Publishing its results for the three months to September 30, mobile-focused online gaming operator LeoVegas reported a 41 per cent year-on-year rise in revenue despite citing ”a challenging quarter” for its two largest markets, Sweden and the UK.
In the third quarter, group revenue increased by 41 per cent to €78.6m, while earnings (EBITDA) was €9m, up from €7.6m in Q3 2017, and equating to an EBITDA margin of 11.4 per cent – a drop from 13.7 year on year.
Net gaming revenue from regulated markets mow represents more than a third of overall NGR at the Stockholm-listed Leovegas, rising to 35.5 per cent of total NGR from 25.3 per cent for the corresponding period in 2017. The number of depositing customers leapt 57 per cent, to 318,189.
“Despite the important improvement efforts, we are not satisfied with our growth or profitability during THE THIRD QUARTER“
Gustaf Hagman, LeoVegas group CEO and co-founder, said the period had been a “quarter of transition,” for the operator. “The third quarter was one of transition for LeoVegas as a group, during which we have focused on compliance measures, completion of platform development projects and other long-term investments to enable the next major steps in the company’s development.
“Despite the important improvement efforts, we are not satisfied with our growth or profitability during the third quarter,” he said
“Our work with compliance has mainly affected our near-term growth in our two largest markets, the UK and Sweden. As a consequence of this shift we saw a drop in the average player value, which we have not been able to mitigate in the short term by a new record number of depositing customers during the quarter.
“As a result of the transition that is taking place in the UK, the general player value has dropped to a lower level. The operators that maintain high standards of compliance with the customer in focus will have a very strong position going forward in the UK.
“The UK market is presently challenging, but as the fourth quarter gets under way, we have begun to see a return to positive trends for the group and have thus found a new level to grow from.
“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,” said the CEO.
“We intend to… channel our focus back to the casino vertical.”
“In addition to Sweden and the UK, which today are our largest markets, we have what we call our ‘scale-up markets’. These include Canada, Denmark, Germany and Italy, among others. We are investing heavily in these markets and see that our KPIs are pointing in the right direction.
“LeoVegas has, since [the] start, focused on being ‘number one in mobile’ and have a unique strength as a casino brand. Sports betting, which we added in 2016, is important for LeoVegas’ total customer offering and growth.
“We have invested in the product and have now succeeded in building up an established sports betting brand. We intend to continue with the strategy we adopted after the FIFA World Cup, namely, to channel our focus back to the casino vertical,” said Hagman.