Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2010 Earnings Presentation
47 slides from Evoke's earnings presentation, Mar 31, 2011
Slide 1: Results for the Year ended 31 December 2010
Results for the Year ended 31 December 2010
Slide 2: Agenda
Agenda Gigi Levy Introduction Aviad Kobrine Financial Review Gigi Levy Operating Review Regulation Gigi Levy & Summary and Q&A Aviad Kobrine
Slide 3: Highlights
Highlights† Revenue $262m, up 6% Revenue B2C $222m, up 13% Revenue B2B $40m, down 21% but 4% up on a pro-forma1 basis Revenue B2C Bingo $50m, up 370% Revenue B2C Emerging Offering $16m, up 12% EBITDA2 $29m down 37% mainly due to poker and increased marketing Strong Q4 followed by strong current trad
Slide 4: Financial Review
Financial Review
Slide 5: Profit and loss account
Profit and loss account $m1 2010 2009 Revenue 262.1 246.7 Operating expenses2,3 98.7 89.9 Research and development expenses3 21.8 24.2 Selling and marketing expenses 91.5 67.3 Administrative expenses3,4,5 21.6 19.8 EBITDA3,4,5 28.6 45.6 Depreciation & Amortization (12.3) (8.5) Net finance, F/X, othe
Slide 6: Revenue
Revenue 2010 - Revenue up 6% to $262m (2009: $247m) Representing CAGR of 24% Revenue 2003 – 2010 $m 6
Slide 7: Revenue
Revenue Strong Q4 2010 Revenue up 18% from Q3 to $71m Revenue 2009 – 2010 $m 7
Slide 8: Geographic segmentation
Geographic segmentation UK up 42%, Europe (ex UK) down 15%, Americas down 16%, ROW down 10% UK share grew to 49% due to Wink Bingo acquisition Geographic segmentation, Revenue 2009 and 2010 Year 2009 $m Year 2010 8
Slide 9: Revenue B2C
Revenue B2C Strong Q4 2010 Revenue to $60m up 12% on Q4 09 and up 17% on Q3 10 Revenue B2C 2009 – 2010 $m 9
Slide 10: Revenue B2B
Revenue B2B Q4 2010 Revenue $11m down 21% on Q4 09, flat on a pro-forma basis Revenue B2B 2009 – 2010 $m Revenues that were reclassified to B2C as a result of Wink Bingo acquisition and changes in several licensees revenues recognition method from gross to net 10
Slide 11: Revenue B2C by Product
Revenue B2C by Product Bingo up 370%, Casino flat, Poker down 26%, Emerging up 12% Bingo growth driven by the acquisition of Wink bingo Revenue B2C 2009 and 2010 $m 11
Slide 12: Casino Revenue mix B2C
Casino Revenue* mix B2C No significant change in Casino games mix Casino Revenue* mix B2C 2008 - 2010 100% 2% 2% 2% 2% 1% 2% 2% 1% 1% 2% 1% 5% 4% 4% 4% 4% 4% 4% 4% 3% 3% 3% 2% 4% 4% 3% 4% Others 90% 5% 5% 4% 4% 5% 3% 4% 4% 3% Keno 80% 21% 23% 23% 22% 21% 21% 22% 23% 23% 23% 22% 18% TableCasino 70% T
Slide 13: 888Casino Revenue Trend
888Casino Revenue Trend Daily revenue in Dec 2010 up 45% vs. Jul 2010 888Casino daily Revenue* 350 ‘000 $ 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 2010 2011 *Revenue defined as Casino house profit – Bonus – Other adj. 13
Slide 14: 888Poker Turnaround
888Poker Turnaround New Poker 6 launched in June 2010 Dec 2010 daily revenue up 65% and Feb 2011 up 92% vs. Jun 2010 888Poker daily Revenue* 250 ‘000 $ Sport Casino games Poker games 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 2010 2011 *Revenue defined as rake + tournament fees + Casino house p
Slide 15: Poker Industry Liquidity – Cash Games
Poker Industry Liquidity – Cash Games Feb 2011 Poker Industry liquidity down 11% vs. Jan 2010 Feb 2011 888Poker liquidity up 35% vs. Jan 2010 Liquidity Trend change% from Jan 2010 140 Poker Industry 888Poker 130 Jan 2010 Base line % 120 46% 110 100 90 80 70 60 1 2 3 4 5 6 7 8 9 10 11 12 1 2 2010 201
Slide 16: Costs Breakdown
