Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2008 Earnings Presentation
79 slides from Evoke's earnings presentation, Mar 30, 2009
Slide 1: Results for the Year ended 31 December 2008
Results for the Yearfor Results ended the six months 31 December ended 30 June 2008 2008 30 March 2009 0
Slide 2: Agenda
Agenda Gigi Levy • Introduction Aviad Kobrine • Financial Review Gigi Levy • Operating Review • Regulation Gigi Levy & • Summary and Q&A Aviad Kobrine 1
Slide 3: Introduction
Introduction 838s%.n —Enjog the pee
Slide 4: Highlights
Highlights † Total Operating Income up 21% to $263m Total Operating Income Casino up 15% to $139m Total Operating Income Poker down 4% to $79m Total Operating Income Emerging Offering up 208% to $45m 1,2 EBITDA up 23% to $56m 1 PBT up 6% to $49m 1 Basic EPS up 8% to 13.4¢ Final Divid
Slide 5: Financial Review
Financial Review 838s%.n —Enjog the pee
Slide 6: Profit and loss account
Profit and loss account $m 2008 2007 % Change Total Revenue 256.9 213.4 20% Other operating income 5.7 3.6 - Total Operating Income 262.6 216.9 21% Operating expenses1 77.3 59.1 Research and development expenses 27.4 23.5 Selling and marketing expenses 80.2 70.9 Administrative expenses2,3 22.0 17.9
Slide 7: Total Operating Income
Total Operating Income Strong 2008 Total operating income growth - $263m (2007: $217m), an increase of 21% Consistent annual growth, CAGR of 35% years 2003-2008 Total Operating Income 2005 – 2008 280 240 263 200 217 $m 160 157 120 123 80 75 40 59 0 2003 2004 2005 2006 2007 2008 6
Slide 8: Geographic segmentation
Geographic segmentation Growth in all regions in 2008 vs. 2007 Strong growth in Europe (ex. UK) up 28%, 23% in Americas, 16% in UK and 13% in ROW Geographic segmentation, TOI 2007 and 2008 2007 2008 120 100 115 107 80 93 90 $m 60 40 20 18 22 18 16 0 UK Europe America ROW (ex UK) (ex USA) 7
Slide 9: Geographic segmentation
Geographic segmentation Europe (ex. UK) became the largest market 44%, UK now 41% Geographic segmentation, TOI 2007 and 2008 TOI by Region 2007 TOI by Region 2008 8% 7% 8% 7% 43% 41% 41% 44% UK Europe America ROW (ex UK) (ex USA) 8
Slide 10: Total Operating Income by Segment
Total Operating Income by Segment TOI Casino up 15% to $139m (2007: $120m) TOI Poker down 4% to $79m (2007: $82m) TOI Emerging Offering up 208% to $45m (2007: $14m) Total Operating Income by Segment 2007 and 2008 $m 2007 2008 140 2007 2008 139 120 60 120 100 50 80 82 79 40 45 60 30 40 20 20 10
Slide 11: Total Operating Income Casino
Total Operating Income Casino TOI Casino Europe (ex. UK) up 31%, Americas (ex US) up 17% UK similar, ROW down 12% TOI Casino by Region 2007 and 2008 2007 2008 80 73 60 $m 56 40 40 40 20 13 16 11 10 0 UK Europe America ROW (ex UK) (ex USA) 10
Slide 12: Total Operating Income Poker
Total Operating Income Poker TOI Poker up 36% in Americas, 18% in Europe (ex UK) and 4% ROW , UK down 28% TOI Poker by Region 2007 and 2008 2007 2008 60 40 $m 40 39 34 28 20 6 5 5 5 0 UK Europe America ROW (ex UK) (ex USA) 11
Slide 13: Total Operating Income Emerging Offering
Total Operating Income Emerging Offering TOI Emerging Offering up 208% to $45m (2007: $14m) TOI Emerging Offering UK up 180% to $39m, in Other regions $5.3m TOI Emerging Offering by Region 2007 and 2008 2007 2008 50 40 39.2 30 $m 20 14.0 10 5.3 0 UK Other Regions 12
Slide 14: Costs Structure
Costs Structure Costs 1 slightly reduced to 78.8% from Total operating income (2007: 79%) Costs as % of Total Operating Income 2007 and 2008 100% 79.0% 78.8% 80% 8.3% 8.4% 60% 32.7% 30.5% Admin. Expenses 40% S&M expenses 10.8% 10.4% R&D 20% Operating expenses 27.2% 29.4% PSP & CB PSP & CB 0% 2007
Slide 15: Marketing Costs
Marketing Costs Total marketing costs at $80.2m (2007: $70.9m) 2008 Marketing costs represent 30.5% of Total operating income (2007: 32.7%) – improved efficiency Marketing costs as % of Total operating income 32.7% 35% 30.5% 1.9% 30% 4.5% 4.4% 25% 4.3% 20% 15% 26.3% 21.8% Other cost 10% Revshare
Slide 16: Marketing Costs
