Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — H1 2016 Earnings Presentation
43 slides from Evoke's earnings presentation, Aug 31, 2016
Slide 1: Results for the Six Months Ended 30 June 2016
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016
Slide 2: Agenda
AGENDA Itai Frieberger | Our H1 2016 Aviad Kobrine | Financial Review Itai Frieberger | Operational Review & Summary Q&A 2
Slide 3: Our H1 2016
OUR H1 2016 Exceptional growth in casino and sport Regulated markets represent a majority of revenues and growing faster than .com Euro 2016 was the first 888sport main event – performed very well Business is well diversified across major gaming verticals, markets and platforms H1 2016 mar
Slide 4: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 4
Slide 5: 2016 H1 Highlights
2016 H1 HIGHLIGHTS Revenue H1 2016, up 19% B2C Revenue up 21% Casino and Sport leads growth: Casino Revenue up 31% Sport Revenue up 63% Five consecutive quarters of revenue growth with record performances in Q1 and Q2 2016 Revenue from regulated markets – fastest growing segment, up 29
Slide 6: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $m H1 2016 H1 2015 % Change Revenue 262.0 220.0 19% Operating expenses2 67.5 60.8 3 Gaming duties 30.2 21.8 Research and development expenses 15.8 16.4 Selling and marketing expenses 90.3 67.1 Administrative expenses 4 14.1 13.0 Adjusted EBITDA3,4 44.1 40.9 8% Depreciation
Slide 7: Group Revenue
GROUP REVENUE Revenue up 19% to $262m (H1 2015: $220m), driven by Casino, Sport and regulated markets Impressive 14% half yearly CAGR since H1 2009 Like for like* growth at 22%, adjusting for lower Sterling** Revenue H1 2009 – H1 2016 ($m) 280 260 262 240 220 $m 220 200 225 200 180 186 160 140
Slide 8: Group Revenue
GROUP REVENUE Outstanding quarterly increases despite adverse currency headwind Quarterly Revenue Q1, Q2 ($m) Q1 ($m) Q2 ($m) 135 135 125 125 130 132 115 115 105 112 105 108 111 114 95 95 103 97 85 85 94 92 75 75 75 79 65 65 69 55 55 61 45 45 Q110 Q111 Q112 Q113 Q114 Q115 Q116 Q210 Q211 Q212 Q213
Slide 9: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION Regulated markets* represents 63% of Revenue, consistently increasing over time per our strategy to expand in regulated markets UK and Europe (excl. UK) represent 87% of Revenue UK up 18% and Europe (excl. UK) up 32% Geographic Segmentation H1 2013 - H1 2016 H1 2015 $
Slide 10: Revenue B2C
REVENUE B2C Revenue up 21% to $230m (H1 2015: $190m) Strong performance led yet again by Casino and Sport Regulated markets continue strong growth 14.5% half yearly CAGR since H1 2009 Revenue B2C H1 2009 – H1 2016 ($m) 240 220 200 230 180 $m 190 160 191 140 171 120 159 100 125 106 89 80 H1 0
Slide 11: Revenue Casino B2C
REVENUE CASINO B2C Casino up 31% to $137m (H1 2015: $105m) Growth is driven by enhanced offering, multi platform and outstanding CRM Further contributors to the success included 777 brand launch, continued momentum of Slots in Spain and additional new volume in Denmark Revenue Casino B2C H1 20
Slide 12: Revenue Sport B2C
REVENUE SPORT B2C Stellar Sport progress, already 10% of Group Revenue, up 63% to $25m (H1 2015: $15m) Revenue increase is a result of our strategic focus and marketing investment New customer recruitment up 82% Revenue Sport B2C H1 2009 – H1 2016 ($m) 25 25 20 15 $m 15 10 8 5 4 3 3 3 2 0 H1 0
Slide 13: Revenue Poker B2C
