Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2009 Earnings Presentation
74 slides from Evoke's earnings presentation, Mar 23, 2010
Slide 1: Results for the Year ended 31 December 2009
Results for the Year ended 31 December 2009 23 March 2010
Slide 2: Agenda
Agenda Gigi Levy Introduction Aviad Kobrine Financial Review Gigi Levy Operating Review Regulation Gigi Levy & Summary and Q&A Aviad Kobrine 2
Slide 3: Highlights
Highlights† ~ Total Operating Income $247m down 6% ~ Total Operating Income B2C $195m down 13% ~ Total Operating Income B2B $51m up 33% ~ Total Operating Income B2C Emerging Offering $25m up 82% ~ EBITDA1,2 $46m down 18% ~ PBT1 $35m down 29% ~ Final Dividend of 3.0¢ Total Dividend 2009: 6.6¢ ~ Cash
Slide 4: Financial Review
888 : HOLDINGS Financial Review
Slide 5: Profit and loss
Profit and loss $m 2009 2008 % Change Net Gaming Revenue 246.7 256.9 (4%) Other operating income - 5.7 Total Operating Income 246.7 262.6 (6%) Operating expenses1 89.9 77.3 Research and development expenses 24.2 27.4 Selling and marketing expenses 67.3 80.2 Administrative expenses2 19.8 22.0 EBITDA1
Slide 6: Total Operating Income
Total Operating Income ~ 2009 - Total Operating Income $247m (2008: $263m), down 6% Total Operating Income 2003 – 2009 300 250 263 247 200 217 $m 150 157 100 123 50 75 59 0 2003 2004 2005 2006 2007 2008 2009 6
Slide 7: Total Operating Income
Total Operating Income ~ FX fluctuation negatively affected Y2009 TOI Total Operating Income 2003 – 2009 300 10 33 250 263 247 200 217 $m 150 157 100 123 50 75 59 0 2003 2004 2005 2006 2007 2008 2009 Estimated revenue loss due to FX rates change FX rates of Jan08 applied 7 Assuming no change in play
Slide 8: Total Operating Income
Total Operating Income ~ H2 09 - Total Operating Income up 9% to $129m compared to H1 Total Operating Income 2007 – 2009 160 140 120 129 100 118 135 127 $m 80 120 60 97 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 8
Slide 9: Total Operating Income
Total Operating Income ~ Strong Q4 09 TOI to $68m up 14% on Q4 08 and up 12% on Q3 09 Total Operating Income 2007 – 2009 80 70 60 50 $m 40 66 66 69 68 68 30 60 57 61 61 50 54 47 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 9
Slide 10: Geographic segmentation TOI
Geographic segmentation TOI ~ Europe (ex UK) and UK down 7%, Americas down 27%, ROW up 36% ~ Stable geographical mix Geographic segmentation*, TOI 2008 and 2009 Year 2008 FY 08 FY 09 10% 7% 37% 140 46% 120 100 122 $m 114 80 97 90 60 Year 2009 40 8% 10% 37% 20 46% 26 19 17 23 0 UK EMEA Americas ROW (
Slide 11: Total Operating Income B2C
Total Operating Income B2C ~ Strong H2 09 - 9% increase compared to H1 Total Operating Income B2C 2007 – 2009 120 100 102 80 94 118 106 $m 60 107 95 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 11
Slide 12: Total Operating Income B2B
Total Operating Income B2B ~ H2 09 Total Operating Income up 25% to $27m (H2 2008: $22m) Total Operating Income B2B 2007 – 2009 35 30 25 27 24 $m 20 22 15 17 10 13 5 2 0 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 12
Slide 13: TOI B2C by Product
TOI B2C by Product ~ Emerging Offering up 82%, Casino down 13%, Poker down 30% ~ Emerging Offering growth is driven by Live Dealer and 888Sport Total Operating Income B2C 2008 and 2009 FY 08 FY 09 140 120 137 119 100 80 $m 60 74 40 52 20 25 14 0 Casino Poker Emerging 13
Slide 14: TOI Emerging offering B2C
TOI Emerging offering B2C ~ H2 09 TOI Emerging offering up 48% to $14m (H2 2008: $9m) Total Operating Income B2C 2008 and 2009 14 12 10 14 $m 8 11 6 9 4 5 2 0 H1 08 H2 08 H1 09 H2 09 14
