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LeoVegas has expanded on its ongoing challenges in the German sector, building on questions raised earlier this year when the company released its Q4 and FY 2020 reports.
In a new quarterly report, the online gambling operator says that during the first quarter of the year, “we saw the full effect of the changes taking place” in the area, with new restrictions related to the upcoming legislation having an impact on results.
However, the group also highlights a Swedish market, where “the strength of the LeoVegas brand and our product breadth is appreciated by our customers,” according to the company.
During the quarter, the Nordic region set a new high, with March representing annual growth for the first time since the temporary COVID-19 restrictions were introduced in July 2020.
Implementation of new restrictions
LeoVegas’ president and CEO, Gustaf Hagman, commented on the company’s success in Germany: “Operators in the market are acting differently with respect to implementing the new restrictions, which unfortunately has led to a skewed competitive situation,” he stated.
“The assessment is that up to 70 per cent – 80 per cent of the German market for casino has temporarily been shifted over to operators that have chosen to not adapt to the coming market regulation.
“Our hope is that this will soon be sorted out by the German authorities, which is a prerequisite for the licence system’s success, with a high level of channelisation and consumer protection. Germany generated approximately six per cent of the group’s total revenue during the first quarter, compared with 15 per cent a quarter earlier.
“Despite this development in Germany we delivered good growth at the group level, which reflects our strong performance in many other key markets, including Italy, Canada and Spain.
“Our business is more diversified than ever before, and growth at the group level is proof that our data-driven way of working and allocating marketing investments is effective.”
LeoVegas, which purchased the €5 million Expekt brand from Betclic Group during the quarter, saw sales rise 8 percent to €96.7 million (2020: €89.4 million).
Net gaming revenue was €93.4 million (2020: €87.1 million), up 7 percent from the same quarter the previous year but down 3 percent from the fourth quarter.
On an NGR per region basis, the firm’s’rest of Europe’ segment was again the leader, accounting for 42 percent of the overall figure, ahead of the Nordics’ 38 percent and the rest of the world’s 20 percent.
On a product basis, casino accounted for 74 percent of the group’s GGR, followed by live casino at 17 percent and sports, which are said to be back to where they were before the global pandemic at 9 percent.
Gross profit for the period was €65.4 million (2020: €59.8 million), and EBITDA increased by 22 percent to €10.4 million (2020: €9 million). EBITDA was hit with a €300,000 provision for projected gaming tax in Denmark for historical times, as well as a SEK 2 million provision for a Swedish Gambling Authority approval, which the company plans to challenge.
The number of depositing customers rose by 12 percent to 462,386 (2020: 413,269), but the number of new depositing customers fell by 12 percent from 193,428 to 186,510.
The company also made a number of moves through its LeoVentures investment unit during the quarter, which Hagman commented on: “The first quarter was an intensive period for our investment vehicle LeoVentures. Among other things we invested in SharedPlay, a company that makes it possible for players to share their gaming experiences with others through the industry’s first multiplayer solution.
“For a long time we have created successful, exclusive games with the help of external providers. We are now taking the next step by starting our own game studio – Blue Guru Games.
“This venture will give us full control and greater flexibility in developing new games, a unique offering to our players, and also a new revenue stream for the group.”
April revenue was €32.7 million (2020: €37.5 million), a decrease of 13 percent from the previous month. With the exception of Germany, growth in April was positive at 4 percent.