In a trading update for the three months to 31 December 2022, LeoVegas – which was acquired by MGM Resorts International late last year – said total revenue stood at €99.5m, which was up 1% year-on-year.
Despite the takeover, LeoVegas must still report its own quarterly report as it still has bonds on the Nasdaq Stockholm corporate bond list.
In the Nordic countries, net gaming revenue (NGR) increased 9%, with a strong performance in Sweden aided by new records for the Expekt brand. In the Rest of Europe, NGR increased 4% year-on-year thanks to healthy growth in the UK and Spain and despite negative impact from Germany.
In the Rest of World region, NGR decreased 15% year-on-year. The trend was favourable in most markets in the region, but growth was adversely impacted in the short term by the business closing a couple of smaller markets in the region earlier in the year.
Fourth quarter results
Gross profit for the fourth quarter was €65.8m, which was up slightly on 2022. Cost of sales, relating to external game and payment service providers, decreased by a small amount to €14.8m. Gaming duties were up slightly and totalled €18.8m.
LeoVegas saw an almost 26% rise year-on-year in personnel costs, which it said was due to provision for the group’s incentive programmes for management, investment in highly qualified technology and product employees, and a headcount increase. Marketing costs during the quarter totalled €34.7m, up compared to €33.8m last year.
A significant burden on LeoVegas’ performance was the €16.6m attributed to other operating expenses. The business said a major proportion of the increase from €10.6m last year was the result of provisions for player claims in two markets. The increase was partly the result of items affecting comparability during the quarter of €700,000, which was driven by transaction-related costs.
EBITDA of €2.6m was down from €11.6m in Q4 2021, while an operating loss of €2.5m compared to a profit of €6.1m a year ago. The group’s depreciation and amortisation excluding acquisition-related depreciation and amortisation totalled €3.9m, which related to acquired intangible assets totalling €1.2m. In the third quarter of the preceding year, Royal Panda’s acquired customer database became fully amortised, which was the main reason for the year-on-year decline.
With income tax up significantly due to deferred tax assets and financial costs up in relation to the business’ bond issue, LeoVegas reported a net loss of €7.8 compared to a profit of €4.2m a year ago.
Full-year overview
Revenue for the full year totalled €394.7m, which was up 0.8% year-on-year.
For the year, LeoVegas reported an operating loss of €1.6m compared to a profit of €18.0m. Over the course of the 12 months, personnel costs were up around €10m with other operating expenses up 77.0% to €64.2m.
LeoVegas elected a new, three-member board ahead of its acquisition by MGM Resorts International last September. The board includes current LeoVegas chief executive Gustaf Hagman, MGM Resorts CEO William Hornbuckle and Gary Fritz, head of gaming at IAC, a major shareholder in LeoVegas.
Earlier this month, MGM Resorts International reported a fifth consecutive record-breaking quarter in Las Vegas during the final three months of 2022. In a trading update for the period ending 31 December 2022, the gaming group said it generated consolidated net revenues of $3.6bn (€3.35bn/£2.98bn), an increase of 18% compared to the prior year quarter.
The group’s operating loss for Q4 was $2.0m compared to operating income of $369.0m in the prior year’s quarter, due primarily to a $1.2bn increase in non-cash amortisation expense relating to the MGM Grand Paradise gaming subconcession and an increase of $338m of rent expense recorded within general and administrative expense related to the VICI and The Cosmopolitan leases, which commenced in April 2022 and May 2022. These were partially offset by a $1.1bn gain on the disposition of The Mirage.
Original article: https://igamingbusiness.com/finance/leovegas-posts-operating-loss-amid-rising-costs/