Slide 15: Average Net Deposit Casino & Poker B2C
Average Net Deposit Casino & Poker B2C ~ Strong correlation between Avg. Net Deposit and FX rates Average Net Deposit Casino & Poker B2C 2008 and 2009 $ Avg. Net Deposit per unique depositor USD/EUR FX USD/GBP FX 350 2.2 2 300 1.8 $ FX 1.6 250 1.4 1.2 200 1 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8
Slide 16: Casino Revenue mix B2C
Casino Revenue* mix B2C ~ Stable Casino game mix – slight expansion of Slots v. Roulette Casino Revenue* mix B2C 2008 - 2009 100% Others 90% 5% 5% 4% 4% 5% 4% 3% 4% Keno TableCasino 80% 21% 23% 22% 21% 21% 22% 23% 23% TablePoker 70% VideoPoker Roulette 60% Slots 50% BlackJack 46% 48% 51% 48% 47% 47%
Slide 17: Revenue retention Casino B2C
Revenue* retention Casino B2C ~ January 2009 actives still contribute 61% of revenue after 12 month ~ Improved casino revenue retention in 2009 61% (2008 34%) Revenue retention Casino B2C 2008 and 2009 100% 2009 2008 80% 60% 40% 20% 0% 1 2 3 4 5 6 7 8 9 10 11 12 Months * Based on revenue from active
Slide 18: Revenue retention Poker B2C
Revenue* retention Poker B2C ~ January 2009 actives still contribute 38% of revenue after 12 months ~ Improved revenue retention in 2009 38% (2008 28%) Revenue retention Poker B2C 2008 and 2009 100% 2009 2008 80% 60% 40% 20% 0% 1 2 3 4 5 6 7 8 9 10 11 12 Months * Based on revenue from active custome
Slide 19: Revenue mix by seniority Casino B2C
Revenue* mix by seniority Casino B2C ~ 1997-2005 actives generate more than 20% of revenue in Q4 2009 Revenue mix by seniority Casino B2C 100% Acquisition year 2009 80% 2008 60% 2007 $m 2006 40% 1997-2005 20% 0% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 19 * Revenue defined as Deposits less wi
Slide 20: Revenue mix by seniority Poker B2C
Revenue* mix by seniority Poker B2C Revenue mix by seniority Poker B2C 100% Acquisition year 2009 80% 2008 2007 $m 60% 2006 40% 2002-2005 20% 0% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 * Revenue defined as Rake+ tournament fees in Pacific Poker 20
Slide 21: Costs Structure
Costs Structure ~ Costs slightly up to 82% from Total operating income (2008: 79%) Costs as % of Total Operating Income 2008 and 2009 100% 79% 82 % 80% 8% 8% 60% 27% 31% Admin. Expenses 10% S&M expenses 40% 10% R&D Operating expenses 20% 29% 36% 0% 2008 2009 21 * Excluding share benefit charges depr
Slide 22: EBITDA and EBITDA margin
EBITDA and EBITDA margin ~ EBITDA* $46m ~ EBITDA* margin 18% EBITDA* 2008 and 2009 EBITDA* EBITDA* margin 60 25% 50 56 20% 21% 40 18% 46 15% $m 30 10% 20 5% 10 0 0% 2008 2009 2008 2009 22 * Excluding share benefit charges
Slide 23: Chargebacks & PSP fees - Group
Chargebacks & PSP fees - Group ~ PSP & CB at 9.2% from TOI (2008: 7.6%) ~ Chargebacks in Q1 to date return to normal levels PSP fees and Chargeback as % of TOI Group PSP CB 12% 9.2% 10% 7.6% 8% 3.7% 1.8% 6% 4% 5.8% 5.6% 2% 0% 2008 2009 23
Slide 24: Players acquisition B2C Casino & Poker
Players acquisition B2C Casino & Poker ~ 2009 B2C Casino and Poker FTDs 206,000 ~ 2009 B2C Casino and Poker CPA at $177* Players acquisition B2C Casino & Poker FTDs (000) CPA $ 250 -7% 250 -24% 200 232 200 221 206 150 150 177 100 100 50 50 0 0 2008 2009 2008 2009 * CPA - excluding revshare 24
Slide 25: Customer Bonuses B2C Casino and Poker
Customer Bonuses B2C Casino and Poker ~ Keeping customer bonus efficiency optimised Customer bonuses* as % of TOI Casino Poker 20% 16% 16% 10% 6% 7% 0% 2008 2009 25 * Bonus excluding converted loyalty points
Slide 26: Strong Real Money Registrations Growth
