LeoVegas reveals revenue drop and net loss ahead of MGM acquisition
LeoVegas Group reported a year-on-year drop in revenue and slipped to a net loss during what is likely to be its final quarter before being acquired by MGM Resorts International.
Land-based casino giant MGM is close to completing its purchase of LeoVegas, having first submitted a public tender offer worth $604.0m (£532.9m/€604.0m) in May this year. The proposal for MGM to pay SEK61.00 in cash per share was unanimously backed by the LeoVegas board, while MGM also secured all regulatory and governmental approvals.
In September, 98.07% of LeoVegas shareholders accepted the offer, while MGM was able to increase the total number of shares controlled in the online operator to 93,447,289 shares, or 95.69% of the business.
Also in September, LeoVegas elected a new, three-member board ahead of the acquisition. The board comprises LeoVegas chief executive Gustaf Hagman, MGM Resorts CEO William Hornbuckle and Gary Fritz, head of gaming at IAC, a major shareholder in LeoVegas.
With the deal expected to conclude imminently, LeoVegas today (3 November) published its third-quarter results, in which it was revealed that revenue was 0.7% lower year-on-year at €98.7m.
Revenue from Nordic countries was up 20%, helped by a record performance by its Expekt brand in Sweden, but this growth was offset by a 19% decline in European revenue and a 10% drop in rest-of-world revenue. The Europe fall was mainly attributed to the decision to halt operations in the Netherlands, while LeoVegas said new regulation in Ontario impacted its rest-of-world performance.
Turning to spending and cost of sales was 9.4% lower at €15.5m, but gaming duties cost was up 21.4% to €19.3m.
LeoVegas also reported higher costs expenses across several operating areas including marketing, which edged up 4.4% to €37.8m. Personnel costs were 31.5% higher at €16.3m, while other operating expenses jumped 71.7% to €17.0m, mainly due to transaction-related costs and spend linked to the decision to stop the launch in New Jersey in the US.
Higher costs meant earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of €2.6m, compared to a positive figure of €11.5m at the same point last year.
When also including €3.7m in depreciation and amortisation costs, as well as €2.9m worth of impairment-related spend, this left an operating loss of €9.3m, in contrast to a €5.5m profit in Q3 2021.
LeoVegas also noted €1.5m in finance costs, meaning pre-tax loss amounted to €10.8m, compared to a €4.1m profit in the corresponding period last year.
The operator paid €169,000 in income tax and reported an additional €172,000 in other loss after tax, leaving a net loss for the quarter of €10.8m, in contrast to the €4.1m profit posted last year.
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