LeoVegas Q2 2017: Steady growth with profitability and strong start to Q3

"As the first gaming company, we now choose to break out revenue from Sweden. Sweden accounts for 37 percent which amounts to EUR 18 million in the second quarter. It puts us in the driver's seat before the coming regulation. The amazing development in Denmark continues and the UK has also had an impressive quarter. This gives us strong momentum into the third quarter, where July started very well with NGR at the new record level of EUR 18.3 million"
Gustaf Hagman, Group CEO and co-founder

Second quarter: 1 April-30 June 2017[1]

• Revenue increased by 60% to EUR 49.7 m (31.0). Organic growth was 53%.
• Revenue from regulated markets accounted for 25.1% (12.8%) of total revenue.
• As the first gaming company, LeoVegas now choose to break out revenue from Sweden. Sweden accounts for 37 percent which amounts to EUR 18 million in the second quarter.
• Denmark that was launched 6 months ago, accounted for 6 percent of the revenues in the second quarter.
• Mobile deposits accounted for 67% (65%) to total deposits, which increased by 67% to EUR 167.9 m (100.6).
• The number of depositing customers was 173,034 (176,635), a decrease of 2%. The number of new depositing customers was 73,014 (109,718), a decrease of 33%. The number of returning depositing customers was 100,020 (66,917), an increase of 49%.
• EBITDA was EUR 6.1 m (-2.5), corresponding to an EBITDA margin of 12.4% (-7.9%). EBITDA adjusted for items affecting comparability was EUR 6.2 m (-2.5), corresponding to an adjusted EBITDA margin of 12.6% (-7.9%).
• Operating profit (EBIT) was EUR 5.5 m (-2.8). EBIT adjusted for items affecting comparability was EUR 5.6 m (-2.8), corresponding to an adjusted EBIT margin of 11.2% (-9.0%).
• Earnings per share before and after dilution were EUR 0.05 (-0.03).
• LeoVegas AB held its Annual General Meeting on the 17thof May. 

Events after the end of the quarter

• Net Gaming Revenue (NGR) totalled EUR 18.3 m in July (12.9), representing growth of 42%.
• LeoVegas Sport was launched in the Danish market on the 7thof July.
• The Company has convened an Extraordinary General Meeting to be held on 23 August to decide on an incentive programme.
• LeoVegas launched its app in Google Play in the UK.
• LiveCasino.com was launched as a stand-alone site within the Group.
• Australia has voted through an amendment to its existing gaming legislation which will adversely affect LeoVegas's revenues from the geographic area Rest of World.

Comment from Gustaf Hagman - Group CEO and co-founder

Second quarter
Revenue totalled EUR 49.7 m (31.0) during the second quarter, an increase of 60%. Organic growth was 53%. 25.1% of the revenues was generated from regulated markets.

Transparency is one of our guiding principles. We believe that transparency promotes trust. It makes it easier for our customers and the stock market to understand what we do. We have therefore now decided, as the first gaming company, to show separately how large our revenues in Sweden are. Sweden alone accounted for 37% of our revenue during the second quarter - something we are very proud of.

EBITDA adjusted for items affecting comparability increased to EUR 6.2 m (-2.5), corresponding to an adjusted EBITDA margin of 12.6% (-7.9%).

The number of new depositing customers decreased during the second quarter of 2017 compared with the second quarter of 2016. This is explained by the record number of new customers in the second quarter a year ago in connection with the launch of LeoVegas Sport, LeoVegas Live Casino, and the UEFA European Championship.

During the quarter, we continued to work with our company culture and values, and we aspire to create the best company culture in the industry. LeoVegas has a very good reputation today as an employer, and we believe that a good company culture is important to maintain a high pace of activity and growth.

LeoVegas continues to be an industry leader with respect to responsible gaming. During the quarter, we launched a specially developed self-assessment tool for our customers along with an internal e-learning tool. This, combined with other tools designed to detect and manage problem gambling, makes the Leo Safe Play programme an industry vanguard.

Our Group company Authentic Gaming has been further developed and now streams from four different land-based casinos. More than 20 operators now include Authentic Gaming's streamed games in their offerings, and more are waiting for integration. We are experiencing a high demand for its products.

LeoVegas saw early that the mobile phone will create growth and new business opportunities within Live Casino. We are well positioned to take advantage of that potential. www.LiveCasino.com has now been launched as a stand-alone affiliate site within the Group.

Our success in Denmark continues, and during the quarter Denmark accounted for 6% of the Company's revenue. We estimate that LeoVegas had an approximate 5% share of the Danish casino market in Q2. In early July, we launched LeoVegas Sport and exclusive live casino tables. In July Denmark accounted for a full 9% of the Company's revenue. This is outstanding performance for a market that was launched roughly six months ago is a prime example of what can be achieved when products, marketing, branding and a strong team work in concert.

Comments on third quarter
July got off to very strong start, with Net Gaming Revenue (NGR) of EUR 18.3 m (12.9), representing growth of 42%. During the third quarter, we do not expect marketing in relation to revenue to deviate meaningfully from the level in earlier quarters this year. 

In Australia, it has been decided to amend its current gaming legislation, which will adversely affect LeoVegas's revenues from Australia when the law comes into force. In the second quarter, Australia accounted for 7.6% of our total revenue.

LeoVegas has a strong cash position of approximately EUR 60 m and no debt in the Company. This means that we have resources to carry out acquisitions and investments going forward and that we see favourable opportunities in the market.

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 5033 6539, UK: +44 (0) 20 3427 0503, US: + 1646 254 3364
code: 4071367 or join at the web https://edge.media-server.com/m6/p/m4uxmss7

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 16th of August 2017 CET on 08:00.

For further information, please contact:

Gustaf Hagman, Group CEO co-founder: +46 70-880 55 22, gustaf.hagman@leovegas.com
Viktor Fritzén, Group CFO: +46 73-612 26 67, viktor.fritzen@leovegas.com
Philip Doftvik, Head of Investor Relations: +46 73-512 07 20, philip.doftvik@leovegas.com
Visitors address: Sveavägen 59, Stockholm
Corporate identity number: 556830-4033

About the LeoVegas mobile gaming group
LeoVegas' vision is to create the ultimate mobile gaming experience and be number one in mobile casino. The business is distinguished by award-winning innovation and strong growth. LeoVegas' technical development is conducted in Sweden, while operations are based in Malta. The Swedish parent company LeoVegas AB (publ) invests in companies that offer gaming via mobile devices and desktop computers along with companies that develop related technologies. LeoVegas has attracted major international acclaim and has won numerous awards, including "Nordic Operator of the year", "Mobile Marketing Campaign of the year", and "Innovation in Mobile and Tablet of the Year" at the international EGR Awards. LeoVegas bases its development on "Mobile First" and is at the forefront of using state-of-the-art technology in the mobile gaming market. With a foundation in a great gaming experience, long-term customer relationships and establishment of a strong brand, the company has attracted a steadily growing customer base through innovative, effective and data-driven marketing. Since its start, the mobile gaming company LeoVegas has shown strong quarter-on-quarter growth. LeoVegas' shares are listed on Nasdaq First North Premier. Avanza Bank AB is the company's Certified Adviser. For more about LeoVegas, visit www.leovegas.com and www.leovegasgroup.com.

[1]Throughout this report, figures in parentheses pertain to the same period a year earlier.