Strong Real Money Registrations Growth ~ Registrations increased by 24% reaching 7.1million at Q4 2009 ~ Quarterly CAGR of 9% between Q1 2002 to Q4 2009. Real Money Registrations Q1 2003- Q4 2009 8 millions 7 6 5 4 3 2 1 0 2003 2004 2005 2006 2007 2008 2009 26
Slide 27: Balance Sheet as at 31 December 2009
Balance Sheet as at 31 December 2009 $m 2009 2008 Non-current assets Intangible assets 70.8 44.8 Property, plant and equipment 21.0 19.7 Financial assets & Deferred tax 0.8 0.8 92.6 65.4 Current assets Cash and cash equivalents 87.5 98.4 Trade and other receivables 21.2 18.7 Total Assets 201.3 182.5
Slide 28: Cash Flow
Cash Flow $m Year to 31 December 2009 2008 Cash flows from operating activities Profit before tax 27.6 40.2 Share benefit charges 7.0 8.4 Profit before tax and Share benefit charges 34.6 48.6 Depreciation and amortisation 8.5 7.4 Interest received (0.6) (3.3) Change in current assets and liabilities
Slide 29: Operational Review
888 : HOLDINGS Operational Review
Slide 30: 2009 - Overview
2009 ‐ Overview Highlights: ~ Creation of Dragonfish ~ Acquisition of Wink bingo ~ New brand architecture ~ Live casino launched ~ Linden Lab deal ~ Dragonfish deals 30
Slide 31: Casino & Games 2009
Casino & Games 2009 ~ Full Multi Currency ~ Games Tab Launch ~ Live Dealer Launch ~ “Recession busting “ promotions ~ New Games in Casino and Games Tab ~ Casino No-DL Upgrade: More Games, Infra upgrade ~ 3D Scratch Cards Arena ~ Live Casino ~ Reef Club Casino ~ £8,888,888 31
Slide 32: Poker 2009
Poker 2009 ~ Many new features launched: ~ Money Transfer ~ Multi Lingual Client ~ Time Bank ~ Over 50 new features and many small bug corrections ~ Poker Ashes ~ Lords of Poker ~ Leo Margets – Last Woman Standing ~ New Loyalty Club ~ Quick-Seat Lobby ~ Major infrastructure improvements – significan
Slide 33: Bingo 2009
Bingo 2009 ~ 888 Ladies ~ 1st birthday ~ Regular calendar events ~ Social media ~ Launch of 5 new jackpot games in Bingo ~ New payment methods ~ Licensees API and room management tools for better self-management by licensees ~ Over 10 New Bingo Networks ~ Further games integration infrastructure 33
Slide 34: Wink Bingo acquisition
Wink Bingo acquisition ~ Three online bingo networks including Wink Bingo, Posh Bingo and Tasty Bingo as well as three skins including Fabulous bingo ~ Network is operated on the Dragonfish bingo infrastructure ~ Over 60,000 active players (as of October 2009) ~ Revenue of £15 million and profit bef
Slide 35: Sport 2009
Sport 2009 ~ Innovative promotions ~ New automated Promotional Video tool ~ Better trading and markets ~ New Betting in Running application ~ More games integration 35
Slide 36: General infrastructure updates
General infrastructure updates ~ B2B readiness ~ CMS implementation across B2B and B2C: ~ Enabled B2C rebranding ~ Support quicker changes ~ New Registration tools ~ TRUSTe seal of approval ~ 12 new payment methods 36
Slide 37: 2010 product plans
2010 product plans ~ General: ~ Better B2B readiness ~ Regulated markets additional support ~ UI Uplift across the various offerings ~ Focus on user experience ~ Innovative products: ~ 3D Casino ~ Poker 6 with some unique features ~ Pachinko ~ I-card and Bet and Watch ~ Many new Games in Casino, Bin
Slide 38: 2010 plans
888 com 2010 plans 888 888 888 888 888 casino games poker sport bingo
Slide 39: Our main goals in 2010
Our main goals in 2010 Take our B2C business to a growth trend Be prepared for the future changes in our industry and in the evolving online world 39 39
Slide 40: How will we achieve it?
