LeoVegas migrates RocketX brands in cost-cutting measure
Stockholm-listed gaming operator LeoVegas Group has taken a series of cost-cutting measures including migrating its Rocket X-managed brands to its own platform.
The brands that LeoVegas-owned supplier RocketX provide services for will be migrated to the Group’s own multi-brand platform Rhino, where all technology is owned and run by LeoVegas.
These brands include 21.co.uk, Pink Casino, Slot Boss, BetUK, Legs Eleven and Slotto.
Currently, RocketX is hosted on the Bede Gaming platform, through a deal announced in April 2018.
Gustaf Hagman, LeoVegas group chief executive, said moving the brands from this platform to Rhino will result in savings of around €2m (£1.7m/$2.2m) through economies of scale.
“The consolidation of brands into one and the same platform will contribute to large economies of scale in the group – both by allowing us to fully utilise our multibrand technology and through a more efficient organisation,” Hagman said.
“Already during the second half of last year, the LeoVegas and Rocket X managed brands in the UK began to perform favourably, and the new structure gives us a good starting point to increase both growth and profitability in the UK market during 2020.”
In addition, the company have called off a planned relocation to new offices in Malta.
The moves follow the decision to withdraw the Royal Panda brand from the UK market, announced earlier this month (8 January).
LeoVegas said that Royal Panda had sales of approximately €1.1 m in the UK during the fourth quarter of 2019, though incurred losses. As the brand was not expected to generate significant revenue during the first quarter of 2020, the decision was taken to pull it from the market.
However, revenue for the remaining operations in the UK, including LeoVegas and the Rocket X brands, grew 15% during the fourth quarter compared to the third quarter.
Overall, Leovegas said its cost-cutting initiatives - including Royal Panda leaving the UK market - will lead to annual savings of approximately €3.7 m. However, one-off restructuring costs of €6.1m will be applied to the company’s fourth quarter accounts, while the business says it will incur an impairment loss of approximately €10 m on its investment in Royal Panda due to loss of value from leaving the UK market.
For the third quarter of 2019, LeoVegas reported a year-on-year increase in both revenue and operating profit after experiencing growth across most of its core markets. LeoVegas said organic revenue growth in local currencies stood at 13.0% for the quarter, but, if it were to exclude the UK, organic growth would have been 27%.