LeoVegas reports flat Q2 revenues with record sports betting numbers as MGM’s takeover bid moves forward

LeoVegas announced Thursday the financial results for the second quarter of 2022, a period going from April 1 to June 30, which saw the company’s revenue increase 1% to EUR 98 million ($101.1 million) compared to the previous year. Excluding the Netherlands, the total saw an increase of 9%. Also, the company’s CEO noted record sports betting revenue.

Adjusted EBITDA for the period totaled EUR 9 million ($9.8 million), corresponding to an EBITDA margin of 9.2%. The number of depositing customers was 442,647, a decline of 4%. Earnings per share were EUR -0.01, before and after dilution, while adjusted earnings per share accounted for EUR 0.05. 

These results come from certain events taking place during the quarter, such as MGM Resorts International’s public takeover bid in May, which “is proceeding” and has an acceptance period valid through August 30. The bid, however, paused the company’s expansion to New Jersey. If it is not accepted, LeoVegas can resume the project with a short start-up period.

The company has also entered the Ontario iGaming and sports betting market this month, on the very day of its official launch on April 4. 

The company’s Annual General Meeting was also carried out this past quarter, specifically on May 19, when the proposed resolutions were approved. 

Gustaf Hagman, the Group’s CEO, spoke in an official press release about the quarter’s results and described it as an “eventful quarter”. 

“LeoVegas was launched as one of the first operators on the newly regulated market in Ontario, Canada, and we released our first proprietary games through the gaming studio Blue Guru Games. We implemented major efficiency improvements through the automation of our CRM activities, which will also create a more individually tailored gaming experience”, Hagman stated. 

On MGM’s takeover bid, the CEO said that it “seems likely that the bid will be accepted, which would lead to the company’s shares being delisted from Nasdaq Stockholm later in the year”. He also added that “regardless of the outcome of the bid, business remains as usual and we are continuing to work relentlessly to create the industry’s premium gaming experience for our customers”.  

On the quarter’s revenue growth, the CEO pointed out that “79% of our revenue was locally regulated and/or taxed. Growth of the proportion of regulated revenue is in line with our strategy and demonstrates our strength in operating in regulated markets with complex and locally adapted regulations”.

“As we wrote in our previous report, we have increased marketing investments mainly connected to the re-regulation in Ontario. We also intensified initiatives in some other markets in which we noted good returns on our marketing. Our operating expenses increased during the quarter, partly driven by new recruitments in our technology organization with the opening of two new tech hubs in Warsaw and Malaga, and partly by expenses connected to the expansion  project in the US market”, he added. 

When it comes to sports betting, Hagman acknowledged that the company’s sport and sportsbook-led brands Expekt and BetUK recorded record revenue during the quarter.

Sports betting as a whole also recorded record revenue. We intend to enter into several football sponsorships in the near future. This is expected to provide us with a global reach to a relevant and partly new target group, and we are able to produce unique content with the clubs and their players, which should attract new customers and increase loyalty among existing customers”, he explained. 

Regarding the markets where the company operates, Hagman stated that they continue to develop well, and “we cannot see any signs to date that the current macro situation with high inflation and rising interest rates is impacting the habits of our players”.

In the US and New Jersey, the company’s expansion projects are on pause. “The assessment is therefore that the most responsible course of action is to pause the expansion until we know whether the bid on LeoVegas will be accepted. If a launch is made possible in the future, we will be able to resume the US expansion with a short start-up period”.

Looking forward, the preliminary numbers for July in terms of revenue amounted to EUR 32.8 million ($33.8 million), representing unchanged growth and 8% excluding the Netherlands.

The Gambling Commission in the UK issued a sanction fee in July of GBP 1.3 million ($1.5 million) to the company relating to deficiencies in procedures along the period from October 2019 to October 2020. At the time of the assessment, LeoVegas had already taken actions to improve and update procedures and processes. 

See LeoVegas’ full Q2 report here.