Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — FY2007 Earnings Presentation
81 slides from Evoke's earnings presentation, Apr 8, 2008
Slide 1: Results for the year ended 31 December 2007
Results for the year ended 31 December 2007 8 April 2008
Slide 2: Agenda
Agenda Gigi Levy • Highlights Aviad Kobrine • Financial Review Gi i Levy Gigi L • Operating O ti R Review i • Regulation Gigi Levy & • Summary and Q&A Aviad Kobrine
Slide 3: Highlights
Highlights
Slide 4: Highlights
Highlights PBT* up 106% to $46m (2006: $22m) EBITDA* up 177% to $46m (2006: $16m) Total Operating Income up 38% to $217m (2006: $157m) Net Gaming Revenue up 36% to $213m (2006: $157m) Casino Net Gaming Revenue up 33% to $118m (2006: $89m) Poker Net Gaming Revenue up 18% to $81m (2006: $6
Slide 5: Financial Review
Financial Review A all N 888m —Enjoy the gp
Slide 6: Profit and loss account
Profit and loss account $m 2007 2006 % Change Net Gaming Revenue 213.4 157.0 36% Other operating income 36 3.6 - - Total Operating Income 216.9* 157.0 38% Operating expenses 59.1 45.6 Research and development expenses 23.5 19.4 Selling and marketing expenses 70 9 70.9 51 0 51.0 Administrative expens
Slide 7: Total Operating Income
Total Operating Income Strong 2007 - Total operating income growth - $216.9m $216 9m (2006: $157.0m), $157 0m) an increase of 38% Total Operating Income 2005 – 2007 250.0 200.0 216.9 150.0 $m 157.0 100.0 123.0 50 0 50.0 0.0 2005 2006 2007 6
Slide 8: Net Gaming Revenue
Net Gaming Revenue Strong 2007 - NGR growth - $213.4m (2006: $157.0m), an increase of 36% Strong Q4 - 2007 NGR growth $62.8m, an increase of 18% above Q3 2007 Q4 2007 NGR from emerging games (mainly Bingo) at $6.2m an increase of 6% above Q3 2007 Quarterly CAGR of 9% from Q1 2005 to Q4 2007
Slide 9: Geographic segmentation NGR
Geographic segmentation NGR UK remained largest market 43% Europe (ex (ex. UK) now 42% Strong growth in Europe (ex. UK) up 55%, UK up 30% and ROW up 35% Geographic segmentation, NGR 2007 and 2006 NGR by Region 2006 NGR by y Region g 2006 2007 8% 11% 120 45% 36% 100 80 91 88 71 NGR by Region 2007
Slide 10: Casino and Poker NGR
Casino and Poker NGR Casino NGR up 33% to $118.1m $118 1m (2006: $88 $88.8m) 8m) Continued Poker growth – up 18% to $80.8m (2006: $68.2m) Casino and Poker NGR 2006 and 2007 2006 2007 2006 2007 130 100 110 118.1 80 $m 90 80.8 88.8 60 68.2 70 50 40 Casino Poker 9
Slide 11: Casino and Poker NGR by Product and Region
Casino and Poker NGR by Product and Region Casino grew strongly in all regions : Europe (ex. UK) 34%, UK 29%, Americas (ex US) 33%, ROW 43%, Total 33% Poker growth driven by strong performance in Europe (ex UK) up 105% : Casino and Poker NGR by Product and Region 2006 and 2007 Casino NGR Poker
Slide 12: Costs Structure
Costs Structure Costs reduced to 79% from Total operating income (2006: 90%) Operating expenses reduced to 27.2% of Total operating income (2006: 29.0%) Administrative expenses* reduced to 8.3% of Total operating income (2006: 15.7%) R&D expenses reduced to 10.8% (2006: 12.4%) Costs as % of
Slide 13: EBITDA and EBITDA margin
EBITDA and EBITDA margin EBITDA EBITDA* up 177% to $45.5m $45 5m (2006: $16.4m) $16 4m) EBITDA *margin up to 21% from Total operating income (2006: 10%) EBITDA* 2006 and 2007 EBITDA EBITDA margin i 50 25% 40 45.5 20% 21% 30 15% $m 20 10% 10% 10 16.4 5% 0 0% 2006 2007 2006 2007 *Excluding share b
Slide 14: Chargebacks & PSP