Marketing Costs 2008 Casino and Poker FTDs 246K (2007: $263K) 2008 Casino and Poker CPA $232 (2007: $225) Marketing costs as % of Total operating income 32.7% 30.5% 80 100% 8% 12.8 90% 16% 70 5.6 20% 80% Other 60 11.9 15% 14.2 70% On-line 50 60% Off-line 23.9 30% 30% $m 40 21.4 50% Affiliates 40
Slide 17: Customer Bonuses
Customer Bonuses Increased bonus efficiency Casino bonuses reduced to 17% in 2008 from 24% in 2007 Poker bonuses reduced to 7% in 2008 from 8% in 2007 Customer bonuses1 as % of Total Operating Income Casino Poker 30% 20% 24% 17% 10% 8% 7% 0% 2007 2008 1 Bonus excluding converted loyalty points
Slide 18: EBITDA and EBITDA margin
EBITDA and EBITDA margin EBITDA 1 up 23% to $55.7m (2007: $45.5m) EBITDA 1 margin 21.2% from Total operating income similar to 2007 (2007: 21.0%) EBITDA* 2006 - 2008 EBITDA EBITDA margin 60 25.0% 50 20.0% 40 $m 15.0% 30 10.0% 20 10 5.0% 0 0.0% 2006 2007 2008 2006 2007 2008 1 Excluding share bene
Slide 19: Strong Real Money Registrations Growth
Strong Real Money Registrations Growth Registrations increased 24% reaching 5.8 million at year end 2008 Quarterly CAGR of 8.6% between Q1 2002 to Q4 2007 Real Money Registrations Q1 2002- Q4 2008 6 5 4 millions 3 2 1 0 2002 2003 2004 2005 2006 2007 2008 18
Slide 20: Balance sheet as at 31 December 2008
Balance sheet as at 31 December 2008 $m 2008 2007 Non-current assets Intangible assets 44.8 40.7 Property, plant and equipment 19.7 16.5 Financial assets 0.2 0.7 Deferred tax 0.6 0.5 65.4 58.4 Current assets Cash and cash equivalents 98.4 104.3 Trade and other receivables 18.7 19.5 Total Assets 182.
Slide 21: Cash flow statement
Cash flow statement $m Year to 31 December 2008 2007 Cash flows from operating activities Profit before tax 40.2 37.4 Share benefit charges 8.4 7.8 Profit before tax and Share benefit charges 48.6 45.2 Depreciation and amortisation 7.4 5.7 Interest received (3.3) (5.4) Change in current assets and l
Slide 22: Operational Review
Operational Review sss%.n —Enjoy the pe
Slide 23: Our 2009-2010 strategy
Our 2009-2010 a strategy 888m —Enjoy the pe
Slide 24: The challenge
The challenge “The trouble with our times is that the future is not what it used to be” Ambroise Paul Toussaint Jules Valéry (1871 –1945) French poet, essayist, and philosopher 23
Slide 25: The risks, how we handle them, the opportunity
The risks How will we handle the risks The opportunity 24
Slide 26: The risks
The risks sss%.n —Enjoy the pe
Slide 27: It's a new and risky world out there for all companies
It’s a new and risky world out there for all companies Unprecedented economic crisis Frantic consumer behavior Risky structural changes No second chance with customers No competitive advantage is safe 26
Slide 28: The impact of the world economic crisis
The impact of the world economic crisis Less disposable income at all customer levels Especially VIPs Exchange rate impacts $ reported revenues Consumers looking for more value Reduced costs in GBP, Euro and NIS Similar for most players 27 27
Slide 29: Currency Trend since Jan 2007
1.000 1.200 1.400 1.600 1.800 2.000 2.200 Date 1/23/2007 2/15/2007 3/10/2007 Source: www.oanda.com 4/2/2007 4/25/2007 5/18/2007 6/10/2007 7/3/2007 7/26/2007 8/18/2007 9/10/2007 10/3/2007 10/26/2007 11/18/2007 12/11/2007 28 1/3/2008 1/26/2008 2/18/2008 3/12/2008 4/4/2008 4/27/2008 5/20/2008 Currency
Slide 30: How will we handle the risks
How will we handle the risks 29
Slide 31: We will not be slow…
We will not be slow… We realized the world has changed We plan on new CPA-LTV ‘equations’ We focus on increasing share of wallet We strive for operational excellence … and costs efficiency We will accelerate B2B 30
Slide 32: What are we doing in B2C
What are we doing in B2C Improved acquisition – especially conversion Phenomenal CRM Better products with more innovation Improved localization and focus on emerging markets Better value for money = more ‘entertainment value’ New business models Local licenses 31
Slide 33: Poker in 11 additional Languages
Poker in 11 additional Languages 32
Slide 34: Segmentation Tools
Segmentation Tools f\\e GMT | Miamon 48 hours limited time offer Get a special bonus of up to $250! 8 Mar - 9 Mar 00:00 - 23:59 GMT* from Romania ' r x Online Help y wu INTHECASINO? aa FS os 0008.89 4: Help onto tie “Hbour is iy Hisiory «= “Wy Favorites “Settings Logout MY BALANCE
