LeoVegas has emerged from a “challenging quarter” for its two largest markets – UK and Sweden – to post a year-on-year (YOY) revenue increase of 41% to €78.6 million, despite a focus on compliance measures to facilitate the next steps in the company’s development.
Reporting on the three-month period from 1 July to 30 September 2018, the mobile gametech group also recorded EBIDTA of €9.0 million, which corresponds to an EBITDA margin of 11.4%, up 13.7% from the same period in 2017.
LeoVegas believes it has made great progress with regards to responsible gaming and compliance – particularly in the UK and in preparation for new regulation in Sweden – which includes more proactive measures to combat anti-money laundering and the implementation of extended SOI (source of income) routines, delivering a more in-depth review of a customer’s financial situation.
According to the Group’s CEO and Founder Gustaf Hagman, this will help to provide LeoVegas with the “best opportunity to work effectively and sustainably in a regulated environment”.
This should set up the company to increase the portion of its net gaming revenue (NGR) from regulated markets, which now stands at 35.5% of the total, up from 25.3% in 2017.
Hagman said: “The third quarter was a quarter of transition for LeoVegas as a Group, during which we have focused on compliance measures, completion of platform development projects and other long-term investments to enable the next major steps in the company’s development.
“The work on meeting compliance requirements in the best way possible has been necessary and will give us a major competitive advantage. We are now at the forefront in this area, ensuring long-term sustainable and profitable growth for the Group.”
As a consequence of its compliance focus, LeoVegas saw a drop in average player value, which it was not able to mitigate in the short term by 318,189 depositing customers – a new record for a quarter.
LeoVegas’ Rocket X brands – including new sports betting brand BetUK – were hit particularly hard in the short term by these compliance requirements, similarly to the recently acquired Royal Panda, which derives nearly half of its revenues from the UK.
“We will see the effects of these first in the longer term, while they have also locked up resources that we have not been able to use for other growth initiatives,” added Hagman.
“In parallel with the progress of certain long-term technical projects that are still ongoing, the organisation has now been able to return to more growth-focused projects. We have also launched a number of new initiatives during the autumn focusing on products and the customer experience which are expected to gradually generate positive effects.
“The results of this work have been confirmed by positive customer KPIs during the start of the fourth quarter. This, in turn, bodes well for a return to higher growth figures going forward.”