Revenue for the three months to 30 September was €99.4m (£85.1m/$114.1m), up from €88.9m in the corresponding period last year.
Classic casino games accounted for 76.0% of all revenue in the quarter, ahead of live casino on 14% and sportsbook with 10%, while LeoVegas experienced a 5.4% increase in customer deposits, to €308.6m.
The number of new depositing customers reached 188,221, up 5.2% on last year and also the highest quarterly total since Q2 2020. Returning depositing customers amounted to 281,500, an increase of 8.4% on last year.
In terms of geographical performance, the Nordics remained the operator’s core market, accounting for 44.0% of all revenue in Q3. Net gaming revenue in the region increased 39.0% year-on-year, helped by the acquisition of the Expekt brand in May, and its subsequent relaunch.
Sweden in particular had a good quarter with record revenue and customer numbers, president and chief executive Gustaf Hagman noted, aided by a better-than-expected performance from Expekt and a stronger performance from the core LeoVegas brand.
“All key markets performed well during the quarter, where our home market in Sweden was the brightest star,” Hagman said. “It is positive that the company can show strong performance in one of the world’s most competitive and strictly regulated gaming markets.”
Revenue from the rest of Europe represented 34% of all revenue for the quarter, with net gaming revenue in the region up 19.0% on last year due to growth in both Spain and Italy. However, legal changes in Germany, coupled with the ongoing regulation process, stunted growth.
LeoVegas noted that if it was to exclude its activities in Germany, then overall revenue for the third quarter would have increased by 31.0%. Germany’s State Treaty on Gambling (Glücksspielneuregulierungstaatsvetrag), which mandates a €1 per spin stake limit on online slots among other restrictions, has impacted operators’ performance across the industry and already contributed to a year-on-year decline in LeoVegas’ Q2 revenue.
Rest of world revenue net gaming revenue increased 42.0% year-on-year and accounted for 22% of all revenue in Q3. LeoVegas said development was particularly strong in Canada, where it posted double-digit growth for the period.
“The favourable revenue growth for the group confirms that the strategy to simultaneously scale up a number of markets and relaunch the Expekt brand has been a success,” Hagman said.
“The company today is more diversified than ever, and we have succeeded in compensating for the sharp drop in revenue in Germany.”
Looking at outgoings, cost of sales increased 8.9% to €17.1m and gaming duties expenses climbed 28.2% to €15.9m. Personnel costs were level at €12.4m, but marketing expenses were 13.8% up to €36.2m, capitalised development costs by 50.0% to €3.6m and other operating spend 33.8% to €9.9m.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was 0.8% lower at €11.8m, but operating profit was up 7.8% to €5.5m.
After accounting for other expenses, including €1.1m in financial costs, this left a pre-tax profit of €4.3m, down 8.5% on last year. LeoVegas paid €204,000 in tax, resulting in a net profit of €4.1m, flat year-on-year.
As to how this impacted the operator’s performance in the year to date, revenue for the nine months to the end of September was 1.3% higher at €292.9m.
EBITDA declined 27.6% to €31.8m, while operating profit fell 49.6% to €11.9m and pre-tax profit 60.9% to €9.0m. LeoVegas paid €1.4m in tax, leaving a net profit of €7.6m, a drop of 64.3% from last year.
Looking ahead, the fourth quarter kicked off with revenue falling 5.2% to €31.1m in October, with the ongoing struggles in Germany exacerbated by LeoVegas withdrawing from the Netherlands. The Dutch market accounted for 6% of Q3 revenue, and generated higher profits than most. Excluding these markets, revenue would have been up 21%.
However, an “abnormally low” sportsbook margin also had a negative impact, though underlying customer activity remained solid, Hagman noted.
Original article: https://igamingbusiness.com/improved-performance-in-sweden-helps-leovegas-offset-german-struggles-in-q3/
