Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — H1 2013 Earnings Presentation
50 slides from Evoke's earnings presentation, Aug 28, 2013
Slide 1: Results for the Six Months Ended 30 June 2013
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
Slide 2: Agenda
AGENDA Brian Mattingley | Introduction Aviad Kobrine | Financial Review Itai Frieberger | Operational Review Brian Mattingley | Summary Q&A 2
Slide 3: Brian Mattingley, CEO | Introduction
BRIAN MATTINGLEY, CEO | INTRODUCTION 3
Slide 4: Summary Results
SUMMARY RESULTS Another record results, revenue up 7% to $200m (H1 2012: $186m) 1 Adjusted EBITDA up 7.2% to $39m (H1 2012: $36m) 1 Adjusted EBITDA Margin kept at 19.3%, (H1 2012: 19.3%) 1 Adjusted PBT at $38m, up 36% (H1 2012: $28m) Cash position $89.3m Interim Dividend 3.0¢ 20% increas
Slide 5: Core Business Remains on Track
CORE BUSINESS REMAINS ON TRACK Strong growth in Casino & Poker New Sports provider - excellent start Mobile growth engine* Accounts for 17% of UK revenue (ex Bingo) 26% FTD’s recruited via touch in the UK (ex Bingo) Spain & Italy – positive contribution in 2013 ahead of expectations * Ju
Slide 6: US Becoming a Reality
US BECOMING A REALITY Three States ready to launch Nevada ready to be launched imminently Delaware Lottery on track to launch New Jersey on track to launch Additional B2B contract prospects Shared liquidity options in negotiation Eight further States in consultation 6
Slide 7: Project Focus
PROJECT FOCUS Restructure development centre in Eastern Europe Additional investment required to deliver US and other opportunities We remain aspirational to launch Poker in Italy & Sport in Spain Spanish slots expected by year end Social medium yet to deliver material results Bingo rest
Slide 8: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW
Slide 9: Highlights
HIGHLIGHTS Another record half-yearly revenue up 7%, to $200m Revenue B2C up 8% to $177m Revenue Casino B2C up 13% to $94m Revenue Poker B2C up 13% to $47m Casino & Poker B2C first time depositors up 10% Adjusted EBITDA up 7.2% to $39m Adjusted EBITDA Margin at 19.3%, (H1 2012: 19.3%)
Slide 10: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $m H1 2013 H1 2012 % Change Revenue 200.1 186.4 7% Operating expenses2 54.2 56.8 3 Gaming duties 7.1 5.5 Research and development expenses 15.2 13.8 Selling and marketing expenses 72.1 61.7 % of Revenues 36.0% 33.1% 4 Administrative expenses 12.8 12.6 Adjusted EBITDA 38.6 3
Slide 11: Revenue
REVENUE H1 2013 - revenue up 7% to $200m (2011: $186m) H1 2013 - highest half-yearly revenue in 888 history F/X headwind estimated at circa $2m 7% CAGR Revenue H1 2009 – H1 2013($m) 200 190 186 189 170 177 150 $m 154 130 129 130 132 110 118 90 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12
Slide 12: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION Revenue growth in UK 3% (ex Bingo 13%), Europe 13%, Americas 14%, ROW is down 3% UK represents 41% of Total revenue in H1 2013 (H1 2012: 43%) More than 50% of revenue generated from regulated markets, boosted by European regulation growth Geographic segmentation, Tota
Slide 13: Geographical Growth per Region/Product
GEOGRAPHICAL GROWTH PER REGION/PRODUCT Casino maintains growth also in the mature UK market Poker growth engine is mostly from Europe outside UK, and is boosted by performance in Spain Casino & Poker B2C Revenue Growth in H1 2013 over H1 2012 16% 16% 14% 12% 12% 10% 8% 6% 4% UK Europe (ex UK) 13
Slide 14: Revenue B2C by Product
REVENUE B2C BY PRODUCT Casino up 13%, Poker up 13%, Bingo down 18%, Emerging Offering up 13% Revenue B2C H1 2013 vs. H1 2012 ($m) H1 12 H1 13 100 90 94 80 83 70 $m 60 50 40 47 41 30 20 27 22 10 12 14 0 Casino Poker Bingo Emerging Offering 14
Slide 15: B2C Casino and Poker FTDs
B2C CASINO AND POKER FTDs Casino up 15% boosted by the launch of slots in Italy, Poker up 7% over the strong prior year comparable B2C FTDs H1 2013 vs. H1 2012 H1 2012 H1 2013 115% 110% 115% 105% 107% 100% 100% 100% 95% 90% 85% 80% Casino Poker 15
Slide 16: Revenue B2C