How will we achieve it? A brand strategy that is on the one hand creating a clear and defined offering for the different lines of product but On the other hand is creating the strong connection of the different lines of product under one powerful mother brand 40 40
Slide 41: 888 Sub Brand Architecture
888 com 888 Sub Brand Architecture 888 888 888 888 888 casino games poker sport bingo
Slide 42: 2010 Plans: Casino
888 Casino 2010 Plans
Slide 43: 2010 Strategy
2010 Strategy Growing market share by delivering segmented products & brands to new customer segments: } 888casino– leading flagship brand } Multi brand – Tactical brands to leverage our marketing channel and database (retention/reactivation) } 888Games– lighter soft gamblers } Live Dealer – high ro
Slide 44: 2010 Plans: Poker
888 poker 2010 Plans
Slide 45: 3 cornerstones of our strategy
3 cornerstones of our strategy Increase customer loyalty and engagement Expanding our customer reach Regulated markets 45
Slide 46: The future of 888poker
VeU The future of 888poker pecotoot ea [twitter | es pone
Slide 47: 2010 Plans: Sport
888 sport 2010 Plans
Slide 48: Shane Warne
Shane Warne Face of 888 Sport 48
Slide 49: Acquisition
888;,. anarwcang of rtING ‘EDLINE Monthly Review Fontwell Park Racecourse Acquisition Join us at the only figure of eight track in the UK > 50 Craps Lang: pari elit tm 906 4 88Bsport.com site? By Ea Michotion 888 sporting’ Edline Thinking of placing a bet at Cheltenham? 999 ss Wy » _ Season Premiere
Slide 50: Casino Poker Bingo Games
Casino Poker Bingo Games ; Not yet a member? Live betting | Promotions Use the iCard for all Home Racecards |~ Results |~ | Courses |w Statistics |w News Travellers Steamers the latest news, form, predictions and results We bet you'll love it! Today's race cards p< Today's meetings meee Taunch now:
Slide 51: 2010 Plans: Bingo
888 bingo 2010 Plans
Slide 52: High level Strategy
High level Strategy Increasing market-share to become a leading global bingo operator through: 1. Penetrating new territories 2. Strengthening our footprint in the UK market } The acquisition of Wink } Strengthening 888ladies’ positioning in the market } Innovation in marketing: } Acquisition throug
Slide 53: 888ladies - positioning
888ladies - positioning Everybody wants to be an 888Lady! } Re-launch of the original concept using Vic Reeves all the way } Strong tag line } Unique proposition – we ARE 888ladies and we are FOR ladies 53
Slide 54: Future focus
Future focus } Regulated markets } Social networks } Applications } Communities } Online marketing 54 54
Slide 55: Dragonfish: 2009 operational highlights, 2010 focus
Dragonfish: 2009 operational highlights, 2010 focus
Slide 56: 2008 to 2009 888 B2B, 2008 Dragonfish, 2009
2008 to 2009 “888 B2B”, 2008 Dragonfish, 2009 ► 8 licensees, 9 bingo networks, ► 20 licensees, 17 bingo networks, handful of casino and poker clients dozens of casino and poker clients, and one e-Payments customer ► UK and Latin America only ► Spanning UK, Continental Europe, Balkans, Latin America,
Slide 57: The year that was: April 2009
The year that was: April 2009 ► Brand Launch ► Website ► Advertising campaign ► Total Gaming Services ► Sales materials ► PPT ► RFP ► Multi-lingual e-Books 57
Slide 58: 2009: Operations and Technology
2009: OPERATIONS AND TECHNOLOGY
