Record Q2 helps LeoVegas double first half profits

13 August 2020

Sweden-based gaming operator LeoVegas has reported a year-on-year increase in revenue and net profit for the first half of the year, after it was boosted by a record performance during the second quarter.

Revenue in the six months to 30 June totalled €200.2m (£181.2m/$236.6m), up 10.8% from €180.7m in the corresponding period last year.

The online-only, casino-focused business performed strongly at a time when peers with a significant sports betting operation or retail presence faced disrpution from novel coronavirus (Covid-19).

In terms of spending in H1, cost of sales amounted to €35.0m and gaming duties €30.6m, which left LeoVegas with a gross profit of €134.6m, up 10.7% on last year.

Looking at other expenses, personnel costs remained level at €25.3m in the first half, while marketing spend edged up 5.1% to €64.0m. Other operating spending also increased 7.9% year-on-year to €19.1m.

This in turn meant earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 43.5% from €22.3m to €32.0m, though after accounting for depreciation, amortisation and impairment costs, operating profit came in at €18.5m, more than double €9.1m last year.

Minor costs elsewhere edged this down to €18.2m in profit before tax, and after LeoVegas paid €1.1m in income tax during H1, this meant it ended the period with €17.2m in comprehensive profit, up 132.4% year-on-year.

“I am very satisfied with how we at LeoVegas are handling the Covid-19 situation so that we can conduct our business without noticeable disruptions, despite challenges such as not being able to meet in our daily work,” LeoVegas chief executive Gustaf Hagman (pictured) said.

“Our industry, like many other sectors, is experiencing a structural shift from offline to online. Owing to LeoVegas’ online position, appreciated brands and proprietary technical platform, we stand strong in an increasingly digital world.”

Looking at the second quarter, during which most operators felt the full impact of Covid-19, LeoVegas posted €110.7m in revenue, its highest quarterly total on record and up 17.3% on the same period last year.

Deposits totalled €355.0m in Q2, up 23.4% on last year, with Mobile accounting for 74% of all deposits placed during the period. LeoVegas was also boosted by a record 195,329 new depositing customers in the quarter, marginally higher than the previous record – 193,428 – set in Q1 this year.

In terms of geographical performance, LeoVegas drew the majority of its revenue from the rest of Europe, with the region accounting for 51% of total net gaming revenue in Q2. The Nordics followed with a 34%, ahead of the rest of the world on 15%.

The core casino business proved to be the main source of income on Q2, accouting for 78% of gross gaming revenue, ahead of live casino on 18% with sports betting's contribution making up the remaining 4%.

Switching attention to spending, and the cost of sales increased 6.2% to €19.0m, and gaming duties 32.8% to €17.0m, leaving the operator with a gross profit of €74.7m for Q2, up 17.1% on last year.

Again, personnel costs were level at €13.2m, while marketing costs increased by 16.4% to €32.7m, but other operating costs were reduced 6.3% to €9.0m. This meant EBITDA for the quarter stood at €23.0m, up 52.3% year-on-year.

After depreciation, amortisation and impairment costs, operating profit came in at €16.3m, up 94.1% on last year, with profit before tax also rising by 91.8% to €16.3m.

LeoVegas paid €903,000 in tax during Q2, which meant it ended the quarter with €14.9m in comprehensive profit, up 101.4% on last year.

“LeoVegas has delivered continued solid growth and profitability during a period of exceptional circumstances in the world around us,” Hagman said.

“Supported by the record-large customer base that we entered the quarter with, together with our ability to quickly adapt to new conditions, the positive trend from the first quarter is continuing.”

LeoVegas also published an update on the third quarter, revealing that in July, it generated €30.7m, up 4.8% on the same month last year. Hagman said this growth is likely to continue throughout the quarter after the gaming market “returned to a more normal environment”.

“We continue to focus on delivering sustainable and profitable growth for our shareholders and on offering an entertaining and safe gaming experience for our customers around the world," Hagman added. "LeoVegas’ long-term vision is to be King of Casino."