Slide 35: Campaign management
Campaign management Call Center Telemarketing NTS Loyalty website Offers Repository Popups Dream Mail/ Central Mailer Data warehouse Delayed Bonus Instant Bonus Pending Bonus (CasBo) Mechanism Mechanism Mechanism 34
Slide 36: Online Viral Promotion
Online Viral Promotion PCP through Facebook 35
Slide 37: Local Promotions
Local Promotions Choose a shirt from one of the leagues shown below... and catch the football fever now! Si ge ENGLISH PREMIER LEAGUE 3S 8s LIGA BBVA BUNDESLIGA ey 3 from one of the leagues shown below... and catch the football fever now! — BUNDESLIGA r team’s shirt is as easy
Slide 38: SEM Sponsored Rankings
SEM Sponsored Rankings Google.co.uk opens it doors 37
Slide 39: Shane Warne, Mark Meisser, Michael Keiner
Shane Warne, Mark Meisser, Michael Keiner 38
Slide 40: Focusing on generating even more trust
Focusing on generating even more trust 39
Slide 41: Industry Awards 2008
Industry Awards 2008 Operator of the Year / Bingo Operator of the Year / Leisure Report Awards 2008 eGaming Review Awards 2008 (888Bingo won 3 awards). Best Betting and Gaming Company / Leisure Report Land-Links Partnership of the Awards 2007 & 2008 Year / eGaming Review Awards Leisure Repor
Slide 42: How do we accelerate B2B
How do we accelerate B2B Continue investing in infrastructure Focus on sales Excel with current customers PR – make sure our success is known to all Continue delivering real value 41
Slide 43: eGaming B2B Competitive Landscape – the big opportunity
eGaming B2B Competitive Landscape – the big opportunity Providers Services Advanced Services Online/offline marketing, management of affiliates, SEO, branding, business analytics Party, BWIN Operations Gtecg, Call Center, Telemarketing, Business operations, Payments processing, Hosting, Crypto- Web
Slide 44: Our New Structure – Separated Business Units
Our New Structure – Separated Business Units 888 Holdings CEO Gigi Levy HR & GO SVP Sigal Srur B2B B2C SVP, MD SVP, MD Adi Soffer – Teeni Finance Gabi H. Campos SVP, CFO Aviad Kobrin Technology Support and B.O Offering SVP CTO SVP Eran Gonen SVP Itai Frieberger Tal Elyashiv 43
Slide 45: B2B casino offers choice to operators
B2B casino offers choice to operators Video Slots Classic slots Progressives Video poker Live Dealer Branded games Table Games Roulette, Craps, Baccarat, Keno Tailor to your target market 888B2B 44
Slide 46: Through Games and Content Partnerships
Through Games and Content Partnerships More than 1,000 games available for integration 888B2B 45
Slide 47: B2B Poker network – full customization
B2B Poker network – full customization 888B2B 46
Slide 48: Huge Bingo footprint
Huge Bingo footprint Think Bingo Mirror Bingo Bingo Scotland Foxy Bingo Wink Bingo Think Bingo Plus 888B2B 47
Slide 49: First B2B sport implementation
First B2B sport implementation 888B2B 48
Slide 50: Modular Pricing
Modular Pricing Divided into 4 categories: Category Pricing model License Software License Fee % NGR Software Player Retention Mgmt %NGR Payment management Affiliate and SEM Mgmt %NGR system Marketing Mgmt %NGR Extras: soft games, poker Transaction Processing Cost + school, languages, chat
Slide 51: Latest B2B Deal – Racing Post
Latest B2B Deal – Racing Post A new B2B deal with the Racing Post RC is the Pre-eminent horse racing industry publication Monetise RC’s vast media assets and loyal audience Leverage 888’s Online capabilities 50
Slide 52: Total Gaming Services
Total Gaming Services
Slide 53: Gaming Services fish
1 Gaming Services fish smunver Oo playtech Chartwell Technology Inc. CRYPTOLOGIC Architects of Garning GTEC NETENT
Slide 54: Some of Our B2B customers
Some of Our B2B customers 888B2B 53
Slide 55: How do we leverage our Casino
How do we leverage our Casino Increase interest and fun More interesting promotions More games – the long tail Multi currency to all customers Improve no-download Ensure we keep VIPs Leverage in B2B 54
Slide 56: More Homemade and integrated games
