Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2016 Earnings Presentation
43 slides from Evoke's earnings presentation, Mar 21, 2017
Slide 1: Results for the Year Ended 31 December 2016
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016
Slide 2: Agenda
AGENDA ITAI FRIEBERGER | 2016 A YEAR OF OUTSTANDING PROGRESS AVIAD KOBRINE | FINANCIAL REVIEW ITAI FRIEBERGER | OPERATIONAL REVIEW & SUMMARY Q&A 2
Slide 3: 2016 A Year of Outstanding Progress
2016 A YEAR OF OUTSTANDING PROGRESS Another year of strong revenue growth, up 18% at constant currency Adjusted EBITDA at constant currency up 24% to $100m Casino and Sport increases of 26% and 58% YoY at constant currency, respectively Regulated markets increased by 24% at constant currency
Slide 4: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW
Slide 5: 2016 Highlights
1 2016 HIGHLIGHTS Revenue up 18% at constant currency to $546m B2C Revenue up 20% at constant currency to $480m Casino and Sport lead growth with 26% and 58% revenue increases at constant currency respectively Seven consecutive quarters of like for like revenue growth with a record Q4 Reve
Slide 6: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT % Change % Change $m 2016 2015 at Constant Reported Currency Revenue 520.8 462.1 18% 13% 2 Operating expenses 136.1 127.4 3 Gaming duties 60.5 50.0 Research and development expenses 34.3 36.8 Selling and marketing expenses 170.2 138.9 % of Revenues 32.7% 30.1% 4 Administrat
Slide 7: Group Revenue
GROUP REVENUE Revenue up 18% at constant currency to $546m (2015: $462m) Reported Revenue $521m (2015: $462m) Growth drivers continue to be Casino, Sport and regulated markets expansion Consistent growth: 19% long term CAGR at constant currency Revenue 2003 - 2016 ($m) 546 FX effect 520 420
Slide 8: Group Revenue
GROUP REVENUE Each quarter’s revenue is higher than the previous year at constant currency Q4 at an all time record Quarterly Revenue at Constant Currency ($m) Q1 ($m) Q2 ($m) 140 140 130 130 120 120 110 134 110 135 100 100 90 +25% 90 +20% 108 112 80 80 70 70 60 60 50 50 Q1 15 Q1 16 Q2 15 Q2 16
Slide 9: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION Regulated markets* represent 63% of revenue at constant currency, increasing 24% Regulated and taxed territories already 72% of revenue at constant currency Europe (excl. UK) up 29%, now the largest geographical segment at 44% UK up 16% at constant currency Geograph
Slide 10: Revenue B2C by Product
REVENUE B2C BY PRODUCT All product lines impacted by adverse currency movements, primarily Sterling Casino is up 26%, Sport is up 58% and Bingo is up 7% at constant currency Lower relative impact of currency on Casino due to increased geographical diversity Poker down 2.7%, despite challengi
Slide 11: Revenue B2C
REVENUE B2C Consistent increases Revenue up 20% at constant currency to $480m (2015: $399m) Reported Revenue $460m (2015: $399m) Revenue B2C 2010 – 2016 ($m) 480 FX Effect 470 420 460 370 399 320 385 $m 344 270 321 220 275 170 213 120 70 20 2010 2011 2012 2013 2014 2015 2016 11
Slide 12: Revenue Casino B2C
REVENUE CASINO B2C Revenue up 26% to $291m at constant currency, Reported Revenue up 21% to $279m Driven by strong CRM capabilities – key for success Healthy player acquisition (up 23%) Expanded presence and content in regulated territories – a growth driver Revenue Casino B2C 2010 – 2016 ($
Slide 13: Revenue Sport B2C
REVENUE SPORT B2C Consistent growth, up 49% to $52m (2015: $35m) – 58% increase at constant currency Capitalising on successful Euro 2016 and substantial step-up in marketing investment New customer recruitment up 52% Revenue Sport B2C 2010 – 2016 ($m) 55 FX Effect 50 52 40 35 $m 30 20 20 10 9
Slide 14: Revenue Poker & Bingo B2C
