European Gaming News
LeoVegas AB: Fourth quarter: 1 October-31 December 2017
“Three acquisitions, a listing change, unicorn status, refined strategy and one of our strongest quarters ever.”
Gustaf Hagman, Group CEO and co-founder
Fourth quarter: 1 October-31 December 2017
- Revenue increased by 65% to EUR 67.8 m (41.2). Organic growth was 48%. Organic growth excluding markets closed in 2017 was 82%.
- Revenue from regulated markets accounted for 29.0% (11.0%) of total revenue.
- Mobile deposits accounted for 69% (67%) of total deposits, which increased by 62% to EUR 224.6 m (139.1).
- The number of depositing customers was 253,299 (176,306), an increase of 44%. The number of new depositing customers was 128,409 (85,384), an increase of 50%. The number of returning depositing customers was 124,890 (90,922), an increase of 37%.
- EBITDA was EUR 6.1 m (10.0), corresponding to an EBITDA margin of 9.0% (24.2%). EBITDA adjusted for items affecting comparability was EUR 7.1 m (10.0), corresponding to an adjusted EBITDA margin of 10.5% (24.2%).
- Earnings per share were EUR 0.02 (0.10) before dilution and EUR 0.01 (0.10) after dilution.
- LeoVegas’ board of directors proposes a dividend of SEK 1.20 (1.00) per share, for a total of SEK 119,634,564 (EUR 12.2 m).
Events after the end of the quarter
- Net Gaming Revenue (NGR) totalled EUR 24.8 m (14.1) in January, representing growth of 76%. Excluding the acquisition of Royal Panda, NGR in January was EUR 20.9 m, representing growth of 48%.
- 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 maximum potential earn-out of SEK 15 m (EUR 1.5 m). LeoVegas completed the acquisition and gained possession of the shares as per 1 January 2018. See page 10 for further information.
- LeoVegas entered into an agreement to acquire, for GBP 65 m (EUR 73.5 m), assets from Intellectual Property & Software Limited and related assets from two additional companies that operate several brands, including 21.co.uk, slotboss.com, Bet UK and UK Casino. See page 10 for further information.
- LeoVegas carried out its change in listing to Nasdaq Stockholm on 5 February.
Comment from Gustaf Hagman – Group CEO and co-founder
An incredibly eventful quarter
Q4 2017 was one of our best quarters ever, with very strong underlying growth. Compared with Q4 2016 and excluding markets that we closed in 2017, our organic growth was an incredible 82% during the quarter. We even set a record for new depositing customers.
During the Q4 LeoVegas passed an important milestone, namely, a market cap higher than a billion dollars, which means that we became a “Unicorn”.
I am very proud that we managed to carry out our first major acquisition during the fourth quarter, Royal Panda. During the last two years we have scoured the gaming market for companies that fit our overall expansion strategy, which Royal Panda does through its strong presence in the UK and its great global brand. Moreover, they earn a higher share of their revenue from mobile devices than the industry on average.
Royal Panda contributed EUR 5.6 m in revenue during the fourth quarter, which is slightly lower than their Q3 figure. This is because Royal Panda was included for only two months of the quarter, and because the company closed a number of markets during the year for the same reason that LeoVegas closed the Czech Republic and Australia. This was according to plan, and adjusted for these markets, Royal Panda grew 57% in Q4. Royal Panda is showing continued good performance in early Q1 2018, and I am very proud of how well our collaboration works already today.
During the quarter we acquired 51% of the shares in GameGrounds United AB (CasinoGrounds). The company operates the site www.casinogrounds.com, which in a short time has become a platform for casino streaming, with an active social casino forum.
In CasinoGrounds we are seeing a new behaviour in which people interested in casino games watch others play casino games via YouTube and Twitch. The combination of proprietary content and video format is creating interesting opportunities going forward and is in line with LeoVegas’ strategy to be an innovative and entrepreneur-driven company. Our ambition now is to scale up existing operations to more markets.
