The top line
Q1 revenues increased by 8% to €96.7m (€89.4m Q120) with organic growth in local currencies of 8%. Adjusted EBITDA was €10.9m (€9m Q120) with adjusted margins of 11.3% (10% Q120). Adjusted earnings per share were €0.07 (0.06 Q120). The number of depositing customers grew 12% YoY to 462,386 (413,269).
Germany continues to impact operators. Excluding that market, LeoVegas’ organic growth was 19% during Q1. Preliminary revenue for April came to €32.7m (€37.5m Q120), a 13% drop YoY, excluding Germany, revenue grew 4% during the month.
Home on the Reichweite: Revenues from Germany for LeoVegas more than halved in the first-quarter with the percentage of total revenues from the country down to 6% from 15% in Q120. The problems continued into the current quarter; preliminary revenue in April was down 13% for the group but excluding Germany it achieved growth of 4%. CEO Gustav Hagman said Germany was now a “massive black market.”
“At the moment it’s the Wild West there, 70-80% of the players have shifted to the black market”, Hagman told analysts on the earning call.
The company is pinning its hopes on the long arm of the German tax authorities once the Interstate Treaty kicks in on 1 July. “From 1 July the legislation will be enforced by the tax authorities” who are expected to be aggressive in their enforcement actions and “there is also talk of blocking payments, which is a good sign”.
German offset: The drop in Germany was offset by strong growth in Italy, Spain and Canada, Hagman said. The group is active in discussions over sports-betting regulation in the province in Ontario, these “are highly promising, the legislation seems fair and healthy and we want to get licensed.” In Sweden, it said the strength of the brand had enabled it to grow on a yearly basis “for the first time since the temporary Covid-19 restrictions were implemented in July 2020”.
Great Expektations: Sports-betting will be a major focus for Leo Vegas with major acquisition drives planned for the Euros, Copa America and Tokyo Olympics. The group is confident Expekt will perform well in the Swedish target market thanks to its history and brand awareness there. For Expekt, CEO Gustaf Hagman did not set a specific growth or revenue target, “but with 9% of our revenues currently coming from sports and with us launching such a great brand we wouldn’t be surprised if the figure reached double digits fairly soon.” LeoVegas will complete the acquisition this month and migrate all its betting activities onto the Kambi platform to launch in time for Euro 2020.
In-house rules: The migration of online casino Royal Panda onto the group player account management system has completed, while the launch Blue Guru games studio and the LeoVentures investment in SharedPlay will see even more focus on in-house games development. The group didn’t provide guidance and said it was part of utilising its experience and knowledge in the casino vertical “to gain a larger share of the value chain, this is important for future revenues.” It will also develop B2B revenues with the division, the first game is expected to go live in Q4 and “20 more games will be launched in the next 24 months,” Hagman added.
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