REVENUE B2C H1 2013 revenue up 8% to $177m (H1 2012: $164m) Consistent half-yearly revenue growth Revenue B2C H1 2010 – H1 2013 ($m) 180 170 177 160 166 164 150 $m 140 153 130 131 120 110 110 111 100 90 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 16
Slide 17: Revenue Casino B2C
REVENUE CASINO B2C H1 2013 revenue up 13% to $94m (H1 2012: $83m) Strong Casino performance assisted by the introduction of Slots in Italy as of December 2012 Revenue Casino B2C H1 2010 – H1 2013($m) 90 94 80 83 82 $m 70 79 69 60 59 58 50 40 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 17
Slide 18: Revenue Poker B2C
REVENUE POKER B2C H1 2013 revenue up 13% to $47m (H1 2012: $41m) Strong Poker growth, supported by robust liquidity and regulated revenue Revenue Poker B2C H1 2010 – H1 2013 ($m) 45 47 40 46 41 35 $m 37 30 25 20 24 20 19 15 10 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 18
Slide 19: Revenue B2B
REVENUE B2B H1 2013 revenue up 1% to $23m (H1 2012: $23m) B2B stable revenue ahead of US opportunities Revenue B2B H1 2010 – H1 2013 ($m) 25 23 23 20 23 24 23 15 21 $m 20 10 5 0 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 19
Slide 20: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN Adjusted EBITDA up 7% to $39m (H1 2012: $36m) Adjusted EBITDA margin stable at 19.3% despite increased gaming duty and US build-up costs Adjusted EBITDA H1 2013 vs. H1 2012 $m Adjusted EBITDA Adjusted EBITDA margin 40 20.0% 38 19.0% 36 34 39 18.0% 19.3% 19.3% 32 36 17.
Slide 21: Adjusted EBITDA Trend
ADJUSTED EBITDA TREND Adjusted EBITDA Margin expansion despite increased gaming duty burden H1 2013 Adjusted EBITDA higher than strong prior year comparison Adjusted EBITDA H1 2010-H1 2013 55 46 50 Gaming Duty burden 42 19.3% 20.0% Adj. EBITDA % 19.3% 45 18.0% 7.1 40 5.5 35 16.0% 39 $m 30 21 36
Slide 22: Cash from Operations
CASH FROM OPERATIONS High % of cash from Adjusted EBITDA continues in H1 2013, 99% (H1 2012: 95%) % Cash from operations as a % of Adjusted EBITDA 100% 90% 99% % 95% 80% 70% H1 12 H1 13 22
Slide 23: Marketing Cost Ratio
MARKETING COST RATIO Higher Marketing ratio mainly in regulated markets Casino and Poker FTD increase of 10% Marketing Costs H1 2013 vs. H1 2012 $m Marketing Costs Marketing Costs % of Revenue 50.0% 80 70 40.0% 60 50 72 30.0% 40 62 36.0% 20.0% 30 33.1% 20 10.0% 10 - 0.0% H1 12 H1 13 H1 12 H1 13
Slide 24: Cost Structure
COST STRUCTURE Cost* percentage at 81% (H1 2012: 81%) Cost ratio is stable despite regulated marketing investment and increased gaming duty Cost as a % of Total Revenue H1 2013 vs. H1 2012 100% 80.7 % 80.7 % 3.0% 3.6% Gaming duties 80% 6.8% 6.4% Admin. Exp enses S&M expen ses 60% 33.1% 36.0% R&D
Slide 25: Customer Incentives B2C Casino
CUSTOMER INCENTIVES B2C CASINO H1 2013 Casino bonuses continues to support growth, demonstrating the optimal CRM efforts Customer Bonuses as % of Revenue Bonus Ratio% Rev $m 35% 105 30% 95 25% 85 20% 75 % $m 15% 65 23% 25% 10% 55 5% 45 0% 35 H1 12 H1 13 25
Slide 26: Customer Incentives B2C Poker
CUSTOMER INCENTIVES B2C POKER Poker bonus ratio decreased, coupled with revenue growth and leading market position in Spain Customer Bonuses as % of Revenue Bonus Ratio% Rev $m 50 24% 45 22% 40 20% 35 30 18% % 25 $m 16% 23% 20 15 14% 18% 10 12% 5 10% 0 H1 12 H1 13 26
Slide 27: Balance Sheet
BALANCE SHEET $m 30-Jun-13 30-Jun-12 Non-current assets Intangible assets 149.8 145.3 Property, plant and equipment 17.3 18.2 Deferred tax & Other financial assets 0.2 0.4 Investment in equity accounted joint ventures 0.4 1.2 167.7 165.1 Current assets Cash and cash equivalents 89.3 68.3 Trade and o
Slide 28: Cash Flow Statement
CASH FLOW STATEMENT $m Six months Ended 30 June H1 2013 H1 2012 Cash flows from operating activities Profit before income tax 35.5 18.4 Share benefit charges 2.5 0.8 Depreciation & amortisation 6.8 7.0 Change in current assets and liabilities (2.2) 10.5 Other non cash adjustments (2.4) (0.1) Cash ge
Slide 29: Itai Frieberger, COO | Operational Review
ITAI FRIEBERGER, COO | OPERATIONAL REVIEW 29
Slide 30: We've Been Busy...
