Leo Vegas releases third quarter results as UK profits fluctuate

Leo Vegas has recorded a 41% increase in revenue for the third quarter of 2018.

Notable achievements in the period from July 1 to September 30 included EUR 78.6 million in revenue with organic growth, excluding markets like Australia which closed in 2017, was 14%. This included 318,189 depositing customers across the Leo Vegas network, an increase of 57% year on year.

Earnings before interest, taxes and amortization for the same period was EUR 9.0 which corresponds to an margin of 11.4%. Net Gaming Revenue from regulated markets was 35.5%.

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Group CEO Gustaf Hagman said the slower than expected growth had been brought upon the company by the downturn in its UK gambling operations, which was a general trend, not something just impacting Leo Vegas. Changes in regulation in the UK meant a greater focus for the industry on compliance, which has come at a significant cost.

“The main explanation for the slower growth is the weak performance we had in the UK during the period. Organic growth for LeoVegas.com in the UK was negative, by 32%,” he said.

“Royal Panda and the Rocket X brands also noted lower revenue from the UK.

“For LeoVegas, EBITDA has fluctuated from quarter to quarter. However, on a yearly basis we have a steady trend with respect to our margin.

“The lower EBITDA margin for the third quarter compared with the second quarter is explained by two main factors. The first is that we have grown our workforce in relation to revenue at a faster pace than previously.

“Most of our new employees are on the responsible gaming and compliance team, which has doubled in size since the start of the year, and in technology development. The second, major factor is the investments being made for the Rocket X brands, which is several major marketing initiatives, including the launch of the BetUK brand. These investments are weighing down earnings in the near term but are expected to lead to higher growth in coming quarters.”

Hagman was also positive about the outlook of LeoVegas.com in the Swedish market, which is due for regulation on January 1, 2019.

“Sweden is one of our core markets, and we are approaching the 1st of January, at which time the market will become regulated after many years of anticipation,” he said.

“We look forward to a fruitful cooperation with the Swedish Gambling Authority, with which we filed our licence application in August.

“We are highly confident that Sweden’s new regulation structure, under which all active operators will work according to the same rules, will lead to a sound gaming market with a high level of channelisation in which the focus is on the customer experience and responsible gaming.

“In Sweden we have had a need in recent quarters to update our product to meet the ever-fierce competition. During the third quarter we launched a log-in and registration process via BankID e-identification and immediate payouts.”