LeoVegas Adjusts Goals After Challenging 2018

When asked to describe what 2018 was like for the company, LeoVegas' CEO, Gustav Hagman, called it simply - "the most challenging" in its history.

For all the reasons the collective team behind the successful operator had to celebrate - a 25% revenue leap in the fourth quarter, annual gross income rise and a number of strategic partnerships along with new markets entered...

...there was an equal quantity of adversities that were either partially overcome or took its toll completely, such as severe regulatory changes and struggles in their key market - The United Kingdom.

For all these reasons, operating profit during the year decreased - prompting the brand's higher levels of hierarchy to postpone its financial goal of reaching €600 million in revenue and €100 million in EBITDA, which was originally forecast for 2020-2021.

Promising Start

"Streamlining" is the key word for the company's plans for 2019. Keeping it brief, but to the point, Hagman remarks: “Our personnel costs in relation to revenue remained at a higher level than we are pleased with. We will thus now focus on cost control, improving efficiency in our ways of working, and increase automation in our operations.”

The new year brings new prospects and it's all been smooth sailing so far: with the launch of the re-regulated Swedish market in January, LeoVegas invested heavily into marketing - the increase of 32% (to €120.8 million) was needed to ensure their leading position in this Nordic country.

January's income was up 16% compared to last year's (€28.7m in profits) and depositing customers marked a hefty 42% growth year-on-year.

Keeping them in the industry limelight, two prestigious acclaims have already been won in London, on the eve of the ICE conference last week.

Figures and How to Interpret Them

There are plenty of financial aspects to be taken into consideration when discussing the course of action the company is about to take...

...One such aspect concerns 2018's 51% revenue increase to €327.8 million which is positive per se, but the almost stagnant situation in the UK - with the slight 7% growth in last three months of the year - implied the general deceleration of this market.

Main site, online casino LeoVegas, was the key contributor to profits - its share in this during the first quarter alone was an astounding 77%. One of the recent acquisitions - online casino, Royal Panda - contributed with 13% of Q4's revenue.

The classic online casino still proves to be punters' favorite - it made up 77% of GGR in Q4, whereas live casino's and sportsbooks' share was 14% and 9% respectively.

Personnel and Other Expenses

So, what made the operating profit dwindle (from €19.9 to €19.2 million)?

Mostly, increase in expenditure for personnel costs (by 55%). The amount of employees grew from 566 to 888 from 2017 to 2018. The company purchased Rocket X, which led to this boost in staff headcount...

...although profits were also sacrificed for a number of Q2's technological ventures and upgrade projects on the operator's platform.

Hagman rounded off argumentation for targets put on hold by saying: “After a challenging 2018 we now see improved momentum with a record strong December and a positive start to 2019. Entering the new year we have full focus on expansion, cost control, increased profitability and to continue building the world’s best mobile casino.”

Source:

"LeoVegas postpones growth targets after challenging 2018", igamingbusiness.com, February 12, 2019.