Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2011 Earnings Presentation
47 slides from Evoke's earnings presentation, Mar 27, 2012
Slide 1: Results for the Year Ended 31 December 2011
Results for the Year Ended 31 December 2011 1
Slide 2: Brian Mattingley, CEO | Introduction
BRIAN MATTINGLEY, CEO | INTRODUCTION 2
Slide 3: Agenda
Agenda Brian Mattingley | Introduction Aviad Kobrine | Financial Review Itai Frieberger | Operational Review Brian Mattingley | Summary Q&A 3
Slide 4: Key Highlights
† Key Highlights Exceptional growth across all major metrics Revenue $331m, up 26% on 2010 1 EBITDA $56m, up 94% on 2010 1 EBITDA Margin 17% vs. 13% in H1 2011 and 11% FY2010 Cash position $82m - $37m corporate cash, $45m customers Record player numbers Wink Bingo payments made † A
Slide 5: Delivering on Strategy
Delivering on Strategy Core B2C focus Growth through volume Increased marketing spend but lower marketing ratio Invested in infrastructure Improved margin Active in new markets Rationalised B2B contracts Mytopia stabilising Management team in place, meeting expectations 5
Slide 6: Regulated Markets
Regulated Markets Core Strand of Strategy Italy - 5% Market Share with low level of investment Spain - License application & software adaptation - Launch circa July 2012 Germany - License application & software adaptation U.S. - CIE contract - Nevada License Application - Software adapta
Slide 7: Outlook and Opportunities
Outlook and Opportunities Continued focus on core strategy Continue to develop pipeline of sizeable B2B contracts Regulative framework New Markets Europe, investment necessary U.S. – blue ocean Expected return to dividend 7
Slide 8: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 8
Slide 9: Highlights
† Highlights Highest yearly revenue ever - $331m, up 26% Revenue B2C up 28% to $284m Revenue Casino B2C up 27% to $148m Revenue Poker B2C up 58% to $61m Casino & Poker B2C first time depositors up 55%, led by Poker Active Players Casino & Poker B2C up 102% 1 EBITDA up 94% to $56
Slide 10: Profit and loss account
1 Profit and loss account 2011 - Total Revenue up 26% to $331m ( 2010 : $262m) EBITDA up 94% to $56m ( 2010 : $29m), improved profitability $m 2011 2010 FY'11 / FY'10 Revenue 331.1 262.1 26% Operating expenses 2,3 108.6 97.2 3 Research and development expenses 29.9 21.8 Selling and marketing e
Slide 11: B2C Daily Average Deposit Growth
B2C Daily Average Deposit Growth March 2012 daily average deposits so far up 84% compared to July 2010 % Relative change base on Jan 2010 150% 140% 130% 120% 110% 100% 90% 80% 70% 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 2010 2011 2012 * Reflect the relative change of deposits
Slide 12: Total Revenue
Total Revenue 2011 - Total Revenue up 26% to $331m (2010: $262m) 2011 – highest Revenue in 888 History Representing a CAGR of 24% Total Revenue 2003 – 2011 ($m) 350 300 331 250 262 263 247 200 217 $m 150 157 100 123 50 75 59 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Revenues for 2003
Slide 13: Total Revenue
Total Revenue Q4 2011 Revenue up 28% to $91m (Q4 2010: $71m) Five consecutive quarterly revenue growth Quarterly Revenue 2010 – 2011 ($m) 90 91 86 80 79 75 70 71 69 $m 60 61 61 50 40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 13
Slide 14: Geographical Segmentation
Geographical Segmentation Revenue growth across all markets : UK 20%, Europe 28%, Americas 55%, ROW 31% UK represents 46% of Total Revenue in 2011 Geographic segmentation, Total Revenue 2010 and 2011 Year 2010 160 2010 2011 7% 8% 153 49% 140 37% 120 127 124 100 UK Europe Americas ROW (ex UK) 9
Slide 15: Revenue B2C by Product
Revenue B2C by Product Casino up 27%, Poker up 58%, Bingo up 8%, Emerging Offering up 33% Revenue B2C 2010 vs. 2011 ($m) 140 148 2010 2011 120 117 100 80 $m 60 61 54 40 50 38 20 16 22 0 Casino Poker Bingo Emerging Offering 15
