Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2015 Earnings Presentation
45 slides from Evoke's earnings presentation, Mar 22, 2016
Slide 1: Results for the Year Ended 31 December 2015
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 1
Slide 2: Agenda
AGENDA Brian Mattingley | Introduction Itai Frieberger | 2015 Overview Aviad Kobrine | Financial Review Itai Frieberger | Operational Review & Summary Q&A 2
Slide 3: 3
3
Slide 4: The Perfect Storm
THE PERFECT STORM POC VAT CURRENCY MOVEMENTS M&A DISTRACTION 4
Slide 5: In Great Shape
IN GREAT SHAPE Another record year across the business A result of proper planning and efficient execution Continued investment in people and technology Significant platform and content enhancements on an ongoing basis New regulated markets and products, with more in the pipeline Strong
Slide 6: Summary of 2015 Results
SUMMARY OF 2015 RESULTS 1 Revenue up 12% on a like for like basis 1 B2C Revenue up 14% on a like for like basis 1 Record Q4 Revenue up 20% for the Group 23% for B2C on a like for like basis Revenue impacted by adverse currency movement of $35m and $10m EU VAT 2 $32m newly introduced gaming
Slide 7: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 7
Slide 8: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $m 2015 2014 % Change Revenue (before EU VAT) 472.3 454.7 4% EU VAT 10.2 - Revenue 462.1 454.7 2% 2,3 Operating expenses 127.4 130.3 4 Gaming duties 50.0 15.8 Research and development expenses 36.8 40.7 Selling and marketing expenses 138.9 133.8 % of Revenues 30.1% 29.4% 5
Slide 9: Group Revenue
GROUP REVENUE Revenue up 12% on a like for like basis to $507.7m (2014: $455m) Reported Revenue up 2% to $462m (2014: $455m) despite new EU VAT and adverse currency movements 19.6% CAGR since 2003 on a like for like basis and 18.7% on a reported basis Revenue 2003–2015 ($m) EU VAT FX effect 50
Slide 10: Group Revenue
GROUP REVENUE Very strong Q4 2015 Revenue Each quarter is higher than comparable quarter on a like for like basis Quarterly Revenue 2010–2015 ($m) 130 Q1 ($m) 130 Q3 ($m) 120 120 124 110 119 110 114 114 100 100 90 103 90 94 94 92 80 80 86 70 70 75 60 69 60 61 50 50 40 40 Q110 Q111 Q112 Q113 Q114
Slide 11: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION Revenue increase in core UK and European markets despite adverse currency movements and EU VAT UK remains the largest market with 46% of Revenue in 2015 Regulated markets* represents 59% of Revenue, consistently increase over time Geographic Segmentation, Revenue 2014
Slide 12: Revenue B2C
REVENUE B2C Revenue up 14% on a like for like basis to $444.2m (2014: $391m) Reported Revenue up 3% to $403m (2014: $391m) despite new EU VAT and adverse currency movements 14.9% CAGR since 2010 on a like for like basis and 12.7% on a reported basis Strong performance continued to be led by
Slide 13: Revenue B2C
REVENUE B2C Positive momentum continued well into H2 Strong Q4 2015 Momentum achieved despite adverse currency movements and EU VAT Revenue B2C Half and Quarterly trend ($m) $m Revenue B2C per Half trend Revenue B2C Quarterly trend 230 120 220 110 210 113 211 200 100 190 100 198 180 90 93 170
Slide 14: Revenue B2C
REVENUE B2C On a like for like basis underlying growth was considerably higher than reported Revenue H215 up 16% over H214 on a like for like basis Q415 up 23% over Q414 on a like for like basis Revenue B2C Half and Quarterly trend ($m) $m Revenue B2C per Half trend Revenue B2C Quarterly trend
Slide 15: Revenue B2C by Product
REVENUE B2C BY PRODUCT All product lines impacted by adverse currency movements On a like for like basis, Revenue increased in all products with the exception of Poker Casino up 18%, Poker down 3.9%, Bingo up 2.1%, Emerging Offering up 51.2% Revenue B2C 2015 vs. 2014($m) $m Revenue B2C per pro
Slide 16: Revenue Casino B2C
