Slide 1: Results for the Six Months Ended 30 June 2019
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019 1
Slide 2: Agenda
AGENDA Itai Pazner | H1 2019 Highlights Aviad Kobrine | Financial Review Itai Pazner | Operational Review Q&A 2
Slide 3: Itai Pazner, CEO | H1 2019 Highlights
ITAI PAZNER, CEO | H1 2019 HIGHLIGHTS 3
Slide 4: H1 2019 Highlights
H1 2019 HIGHLIGHTS ☉ Executing on the Group’s strategy ☉ UK demonstrating consistent turnaround ☉ Expanding the 888 product suite into new markets ☉ Post Merger Integration progressing well ☉ Product-focused organisation 4
Slide 5: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 5
Slide 6: H1 2019 Financial Highlights
H1 2019 FINANCIAL HIGHLIGHTS 1 ⦿ Revenue up 7% on a like for like basis driven by UK turnaround and further progress in regulated markets ⦿ Revenue increase led by Casino and Sport up 14% and 28% respectively at constant currency ⦿ Fourth consecutive quarter on quarter revenue growth in the UK, H1 2
Slide 7: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $US Millions H1 2019 H1 2018 Revenue 277.3 283.9 ⦿ Figures shown before the impact of IFRS 16 2 Higher gaming duties at $45m impact adjusted EBITDA VAT accrual release - 10.7 ⦿ Revenue (excluding VAT accrual release) 277.3 273.2 margin Operating expenses 3 71.5 70.4 ⦿ Stabl
Slide 8: Group Revenue
GROUP REVENUE ⦿ Group revenue up 2% to $277m (H1 2018: $273m); up 7% on a like for like basis* ⦿ Casino, Sport, new markets, healthy acquisition and UK recovery driving growth ⦿ B2B is impacted by transfer of business from B2B to B2C, soft trading in Globalcom bingo network and migration of Cashcade
Slide 9: B2C Deposit Trend
B2C DEPOSIT TREND ⦿ Continued positive deposit trend supporting revenue growth ⦿ UK recovery, Italy and additional regulated markets driving increased share of deposits from regulated markets ⦿ Positive trend has continued into the second half of 2019 with double digit growth year on year Deposits T
Slide 10: Our Engine – Like for Like Comparison
OUR ENGINE – LIKE FOR LIKE COMPARISON ⦿ Strong progress in 888’s key growth engines: Casino and Sport ⦿ Overall B2C new customer acquisition up 20% ⦿ Casino new customer acquisition up 49% with active customers up 30% Group Revenue H1 2019 vs. H1 2018 Revenue increase YoY% Like for Like Revenue incr
Slide 11: Our Engine – Like for Like Comparison
OUR ENGINE – LIKE FOR LIKE COMPARISON ⦿ Strong progress in 888’s key growth engines: Casino and Sport ⦿ Overall B2C new customer acquisition up 20% ⦿ Casino new customer acquisition up 49% with active customers up 30% Group Revenue and New Acquisition H1 2019 vs. H1 2018 Revenue increase YoY% B2C Fi
Slide 12: UK Turnaround
UK TURNAROUND ⦿ UK recovery built on recreational player base ⦿ UK Casino first time depositors up 74%, driven by Orbit launch in May 2018 ⦿ B2C UK customer acquisition up 30% with all product verticals showing increases UK Revenue and New Customer Acquisition H1 2019 vs. H1 2018 Revenue LFL increas
Slide 13: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION ⦿ UK and Italy increasing as a share of Group revenue at the expense of ROW and Germany ⦿ Healthy geographical diversification continues ⦿ Regulated and taxed markets represent a record 74% of revenue Geographic Segmentation H1 2013 – H1 2019 H1 2019 (H1 2018) ROW 95% Ameri
Slide 14: Revenue Casino B2C
REVENUE CASINO B2C ⦿ Revenue up 9% to $175m (H1 2018: $161m) reflecting a 14% increase at constant currency ⦿ Launch of Orbit, 888’s cutting edge web-based Casino front end (May 2018), has accelerated Casino progress ⦿ Casino FTD’s up 49% and active customers up 30% Casino Revenue B2C H1 2019 vs. H1
Slide 15: Revenue Sport B2C
REVENUE SPORT B2C ⦿ Revenue up 19% to $45m (H1 2018: $37m), up 28% at constant currency ⦿ Consistent growth continued to be led by regulated markets ⦿ Higher new customer acquisition and active days despite prior year World Cup comparative, ARPU up 19% ⦿ New front-end deployed post period end Sport
Slide 16: Revenue Sport B2C