Costs Breakdown Aggressive marketing investment resulted in reduced margins but result in strong trading in Q4 and Q1 2011 Costs as % of Revenue 2009 and 2010 89 % 82% *Excluding share benefit charges depreciation amortisation forex and restructuring 16
Slide 17: EBITDA and EBITDA margin
EBITDA and EBITDA margin EBITDA* $29m (2009: $46m) EBITDA* margin 11% (2009: 18%) EBITDA* 2009 and 2010 EBITDA* EBITDA* margin $m *Excluding share benefit charges and restructuring costs 17
Slide 18: EBITDA Bridge 2009 - 2010
EBITDA “Bridge” 2009 - 2010 Newly acquired Wink Bingo showed strong results Offset by poker weakness in H1 EBITDA* Bridge 2009 and 2010 $m *Excluding share benefit charges and restructuring costs The data represents contribution to EBITDA while overheads are shown separately Dragonfish decline is im
Slide 19: Chargebacks & PSP fees - Group
Chargebacks & PSP fees - Group PSP & CB at 6.6% from Revenue (2009: 9.2%) Chargebacks back to normal rates PSP fees and Chargeback as % of Revenue 9.2% 6.6% 19
Slide 20: Customer acquisition B2C
Customer acquisition B2C 2010 B2C Casino and Poker FTDs 214,000 up 3% over 2009 2010 B2C Bingo 169,000 up 339% over 2009 Customer Acquisition B2C (‘000) 20
Slide 21: B2C Marketing Costs
B2C Marketing Costs 2009 B2C Casino and Poker CPA at $201* (2009: $177*) Aggressive marketing investment in 2010 B2C Marketing costs B2C Marketing ($m) B2C Marketing as % of Revenue *CPA - excluding revshare 21
Slide 22: Customer Bonuses B2C Casino and Poker
Customer Bonuses B2C Casino and Poker Under control, optimisation is maintained Customer bonuses* as % of Revenue *Bonus excluding converted loyalty points 22
Slide 23: Strong Real Money Registrations Growth
Strong Real Money Registrations Growth Registrations increased by 23% reaching 8.7 million at Q4 2010 Quarterly CAGR of 8% between Q1 2003 to Q4 2010. Real Money Registrations Q1 2003- Q4 2010 millions 23
Slide 24: Balance Sheet as at 31 December
Balance Sheet as at 31 December $m 2010 2009 Non-current assets Intangible assets 162.3 70.8 Property, plant and equipment 21.5 21.0 Deferred tax & Financial assets 0.8 0.8 Investment in equity accounted joint ventures 1.3 - 185.9 92.6 Current assets Cash and cash equivalents 61.5 87.5 Trade and oth
Slide 25: Cash Flow Statement
Cash Flow Statement $m Year to 31 December 2010 2009 Cash flows from operating activities Profit before tax 10.6 27.6 Share benefit charges 2.3 7.0 Profit before tax and Share benefit charges 12.9 34.6 Depreciation, impairment and amortisation 12.3 8.5 Interest and share of post tax profit in the JV
Slide 26: Operating Review
Operating Review
Slide 27: Total Revenue seasonality
Total Revenue* seasonality 105 Jan 2010 Base line % 100 95 90 85 80 75 70 1 2 3 4 5 6 7 8 9 10 11 12 *Revenue normalized by number of days in the month Good start, followed by revenue decrease February to July: Rebranding Technical Changes World Cup General Poker weakness Turnaround from July: Poker
Slide 28: Full B2C Rebranding
Full B2C Rebranding Www com 888 888 888 888 888 casino poker sport bingo games HOLDINGS
Slide 29: Casino – Product innovation
Casino – Product innovation Player account management tool Pachinko and other new games 29
Slide 30: Casino – Introduction of Casino Multi-brands
Casino – Introduction of Casino Multi-brands 30
Slide 31: Poker – 888poker reinvented
Poker – 888poker reinvented 31
Slide 32: Poker – Product innovation
Poker – Product innovation Poker Cam Team Poker 32
Slide 33: Poker – Great results in H2
Poker – Great results in H2 Jan 10 – Jan 11 market declined 8%, non US-facing down 21% 888 grew 31% in the period and 72% from June 10 Source: PokerScout.com; monthly average liquidity of cash games 33