Slide 59: New Content Management System (CMS)
New Content Management System (CMS) ► Enabled management of hundreds of web assets per Social Media Dragonfish partner (in various languages: Polish, Greek, Spanish, Portuguese, Italian, French, French, English) ► Supported marketing services ► Social media marketing for buzz ► Landing pages for pai
Slide 60: 2009 partners, group 1: Land-based gaming companies
2009 partners, group 1: Land-based gaming companies 60
Slide 61: 2009 partners, group 2: Online marketers, portals and media companies
2009 partners, group 2: Online marketers, portals and media companies 61
Slide 62: 2009: Player acquisition as a service to partners
2009: PLAYER ACQUISITION AS A SERVICE TO PARTNERS
Slide 63: Player acquisition for partners
Player acquisition for partners ► Offline marketing ► Paid search marketing on behalf of partners ► Organic search marketing on behalf of partners ► Management of marketing affiliates on behalf of partners ► Dedicated affiliate managers work on closing contracts for the brands we promote ► Sales and
Slide 64: 2009: Sales and Business Development
2009: SALES AND BUSINESS DEVELOPMENT
Slide 65: The Sales Funnel
The Sales Funnel ► Proactive engagements typically have 3 lengths ► 18-24months - undecided new entrant to online gaming (i.e. Lottery), ► 6-8 months - typical deal with large online gaming or media company ► 3-4 months - “churn business”, smaller deals or non-complex deals 65
Slide 66: Development of Sales Methodology for Account Coverage
Development of Sales Methodology for Account Coverage ► Account engagements in 3 different ways ► Engagement Accounts (closed, imminent closing opportunity) ► Development Accounts (phase before imminent closing opportunity) ► Investment Accounts (significant opportunity in general, large profits 201
Slide 67: 2010: Focus
Total Gaming Services fish 2010: FOCUS Technology Operations Marketing ePayments Casino Poker Bingo Quickplay
Slide 68: Launch 2010
Launch 2010 ► Games & Technology campaign (first of four campaigns) ► Breadth of games ► Customer insight ► Media consumption ► Outdoor / giant screen ► Key trades / show guides ► DF stand ► Gaming intelligence.com 68
Slide 69: 2010 trends
2010 trends ► Prospects: f Financial services f US Casino (RFP) f UK Bookmaker Casino (RFP) f US Casino (RFP) f Lottery f Spanish / Latam Casino group f UK Sportsbook f Italy: Online Gaming, Media, Offline Gaming f France: Offline Casino, Media f Belgium: Offline Casino f China and Russia leads ► Pr
Slide 70: www.dragonfishpay.com
70 www.dragonfishpay.com BUILT FOR YOUR | ONLINE WORLD Games & Technology —— ‘=> ePayments stein eerie | ePayment optimisation Dragonfish’s unparalleled ePayment expertise drives your ability to achieve key strategic and commercial objectives. Our proprietary ePayment optimisation platform, combined
Slide 71: Regulation
Regulation } Europe } US } Rest of the World 71
Slide 72: Summary and Q&A
888 : HOLDINGS Summary and Q&A
Slide 73: Summary
Summary } 2009 one of the toughest consumer years ever but ... } … continued our commitment to invest in the business for the future } Created a real B2B business – presents significant opportunities for growth } Maintained a leading B2C operation } Financially and operationally strong platform to g
Slide 74: Thank You
888 : HOLDINGS Thank You