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LeoVegas Reveals Q3 2018 Results, CEO Not Satisfied

Publish: 12.12.2018
LeoVegas has recently announced the results for the third quarter of the year, and although the company posted an increase in revenue, its CEO is not satisfied with the performance in this period.

Commenting on the figures, Gustaf Hagman, LeoVegas’ Chief Executive Officer, said he wasn’t happy with the performance demonstrated during the three-month period ended September 30, which ended with revenue rising by 41% when compared to the corresponding period of last year.

Gustaf Hagman: despite the growth, LeoVegas’ governance not happy with the results

Revenue Did Increase

Revenue for the year’s third quarter reached a total of $88.3 million, with the company’s Royal Panda subsidiary accounting for $12.1 million, and Rocket X business bringing a further $10.7 million.

Customer deposit also recorded a rise, totalling $284.5 million in Q3, 31% more than in the third quarter of 2017.

At this moment, more than a third of the company’s revenue (35.5%) comes from regulated markets, and it is estimated this share will jump to nearly 60% once Sweden completes the re-regulation of its gaming market, which is expected to be completed in January next year.

Hagman described this period as “a quarter of transition” for the business, during which LeoVegas centred its attention to strengthening its processes aimed at responsible gaming and preventing money laundering.

According to him, these measures slowed down the company’s growth in markets such as the UK and Sweden. Hagman pointed out it had been necessary to complete these tasks in order to gain a long-term competitive advantage.

Cost of sales increased during the period, by more than 40% to $16.5 million, while at the same time, gaming duties went up by 81% to $8.2 million. All of this resulted in gross profit rising by 37% to $63.3 million. Personnel costs nearly doubled to $11.8 million, while marketing expenses and other expenses rising to $31.5 million and $11.3 million respectively. The report also revealed that the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) increased to $10.1 million.

Hagman Wasn’t Happy

Operating profit dropped by 49% to $3.9 million, while net profit for the quarter reached $14.4 million, which is an improvement of 98% when compared to the previous year.

Revenue increased by 63% to $273.6 million for the first nine months of 2018, with net profit going up by 27% to $23.7 million. EBITDA for the said period climbed to $37.7 million.

Hagman said that despite the important improvement efforts, the company wasn’t satisfied with its growth or profitability during the third quarter.

He pointed out that compliance had affected growth in two of LeoVegas’ largest markets, which had resulted in a drop in the average player value.

Hagman stated the second factor that had made a significant impact was the large projects the company had begun during the second quarter. LeoVegas’ CEO added the effects of these first wouldn’t be seen in the longer term.

However, he did note the company had launched a number of initiatives aimed at creating a better product and consumer experience, which would have a significant impact on increasing revenue and profit.

In related news, one LeoVegas punter managed to score a record-breaking Yggdrasil jackpot, after taking home a staggering sum of C$11.87 million.