Refined strategy
For several years we have been searching for acquisition candidates, and we have now successfully carried out our first acquisition. This is yet another milestone in the Company’s history. LeoVegas will always focus on organic growth, but we will also make complementary acquisitions when we believe that they will develop our overall business. I want to add, however, that in the near-term we will focus on integrating these recent acquisitions.
Our expansion strategy is to grow in regulated markets and markets that will soon become regulated, and to carry out strategic, complementary acquisitions.
Our product strategy is to be the most innovative and pioneering company in the gaming industry.
Change in management team
LeoVegas Mobile Gaming Group is striving to be the most innovative, entrepreneurial and fastest growing company in our industry. To strengthen this pursuit, we are working intensively with our company culture, among other things.
Toward this end, I have created a new position, Chief Human Resources officer (CHRO), and brought Caroline Palm onto the Group Management team. In recent years Caroline has served as head of HR for a technology and entrepreneur-driven company grouping with more than 2,000 employees.
During the quarter we have seen the strengths of Jarl Modén’s work, and as a result we have promoted him to the permanent position of Chief Product Officer (CPO) on the Group Management team.
Authentic Gaming
Authentic Gaming unveiled very exciting news with the announcement of an agreement with Foxwoods Resort Casino, the largest casino resort in the USA. This has made it possible for the first time for casino gamers in Europe to play live casino streamed directly from casino tables in the USA. The service is distributed through Authentic Gaming’s network of operators, which includes LeoVegas.
4Q’17 figures
Revenue during the fourth quarter amounted to EUR 67.8 m (41.2), an increase of 65%. Organic growth was 48%. EBITDA adjusted for items affecting comparability related to consulting services for acquisitions and our listing on Nasdaq Stockholm was EUR 7.1 m (10.0), corresponding to an adjusted EBITDA margin of 10.5% (24.2%). Revenue from regulated markets accounted for 29% (11%) of total revenue during the quarter.
2017 – The year as a whole
We grew by 53% during 2017. But our organic growth during the year, excluding markets that we closed, was a full 61%. This is outstanding performance and figures that we at LeoVegas are very proud of.
In terms of personnel we grew from 365 employees at the start of the year to 566 at year-end, which of course puts high demands on our managers and organisation.
We have expanded our offices, and during the year we moved to new premises in Stockholm – all to create the best conditions for continued growth of the Company.
Denmark
During the year Denmark went from being a small market to a very important one and has thereby shows that our model, combined with hard work, is successful. LeoVegas is now one of the absolute strongest gaming brands in Denmark and continues to grow.
Canada
During the quarter, we launched our free-to-play site, LeoVegas.net, in Canada with the hockey legend Mats Sundin as an ambassador. At LeoVegas.net you can play mobile casino games without wagering real money and this will provide good marketing opportunities.
Our position – GameTech
Ever since LeoVegas was established we have been extremely product- and technology-driven. We therefore view ourselves not only as a mobile gaming company, but as a leading tech company in the gaming industry. Explaining LeoVegas to people in our external environment when it comes to identity, culture and way of working is described best by the term GameTech.
Start of 2018
Rocket X
We began the year with another large acquisition, with focus on the UK, when we entered into an agreement to acquire assets from Intellectual Property & Software Limited (“IPS”) along with related assets from two related companies with highly-ranked brands such as 21.co.uk, Slotboss, Bet UK and UK Casino. We now refer to this collectively as Rocket X.
Since its launch in 2012 LeoVegas has had a very successful global brand strategy. Following the acquisition of Royal Panda, LeoVegas has two scalable brands. In larger markets these global brands, LeoVegas and Royal Panda, can be complemented with a local, multibrand strategy, which has now been made possible through the Rocket X acquisitions. The UK market is sufficiently large and mature to justify working with several brands. In Rocket X we have identified several features that have caught our interest, and they have great momentum – both in their growth and profitability. This, combined with one of the market’s most effective customer acquisition models, gives us a stronghold in the UK plus 85 new employees with local expertise. With this acquisition we have also get a company culture that has a sharp focus on technology and products, which is a perfect match for LeoVegas.