Slide 16: Revenue B2C
Revenue B2C Q4 2011 Revenue up 32% to $79m (Q4 2010: $60m) Quarterly Revenue B2C 2010 – 2011 ($m) 80 79 75 74 70 65 66 64 60 59 60 55 $m 50 52 51 45 40 35 30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 16
Slide 17: Revenue B2C
Revenue B2C H2 2011 Revenue up 38% to $153m (H2 2010: $111m) Revenue B2C H1 2010 – H2 2011 ($m) 150 153 130 131 110 $m 110 111 90 70 50 H1 10 H2 10 H1 11 H2 11 17
Slide 18: Revenue Casino B2C
Revenue Casino B2C H2 2011 Revenue up 37% to $79m (H2 2010: $58m) Revenue Casino B2C H1 2010 – H2 2011 ($m) 80 79 70 69 60 59 58 50 $m 40 30 20 10 0 H1 10 H2 10 H1 11 H2 11 18
Slide 19: Revenue Poker B2C
Revenue Poker B2C H2 2011 Revenue up 95% to $37m (H2 2010: $19m) Revenue Poker B2C H1 2010 – H2 2011 ($m) 40 35 37 30 25 24 $m 20 20 19 15 10 5 0 H1 10 H2 10 H1 11 H2 11 19
Slide 20: Revenue B2B
Revenue B2B H2 2011 Revenue up 16% to $24m (H2 2010: $21m) Revenue B2B H1 2010 – H2 2011 ($m) 24 23 24 22 23 21 20 21 $m 19 20 18 17 16 15 H1 10 H2 10 H1 11 H2 11 20
Slide 21: 888Casino Deposit Trend
888Casino Deposit Trend 888Casino shows continues growth of deposits as of Q3 2010 March 2012 daily average up 64% compared to July 2010 888Casino Daily Deposits 120% 110% 100% 90% 80% 70% 60% 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 2010 2011 2012 21
Slide 22: 888Poker Deposit Trend
888Poker Deposit Trend 888Poker product and CRM activities as of July 2010 translated into strong growth March 2012 daily average up 156% above July 2010 888Poker Daily Deposit 130% 110% 90% 70% 50% 30% 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 2010 2011 2012 22
Slide 23: EBITDA and EBITDA margin
EBITDA and EBITDA margin EBITDA up 94% to $56m (2010: $29m) EBITDA margin up to 17% (2010: 11%) EBITDA 2010 vs. 2011 EBITDA EBITDA margin 60 18% 16% 50 56 14% 17% 40 12% $m 10% 30 8% 20 6% 11% 29 4% 10 2% - 0% 2010 2011 2010 2011 * Excluding share benefit charges, depreciation, amortisation, r
Slide 24: Marketing Cost Ratio
Marketing Cost Ratio Marketing ratio to Revenue in 2011 at 31% 2011 B2C Casino & Poker CPA* lower than previous year Higher efficiency in core business helped to increase profitability despite high investment in regulatory markets Marketing Costs 2010 vs. 2011 Marketing Costs Marketing Cost
Slide 25: Cost Structure
Cost Structure Cost percentage down to 83% (2010 : 89%) Decrease of cost ratio despite the additional gaming tax costs Cost as a % of Total Revenue 2010 vs. 2011 89.1 % 100% 83.2 % 0.6% 2.2% 8.2% 80% 8.3% Gaming Taxes an d d uti es Admin. Expenses 34.9% 60% 30.9% S&M expenses % R&D 40% 8.3% 9.
Slide 26: Chargebacks & PSP fees - Group
Chargebacks & PSP fees - Group CB & PSP at 6.9% of Total Revenue (2010: 6.6%) When comparing on a like for like basis to 2010, CB & PSP ratios are the same Chargebacks & PSP fees as % of Total Revenue 10% 9.2% CB PSP 7.6% 8% 6.9% 3.7% 6.6% 1.8% 1.0% 6% 1.1% % 4% 5.8% 5.6% 5.5% 5.9% 2% 0% 2008
Slide 27: Customer Bonuses B2C Casino
1 Customer Bonuses B2C Casino Casino revenue growth continue to be driven by optimal use of bonuses and CRM efforts Customer Bonuses as % of Revenue 25% 155.0 % se of 27 e i n crea 135.0 n u 20% Reve 115.0 15% 95.0 % 10% $m 18% 17% 75.0 5% 55.0 0% 35.0 2010 2011 Bonus Ratio% Rev $m 1 Excluding co
Slide 28: Customer Bonuses B2C Poker
1 Customer Bonuses B2C Poker Poker revenue growth continue to be driven by optimal use of bonuses and CRM efforts, leveraging the 2011 industry events Customer Bonuses as % of Revenue 65.00 14% 60.00 12% 55.00 50.00 10% 45.00 8% 40.00 % 6% 35.00 $m 11% 30.00 4% 8% 25.00 2% 20.00 0% 15.00 2010 201
Slide 29: Players' Value Over Time
Players’ Value Over Time Average revenue generated by new players during first 3 months (an indicator of life time value) increase over time (Jul 10 = 100) Casino first 3M up 42% in value, Poker first 3M is up 20% This reinforces the strong acquisition trend during FY 2011 and especially Q4