REVENUE POKER & BINGO B2C Poker Revenue down 2.7% to $84m (2015: $87m) despite challenging market and adverse currency Stable Poker business performance, strong relative liquidity Bingo Revenue up 7% at constant currency to $47m (2015: $44m) Bingo actives up 8% Revenue Poker & Bingo B2C 2016
Slide 15: Acquisition
ACQUISITION Continued traffic optimisation, only profitable acquisition channels pursued Increases lead by Sport and Casino B2C First Time Depositors 2014 – 2016 160% 140% 146% 120% 128% 100% 80% 100% 60% 40% 2014 2015 2016 * FY 2014 as base . . 15
Slide 16: Marketing Cost
MARKETING COST Supporting strategic investment in Sport, Casino growth and regulated expansion Sport acquisition up 52% with actives increase 49% Casino acquisition up 23% with actives increase 27% Lower marketing cost ratio than H1 2016 Marketing Cost 2016 vs. 2015 Marketing Costs Marketing
Slide 17: Cost Structure
COST STRUCTURE Cost Revenue ratio at 83% (2015: 83%) Increased cost ratio only in growth related components (Marketing and Gaming duties) Continued trend of lower operational and admin costs Cost as a % of Total Revenue 2016 vs. 2015 * 89.1 % 83.2% 82.2% 0.6% 81.1% 82.6% 82.7% 8.3% 77.9% 80% 2
Slide 18: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN 1 Adjusted EBITDA up 12% to $90m (2015: $81m), up 24% to $100m at constant currency Newly introduced gaming duties and Sterling adverse impact 1 Adjusted EBITDA margin at constant currency 18.3% (2015: 17.4%) Adjusted EBITDA 2016 vs. 2015 $m Adjusted EBITDA % Adjuste
Slide 19: Dividend
DIVIDEND Total dividend for the year 19.4c (2015: 15.5c) 8.9c per share final dividend for the year (2015: 7.5c) 10.5c per share special dividend for the year (2015: 8.0c) More than double 2012 dividend Dividend Per Share ($c) 2012 – 2016 $c 116% 22.0 120% 20.0 18.0 100% 16.0 72% 80% 14.0 67
Slide 20: Balance Sheet
BALANCE SHEET $m 31-Dec-16 31-Dec-15 Non-current assets Goodwill and other Intangible assets 158.6 157.3 Property, plant and equipment 9.1 11.2 Other non-current assets 1.8 2.0 Investments 1.5 1.6 171.0 172.1 Current assets Cash and cash equivalents 172.6 178.6 Trade and other receivables 37.0 35.6
Slide 21: Cash Flow Statement
CASH FLOW STATEMENT $m Year Ended 31 December 2016 2015 Cash flows from operating activities Profit before income tax 59.2 32.5 Share benefit charges 6.7 4.1 Depreciation and amortisation 19.0 18.6 Change in current assets and liabilities (7.3) 38.4 Other adjustments (0.3) (2.6) Cash generated from
Slide 22: Itai Frieberger, CEO | Operational Review
ITAI FRIEBERGER, CEO | OPERATIONAL REVIEW
Slide 23: Total Group Revenue and Growth Indicators
TOTAL | GROUP REVENUE $546.4M* $462.1M $454.7M $400.5M 2013 2014 2015 2016 B2C | NEW DEPOSITORS SPORT | BETS 170% 140% 133% 150% 135% 124% 100% 100% JAN 2015 FEB 2015 OCT 2016 DEC 2016 JAN 2015 DEC 2015 JUL 2016 DEC 2016 CASINO | BET POKER | GGR 147% 133% 111% 109% 113% 100% 104% 100% JAN 2015 AUG 2
Slide 24: Industry in Transition
INDUSTRY IN TRANSITION 24
Slide 25: Delivering on Our Five Year Plan
DELIVERING ON OUR FIVE YEAR PLAN Establish 888 as a multi-market and multi-product operator Create and grow a Sport vertical Drive regulated growth Invest in our back office/CRM capabilities Develop a leading mobile proposition 25
Slide 26: Multi Facet Operator
MULTI FACET OPERATOR Multi marketing channel (acquisition and CRM) Multi line of business (B2C/B) Multi platform Multi product Multi market 26
Slide 27: 24 Month Delivery
24 MONTH DELIVERY NEW PREMIUM NEW PREMIUM 888 GAMES DE/NV 888 GAMES 888SPORT.IT 888.RO POC READINESS 888SPORT FREE BET HUNT 777.COM 888.ES SLOTS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 888SPORT M&A EFFORT GERMANY NEW PREMIUM 888SPORT 888 GAMES MARKETING PUSH 888 IRELAND FLASH NEW PREMIUM into 888 GAMES 88
Slide 28: Our Mode of Operation
OUR MODE OF OPERATION Getting to critical mass Grabbing market share Then driving ROI/RTC 28
