LeoVegas has delivered a strong start to 2021 despite acknowledging headwinds in the German sector related to updated regulatory requirements in the country, as well as encountering difficulties in the Nordics.
As part of its Q1 2021 report, it disclosed that casino accounted for 74% and live casino 17% of the group’s Gross Gaming Revenue (GGR), while sportsbook is now back at the same level as before the global pandemic started (9% share).
Group revenue increased 8% to €96.7 million, but it was noted that if Germany had been excluded, a revenue increase of 19% would have been recorded.
Net Gaming Revenue (NGR) amounted to €93.4 m (87.1) during the period, an increase of 7% compared with the same period a year ago, with 65% from regulated markets and markets in which the company pays local gaming taxes (74% Q1 2020).
Meanwhile, adjusted EBITDA stood at €10.9 million, corresponding to an adjusted margin of 11.3% – a small increase on the 10% recorded 12 months prior – and reported EBITDA was €10.4 million, up from €9 million.
Operating profit (EBIT) stood at €3.7m, up from €2.2m in Q1 2020, while adjusted EBIT was €8.2m (6.3), corresponding to an adjusted EBIT margin of 8.5%.
Challenges in the German sector took a prominent place in the report, as LeoVegas estimates that up to 70% to 80% of the local casino market had temporarily shifted to sites ‘that have chosen to not adapt to the coming market regulation’.
Aproximately 6% of LeoVegas’ total revenue was generated from the German betting space in the first quarter, a significant drop from the 15% in Q4 2020, although these headwinds were offset by success in other markets such as Italy and Spain.
The impact of the German challenges was still emphasised, however, contributing heavily to a 1% decrease in overall Net Gaming Revenue (NGR) in Europe outside the Nordic region.
In the Nordic region itself, NGR decreased by 3%, largely attributed to the implementation of temporary restrictions in Sweden in July 2020, such as new deposit limits, although ‘a gradual recovery’ has taken place with Swedish growth reported in March for the first time since the measures were introduced.
Additionally, LeoVegas affirmed the company’s intention to appeal a sanction fee of SEK 2 million by the Swedish Gambling Authority, although Group President and CEO Gustaf Hagman maintained that ‘the strength of the LeoVegas brand and our product breadth is appreciated by our customers’ in the country.
Indeed, the operator’s Swedish customer base set a new record during the quarter, representing growth on a yearly basis since the implementation of temporary COVID-19 restrictions, while the overall number of depositing customers rose by 12% to 462,386 from 413,269, with 275,876 returning and 186,510 new customers.
The €5 million acquisition of Swedish brand Expekt from Betclic was also highlighted as a significant achievement in the quarter, bolstering LeoVegas’ presence in the sports betting space,
LeoVegas noted that the takeover, which will be completed this month, ‘complements the group’s brand portfolio and product offering in a strategically good way’ whilst the timing of the acquisition is ‘perfect’ due to the upcoming UEFA European Championship in June.
In addition, the group was able to utilise its LeoVentures investment arm to offset regulatory and pandemic-related headwinds, in particular the 1.1 million purchase of a 25% stake in SharedPlay, enabling LeoVegas to leverage the latter’s industry-first multiplayer gaming solution.
Other investment success has seen LeoVegas consolidate all of its wholly owned brands on its Rhino platform, having recently integrated the Royal Panda brand, in addition to launching Blue Guru Games – its own studio which it intends to use to develop and release exclusive games in late 2021.
On the other side of the Atlantic, the firm’s shares were taken on for trading in USD on OTCQX markets, meeting ‘steadily growing interest from US investors’, while Canada was also identified as a regulated market where the operator found commercial success.