Chargebacks & PSP Chargebacks down to 1.3% 1 3% of Total Operating Income (2006: 1.6%) 1 6%) PSP commissions* 6.0%, comparable to 2006 (5.8%) PSP and Chargeback as % of Total operating income PSP Chargebacks 8% 7% 1.6% 1.3% 6% 5% 4% 3% 5.8% 6.0% 2% 1% 0% 2006 2007 *Excluding Emerging offering 13
Slide 15: Marketing Costs
Marketing Costs Total Marketing g costs at $ $70.9m ((2006: $ $51.0m)) Represented 32.7% of Total Operating Income - same as 2006 (2006: 32.5%) Marketing costs as % of Total operating income 32.5% 32.5% 32.7% 35% 1.4% 1.9% 30% 4.2% 4.5% 25% 20% 15% 26.9% 26.3% Other cost 10% Revshare based cost
Slide 16: Marketing Costs
Marketing Costs Expanded Affiliate program 2007 FTDs* 263k (2006: 263k) 2007 CPA* $225 (2006: $170) (excluding rev share FTDs and costs) Marketing costs by channel as % of Total operating income 80 100% 6% 8% 70 5.6 90% 60 24% 20% 14.2 80% 50 3.0 70% $m 11.9 21.4 60% 30% 40 37% 50% Other Other
Slide 17: Customer Bonuses
Customer Bonuses Increased bonus efficiency Poker bonuses reduced to 8% in 2007 from 11% in 2006 Casino bonuses reduced to 24% in 2007 from 31% in 2006 Customer bonuses* as % of NGR Casino Poker 40% 30% 31% 24% 20% 10% 11% 8% 0% 2006 2007 *Bonus excluding converted loyalty points 16
Slide 18: Strong Real Money Registrations Growth
Strong Real Money Registrations Growth Registrations increased 31% reaching 4.7 4 7 million at year end 2007 Quarterly CAGR of 9.6% between Q1 2002 to Q4 2007 Real Money Registrations Q1 2002- Q4 2007 5 4 3 millions 2 1 0 2002 2003 2004 2005 2006 2007 17
Slide 19: Balance sheet as at 31 December 2007
Balance sheet as at 31 December 2007 $m 2007 2006 Non-current assets Intangible assets 40.7 --- Property, plant and equipment 16.5 13.0 Fi Financial i l assets t 07 0.7 --- Deferred tax 0.5 0.6 58.4 13.6 Current assets Cash and cash equivalents 104.3 114.4 Trade and other receivables 19.5 9.7 Total
Slide 20: Cash flow statement
Cash flow statement $m Year to 31 December 2007 2006 Cash flows from operating activities Profit before tax 37.4 77.6 Share benefit charges (non-cash) 7.8 8.8 Profit before tax and Share benefit charges 45.2 86.4 Depreciation and amortisation (non-cash) 5.7 3.8 Interest received (5.4) (4.9) Change C
Slide 21: Operational review
Operational Ope at o a review e e
Slide 22: Agenda
Agenda A reminder of our 2007 strategy Our achievements: Our offering Our marketing Our B2B business Growth in 2008 and beyond A taste of 2008 Responsible R ibl GGaming i Industry accolades Regulatory developments Summary
Slide 23: Our 2007 achievements – our offering
Our 2007 achievements – our offering ff i
Slide 24: 888 new Offering: Casino, Poker, Bingo, Sport
888 new Offering: Casino, Poker, Bingo, Sport
Slide 25: Casino - New Games
Casino - New Games 2007 - 888 h has d developed l d an iintegration t ti infrastructure i f t t to t facilitate f ilit t addition of new 3rd party games. 2008 – 888 will integrate the following game types - Video Slot Machines: Advanced Bonus Rounds Jackpots Fixed Odds Games: Scratch cards
Slide 26: Various New Poker Features
Various New Poker Features Rake-based bonus (instead of wagering-based) Flexible First Deposit Bonuses (= acquisition tool) Attractive reload bonuses (= retention, NGR) Real time indication (on the poker table) of the progress in clearing the bonus Advanced bonus management system Unifyi
Slide 27: Various New Poker Features (cont.)