In connection with the acquisition of Royal Panda, the Group secured debt financing of EUR 100 m, of which EUR 20 m was utilised in connection with the acquisition. We thus have scope of up to EUR 80 m to settle the Rocket X acquisitions.
During the fourth quarter of 2017 Rocket X had revenue of GBP 11.7 m and adjusted EBITDA of GBP 3.8 m, for an adjusted EBITDA margin of 32.6%. Revenue for the fourth quarter grew 49% compared with a year earlier. Of total revenue, 96% comes from the UK and 73% via mobile devices.
The acquisition is contingent upon the fulfilment of conditions, and possession is expected to be transferred during the latter part of Q1’18.
If both Royal Panda and Rocket X had been part of LeoVegas during the entire fourth quarter, consolidated revenue would have been EUR 84 m.
Product news
Apple Pay and facial recognition
Fifty-five per cent of LeoVegas’ customers in the UK use iPhones. The launch of Apple Pay is thereby contributing to an improved experience for these customers. Being able to offer Apple Pay requires that the market is locally regulated, which the UK is. The UK is the first market in which LeoVegas is launching Apple Pay, but we already have plans to introduce it in more markets. Using state-of-the-art technology, LeoVegas is also launching facial recognition for log-ins and approval of payments using Apple Pay. This is possible owing to LeoVegas’ own technology paired with Apple’s new iPhone X, allowing customers to log in in a few hundredths of a second and approve payments via Apple Pay just as fast.
Expanded focus on live sport
LeoVegas is working intensively to improve and build the best sports betting experience ahead of the forthcoming UEFA World Cup. As part of this we are expanding our live streaming offering in the Nordic markets. LeoVegas Sport now has a strong offering of some 10,000 live broadcast sport events.
Exclusive games
LeoVegas is working closely with a number of game developers, including NetEnt and Yggdrasil, to come up with innovative and exclusive games, which we call LeoVegas Originals. One example is WitchCraft Academy from NetEnt, which was launched in January, and more games are in the starting blocks for launch.
Nasdaq Stockholm’s Main Market list
I am very happy to note that as from 5 February LeoVegas is traded on Nasdaq Stockholm’s Main Market list. This change in listing will strengthen the Company and give us an even better quality seal in our communication and cooperation with authorities, licensors and partners. For institutional investors – both in Sweden but even more so abroad – we will become more accessible and attractive as a company.
Other comments on Q1 2018
January has begun well, with Net Gaming Revenue (NGR) of EUR 24.8 m (14.1), representing growth of 76%. Growth excluding acquisitions and closed markets was 72%. During the first quarter we expect marketing in relation to revenue to be slightly lower than the average for 2017.
We continue to win numerous accolades – most recently at the EGR Nordics Awards, where the most successful and innovative gaming companies were highlighted. In tough competition LeoVegas won three distinctions: “Nordics Operator of the Year”, “Casino Operator of the Year” and “Sports Betting Operator of the Year. It’s always fun to win!
With several great acquisitions, awards, our change in listing and a strong start to the first quarter, all of us at LeoVegas are looking forward to an exciting 2018.
Presentation of the report – today at 09:00 CET
To participate in the conference call, and thereby be able to ask questions, please call one of the following numbers: SE: +46 (0) 8 5065 3942, UK: +44 (0) 330 336 9411, US: +1720 543 0214 code: 492 82 23 or join at the web https://edge.media-server.com/m6/p/o7um9xoi
Source: European Gaming News
Wagering requirements; whether you love them or hate them, with the Gambling Review well underway, there’s never been a better time to debate if they still have a place in modern gambling and whether the upcoming review will ban them once and for all. But first, let’s look at their development and why they are a contentious issue in the industry.
What are wagering requirements?
Wagering requirements are a common term and condition attached to a bonus that prevents players from taking a promotion and withdrawing it immediately. They are applied differently by each gambling brand. Some, like PlayOJO, Paddy Power, MrQ and Betfair, have revolutionised the casino scene by offering no wagering bonuses. In contrast, others take the predatory route and list bonuses with up to 100x requirements (the average is around 30x).