REVENUE POKER B2C No. 2 position in global poker rankings*, outperformed market in relative liquidity Increased focus on Poker schedule optimisations, cross-selling to other products and exciting big tournaments Poker Revenue down only 6% to $42m (H1 2015: $45m) despite challenging market and
Slide 14: Revenue Bingo B2C
REVENUE BINGO B2C Revenue up 2% to $23m (H1 2015: $23m) Optimisation efforts and further instant games content supported Bingo progress Adjusting for currency we see Bingo turnaround continues with H1 2016 9% higher than parallel period Revenue Bingo B2C H1 2016 vs. H1 2015 ($m) FX 24.6 24 1.5
Slide 15: Marketing Cost
MARKETING COST Increased marketing supports revenue growth, with 22% new player increase, and 19% Revenue increase Marketing increase is driven mostly by Sport strategic investment and Casino growth Investment is expected to drive further volume throughout the rest of the year Marketing Cost H
Slide 16: Cost Structure
COST STRUCTURE Cost ratio to Revenue at 83% (H1 2015: 81%) Lower operational cost Increased ratio only in growth generating components (Marketing and Gaming duties) Cost as a % of Total Revenue H1 2016 vs. H1 2015 * 81.4% 83.2% 80% 9.9% 11.5% Gaming duties 5.9% 5.4% Admin. Expenses 60% 30.5% S
Slide 17: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN Adjusted EBITDA up 8% to $44m (H1 2015: $41m) Newly introduced gaming duties adverse impact Adjusted EBITDA up 16% at constant currency*, with margin at constant FX 17.6% Adjusted EBITDA H1 2016 vs. H1 2015 $m Adjusted EBITDA % Adjusted EBITDA margin 47 25% 3 17.6% 4
Slide 18: Dividend
DIVIDEND High dividend payout ratio continues 3.8c per share interim divided 52% increase compared to H1 2012 DIVIDEND PER SHARE ($c) H1 2012 – H1 2016 $c 52% 4.0 50% 3.8 40% 3.6 40% 40% 3.4 3.2 3.8 20% 30% 3.0 3.5 2.8 3.5 20% 2.6 2.4 3.0 10% 2.2 2.5 2.0 0% H112 H113 H114 H115 H116 Dividend pe
Slide 19: Balance Sheet
BALANCE SHEET $m 30-Jun-16 30-Jun-15 Non-current assets Goodwill and other Intangible assets 159.3 159.1 Property, plant and equipment 8.9 13.7 Other non-current assets 2.0 2.2 Investments 1.5 1.7 171.7 176.7 Current assets Cash and cash equivalents 143.0 141.6 Trade and other receivables 38.2 37.2
Slide 20: Cash Flow Statement
CASH FLOW STATEMENT $m Period Ended 30 June H1 2016 H1 2015 Cash flows from operating activities Profit before income tax 27.8 20.0 Share benefit charges 3.2 2.4 Depreciation and amortisation 9.7 9.4 Change in current assets and liabilities (17.6) 5.7 Other non cash adjustments (0.3) (2.7) Cash gene
Slide 21: Itai Frieberger, CEO | Operational Review
ITAI FRIEBERGER, CEO | OPERATIONAL REVIEW 21
Slide 22: Total Group Revenue and Growth KPIs
TOTAL | GROUP REVENUE $200M $225M $225M $267M H1 2013 H1 2014 H1 2015* H1 2016* B2C | NEW DEPOSITORS SPORT | BETS 100% 125% 145% 148% 100% 117% 137% 191% JUL 2015 OCT 2015 FEB 2016 APR 2016 JAN 2015 AUG 2015 DEC 2015 JUN 2016 CASINO | BET CASINO | ACTIVES 100% 113% 128% 136% 100% 124% 131% 138% JAN
Slide 23: The Online Business Cycle
THE ONLINE BUSINESS CYCLE 888 Marketing —— $$$ y Net Gaming Revenue x yaa * i ro Pod Activity s XZ a . Acquisition a s Return To » \\ Cost Brven | s ' ° ” ! “anne 2° : fF / \ % CRM: A @). €---2 2 eee ~” Deposits
Slide 24: Acquisition