REVENUE CASINO B2C Casino growth continues, leveraged by unique content, increased mobile activity and smart marketing approach Successful launch of 777 brand and Slots in Spain 18% increase on a like for like basis Revenue Casino B2C 2010 – 2015 ($m) FX effect EU VAT 261 260 8 240 23 220 231
Slide 17: Revenue Poker B2C
REVENUE POKER B2C Poker Revenue on a like for like basis down 3.9% to $90m (2014: $94m) No. 2 position in global poker rankings* maintained, outperformed market in relative liquidity Outperform industry average Revenue Poker B2C 2010 –2015 ($m) FX effect EU VAT 100 2 90 90 94 80 94 87 $m 70 88
Slide 18: Revenue Emerging Offering B2C
REVENUE EMERGING OFFERING B2C Emerging offering reported Revenue up 38% to $41m (2014: $30m), up 51% on a like for like basis driven by Sport Strong increases across all Sport measures including revenue, deposits, activity and customer acquisition Sport product is currently offered in most of
Slide 19: Revenue Bingo B2C
REVENUE BINGO B2C Revenue on a like for like basis up 2% to $48m (2014: $47m) New innovative offers and content are constantly introduced with more in the pipe line While KPI’s improve the market remains highly competitive Revenue Bingo B2C 2013 – 2015 ($m) FX effect 48 50 4 45 40 47 44 $m 44
Slide 20: Corporate Cash Position
CORPORATE CASH POSITION Cash position remains strong with corporate cash net of customer deposits ahead of previous year Maintain high EBITDA cash conversion ratio Customer deposits increased 22% Cash position 2015 120 100 105 % 80 96$m 60 82$m 40 53$m 20 - Dividends Customers Cash net of Net
Slide 21: Marketing Cost Ratio
MARKETING COST RATIO Marketing ratio remains stable but customer acquisition increased 28% Strong Revenue growth driven by optimised marketing and strong analytics Lower Cost per Acquisition (CPA) Marketing Costs 2015 vs. 2014 Marketing Costs Marketing Costs % of Revenue* EU VAT $m % 140 30.0%
Slide 22: Cost Structure
COST STRUCTURE Cost ratio to Revenue* at 81% (2014: 78%) Continued efficiency improvements save for external factors Cost as a % of Total Revenue 2010 – 2015** 89.1% 83.2% 82.2% 0.6% 77.9% 77.9% 80.8% 8.3% 2.2% 80% 3.1% 8.2% 9.0% 7.2% 3.5% 3.5% 10.6% Gaming duties 8.3% 6.8% 8.9% 8.9% 7.8% R&D 60
Slide 23: Processing Cost
PROCESSING COST Consistent reduction in processing fees as volume in regulated markets increases Additional payment methods introduced, growth in deposits and optimisation of costs improve performance over time Cost as a % of Total Revenue 2008 - 2015 10% 9.2% CB PSP 7.6% 8% 6.6% 6.9% 6.8% 3.7%
Slide 24: Adjusted EBITDA Bridge 2014 vs. 2015
ADJUSTED EBITDA BRIDGE 2014 vs. 2015 Strong adjusted EBITDA mitigated an incremental $42m external impact of newly introduced gaming duties and EU VAT Before adjusting for adverse currency movements Internal vs. External effects Increase Decrease 140 120 10.2 22.4 100 32.2 $m 80 123.1 60 100.7 8
Slide 25: Adjusted EBITDA Trend
ADJUSTED EBITDA TREND Continues improved performance over time despite external factors Before adjustment for adverse currency movements Adjusted EBITDA 2010 –2015 148.0 EU VAT 128.0 Newly introduced Gaming Duties* 123 Adj. EBITDA 10 108.0 32 88.0 $m 101 68.0 76 81 48.0 67 56 28.0 29 8.0 2010 20
Slide 26: Dividend
DIVIDEND Steady increasing dividend, hand in hand with strong cash generation DIVIDEND PER SHARE ($c) 2012 - 2015 $c 72% 17.5 67% 70% 15.5 56% 60% 13.5 50% 11.5 9.5 40% 15.0 15.5 30% 7.5 14.0 5.5 20% 9.0 3.5 10% 1.5 0% FY12 FY13 FY14 FY15 Base %change vs. FY12 26
Slide 27: Balance Sheet
BALANCE SHEET $m 31-Dec-15 31-Dec-14 Non-current assets Goodwill and other Intangible assets 157.3 157.2 Property, plant and equipment 11.2 15.5 Other non-current assets 3.6 1.4 172.1 174.1 Current assets Cash and cash equivalents 178.6 163.1 Trade and other receivables 35.6 30.0 Total Assets 386.3
