LeoVegas reports strong Q4 despite struggle in the Nordic markets
LeoVegas AB has had a rough time in the Nordic markets as of late, despite them being its main markets, and even after reporting its strongest Q4 ever.
Sweden and Norway both had some adjustments in their respective gambling laws and regulations, adding onto the massive increases in tax in Denmark. Such changes caused LeoVegas some damage in the nordic region, but despite that, the company’s adjusted EBITDA increased by about 25% throughout 2020 and the operating cash flow surged by 90%.
The company has also voiced its distress on the German market, which has been re-regulated as of late when the federal states ultimately decided it would be convenient to launch a new licencing system that is set to start being used in the second half of this year.
Operators who are looking to apply for a gaming licence in the country have to accept the large number of restrictions in the package, such as a five-second rule between spins, a compulsory limit on spins (€1 wager per spin), monthly deposit limits of €1,000 and even a ban on live casino online.
Once licences are ready to be handed out in the country, the group is hoping to acquire them on a nationwide basis. The company has also stated that “there are certain elements and limitations in the German regulations that will affect customer value negatively and also risk leading to low channelisation”.
The company recognizes that “regulation is positive from a long-term perspective” and has stated that these types of issues can be resolved on their own as time goes by thanks to factors such as lower competition than usual and improved access to local payment opportunities and marketing channels.
CEO and President at LeoVegas, Gustaf Hagman, mentioned in a comment:
In the German market, LeoVegas has implemented a number of changes ahead of the forthcoming licence system in July 2021. As expected, this affected revenue during the period. Operators in the market are acting differently with respect to the new restrictions, and at present necessary clarity is lacking in the ongoing transitional period, which unfortunately has led to a skewed competitive situation until the licence system has been fully implemented.
In a surprising turn of events, Italy now ranks within the 5 best jurisdictions for LeoVegas, what was revealed in the company’s 2020 fourth quarter report. The report has also seen the group scoring double-digit growth all over its key markets, aside from the United Kingdom and Sweden.
The group’s revenue went up by 13% in the fourth quarter to attain €98.4m, a considerable improvement from its 2019 equivalent of €87.1m despite the circumstances. The number of customers who deposited increased by about 24%, going from 372,032 to 461,983 in 2020. Gross profit also increased to €66.9m from €57m in 2019, however EBITDA decreased from €14.5m to €7.9m, a huge 45% decline.
LeoVegas’ NGR was divided as follows: “Rest of Europe” made up 47% of it, Nordic countries accounted for 36% and the rest of the world came in at 17%. And when it comes to products, casino was the highest ranking with 75% of the company’s GGR in Q4, then came live casino with 16% and sports betting with 9%.
Gustaf Hagman ended his statement by saying:
LeoVegas concluded the record year 2020 with its strongest fourth quarter ever. And we did this despite frequent changes to the gaming requirements in our markets in addition to finding ourselves in the midst of a global pandemic. I am proud of our ability to quickly adapt to changed conditions through a high capacity for innovation at the same time as we are building an increasingly solid and diversified business. On the tailwinds of a strong 2020 we are now looking forward to a year with many exciting growth initiatives and an even stronger customer offering.