REVENUE SPORT B2C ⦿ Revenue up 19% to $45m (H1 2018: $37m), up 28% at constant currency ⦿ Consistent growth continued to be led by regulated markets ⦿ Higher new customer acquisition and active days despite prior year World Cup comparative, ARPU up 19% ⦿ New front-end deployed post period end Sport
Slide 17: Revenue Poker B2C
REVENUE POKER B2C ⦿ Revenue down 24% to $23m (H1 2018: $31m); up 26% compared to H2 2018 reflecting stablisation since the middle of 2018 ⦿ Cross-sell to Casino and Sport offset some of the decline with overall revenue from Poker players declining by only 4% ⦿ Revenue is impacted by payments restric
Slide 18: Revenue Bingo B2C
REVENUE BINGO B2C ⦿ Revenue up 10% to $19m (H1 2018: $18m); up 17% at constant currency, down 3% pro forma (adjusting for Costa acquisition at constant currency) ⦿ Revenue up 9% (excl. the acquired brands ) compared to H2 2018 ⦿ New customer acquisition up 33% (up 20% excl. the acquired brands) Bing
Slide 19: Marketing Cost
MARKETING COST ⦿ Encouraging 20% increase in new customer acquisition despite stable marketing investment year on year reflecting efficiency of spend ⦿ Marketing in regulated markets up 4% ⦿ Stable marketing ratio at 30% (H1 2018: 30%) Marketing Cost H1 2019 vs. H1 2018 $m Marketing Costs % Marketin
Slide 20: Cost Structure
COST STRUCTURE ⦿ Total costs at 84.9% of revenue* (H1 2018: 80.8%) driven primarily by higher gaming duties ⦿ Higher gaming duties result from the Group’s regulated markets focus coupled with higher gaming duties rates in the UK, Italy and Romania ⦿ Admin cost increases are the result of legal costs
Slide 21: Growth in Regulated Markets
GROWTH IN REGULATED MARKETS ⦿ Increase in gaming duties – both in volume and in rate ⦿ Gaming duty ratio was reduced in Spain from H2 2018 Gaming Duties Bridge H1 2018 to H1 2019 Increase Decrease 50 3.7 4.9 45 5.8 40 35 44.9 30 37.8 25 20 Gaming Duties UK Italy, portugal, Spain Gaming Duties Actual
Slide 22: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN ⦿ Higher UK POC and other gaming duties impact margin ⦿ Adjusted EBITDA at $42m (H1 2018: $52m) and $45m at constant currency ⦿ Adjusted EBITDA margin at 15% (H1 2018: 19%) Adjusted EBITDA H1 2019 vs. H1 2018 $m Adjusted EBITDA % Adjusted EBITDA margin 60.0 50.0 20.0% 40.0
Slide 23: Balance Sheet
BALANCE SHEET $US Millions Period Ended 30 June H1 2019 H1 2018 Non-current assets ⦿ Unlevered balance sheet Goodwill and other Intangible assets 242.0 160.2 Right-of-use assets 26.1 - ⦿ $26.1m right of use assets – a result of IFRS 16 Property, plant and equipment 13.4 8.4 ⦿ Increase in fixed asset
Slide 24: Cash Flow
CASH FLOW $US Millions Period Ended 30 June H1 2019 H1 2018 Profit before income tax 22.2 60.1 ⦿ M&A totaling $53m partially funded by $33m RCF Adjustments 14.7 12.9 ⦿ Final 2018 Dividend of $29m paid Changes in working capital 5.2 (34.2) Exceptional items 1.6 (12.0) VAT accrual release - (10.7) Net
Slide 25: Itai Pazner, CEO | Operational Review
ITAI PAZNER, CEO | OPERATIONAL REVIEW 25
Slide 26: UK Turnaround
UK TURNAROUND ⦿ 360 degree approach – combining R&D, Product, Marketing, enhanced responsible gaming and compliance ⦿ Infused by Orbit Casino and evolving 888sport product ⦿ Continued growth focus in the biggest online gaming market globally ⦿ Rolling out this methodology to further markets UK Reven
Slide 27: Casino Leadership
CASINO LEADERSHIP ⦿ Orbit global rollout completed ⦿ KPIs showing clear positive trends: FTDs, Activity, user engagement that are complemented by lower CPA ⦿ Continued investment in content and personalisation, utilising AI and new marketing tools Revenue Casino B2C H1 2019 vs. H1 2018 Casino Active
Slide 28: Casino Leadership
CASINO LEADERSHIP ⦿ Unique content constantly delivered by section8 complemented by games from leading worldwide providers Section8 Originals New Providers 3rd Party 28
Slide 29: Our Growth Story - Sport