The requirement is the amount a player must wager at the casino before any winnings made with a bonus are valid for withdrawal. In the case of a £100 bonus, a 30x requirement would mean a player must wager a total of 100×30=£3,000 before they could withdraw any winnings. Most players would easily decimate their winnings before fulfilling the condition and, as most bonuses expire within 7-14 days, may well be forced to play for periods, or at times, they otherwise might not.
Why do wagering requirements exist?
In the early days of online casinos, bonus hunting among players became widely popular. It led to forums where players shared information on where and how to profit from the best welcome bonuses, earning money from the available offers available and never playing at a site again.
As casinos began to notice players taking bonuses and withdrawing without using them fairly, they combatted the practice with wagering requirements and other terms, such as the ability to withdraw a bonus and any winnings made if an account was suspect of this activity.
However, with no limits or official licensing rules to regulate wagering requirements at that time, things soon got out of hand as operators set high limits that were and still are unattainable to most players. Additionally, in many cases, the terms and conditions were not clearly displayed or explained, leading to the confiscation of bonuses and winnings without players understanding how or why they’d fallen foul of the casino’s rules.
Wagering requirements under fire with UKGC
By 2014, and following a flood of player complaints, the Gambling Commission weighed in, creating the Gambling (Licensing and Advertising) Act which prescribed operators were to advertise their bonus terms and conditions clearly and explain them to players. This led to some reducing their requirements to more feasible levels. However, not all operators followed suit, hence why we’re still discussing wagering requirements today.
More recently, in February 2022, the UKGC set its sights on reforming wagering requirements again, issuing new guidance regarding fair and transparent terms and practices, which acknowledged that wagering requirements could lead to excessive play, not in line with social responsibility rules for operators.
The new guidance rules cited that licensees used potentially unfair terms, with examples including:
- “terms that allow licensees to confiscate customers’ un-staked deposits
- terms regarding treatment of customers’ funds where a licensee believes there has been illegal, irregular or fraudulent play
- promotions for online games that have terms entitling a licensee to void real money winnings if a customer inadvertently breaks staking rules
- terms that unfairly permit licensees to reduce potential winnings on open bets.”
It also stated that the Commission was aware of:
- “terms and conditions that are difficult to understand
- welcome bonus offers and wagering requirements which may encourage excessive play.”
While the guidance did not contain rules for abolishing or limiting wagering requirements, they instructed licensees to review their terms and conditions to ensure they fit consumer protection laws and that; “The LCCP requires rewards and bonuses to be constructed in a way that is socially responsible. Although it is common practice to attach terms and conditions to bonus offers, the Commission does not expect conditions, such as wagering requirements, to encourage excessive play.”
Will wagering requirements be banned?
With the Gambling Review white paper currently overdue and keenly expected by all industry stakeholders, many wonder if it will cover wagering requirements or, more specifically, exclude them from casino practice. The Gambling Review aims to update the 2005 Gambling Act, fit for the modern age, and wagering requirements would undoubtedly slot into the remit of what’s being discussed, which includes greater player protections and affordability checks.
While it’s clear that some big-name operators and affiliates like No Wagering are pioneering the way in bringing zero wagering bonuses to players, many sites have not followed suit. This is despite clear evidence that players favour fairer bonuses (PlayOJO is one of 39 brands operated by the same parent company, it is the only one with zero requirements, and it’s the most successful of all, according to the company).
Realistically, we’re not sure that the new gambling regulations will ban wagering requirements completely (as we covered earlier, they do exist for a reason), but it certainly wouldn’t be beyond the imagination for there to be a maximum cap applied in the view that excessive requirements equate to excessive play.
What’s next for operators and bonuses if wagering requirements are banned?
Bonuses are one of the most important factors for players in picking between casino sites, and they make players feel lucky to score something for free straight off the bat (even if the wagering requirements mean this is not really the case).
If wagering requirements are banned, operators unwilling to offer bonuses without wagering requirements will have to return to the drawing board and reimagine rewards, especially welcome offers. Alternatively, they could begin competing based on other USPs, such as focusing more on the casino product to pull in the punters by offering unique games, making space for indie developers, having instant withdrawals, or gamified loyalty benefits and better loyalty clubs.
