment solutions and allow us to market sports betting throughout Germany.
In the autumn of 2017 we set the goal of changing our listing to Nasdaq’s Main Market, and in early February we could once again ring the stock exchange’s bell. The first day for trading on Nasdaq Stockholm was 5 February 2018, where we immediately moved into the Large Cap list.
We are continuing our hard work and are accelerating into 2018 on the momentum we built up last year.”
First quarter
Our revenue during the first quarter amounted to EUR 77.4 m (43.9), representing growth of 76%. Our organic growth was 40%. Organic growth excluding markets that we closed in 2017 was 61%. EBITDA adjusted for items affecting comparability was EUR 9.0 m (6.2), corresponding to an adjusted EBITDA margin of 11.6% (14.0%).
KPIs and transparency
Transparency is important for LeoVegas. We have therefore decided to disclose additional Key Performance Indicators as a way to increase transparency and understanding for us as a group.
We have opted now for the first time to break down our revenue for the Sports book and Live Casino. Sport accounts for 6.5% of Gross Gaming Revenue (GGR), and Live Casino for 15.3%. We show these KPIs based on GGR due to calculations of bonuses, but the figure is basically identical to Net Gaming Revenue (NGR).
We have also opted to separately report on LeoVentures. LeoVentures today has an adjusted EBITDA of EUR -0.3 m, which is due to the fact that several of its companies are in the investment phase.
LeoSafePlay
Responsible gaming is one of LeoVegas’ foundations since the start of 2011. Over the past year, LeoVegas has made a push in Responsible Gaming, which has resulted in more staff and improved tools based, among other things, on machine learning combined with the launch of the site www.LeoSafePlay.com. LeoSafePlay is a portal dedicated to identifying and managing unhealthy gaming behavior.
LeoSafePlay offers self-assessment tests, information for families and a free tool (GamBan) to block one’s own access to all gaming sites.
With upcoming regulations in Europe, including in Sweden, there are a number of regulations on responsible gaming, and we at LeoVegas embrace these as an important part of sustainable gaming, and also as a long-term sustainable business. The fact that gaming companies take responsibility and work with responsible gaming is good for the industry, and LeoVegas has a stated ambition and strategy to be at the forefront. A proof of this is the launch of a new self-exclusion function in the UK, where customers now automatically will be excluded from all our brands when they exclude from one of them. Later in the year we will be able to customize offers and bonuses based on a customer’s risk level.
Acquisitions
Rocket X
The integration work is moving forward very well. We have quickly been able to work together on a number of matters and are identifying synergies in our knowledge-sharing and ways of working.
In connection with the acquisition’s closing, Rocket X was put on the same gambling licence as LeoVegas. This was an extensive process, and already there we saw proof that we work very well and effectively together between the teams. I think this is why it feels like Rocket X has been part of the Group for a longer time than just a few months.
During the quarter Rocket X contributed revenue for only one month. For the first quarter this entailed EUR 4.0 m in revenue and EBITDA of EUR 0.9 m, for an EBITDA margin of 22.5%.
Royal Panda
The work with Royal Panda is also progressing well and is on track. The period for payment of the earn-out expires in December 2018, and we see a great willingness for cooperation and interaction between the various teams.
During the first quarter Royal Panda was fully consolidated and contributed EUR 10.9 m in revenue, with an EBITDA margin of 7.8%. The low margin for Royal Panda is attributable to substantial marketing costs in February and March, which drove large gains in the number of new depositing customers and also NGR.
Company culture and kickoff
LeoVegas’ company culture is a major reason why we today are Sweden’s leading GameTech company. It is therefore imperative to promote this culture within the Group. We are sensitive to the fact that acquisitions require resources, time and commitment. It is for this reason that we invested further in our work with the company culture and gathered our entire Group of more than 700 people to a kickoff event. It was extremely successful and exceeded our high expectations, and we are already seeing positive effects from the event.
Markets
Sweden
Sweden had yet another record quarter for new and returning customers. This shows that we have a strong and loyal customer base in one of our core markets. What we can see, however, is that the value per customer has gone down slightly, which is explained in part by a higher share of sport customers and an unfavourable gaming margin for casino.
Norway
Norway has historically and periodically blocked payment solutions that are linked to gaming sites. Now there is also a proposal to introduce additional barriers to using game sites. There are still no details when and how this will be introduced. Norway currently has no local licensing system, and instead of banning, I hope Norway will move towards a local regulation similar to the developments we see in Sweden. The Group’s revenues from Norway were 4.6% in March. Regardless of the outcome, development in Norway does not affect LeoVegas’ financial targets. LeoVegas has long been very clear in welcoming gaming market regulation and the Group’s strategy is to expand in regulated markets and markets that are developing against regulation.