Slide 28: Cash Flow Statement
CASH FLOW STATEMENT $m Year Ended 31 December 2015 2014 Cash flows from operating activities Profit before income tax 32.5 67.9 Share benefit charges 4.1 1.7 Depreciation, amortisation and Impairment charges 18.6 19.0 Change in current assets and liabilities 38.4 25.7 Other non cash adjustments (2.6
Slide 29: Operational Overview
OPERATIONAL OVERVIEW 888
Slide 30: A Busy Year
A BUSY YEAR 888.RO 777.COM 888.ES SLOTS 888SPORT.IT NEW PREMIUM 888 GAMES 2015 Q1 Q2 888 Q3 Q4 2016 IRELAND 888SPORT 888.DK A BUSY YEAR M&A EFFORT WINK SLOTS 30 30
Slide 31: Group Revenue and Growth in Key Metrics
[ [ TOTAL | GROUP REVENUE $376M $401M $455M $508M 2012 2013 2014 2015 B2C | FTDs SPORT | BETS 100% 126% 135% 162% 100% 177% 244% 300% JUN 2014 DEC 2014 MAY 2015 DEC 2015 JAN 2014 DEC 2014 APR 2015 DEC 2015 CASINO | BETS POKER | ACTIVES 100% 111% 120% 142% 100% 108% 115% 120% JAN 2014 FEB 2015 AUG 20
Slide 32: Long Term Trend
LONG TERM TREND B2C DEPOSIT TREND Based on Jan 2010 210% FX effect 190% 170% 150% 130% 110% 90% 70% 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 2 3 4 5 6 7 8 9 10 11 12 2010 2011 2012 2013 2014 2015 *FX
Slide 33: C2 - New Cashier
C2 - NEW CASHIER 102271038776 FULLHD £ US$280,174 29 vt yoke . ee HOLDINGS 33
Slide 34: Poker Outperformance
POKER OUTPERFORMANCE LIQUIDITY 120% 100% Monthly Liquidity Index 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 8 9 10 11 12 1 2 2013 2014 2015 2016 Operator 1 Operator 2 Operator 3 Operator 4 Operator 5 888Poker Industry Source: Pokerscout, February 2016 34
Slide 35: Operational Management
98 OPERATIONAL MANAGEMENT 270 10 GAMING LICENSES COMBINED TENURE PROJECTS DELIVERED 108 $53m 229 NEW GAME TITLES IN JACKPOT WINNING BINGO BRANDS 248m 21 $4.8b COMMUNICATIONS SENT TERABYTE OF DATA STORED UK MARKET SIZE PER H2GC 35
Slide 36: What's Under the Hood?
WHAT’S UNDER THE HOOD? 36
Slide 37: B2C Acquisition
B2C ACQUISITION FTD’s 2015 vs. 2014 % 200 % 180 % 191% 160 % 140 % 120 % 141% 128% 121% 100 % 104% 80% 60% Group Poker Casino Bingo Sport 37
Slide 38: B2C Actives
B2C ACTIVES Actives 2015 vs. 2014 200 % 180 % 185% 160 % 140 % 120 % 137% 100 % 113% 115% 80% 101% 60% 40% Group Poker Bingo Casino Sport 38
Slide 39: Sport
SPORT SPORT BETS 850% 750% 650% 550% 450% 350% 250% 150% 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 2012 2013 2014 2015 2016 Based on average daily Bets 39
Slide 40: Sport
SPORT SPORT LIVE BETTING SHARE AND DAILY EVENTS TREND 350% 70% Daily Events Growth 67% 65% Live Betting proportion 65% 300% 62% 60% 56% 315% 250% 55% 200% 52% 50% 213% 45% 150% 40% 147% 100% 119% 35% 100% 50% 30% H2'13 H1'14 H2'14 H1'15 H2'15 Based on average daily Bets 40
Slide 41: Regulated Markets
888. HOLDINGS Sidder j din mobi Find dit spil pa 888d, 5 mio, spillere workdwiidel
Slide 42: 888.ES GGR Trend
888.ES GGR TREND (Euro Based) 888 SPAIN GGR GROWTH (EURO based) Launch of 888.es Spain Sport Launch Spain Slots Launch 600% 500% 400% Bets 300% 200% 100% 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 2 3 4 5 6 7 8 9 10 11 12 2012 2013 2014 2015 Poker House pro
Slide 43: 888.IT Deposit Trend
888.IT DEPOSIT TREND 888 ITALY DEPOSITS (EURO BASED) 165% 35% 155% Approved Deposit s EUR 30% Deposit mobile share 145% 135% 25% Mobile Deposit Share % 125% Approved Deposit EUR 20% 115% 15% 105% 95% 10% 85% 5% 75% 65% 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 2014 2015 43 43
Slide 44: CasinoFlex
CASINOFLEX Daily Deposit Increase X 20 # of Brands (left axis) 14 12 10 8 6 4 2 - 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 2014 2015 2016 44
Slide 45: What's Next?
WHAT’S NEXT? Build on another record year Clear growth strategy New markets Continuance in sport growth Non organic opportunities Enhanced content portfolio, platform and product edge Strong current trading 45