LeoVegas Q3 2021 revenue rises 12% driven by “brightest star” Swedish market

LeoVegas has reported a 12% year-on-year revenue increase for Q3 2021 to €99.4m (£85m). In a third-quarter trading update, the operator said the revenue increase would have amounted to 31% save for the financial impact of German regulations. However, company EBITDA dropped to €11.5m from a prior 2020 high of €11.9m, with a corresponding decrease in EBITDA margin to 11.6%. Gross profits increased to €6.6m, corresponding to a gross margin of 66.8%. Depositing customer numbers also increased by 7% annually to 469,721.

At a divisional level, the Nordics made up 44% of NGR during Q3, beating the Rest of Europe division with 34% and the Rest of World segment, which accounted for 22% of NGR. Rest of World NGR rose by 42% year-on-year for Q3 thanks to another quarter of growth in the Canadian market, with Nordics NGR coming in second at 39% growth. “The positive trend is a result of a record-high customer base for the LeoVegas brand and strong growth for the Expekt brand since completion of the acquisition in May,” LeoVegas said in a statement. Other markets that performed well during the quarter included Italy, Spain and Canada, all of which grew between 40% and 70%. NGR from the Rest of Europe segment declined by 19%, punctuated by an 8% decline in German NGR following the implementation of measures to obtain a German licence. The overall share of NGR generated by the German market dropped to just 3% during Q3, down from 17% a year prior. At a group level, total revenue generated from locally regulated markets decreased to 66% during Q3, down from 68% a year prior and up 1% on a quarter-on-quarter basis. “All key markets performed well during the quarter, where our home market in Sweden was the brightest star,” LeoVegas CEO Gustaf Hagman explained. “The favourable revenue growth for the group confirms that the strategy to simultaneously scale up a number of markets and relaunch the Expekt brand has been a success. “The company today is more diversified than ever, and we have succeeded in compensating for the sharp drop in revenue in Germany,” Hagman added. LeoVegas paid gaming taxes of €15.9m, corresponding to 16% of its total revenue, with marketing costs increasing to €36.2m during Q3. “In pace with growing revenue, the share of marketing investment is expected to gradually decrease from the current levels,” said Hagman. “At the same time, we have continued to invest in product and technology ahead of forthcoming market expansions, including the upcoming US launch. “We are seeing some normalisation of office and travel-related costs as the pandemic is hopefully nearing its end, while general cost control in the group continues to be good,” Hagman concluded. Assessing the firm’s performance during Q3, Regulus Partners analyst Paul Leyland hailed the performance of management. “LeoVegas is continuing to demonstrate that strong operations management across a portfolio of markets can create significant business resilience in the face of consistent regulatory pressure,” Leyland said. “To put this into context, in three years LeoVegas has received a regulatory battering in four of its most important markets in the UK, Sweden, Germany and the Netherlands. The fact that the group has still been able to grow is therefore impressive,” Leyland added.