0% y *009 9 a HOLDINGS 0. a SS WE'VE BEEN BUSY...
Slide 31: We've Been Busy... Casino, Poker, Sport
WE’VE BEEN BUSY… CASINO New game platform deployed – NetEnt New games developed by in-house game studio – excellent performers to date Magic888 – first real money facebook Casino POKER Climbed to #4 position in Pokerscout.com Ongoing, meticulous network management Continued execution
Slide 32: We've Been Busy... Bingo, Platform, Mobile
WE’VE BEEN BUSY… BINGO New game platforms deployed – NetEnt, Williams Existing partnerships extended while new skin signed and deployed over Dragonfish Bingo Network Bingo B2C operations streamlining PLATFORM Additional analytics and real time campaign features added Regulation adaptio
Slide 33: We've Been Busy... US Licensing
WE’VE BEEN BUSY… Won Delaware Lottery bid and commenced delivery Nevada deployment imminent Licensing and deployment effort in NJ (CSIE application and CIE license partnership) 33
Slide 34: Poker Liquidity
POKER LIQUIDITY Poker Liquidity trend change since Jan 2011 200% Poker Industry 888Poker 180% 160% 140% 120% 100% 80% 60% 40% 20% 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 7 2011 2012 2013 Source: pokerscout, July 2013 34
Slide 35: Mobile – Executing Our Game Plan
MOBILE – EXECUTING OUR GAME PLAN 35
Slide 36: Mobile Revenue in UK
MOBILE REVENUE IN UK Mobile Share in UK (ex Bingo) Gross Gaming Revenue New Depositors 1400% 3500% 1200% 13.2x 3000% 32.4x 1000% 2500% 800% 2000% 600% 1500% 400% 1000% 3.8x 10.2x 200% 500% 100% 100% 0% 0% H1'12 H2'12 H1'13 H1'12 H2'12 H1'13 36
Slide 37: Regulated Markets
REGULATED MARKETS FROM PENETRATION TO SUSTAINABLE GROWTH Italy Italian online Casino market share (March 2013) Maintaining Casino Market Share Continued optimized marketing campaigns Others 29% Offline Operators 40% Video Slots position 2013 Revenues on a Bwin 8% different, higher level Eurobe
Slide 38: Casino Market Share Trend in Italy
CASINO MARKET SHARE TREND IN ITALY 350% 300% 250% 200% 150% 100% 50% 0% Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 888 Snai Cogetech Eurobet William Hill G. Live TITAN Sisal Winga Lottomatica GD/Bwin BetClic People's Source: AAMS 38
Slide 39: 888.it Market Share
888.it MARKET SHARE Italian Online Casino market share 7% 6% 6.3% 5% 5.7% 4% 4.2% 3% 2% 1% 0% H211 2012 H1 13* * According to Internal estimations 39
Slide 40: 888.es Poker Gross Gaming Revenue
888.es POKER GROSS GAMING REVENUE 888 Spain Poker GGR Growth 350% 300% 250% Launch of 888.es 200% 150% Spain Tax regime 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 7 8 2011 2012 2013 40
Slide 41: USA
USA Preparation for launch in NV, DE and NJ during H2 888 brand to be deployed in NV through partnership with Treasure Island and in NJ through CIE (Caesars Atlantic City) 3 brands to be deployed in DE (Lottery sub-licensees) 3 data centers in final stages of deployment Following discussio
Slide 42: The Network - 2013
THE 888 NETWORK - 2013 4242
Slide 43: The Network - US
THE 888 NETWORK - US 4343
Slide 44: The Network - 2014
THE 888 NETWORK - 2014 4444
Slide 45: Summary
SUMMARY 45
Slide 46: Brian Mattingley, CEO | Summary
BRIAN MATTINGLEY, CEO | SUMMARY 46
Slide 47: Summary and Outlook
SUMMARY AND OUTLOOK Another record H1 results US becoming a reality Strong momentum in mobile medium Continued growth in regulated markets Investment under-way to capitalise on opportunities Highly motivated and committed team Current trading in line with expectations 47
Slide 48: Q&A
Q&A 48
Slide 49: Appendix
Appendix 49
Slide 50: Chargeback & PSP Fees
CHARGEBACK & PSP FEES Improved Chargeback and PSP ratios, leveraged by continued optimisation efforts H1 2013 at 6.4% of total revenue (H1 2012: 7.1%) Chargebacks & PSP fees as % of Total Revenue CB PSP 10% 9.2% 7.6% 8% 3.7% 6.6% 6.9% 6.8% 6.4% 1.8% 1.0% 0.9% 6% 1.1% 0.8% 4% 5.8% 5.6% 5.5% 5.9%