Slide 34: Bingo – further platform improvement
Bingo – further platform improvement New languages Embedded games New games section 34
Slide 35: Bingo – Wink performed exceptionally well
Bingo – Wink performed exceptionally well Wink Bingo daily Revenue* 140 Q1 2010 Base line % 130 120 110 100 90 80 Q1 10 Q2 10 Q3 10 Q4 10 *Revenue defined as Deposits – Cashouts 35
Slide 36: Bingo – Wink arrangement
Bingo – Wink arrangement Earn out close to its cap Agreement to spread payment till May 2012 Protection for vendors: Some of the Wink assets as security In case of default vendors may initiate a sale of the Wink business If 888 goes into administration of liquidation, vendors may exercise security L
Slide 37: Investment in technical infrastructure
Investment in technical infrastructure Campaign Admin tools Queue manager Manager system New CMS 37
Slide 38: Continued win in Regulated Markets
Continued win in Regulated Markets May 2009 – Agreement with Phumelela Gold Sep 2009 – Agreement Enterprises with Caesars Interactive July 2010 – Sign Ad Astra March 2010 – Sign Entertainment and Full Fun to French CasinoFlex deal with Bwin Poker Network Italia & Gioco Digitale May 2010 – Sign JV wi
Slide 39: First software only deals
First software only deals Flexible casino solution Fully localized Huge game choice Download & non-download Live dealer Player management platform Simple integration into partner’s existing operating system 39
Slide 40: First payment only deals announced
First payment only deals announced Second Life - The world’s leading 3D environment ePayments offering Advanced cashier interface Back office functionality Fraud & Risk Management Customer support Payment optimisation The Linden Dollar economy generates $500m per annum 40
Slide 41: Mytopia
Mytopia Bingo Island Bingo Island is the most popular bingo application in Facebook Weeds and Dexter social games deals signed More than 1M monthly active mobile poker player Growing, still not profitable Initial proof as a source for real money customer acquisition 41
Slide 42: Regulatory frameworks remain complex
Regulatory frameworks remain complex Overall positive trends: Italy - casino and cash games decree published France – follow-up committee set up, Q4 summary Germany – potential Sportsbetting regulation, 2012 Spain – bill final version expected Q3, 2012 Greece – bill debated in parliament Denmark – p
Slide 43: Regulation – NGBC and NGC approval
Regulation – NGBC and NGC approval Commercial relationship with Caesars recommended for approval by the NGCB and approved by the NGC First online gaming company to be found suitable for work with a Nevada licensed company The result of a 12 months process Good indication to 888’s ability to pass the
Slide 44: Ladbrokes
Ladbrokes No updates Will be determined either way in the near future 44
Slide 45: Current trading
Current trading Very strong current trading Q1 2011 to date 7% above the very strong Q4 2010 and 10% above Q1 2010 Trend as per traditional ‘normal good’ years and unlike 2010 Fueled by Poker very strong performance and good performance across the business New customer signups 7% above the strong Q4
Slide 46: Summary
Summary Tough H1 2010 Decision not to cut investment despite challenging trading Major H1 2010 problems resolved Improvement through H2: Poker reinvented Strong performance across the business Very strong start to Q1 2011 Back on track Regulatory changes remain the major risk – and the big opportuni
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