OUR GROWTH STORY - SPORT ⦿ New proprietary 888sport front-end deployed ⦿ Progressing as planned to first market re-launch (888sport.se) ⦿ Dublin (ex-Betbright) is the new 888sport global hub ⦿ PMI progressing very well ⦿ Sport continues to be a cross-market / cross product growth engine ⦿ Looking fo
Slide 30: Regulated Continental Europe
REGULATED CONTINENTAL EUROPE Continental Regulated Progress (Bets EUR) ⦿ Existing regulations expansion (Italy, Spain, Denmark, Romania) ⦿ New regulations launched (Sweden, Portugal) 2000% ⦿ Potential future regulations (Netherlands, Germany, France) 1500% Bets 1000% 500% 0% 1 2 3 4 5 6 7 8 9 10 11
Slide 31: Turning Things Around - Poker
TURNING THINGS AROUND - POKER ⦿ Stabilising 888poker post a challenging 2018 ⦿ Liquidity is king ⦿ 888poker.pt launch marked first EU shared liquidity ⦿ Aiming to launch 888poker.fr during 2020 ⦿ Poker8 development and rollout continues, a constant improvement ⦿ Results are following investment 31
Slide 32: Turning Things Around – Dragonfish / Bingo
TURNING THINGS AROUND – DRAGONFISH / BINGO ⦿ Full-stack bingo and casino offering with over 600 games from 30+ different game providers ⦿ Roll-out of new technology-based client infrastructure underway ⦿ Costa PMI on track ⦿ Maintaining a healthier and more balanced player ecosystem following additi
Slide 33: Dragonfish Platform KPIs
DRAGONFISH PLATFORM KPI’s Bingo Platform (GBP) Bonus Per Player ARPU 160% 160% 120% 120% 80% 80% 40% 40% OPTIMISATION VALUE 0% 0% 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1
Slide 34: US
US ⦿ 888casino re-launched through Orbit in NJ ⦿ 888sport going into 2nd NFL season with campaigns and cross-sell efforts ⦿ Aiming to grow market share and leverage into additional states ⦿ “Smart and Selective” approach to new states ⦿ Recent record-breaking WSOP event across NJ and NV with Caesars
Slide 35: US: Good Early Signs for Orbit NJ
US GOOD EARLY SIGNS FOR ORBIT NJ #1 Poker Network in the US** ⦿ Daily casino bets Increase ⦿ +31% in daily avg. FTDs* since Orbit grand launch AVE. CASINO BETS 888 PLATFORM ORBIT 16% LAUNCHES 72% 12% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 2018 2019 *In 888Casino NJ, 1-23/7 compared to 24/7-31/8
Slide 36: Summary
SUMMARY ⦿ UK turnaround and back to growth pattern ⦿ Numerous growth opportunities in other EU markets ⦿ On track to reach 1 million FTDs this year – a significant milestone ⦿ Focused on Poker and Bingo turnaround efforts ⦿ Growing US footprint through “Smart and Selective” approach ⦿ Recent acquisi
Slide 37: Appendix
888 APPENDIX
Slide 38: EU Shared Liquidity
EU SHARED LIQUIDITY ⦿ Immediate positive effect of Portugal players on the overall joint network with Spain ⦿ 888poker.fr planned for 2020 ⦿ Awaiting regulatory advancement in Italy Portugal Impact on Shared Liquidity 200% 180% Monthly Liquidity Index 160% 140% 120% 100% 80% 60% 40% 20% 0% 5 6 7 8 9
Slide 39: Continental European Regulated
CONTINENTAL EUROPEAN REGULATED ⦿ Spain robust performance, offset in part by Poker and FX ⦿ Italy stellar growth DEPOSIT TRENDS 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10
Slide 40: Product Leads the Way
PRODUCT LEADS THE WAY ⦿ An organisational strategic focus on product ⦿ Both quality and innovation ⦿ Enhanced UX and customer journey ⦿ AI, content customisation and localization as major product facets ⦿ Embedded customer due diligence & responsible gaming tools ⦿ A seamless cross-product customer
Slide 41: EU Shared Liquidity
EU SHARED LIQUIDITY ⦿ Immediate positive effect of Portugal players on the overall joint network with Spain ⦿ 888poker.fr planned for 2020 ⦿ Awaiting regulatory advancement in Italy Portugal Impact on Shared Liquidity 200% 180% Monthly Liquidity Index 160% 140% 120% 100% 80% 60% 40% 20% 0% 5 6 7 8 9
Slide 42: Orbit NJ First Signs
ORBIT NJ FIRST SIGNS AVERAGE DAILY CASINO BETS AVERAGE DAILY NEW PLAYERS +31% in daily avg. FTDs* since Orbit grand launch ORBIT LAUNCHES ORBIT LAUNCHES 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 1 5 9 13 17 21 25 29 2 6 10 14 18 22 26 30 4 8 12 16 20 24 28 1 5 9 13 17 21 25 29 2018 2019 5 6 7 8 * I