LeoVegas' marketing costs hit Q2 profits
Sportsbook and live casino launches helps double new customers but company makes a 2.5m loss
LeoVegas posted a 67% year-on-year revenue increase for Q2 2016 this morning, but reported a loss in profits due to marketing and affiliate costs related to its sportsbook launch.
Revenue for the three-month period ending 30 June 2016 amounted to 31m (£26.5m), up from 18.5m (£15.8m) in Q2 2015, which the operator said was entirely organic.
However, EBITDA for the period amounted to a loss of 2.5m (£2.1m), with an EBITDA margin of -7.9%. Operating profit decreased from -0.6m (£0.5m) to -2.8m (£2.4m).
Marketing spend increased by 50% from the previous quarter to 18.7m (£16m), while marketing to revenue ratio was 60%.
The number of new depositing customers doubled from the previous quarter with 109,718 joining, driven by the increased marketing and launch of its new sportsbook.
LeoVegas Sport accounted for 4.6% of NGR before bonus costs during the European Championships, with 80% of stakes coming from mobile devices.
The UK market saw its share of NGR decrease from 18% to 13% during the quarter, driven by a low gaming margin in combination with high bonus costs associated with a higher level of customer acquisition both in sports and casino.
LeoVegas Group CEO Gustaf Hagman described the quarter as “intense” following the launch of its new products, including a new live casino, and added these should be viewed from a “long-term perspective”.
“LeoVegas’ strategy is to prioritise growth,” said Hagman.
“The marketing potential turned out to be greater than we had expected, which resulted in the number of new depositing customers being almost doubled compared with the previous quarter to around 110,000.
“Although we scaled up the marketing investments by 50% from the first quarter, we had the lowest customer acquisition cost ever.”
LeoVegas added it has made a strong start to Q3, with 12.8m (£10.9m) NGR reported in July alone â an increase of 68% compared to the same month last year.