Slide 29: Casino Engine
CASINO ENGINE Unique internally developed content is offered alongside other well known content More than $50m of Jackpots awarded in 2016 Constantly increasing actives and deposits, utilising our CRM advantage MORE BIG PRIZES CASINO ACTIVES GROWTH $17 MILLIONS $15 Jackpot amount 180% $13 160%
Slide 30: Poker Liquidity
POKER LIQUIDITY Significant and long term industry outperformance Relative Liquidity 2012-2017 160% 140% Monthly Liquidity Index 120% 100% 80% 60% 40% 20% 0% 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2012 2013 2014 2015 2016
Slide 31: Blast – Next Generation Poker
BLAST – NEXT GENERATION POKER Successful introduction of Blast Sit & Go game during H2 2016 Immediate uptake by players, increasing Sit & Go volume with minimal cannibalisation Recently launched in Spain, additional markets to follow Introduction of BLAST – Sit & Go Fee Split ($) 31
Slide 32: Bingo Platform
BINGO PLATFORM Bingo Actives Trend 2013 – 2016 32
Slide 33: CasinoFlex
CASINOFLEX Gaining Traction 33
Slide 34: Delivering on Our Five Year Plan
DELIVERING ON OUR FIVE YEAR PLAN Establish 888 as a multi-market and multi-product operator Create and grow a Sport vertical Drive regulated growth Invest in our back office/CRM capabilities Develop a leading mobile proposition 34
Slide 35: Sport Bets
SPORT BETS 1450% Exponential Increases Euro 2016 1250% Italy Sport Launch 1050% Spain Sport Launch 850% World Cup 650% New Platform Launch 450% 250% 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 7 8 9 10 11 12 1 2012 2013
Slide 36: Delivering on Our Five Year Plan
DELIVERING ON OUR FIVE YEAR PLAN Establish 888 as a multi-market and multi-product operator Create and grow a sport vertical Drive regulated growth Invest in our back office/CRM capabilities Develop a leading mobile proposition 36
Slide 37: Regulated Markets Penetration
REGULATED MARKETS PENETRATION * CASINO POKER SPORT BINGO OTHER UK 5B GBP ITALY 1B EUR SPAIN 430M EUR 2% 3% 2% 4% 3% 4% 27% 36% 43% 56% 56% 37% 13% 14% US 210M USD DENMARK 3B DKK 5% ROMANIA ~85M EUR 17% 12% 7% 83% 48% 47% 29% 52% * Outer circle represent the market, inner circle represent 888 * Data
Slide 38: Regulated vs. .com Deposit Trends
REGULATED VS. .COM DEPOSIT TRENDS B2C Deposit Trend Non-Reg Regulated Markets FX Effect 220% 170% 120% 70% 20% 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 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
Slide 39: 888.es Bet Trend (Euro Based)
888.ES BET TREND (Euro Based) Revenue Growth Fueled by Enhanced Offerings and Content 450% Launch of 888.es Spain Sport 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 3 4 5 6 7 8 9 10
Slide 40: 888.it Bet Trend (Euro Based)
888.It BET TREND (Euro Based) Revenue Growth Fueled by Enhanced Offerings and Content Italy Sport Launch 300% Sport Bet EUR Casino Bet EUR 250% 200% 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 7 8 9 10 11 12 1 2014 2015 2016 2017 40
Slide 41: Delivering on Our Five Year Plan
DELIVERING ON OUR FIVE YEAR PLAN Establish 888 as a multi-market and multi-product operator Create and grow a Sport vertical Drive regulated growth Invest in our back office/CRM capabilities Develop a leading mobile proposition 41
Slide 42: Building on Our 2016
BUILDING ON OUR 2016 888 is now a leading multi-market and multi-product operator Maintain our unique technology edge to support continued strong organic growth – our #1 priority Build on our proven regulated markets success Sport remains our blue ocean 42
Slide 43: Summary & Outlook
SUMMARY & OUTLOOK Positive trends across a healthy, diversified business Outstanding operational momentum Continued investment in platform and content is paying off (again) Increased dividend payments Adapt to existing regulation together with new regulated markets Confident of continued