ACQUISITION Constant traffic optimisation continues, only profitable acquisition channels pursued First Time Depositors H1 2014 – H1 2016 140% 148% 120% 122% 100% 80% 100% 60% 40% H1 14 H1 15 H1 16 * H1 14 as base . . 24
Slide 25: Fueling Future Growth
FUELING FUTURE GROWTH B2C DEPOSIT TREND 250% Based on Jan 2010 230% FX effect 210% 190% 170% 150% 130% 110% 90% 70% 50% 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 11 11 10 11 12 10 11 12 2010 2
Slide 26: Actives
ACTIVES Increased activity supports growth and retention efforts Actives H1 2014 - H1 2016 130% 120% 110% 121% 100% 90% 111% 80% 100% 70% 60% 50% 40% H1 14 H1 15 H1 16 * H1 14 as base . . 26
Slide 27: Revenue Trend
REVENUE TREND Revenue H1 2009 – H1 2016 ($m) 280 260 262 240 220 $m 220 200 225 200 180 186 160 140 154 120 130 118 100 H1 09 H1 10 H1 11 H1 12 H1 13 H1 14 H1 15 H1 16 27
Slide 28: Casino
CASINO 28
Slide 29: Casino Content
CASINO CONTENT Unique internally developed content continues to dominate our growing Casino platform Offered alongside well known content, thus enabling a unique and rich experience that is constantly updated In House developed content continue to dominate our VS arena 100% 90% 48% 80% 41% 70%
Slide 30: Mobile Share
MOBILE SHARE UK Mobile Share B2C H2 2012 – H1 2016 UK Mobile Revenue Share UK Mobile Deposit Share 56% 50% 55% 50% 50% 50% 40% 40% 44% 43% 30% 30% 40% 37% 33% 29% 20% 20% 20% 19% 10% 10% 11% 11% 5% 4% 0% 0% H2'12 H1'13 H2'13 H1'14 H2'14 H1'15 H2'15 H1'16 H2'12 H1'13 H2'13 H1'14 H2'14 H1'15 H2'15 H1'
Slide 31: Poker Reinvented
POKER REINVENTED 31
Slide 32: Poker
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Slide 33: Regulated Markets
REGULATED MARKETS DENMARK UK IRELAND ROMANIA SPAIN ITALY GIBRALTAR 33
Slide 34: 888.ES GGR Trend (Euro Based)
888.ES GGR TREND (Euro Based) Revenue growth fueled by increased offerings and content Launch of 888.es Spain Sport Launch Spain Slots Launch 400% 350% 300% 250% Bets 200% 150% 100% 50% 0% 1 2 3 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
Slide 35: 888.It Bet Trend (Euro Based)
888.It BET TREND (Euro Based) Sport launch driving additional volume 250% Italy Sport Launch 200% Italy Mobile Launch 150% 100% 50% 0% 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 2014 Casino Bet EUR 2015 Sport Bet EUR 2016 35
Slide 36: Sport
SPORT 36
Slide 37: Sport Bets
SPORT BETS Sport bets continue to rise 1050% 950% 850% 750% 650% 550% 450% 350% 250% 150% 50% 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 2012 2013 2014 2015 2016 Based on average daily Bets 37
Slide 38: Euro 2016
EURO 2016 Euro 2016 football event drives uplift FTDs 24% 100.2% 91% 55% 23% Actives 21% Bets Margin Revenue Football Bets per Event 38
Slide 39: Innovation
INNOVATION 39
Slide 40: Bingo Platform
BINGO PLATFORM Bingo Bet Trend GBP 2012 – 2016 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 2012 2013 2014 2015 2016 40
Slide 41: Casino Flex
CASINO FLEX Daily Deposits (GBP) 20 # of brands 80,000 18 16 70,000 14 60,000 12 50,000 10 40,000 8 30,000 6 4 20,000 2 10,000 - - 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 2014 2015 2016 41 41
Slide 42: Summary
SUMMARY Positive trends across a healthy business Organic growth remains our #1 priority Continued investment in platform and content is paying off (again) Existing regulation adaptations alongside new regulated markets M&A represents incremental value opportunity Strong current trading,
Slide 43: Q&A
Q&A 43