LeoVegas records 38% downturn in EBITDA following MGM deal completion
Sweden reigns supreme for the Stockholm-headquartered operator as MGM Resorts deal completes
LeoVegas has recorded a 38.3% year-on-year (YoY) downturn in adjusted EBITDA from €11.5m to €7.1m as the operator gears up for a new era after being purchased by MGM Resorts International.
On 7 September, the $604m offer by MGM Resorts was accepted by shareholders, and around 96% of the firm’s shares were acquired. An additional 2% of the operator’s shares were acquired during the extended tender offer.
Due to the acquisition, LeoVegas was delisted from the Stockholm Stock Exchange on 22 September.
LeoVegas noted the downturn in adjusted EBITDA, which fell to a negative €2.6m when looking at the reported figure, was due to “transaction-related costs” relating to the MGM offer, along with a provision for gaming tax.
In terms of costs for the firm in Q3, gaming taxes totalled €19.3m, corresponding to 19.5% of revenue and included an item which affected compatibility, which cost €1.3m. The cost of sales was 15.7% of revenue and consisted of costs for external game and payment service providers.
Marketing costs rose 4.4% YoY to €37.8m, including prepaid marketing for closed markets in the rest of the world. Marketing expenses in comparison to revenue were 38.5%, up from 36.5% last year.
Additionally, reported profit (EBIT) plummeted to negative €9.3m compared to a positive EBIT of €5.5m in Q3 2021 with a corresponding EBIT margin of -9.4%
In terms of revenue, LeoVegas posted a slight dip of 1% to €98.7m for the reporting period.
The Dutch market continued to slow down growth outside of the Nordic countries in Europe. Germany also continued to have a negative impact as overall NGR in Europe outside of the Nordics was down 19%.
There was also a dip in the rest of the world region, with NGR decreasing 10% YoY. The operator stated that this region was adversely impacted in the short term due to the new regulation in Ontario and by the firm closing in a couple of smaller markets in the region in the quarter.
The Nordics were the bright spot for LeoVegas in Q3, as NGR increased by 20% YoY, with Sweden doing the best, driven by all-time highs for Expekt. Conversely, Finland declined substantially due to a regulation change at the start of 2022.
At the firm’s general meeting at the end of September, Gary Fritz, William Hornbuckle and Gustaf Hagman were appointed as new board members, with Fritz taking over as chairman of the board until the end of the next general meeting.
LeoVegas also inked two deals with football clubs in the quarter. The first being with Premier League champions Manchester City, and the second was as a global partner with Serie A juggernauts Inter Milan.