LeoVegas beats EBITDA projections after slashing World Cup marketing
Operator said it cut marketing spend as its models forecast low cut-through and returns
LeoVegas has released its preliminary results for the second quarter of 2018, revealing a better than expected EBITDA figure thanks to lower-than-expected marketing costs.
EBITDA hit €15m on revenues of €87m, the firm spent 35% of GGR on marketing rather than the projected 42%.
Revenue climbed 12% to €87m, with marketing costs for the period of €30m, equivalent to 35% of GGR, rather than the previously estimated 42%.
The operator warned before the tournament it would be spending “opportunistically” rather than to a set plan.
In a statement this morning, LeoVegas CEO, Gustaf Hagman said: “Our data-driven marketing model works so that we only invest if we see good enough returns in our marketing channels. During the World Cup there are many gaming companies that are advertising, which means that the effectiveness of marketing and the value of customers can be more uncertain.”
Hagman added: “Our models have indicated that we should not advertise in some channels due to the low return, which in turn led to a significantly higher EBITDA than expected.”
It was a busy quarter for the operator, which coincided with the launch of a new LeoVegas online platform and new sportsbook. In addition, the company announced the decision to spin out its responsible gaming business LeoSafePlay into a separate entity, independent of the main LeoVegas brand.
Addressing the company’s ongoing strategy, Hagman added: “We continue to act in line with achieving our financial targets, which is to reach at least €600m in revenue and €100m in EBITDA results in 2020.”
The positive estimates have caused a 11.55% rise in the company’s share price, with shares trading on the Nasdaq Stockholm index at SEK76.70 per share.