Slide 30: The Impact of Active Players
The Impact of Active Players Average revenue/player is impacted by increase in actives Underlying deposits and LTV remain healthy 888Casino Ave. Revenue/Player Trend as of Q1 2010 Ave. Revenue/Player 200% Active Players 180% Ave. Revenue/Player (Depositors Only) 160% Deposits / Unique Deposito
Slide 31: Balance Sheet
Balance Sheet $m 31-Dec-11 31-Dec-10 Non-current assets Intangible assets 141.9 162.3 Property, plant and equipment 17.1 21.5 Deferred tax & Financial assets 0.6 0.8 Investment in equity accounted joint ventures 1.2 1.3 160.8 185.9 Current assets Cash and cash equivalents 81.9 61.5 Trade and other r
Slide 32: Cash Flow Statement
Cash Flow Statement $m Year to 31 December 2011 2010 Cash flows from operating activities Profit before tax 5.8 10.6 Goodwill Write-off 20.7 - Share benefit charges 2.9 2.3 Depreciation & amortisation 13.0 12.3 Change in current assets and liabilities 36.1 (6.2) Other non cash adjustments 4.6 0.9 Ca
Slide 33: Itai Friberger, COO | Operational Review
ITAI FRIBERGER, COO | OPERATIONAL REVIEW 33
Slide 34: Goals and Focus
Goals and Focus Continue growth in core products Leverage position with in-house marketing agency and proprietary technology Successful marketing campaigns have led to significant increase in brand awareness YoY growth in searches for ‘888 Poker’ up 209%, ‘888 Casino’ up 153%, and ‘888’
Slide 35: Casino and Games
Casino and Games Potential growth via marketing and product New Casino product – Casino 50 888 Games Studio and the GGP platform Mobile Segmented CRM – analytics Multi brands and cross-sell throughout the platform 35
Slide 36: Casino 50
Casino 50 WELCOME luckylucky LIVE CASINO ROULETTE & BLACKJACK MY RECENTLY PLAYED | CASHIER 0.00 BALANCE MY FAVOURITES MY ACCOUNT ? 1) 118+] 15:01 v v SET MY LOBBY SLOT MACHINES JACKPOT GAMES CARD & TABLE VIDEO POKER & GAMES ARCADE GAMES GO TO THE LAUNCH PARTY EVENT ea a @ TIME TO THE NEXT LOBBY SURP
Slide 37: UK Casino – Searches for '888 and Casino'
UK Casino – Searches for ‘888 and Casino’ Successful marketing campaigns cause spikes in searches Strength of our product and CRM lead to ongoing uplift 888 37
Slide 38: 888poker
888poker Leverage strong market position “We play different” strategy External brands (LG & Ryanair) Regulations On Tablets iOS & Android Poker Infra 38
Slide 39: 888poker – Keeping the Trend
888poker – Keeping the Trend 39
Slide 40: UK Poker – Searches by Brand Name
UK Poker – Searches by Brand Name 70 60 50 40 30 20 10 0 888 Poker CompeItor 1 CompeItor 2 CompeItor 3 CompeItor 4 CompeItor 5 CompeItor 6 CompeItor 7 40
Slide 41: UK Poker – Searches by Brand Name
UK Poker – Searches by Brand Name 888Poker now second most searched for poker brand in UK 10 9 8 7 6 5 4 3 2 1 0 888 Poker CompeItor 1 CompeItor 2 CompeItor 4 CompeItor 5 CompeItor 7 41
Slide 42: Bingo
Bingo Focus on player value Bingo no back office More Games 27 new skins, 3 new Networks BigBrother bingo Going forward: Bonuses, Jackpots Mobile 42
Slide 43: Sport
Sport 2011 into 2012 Operational optimisation Capitalising on FIFA World Cup Euro12 and Olympic Games Sport is an opportunity for 888 43
Slide 44: Widespread appraisal of contracts; CasinoFlex; Caesars Interactive Entertainment
Widespread appraisal of contracts Launched CasinoFlex with leading Italian brands Caesars Interactive Entertainment More US deals anticipated 44
Slide 45: Brian Mattingley, CEO | Summary
BRIAN MATTINGLEY, CEO | SUMMARY 45
Slide 46: Summary
Summary Focused, talented management team Focused on core strategy Innovative products embraced by customers Robust trading and strong cash generation Quality partnerships in new markets Investing now for longer term 46
Slide 47: Q&A
Q&A 47