LeoVegas reports 13% Q4 revenue rise despite Swedish and German headwinds

LeoVegas has reported all-time high revenue of €98.3m for Q4 2020 following a 13% annual increase. Company adjusted EBITDA rose to €11.4m during Q4, with a corresponding increase in EBITDA margin at 25%. The percentage of company revenue generated from regulated markets dropped by 10% during the quarter, accounting for 45% of total revenue. Q4 operating losses narrowed from €2.5m to €0.8m year-on-year. In the Nordics, LeoVegas confirmed a 4% year-on-year decrease in net gaming revenue (NGR), primarily due to deposit and bonus restrictions in Sweden. However, Rest of Europe revenue rose by 34% in the same period, as Rest of the World increased by 3%.

LeoVegas reported a 15% rise in new depositing customers (NDCs) during Q4, with a 31% rise in returning depositing customers over the same period. “I am proud of our ability to quickly adapt to changed conditions through a high capacity for innovation at the same time as we are building an increasingly solid and diversified business,” LeoVegas CEO Gustaf Hagman said. “It is a demonstration of strength that LeoVegas delivered adjusted EBITDA growth of 25% for the full year while the operating cashflow increased almost 90%. “This was achieved despite maintaining a high investment pace with launches of new brands, new markets and product improvements” Hagman added. During the period, LeoVegas secured its financials through a revolving bank credit facility and a bond issue which raised SEK500m. German revenue was reduced in Q4 by 50% due to the implementation of transitional online gambling measures in the country, with the worst impact felt in December and carrying into 2021. In addition, the firm revealed an amended calculation method for previously applied Danish gambling taxes, a change which has led to a one-off cost of €3.5m charged against EBITDA. The migration of Royal Panda brands to the operator’s new proprietary tech platform also contributed to an impairment loss of €1.9m during Q4. Regulus Partners analyst Paul Leyland suggested LeoVegas has lagged behind some of its competitors in Q4 due to a low sports mix, while others have benefitted from a flurry of constant fixtures and high margins. This leaves the operator at a crossroads in terms of future development. “Once reasonable market share has been hit in most ‘more visible’ markets, operators have a stark choice,” explained Leyland. “All strategic paths are still arguably open to LeoVegas and none yet seem to be mutually-exclusive, though that may change. “The first path will also almost certainly lead to being involved in somebody else’s M&A plans. “Growing the segment remains the most certain path to cross-regional dominance, but it has so far been elusive in gaming outside a few examples (Sky, Tombola, Gamesys) interestingly all UK, where mass market is viable. Most Nordic operators have had a painfully opposite experience in the UK, LeoVegas included,” Leyland concluded. LeoVegas’ share price increased by more than 10% in early trading on Nasdaq Stockholm.