LeoVegas revenue rises 4% in Q1

LeoVegas has reported a first quarter 2020 revenue rise of 4% year-on-year to €89.4m.

Company EBITDA increased to €9m during Q1, with a corresponding EBITDA margin rise to 10%. LeoVegas operating profits increased by 24% year-on-year, with the company attributing this better-than-expected performance to its focus on operational efficiency and cost-cutting strategy.

In January, the operator called off a planned office move in Malta, as well as beginning the transfer of its UK-based brands away from third-party software and onto its own proprietary platform. The migration, which completed in April, is expected to save the group approximately €3.7m annually.

LeoVegas confirmed that “unfavourable currency movements” in its main market of Sweden had negatively impacted Q1 revenue by €1.4m. LeoVegas marketing costs decreased during the period, falling to €31.3m from a previous Q1 2019 high of €32.8m.

There were also strong year-on-year increases in customer figures, with the number of depositing customers increasing by 6% to 413,269 and a record 10% increase in the number of returning depositing customers, which hit 219,841.

In the Nordics region, NGR grew by 10% annually, accounting for 41% of total revenue. However, LeoVegas said this was adversely affected by newly introduced deposit and bonus limits in Denmark towards the end of the quarter.

Net gaming revenue from the rest of the world grew by 12%, corresponding to 13% of total group revenue. LeoVegas now generates 53% of its revenue from regulated markets, which is down 2% from the same period in 2019.

Rest of Europe net gaming revenue decreased by 3%, generating 46% of total revenue. However, LeoVegas cited positive performance in its Royal Panda brand and a recovery in German revenue, which was hit by the removal of PayPal as its main deposit method.

LeoVegas CEO Gustaf Hagman said Covid-19 had a “minor” impact on online operations during the quarter, most notably in its sports betting operations which were hardest hit.

However, Hagman said the group had taken market share from land-based operators as well as its more sportsbook-oriented competitors during the period. Hagman revealed the operator had been “exercising extra restraint” with its customers during the lockdown to counter any rise in problem gambling among players.

“Thus far, we have not seen signs from our data that problem gaming among our established and new customers has risen, and we are paying great attention at the individual level to ensure this remains the case,” said Hagman.

Hagman was one of five industry CEOs to publicly criticise new Swedish deposit and bonusing limits proposals, claiming they would reduce channelisation to locally licensed operators.

Citing these unfortunate proposals, which he claimed were on “weak grounds”, Hagman said they will ultimately drive consumers to Sweden’s black market, where no consumer protection exists.

Regulus Partners analyst Paul Leyland said: “LeoVegas was one of the leading signatories of the open letter to Sweden’s minister responsible for gambling, highlighting both the risks of fiscal-regulatory tightening and a lack of traction in terms of effective stakeholder communication.

“We believe that this position was in part caused by a sector ‘need’ to believe in domestic regulation leading to growth opportunities and we would caution that LV’s language regarding Germany may fall into the same trap,” he added.