Italy
It was roughly one year ago that we acquired Winga.it and its gambling licence for the Italian market. During the autumn of last year we switched out the Winga brand to LeoVegas. The next step in our expansion for LeoVegas is to migrate the technical platform in Italy to our proprietary platform, Rhino. This will take place during the second quarter, at which time we will be able to fully offer our award-winning mobile gaming experience. This, combined with a strengthening of our commercial team in Milan, gives us favourable conditions to invest on a large scale in Italy.
Canada
Canada is a market of great interest and is showing strong growth for LeoVegas. During the quarter we began using our ambassador, hockey legend Mats Sundin, in our market communication in Canada.
UK
Following our recent acquisitions, the UK is our largest market measured by revenue and accounted for 25.6% of NGR during the first quarter. The effectiveness of our marketing in the UK was also the best ever during the quarter.
LeoVegas has high ambitions for compliance with laws and regulations and we have continuously improved our procedures and processes. We have had discussions with the UK Gambling Commission, UKGC, on suspected cases of breaches of the British gaming rules. A clear majority of cases are attributable to affiliate marketing. Our assessment is that the UKGC will issue fines for these violations and we have made a provision for the full amount.
We have also improved our routines, which has led us to close off non-compliant affiliates. This means that I feel great assurance in the work we do, both in the short and long term, but also in the face of continued expansion into new regulated markets. It’s good that UKGC puts increased demands on us in the gaming industry. It is an advantage for serious actors who both have the will and ambition to work in a regulated market.
New financial targets for 2020
In 2015 we set a target to reach EUR 300 m in revenue by 2018. Our new revenue target represents a doubling to EUR 600 m by 2020, not including any major acquisitions. Parallel with this we are aiming for EBITDA of at least EUR 100 m, which implies adjusted earnings per share of at least SEK 8 by 2020.
The new targets confirm our continued focus on strong growth combined with a sound view of profitability. The targets create transparency about where we are headed, both internally and externally.
LeoVegas’ long-term dividend policy remains intact, which is to distribute at least 50% of profit, and the proposal to the Annual General Meeting on 29 May is to pay a dividend of SEK 1.20 per share.
Comments on the second quarter
April has begun strong with Net Gaming Revenue (NGR) of 29.3 MEUR (16.5), corresponding to a growth rate of 77 percent. Marketing in relation to revenue for the Group in the second quarter of 2018 will be higher than the average for 2017, which was 42.3%. Due to the marketing opportunities surrounding the World Cup, the total amount of marketing is more difficult than usual to anticipate in advance. LeoVegas will act opportunistically with marketing on the opportunities we see.
I am looking forward to the second quarter, in which Rocket X will be included for the entire quarter and an exciting summer of sport will get under way with the World Cup in June followed by the Swedish Open tennis tournament in Båstad, for which we are now a Principal Partner.
This information is information that LeoVegas AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted for publication, through the agency of the contact person set out below, at 2nd of May 2018 CET on 08:00.
Source: European Gaming Media and Events
The iGaming industry is advancing at breakneck speed, driven by technological innovation and evolving player expectations. Itai Zak, Executive Director of iGaming at Digicode, emphasizes the importance of bridging client aspirations with customized business solutions. Key trends shaping the future of iGaming include live dealer games, blockchain integration, artificial intelligence (AI) and machine learning (ML), enhanced personalization, and shifting regulatory environments. Let’s delve into how these trends influence the industry, presenting new opportunities while paving the way for future growth.
A Closer Look at Emerging Trends
- Live Dealer Games
Live dealer games are revolutionizing the online gaming experience, blending the best aspects of land-based casinos with the convenience of virtual gaming. Players can now engage with real-life dealers via high-definition video streams, enhancing the social component of online gambling. This bridge between physical and virtual casinos introduces interactive features like live chat and immersive gameplay. Industry leaders like Evolution Gaming and NetEnt are setting new standards in player engagement with innovative game formats and top-tier studio setups, redefining the realism and appeal of live gaming.
- Blockchain and Cryptocurrency Integration
Blockchain technology is transforming iGaming by offering unparalleled transparency and security. With blockchain’s ability to enable provably fair gaming, players can verify that each round is fair via an immutable ledger. Cryptocurrencies like Bitcoin and Ethereum facilitate faster, more secure transactions, catering to tech-savvy players who value privacy. Platforms like Bitcasino.io are leading the way, leveraging blockchain to ensure fairness and seamless payments. However, the rise of blockchain also attracts regulatory attention, requiring operators to balance innovation with compliance as governments navigate this new technology.
- Artificial Intelligence and Machine Learning
AI and ML are instrumental in enhancing player experience and operational efficiency. AI algorithms analyze player behavior in real-time, offering personalized game recommendations and promotions. Additionally, AI-powered chatbots provide instant customer support, improving user satisfaction. AI-driven predictive analytics also help operators fine-tune marketing strategies based on player preferences. Companies like Bet365 are already using these technologies to stay ahead of the competition, offering more personalized and efficient gaming experiences.
