LeoVegas UK revenues plunge 32% on regulatory strains
Operator share price falls following UK struggles, although total group revenues increase 41%
LeoVegas has reported a 32% drop in organic revenues for the UK in Q3 due to increased regulatory pressures on the business.
The operator’s UK-facing Rocket X and Royal Panda brands also took a hit, group CEO Gustaf Hagman said.
Hagman said he was not satisfied with the operator’s overall growth and profitability during the quarter, and attributed the poor performance on new, stringent regulatory changes in the UK.
“The adjustments we have made to how we conduct business have been necessary in order for us to deliver sustainable and strong growth over the long term,” Hagman said.
“The operators that maintain high standards of compliance with the customer in focus will have a very strong position going forward in the UK, but in other jurisdictions as well, since more and more countries are regulating their markets, and knowledge is thereby being built up about compliance in regulated markets.
“The work on automating and streamlining these processes has already begun.”
$LEO outlook: «The results of this work have been confirmed by positive customer KPIs during the start of the fourth quarter. This, in turn, bodes well for a return to higher growth figures going forward.»
— OrakelO (@Orakel_O) November 7, 2018
The operator has been reorganising its business over the last six months to increase sustainability and reduce reliance on high-value customers.
The final earn-out payment for Royal Panda, due in December, has also been halved to €30m as the business failed to meet its financial target of €50m in NGR for the year.
Despite that poor performance in the operator’s second biggest market (the UK), group revenues rose 41% to €78.6m, with NGR amounting to €26.6m, up 29% on the previous year.
Organic growth in local currencies was 14%, with EBITDA up 15% to €9m.
Hagman said the group would continue its focus on Sweden, its biggest market, with a new marketing campaign to feature Swedish actor Dolph Lundgren.
“This, along with LeoVegas being the most well-known and appreciated online casino brand gives us a very strong position ahead of regulation,” Hagman said.
LeoVegas’ share price was down 22% in early trading this morning.