More Homemade and integrated games 55
Slide 57: Live Dealer for Europe Launched
Live Dealer for Europe Launched 56
Slide 58: What are we doing in Poker
What are we doing in Poker Working to Increase market share Improving product and innovating Building our brand: A great B2C operator The best B2B network Adding liquidity through: B2C excellence B2B aggressive sales 57 57
Slide 59: Poker 5.4 – New features with new Loyalty program
Poker 5.4 – New features With new Loyalty program 58 58
Slide 60: Keeping Bingo growing
Keeping Bingo growing Continue improving product Increase entertainment value Increase UK market share Launch across Europe Focus on B2B growth 59
Slide 61: Bingo community screenshot
GOGiuuices com Pe The Picture Room =) Choose 4 gallery Top Rated Just Added x - The Picture Room My Bday Bash (25 Most Viewed lop Rated Just Added Gallery Title | Posted =y Person's tharre on Frid J Tags: party, friends, event Picture title Comments | 4 sum dolor st amet conse ctetuer dit men Person
Slide 62: Bingo in additional countries
Bingo in additional countries 61
Slide 63: Becoming a player in Sport
Becoming a player in Sport Improve product Focus on specific markets Excel in cross sell Leverage CRM 62
Slide 64: Betting in Running Flash Application
Betting in Running Flash Application 63
Slide 65: Are softer Games a new promise?
Are softer Games a new promise? Offer a lighter, softer and easier alternative Launched recently Optimize for recession times Learn the new CPA-LTV world Cross sell 64 64
Slide 66: Games Tab
Games Tab B88s00r1 a3 saven Jackpot i> ATCA KEN on GAME @N —c FANGYSE1 0 FRE oo SII fo ae0R
Slide 67: We have a strong position
We have a strong position The B2C-B2B combination UK leadership position No poker dependency Strong bingo business Expertise in marketing Good track record in taking advantage of change 66
Slide 68: The opportunity
The opportunity sss%.n —Enjoy the pe
Slide 69: It's tiring to be told: 'risk is also an opportunity'…
It’s tiring to be told: ‘risk is also an opportunity’… “Opportunity is missed by most people because it is dressed in overalls and looks like work.” Thomas Edison 68
Slide 70: Many new opportunities
Many new opportunities Address customers’ needs in recession better than others Find new innovative products customers want more Find new geographies where competition is minimal Win licenses giving us exclusive positions in key markets Become one of the leading B2B providers Acquire pro
Slide 71: And limitations are mostly in our minds
And limitations are mostly in our minds “The worldwide demand for automobiles will not exceed one million” Gottlieb Daimler “…if only due to the lack of chauffeurs.” 70
Slide 72: What will you see us doing
What will you see us doing Thinking ‘recession’ and ‘value’ Focusing on what’s important Being more efficient …but NOT sacrificing the future for short term profit Looking for opportunities Not forgetting responsible gaming 71
Slide 73: Regulation
Regulation sssiz om —Enjoy He pe 72
Slide 74: Regulation
Regulation EU EU Commission’s historic view – freedom of establishment and concept of mutual recognition Supported by the ECJ – Placanica/Gambelli cases Infringement proceedings against Italy, Denmark, Finland, Germany, France, Austria, Greece Various Member states look to liberalise – Ita
Slide 75: Regulation (cont.)
Regulation (cont.) US Various initiatives on a federal level are yet to gain sufficient momentum Certain states including California look to regulate, nothing concrete yet No news about a DOJ settlement ROW Various countries look to liberalize online gaming including in Africa, LATAM and
Slide 76: Summary
Summary 838si.n —Enjoy He pe
Slide 77: Summary
Summary Robust growth in 2008 despite unprecedented economic conditions since September Year of transformation into B2C and B2B business lines key to growth in coming years Complete B2C offering – casino, poker, bingo, sport and backgammon Strong growth in B2B and emerging Offering Innov
Slide 78: 838si.n
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Slide 79: Thank you!
Thank you! sss%.n —Enjoy the pe