- Richer Personalization and Engagement
Personalization has become crucial for iGaming operators looking to boost player satisfaction and retention. By leveraging data analytics, companies can offer tailored game recommendations, dynamic bonuses, and individualized promotional offers. This level of engagement enhances the player experience and strengthens loyalty. Industry pioneers like DraftKings and FanDuel push the envelope by offering highly customized features, such as personalized fantasy sports leagues and bespoke betting options.
- Regulatory Changes and Market Expansion
The constantly evolving regulatory landscape offers both challenges and opportunities for iGaming operators. As more regions legalize various forms of online gambling, companies gain access to new markets. With their large populations and increasing internet penetration, emerging markets like Brazil and Nigeria represent lucrative opportunities. However, navigating the diverse regulations in these markets requires agility and strict compliance with local laws to succeed.
- Enhanced Payment Solutions
With digital transactions becoming the norm, the demand for fast, secure, and flexible payment methods is skyrocketing. From digital wallets to instant banking and cryptocurrencies, players expect payment solutions that offer convenience and security. This growing demand is driving innovation in payment processing, giving operators more opportunities to streamline the transaction process while building trust with users.
Future Implications
The Expanding Role of AI and Blockchain
AI and blockchain are not just current trends, but they are poised to play an even more significant role in iGaming’s future. As AI technology evolves, more sophisticated algorithms will emerge, enabling real-time adaptation to player behavior and preferences. Blockchain’s application may extend beyond transparency and security, transforming game mechanics and player interactions potentially redefining how games are designed and played.
Shifting Player Preferences
Player expectations will continue to evolve toward immersive, interactive experiences. As Virtual Reality (VR) and Augmented Reality (AR) become more mainstream, they will significantly influence the future of iGaming. Players will demand more engaging, lifelike environments, pushing the industry to create innovative game formats and features that offer deeper immersion and entertainment value.
Regulatory Developments
The regulatory environment will continue to evolve, and iGaming operators must stay agile to navigate future changes. New regulations may increasingly emphasize responsible gaming and player protection, influencing platform design and operational practices. A more harmonized regulatory framework across jurisdictions could provide stability while requiring operators to prioritize compliance.
Integrating Emerging Technologies
Technologies like 5G and edge computing are set to revolutionize iGaming by enabling faster, more reliable connectivity. This will allow for more complex game designs and real-time player interactions, opening new avenues for innovative gaming experiences. As these technologies mature, operators will have greater opportunities to differentiate their offerings. The potential of these emerging technologies to revolutionize iGaming is truly exciting and promising for the industry’s future.
Final Thoughts
The iGaming industry is on the cusp of significant transformations, driven by technological advancements and shifting player demands. Innovations like live dealer games, blockchain integration, AI, ML, and enhanced personalization are just the beginning. As the industry evolves, staying ahead of these trends will be critical for operators looking to thrive in an increasingly dynamic environment.
At Digicode, we are constantly exploring new technologies and refining our solutions to meet the evolving needs of our clients. Our focus on adaptability and foresight ensures that our clients are not just keeping pace with the industry—they’re leading it.
The post Innovations Redefining iGaming: What Operators Need to Know appeared first on European Gaming Industry News.
A partnership between game developer Turbo Games and iGaming solution provider and aggregator Slotegrator began in November 2022 via the APIgrator game integration solution. Since then, the collaboration has been developing successfully — and now it’s time to analyze what made it successful.
Turbo Games has noticed how the new technologies spreading throughout the industry can work for the good of brand transparency and player loyalty: “We can already see how blockchain technology has made it possible to make betting checks more accessible to players. All you need is a blockchain-hash and a decoder service. We think we will continue to move in this direction. Many traditional online casinos do not offer the possibility to check the bet. Sooner or later we all have to come to this. Perhaps the development of artificial intelligence will help here, because we are already seeing its involvement in all spheres of human life.”
Turbo Games specializes in provably fair games. Provable fairness is a concept where players can verify their wins or losses using blockchain technology — the outcome of the game is dictated by a smart contract and is absolutely random, barring the possibility of any human involvement. Using cryptographic hashing algorithms, the gambling site and the player’s device both generate seeds (random strings of numbers). Players receive a key that allows them to check the results; if the results are the same as the game round they witnessed, it proves that there was no foul play.
According to statistics from Turbo Games, the audience for provably fair games is mostly between 18 and 25 years old. However, there are also players aged 35-40 who prefer traditional games but would like to try something new, and have turned their attention to provably fair games.
