LeoVegas reveals revenue and operating profit growth

LeoVegas Gaming Group has reported a year-on-year increase in both revenue and operating profit for the third quarter after experiencing growth across most of its core markets.

Group revenue for the three months to 30 September 2019 came in at €88.2m (£76.0m/$97.7m), up 12% from €78.6m in the same period last year. LeoVegas said organic revenue growth in local currencies stood at 13.0% for the quarter, but, if it were to exclude the UK, organic growth would have been 27%.

Net gaming revenue climbed 11% year-on-year, with the Nordics responsible for 44% of this. The rest of Europe followed with a 42% share and the rest of the world accounted for the other 14%.

In terms of products, classic casino games, including slots, were by far the most popular with customers, accounting for 74% of gross gaming revenue in Q3. Live casino followed in a distant second with 17%, and then sports betting on 9%.

Revenue was boosted by a 9% year-on-year rise in deposits for Q3 to €275.5m, with mobile accounting for 75% of total deposits in the quarter, up from 71% last year. New depositing customers fell 4% to 135,019, but returning depositing customers was up 12% to 199,023.

Marketing was the main outgoing for LeoVegas in the quarter, with the operator spending €27.7m, slightly down on €28.0m last year. Personnel costs were up marginally from €10.5m to €11.3m, but other operating expenses were down from €10.1m to €8.7m.

Keeping control of costs, together with the increase in revenue, meant LeoVegas was able to post an operating profit of €6.0m, up 70.9% from €3.5m last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) also jumped from €9.0m to €12.7m.

However, profit before tax slipped by 58.4% from €13.2m to €5.5m, while net profit was down from €12.8m to €5.1m. LeoVegas said net profit for the same period last year was affected by a non-cash remeasurement item of €10.1m.

The Stockholm-listed operator's share price was down around 8% to SEK2.72 – its lowest mark in six months – on Thursday morning.

LeoVegas also published results for its performance in the nine months to the end of September, with revenue for the period amounting to €269.0m, which is up 10.7% on €243.3m in the same period last year.

EBITDA for the nine-month period was up from €175.8m to €180.1m, but net profit for the three quarters was down from €21.1m to €12.5m, primarily as a result of the non-cash remeasurement item in Q3 of last year.

“We continued to show progress during the third quarter in a difficult-to-navigate environment and generated double-digit growth in both sales and operating profit,” LeoVegas president and chief executive, Gustaf Hagman, said.

“Greater regulatory complexity in several of our main markets has given rise to certain short-term challenges but is also raising the barriers to succeed in the sector which benefit established companies.

“LeoVegas today has a much more even distribution of revenue across several markets and brands where half of our revenue is derived from locally regulated markets, which contributes to greater stability and lower business risk.

“Meanwhile, we continue our efforts to execute our strategy of innovation, expansion and profitability.”