Moreover, it would present a fantastic opportunity for remote operators to move away from the tired system of matched deposit bonuses towards more exciting and fresher ideas like promo wheel spins, mystery gifts on first deposits, prize draws and so on. With brands including PlayOJO, Paddy Power, MrQ and Betfair already doing this, operators do not lack a blueprint to success, just the gumption to embrace a new model.
Another company has officially launched its activities in the growing niche of online betting in Bulgaria. But here we are not just talking about another operator licensed by national institutions, but about a leading brand worldwide. Betway is one of the largest bookmakers in Europe and globally, and the fact that it already offers its services in Bulgaria speaks positively about the development of the gambling business in the country.
Indications of an increase in the size of the industry appeared last year, when several operators received a permit to operate under Bulgarian jurisdiction. It is unlikely that this process will end with the official launch of betway bulgaria, rather the brand entering the country can be perceived by international operators as a positive assessment of the market in Bulgaria. What can we find at Betway besides the obvious – increased competition and of course more choice for consumers?
What do we find in the sports section?
Sports betting – this is the leading sector of the company, which started operations in 2006. The brand is associated with a number of teams in Europe such as Tottenham, Atletico Madrid, Leicester, Alaves, Belenenses, Werder, etc. Of course, the top championships in Europe are present in the latest betting platform, but that’s not all. Betway offers the opportunity to make predictions at less popular UEFA championships. The fans of the Bulgarian championship have options too. All matches of the First League are present in the bookmaker’s menu, and are offered with dozens of choices for each of them.
Real-time bets and long-term combinations
Live bets are a big thrill for many players. This option is present at Betway, and this also applies to the mobile version, of course. It is not difficult to detect current events – they come first when loading the platform. And with them the bookmaker really comes up with interesting offers, some of which are rare on the Bulgarian market. The outcome of the bets become clear in literally seconds if the next goal market or one of the performance options is selected.
In addition, the company accepts predictions with a much longer horizon. It is now standard to bet on who will be the champion in England, Spain, Italy or Germany. However, there are also specific markets and selections for certain teams – will Barcelona take the trophy this season, will Liverpool reach the final in at least one of the tournaments in which it participates, etc. And if users don’t find what they’re looking for in these offers, they can always turn to the betting menu. The bet-builder is still limited to one match, from which we can choose two or more selections until the desired odds are formed. This is the most appropriate way to optimize the bet according to personal preferences and therefore it is increasingly preferred by the players.
Betway’s first steps on the Bulgarian market are impressive. And this is just the beginning, we can expect even more in the near future.
EveryMatrix announces the second RGS Matrix partnership with Wild Boars, newly launched gaming studio that aims to bring creative storytelling and a fresh feel to the gaming industry.
Launched in 2019 as EveryMatrix sixth standalone solution, RGS Matrix enables gaming development teams to distribute, manage, and report upon a proprietary game product portfolio.
This ‘out of the box’ remote gaming server was built on an open architecture and caters for outstanding player experience, consistent deployment, and quicker content integration.
Mathias Larsson, Managing Director of RGS Matrix, says: “This is our second RGS Matrix agreement and it brings me a lot of joy to know that our solution starts gaining momentum in the market. Our remote gaming server aims to help the new generation of game builders by providing all the means to create, design, distribute and manage games.
“The team of Wild Boars is experienced, skilled and highly creative. I am looking forward to seeing their games live and appreciated by players in many countries.”
Oleksandr Yermolaiev, Managing Director of Wild Boars, comments: “We truly believe that choosing a right partner is crucial for success. For us, RGS Matrix and its remarkable team is just that partner. We are excited to use EveryMatrix solution, focus on what we do best and bring our innovative games to a wide range of operators, territories and players. RGS Matrix is dashing ahead and we are happy to join the ride.”
RGS Matrix powers slots and table games, and is currently certified for Malta, Latvia, Lithuania, Estonia, Sweden, Spain, Denmark, Romania, and Colombia, with many jurisdictions to come in the upcoming years.
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