There are good odds that the technology of provably fair games will become more popular, if not even commonplace, because it gives players a feeling of transparency and proves that the business is trustworthy without the need to search through dozens of reviews. Whereas many innovations in iGaming simply add entertainment, provable fairness addresses security concerns and reassures players that they’re not being exploited, which is invaluable.
Provably fair games are beneficial for both players and online casinos. Vadim Potapenko, Head of Sales at Turbo Games, comments: “It often happens that the users are not satisfied with the result, because gambling is not only about big wins, but also possible losses. By allowing them to check the fairness of a bet, we make life easier for platforms and players. Of course, this allows us to communicate with partners and users that we work honestly and that’s why they should trust our games.”
Ayvar Gabidullin, Business Development Manager at Slotegrator, adds that “this type of game is now becoming more and more popular and has great potential for both players and game providers in the future. On the part of the player, the advantage is that the player can always be sure that his game is fair and he can independently check any of his bets. And for the game provider, this also simplifies the process of implementing casino games, since now it will not be necessary to obtain the appropriate certificates from independent laboratories before launching new games, they can immediately enter the market with these games and where anyone can check the result and make sure that that there is no cheating with players. Many game providers are starting to look towards this type of game. And as far as I see, many operators are starting to think about adding these games.”
What do players in 2023 need? The iGaming industry is all about reputation and trust. Players have a huge number of platforms to choose from, making them pickier and pickier. There’s an abundance of forums where players leave reviews, so if players view a brand as untrustworthy, there are plenty of places they can share their opinion. Provable fairness not only stops that from happening, it provides evidence to the contrary, giving players something else to talk about.
Slotegrator also recommends investing time and effort into localization and creating an effective and detailed marketing strategy — before trying provably fair technology players need to get to the platform, and there is no acquisition without marketing.
ABOUT SLOTEGRATOR
Since 2012, Slotegrator has been one of the iGaming industry’s leading software and business solution providers for online casino and sportsbook operators.
The company’s main focus is software development and support for online casino platforms, as well as the integration of game content and payment systems.
The company works with licensed game developers and offers a vast portfolio of casino content: slots, live casino games, poker, virtual sports, table games, lotteries, casual games, and data feeds for betting.
Slotegrator also provides consulting services in gambling license acquisition and business incorporation.
More information: https://slotegrator.pro/
ABOUT TURBO GAMES
Turbo Games — a provably fair games provider that belongs to Turbo Stars company — has an ambitious goal to establish widespread recognition throughout the iGaming world. Even though it is young, the company consists of professionals who have been working on the brand for over five years and are even planning to introduce a new brand for a wider audience soon.
Turbo Games also works in Europe, India, and South Africa, where the company sees the most potential and expects the same “hype” as in Brazil.
The portfolio of Turbo Games consists of 21 titles, including well-known games like Mines, Crash X, DoubleRoll, Hi-Lo, and Plinko. The studio releases a game every month. However, not all games are developed from scratch. Wicket Blast and Spin Strike, the last two releases, are based on cricket and the Indian Premier League. Crash X remains the most popular fast game in the Turbo Games portfolio, and the studio reports that crash games enjoy stable levels of popularity. Overall, the main focus of the brand is provably fair games.
More information: https://turbogames.io/
Looking to take your career to the next level in the games industry? Then, Nordic Game Talents is the place to be! Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.
From Oct 27-29, the online and interactive event is dedicated to recruitment and career building in the creative & games industry within the Nordic region. The event empowers participants to be part of a bigger community and motivates them to explore new paths in achieving their career goals.
Hiring creative & games studios – Supercell, Funcom, Panzerdog, Tactile Games, Gamecan, Fingersoft, Dazzle Rocks, Redhill Games to name a few from the Nordic region will be participating in the event. These studios will share information on their latest projects, work culture and what it takes to be part of their team. The individual games associations from Finland, Denmark, Sweden, Norway and Estonia will share insights through live sessions on the booming games industry in their respective countries. Career development topics pertinent to job seekers like – How to have a successful first interview, Creative Portfolio reviews will also be discussed.
Experienced game industry professionals and individuals beginning their careers from around the world are welcome to join the event. One-to-one interviews with the hiring studios can be scheduled through the event platform. A great opportunity to get to know the studios and network with game professionals from around the world.
Participating in the event
As a job seeker attending Nordic Game Talents, take a few minutes to fill out a simple registration form. After filling the registration form you will receive a link to the online event platform – PINE, to join the event on 27th October. Participants joining Nordic Game Talents will also receive a free-of-charge pass to the Nordic Game Conference.
To view the complete agenda, please click here and to learn more about the event please visit Games Job Fair
About Games Factory Talents
A Helsinki-based talent attraction agency dedicated to the games & creative industry. Our services include direct recruitment, organizing game job fairs and managing a community of game industry professionals through our GameDev Talent Board.
To learn more about Games Factory Talents visit – Games Factory Talents
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