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LeoVegas experiences year-on-year revenue drop

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LeoVegas reveals a year-on-year revenue drop before the MGM acquisition due to higher costs and regulatory limitations.

The online gaming industry is seeing many acquisitions and business partnerships, including big names.

MGM is currently in the process of acquiring LeoVegas at an impressive SEK61 per share. In a recent report, LeoVegas announced a year-on-year drop in revenue ahead of the acquisition.

Reasons for the drop?

In a recent report, the LeoVegas Group revealed that it has seen a year-on-year drop in revenue, slipping to a net loss in its final quarter before the acquisition by MGM Resorts International.

The expectation is for the deal to conclude very soon. Earlier this month, LeoVegas published its third quarter results. The latest results revealed a revenue drop of 0.7% year-on-year, leaving it at €98.7m.

In this quarter, there has been a revenue increase of 20% in Nordic countries, with record performance from the Expekt brand in Sweden. However, this growth was not enough to improve overall results. As European revenue saw a 19% decrease, and the rest of the world (ROW) saw a 10% drop.

The main reason for the drop in revenue in Europe is believed to be the stop of operations within the Netherlands. And on top of that, the ROW performance has been impacted by the new regulations in Ontario.

Another figure to consider is the company cost. While spending and cost of sales decreased to 9.4%, settling at €15.5m, there was an increase in gaming duties costs. It rose to 21.4%, which resulted in a total cost of €19.3m.

Cost increases across the board

The LeoVegas group also saw an increase in cost expenses across various operating areas, including marketing. The latter was up 4.4% to €37.8m. Then there are the personnel costs which rose by 31.5% to €16.3m. Furthermore, the operating expenses jumped to 71.7% to €17m. The latter could be because of transaction-related costs and spending linked to the halt of its New Jersey launch in the US.

The increase in costs led to earnings before interest, tax, depreciation, and amortisation (EBITDA) coming in at a loss of €2.6m. Which is a relatively big drop compared to the €11.5m figure of the previous year. The total operating profit dropped to a loss of €9.3m.

Other reasons for the drop include the €1.5m in finance cost, which led to a pre-tax loss of €10.8m. At the same time last year, there was a profit in this area of €4.1m.

In terms of tax, the operator paid €169,000 and reported a €172,000 loss after tax. This leaves the company with a total net loss of €10.8m for the quarter in comparison to the €4.1m profit the previous year.

LeoVegas continues to reach strategic goals

Despite the loss, the third quarter also resulted in a few big wins for LeoVegas as they completed various strategic goals.

The company partnered with the Premier League champions, Manchester United. This is a strategic partnership set to enhance its sports betting offering and provide new experiences for sports fans.

LeoVegas also partnered with Serie A club Inter - a collaboration that will last throughout 2022 and 2023. Again, this is another partnership that is set to improve the experience for sports bettors and fans.

The MGM acquisition will be concluded by the new three-member board. The board is made up of LeoVegas Executive Gustaf Hagman, the MGM Resorts CEO Bill Hornbuckle, and the Head of Gaming at IAC Gary Fritz.

Published: November 17, 2022

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Article by Stelly

CasinoWow Contributor

Hey there! I am Stelly, and happily, I'm part of CasinoWow's content team. It excites me to be able to write and share with all gambling enthusiasts unbiased reviews and news that contribute to the gambling community and industry. Thankfully, I also have the chance to help you make an informed choice for casino brands and games, as well as provide interesting guides and news.

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