Various New Poker Features (cont.) Additional languages New communication options with players WPC – largest online tournament Improving the tournaments capabilities Significant g infrastructure improvements Better multi-tabling Unique features in the client
Slide 28: 888ladies Bingo
888ladies Bingo Built in 2007 and Introduced in the UK M k t on February Market F b 1st Using In House Technology Web-based, Web based no download app 6 bingo rooms 75-ball, 75 ball 90 90-ball ball games Lively chat in game app with chat hosts Competitive promotions and bonuses
Slide 29: 888Sport Offer
888Sport Offer Deal signed and product integrated in 2007, Launched March 5th 2008 Available in UK, Spain, Germany, Sweden Austria and Denmark Trading provided by Blue Square Betting platform provided by Orbis Support Multi currency – USD, USD DKK DKK, SKK SKK, Euro and Sterling (deposit a
Slide 30: New Payment Methods
New Payment Methods Pay & Play – 888 stored value card Developed and managed internally Used by 888 for local events, by its white labels (Tower Torneos, Rileys) and affiliates ffili EntroPay - Virtual VISA card March 2007: Offered through call center for immediate deposits p by ypphone
Slide 31: Localization@888
Localization@888 Accelerated localization process: Year Casino Poker Sport Bingo 2005 11 1 0 0 2006 12 6 0 0 2007 (Till March 2008) 14 8 5 1 New translated applications and release of updated versions throughout 2007: 2 new languages for Casino (Danish and Greek) 2 new languages for Poker (Dutch
Slide 32: Integration Platform www.888debut.com
Integration Platform www.888debut.com Support S dditi off new 3rd party t addition t games. Easy to use single point of integration to 888 internal gaming and back office platforms. 2007- 2007 Integration I t ti off 888 and Blue Square 2008 - Integration of 3rd party new games by multiple ve
Slide 33: Bingo business integration
Bingo business integration 7 networks t k license li th the software ft iincluding: l di Foxybingo.com Mirrorbingo.com ThinkBingo.com Bingoscotland.com Thinkbingoplus.com WinkBingo.com Cashcade Bingo Network (include in excess of 25 white labels) Foxy o ybbingo, go, Mirror o Bingo
Slide 34: Our 2007 achievements – our marketing
Our 2007 achievements – our marketing k ti
Slide 35: What did we do?
What did we do? Product Consumer Truth Insight Company p y Corporate p Culture Ambition
Slide 36: Magazine Ads
Taxis – In & Out Magazine Ads Playful Minds Everywhere – Playful Minds Consistent message His & Hers On-The-Go across regions
Slide 37: Sample regional activity - Pokertour 2007 Austria
Sample regional activity - Pokertour 2007 Austria The Austrian „Pokertour 07“ took place in the 9 gg biggest cities of Austria 888.com was the main sponsor of the tour. Final event in the Concord Card Casino, Casino Vienna Vienna, broadcasted for television. 1.500 players joined the federal
Slide 38: Sample regional activity – GIGA Pokernight daily show
Sample regional activity – GIGA Pokernight daily show 888.com featured in the daily poker show called “Pokernight“. In the show,, GIGA broadcasts live studio tournaments with 888.com branded tables. 20,000 daily viewers online stream 1,000 contacts each day Website: 1,000,000 page impressi
Slide 39: Sample regional activity - 888.com German National Team
Sample regional activity - 888.com German National Team 50,000 players joined to become one of the 30 qualifiers for the final event, TV produced final event, to win two places in the German National Poker Team
Slide 40: Viral Marketing & User Generated Content
Viral Marketing & User Generated Content
Slide 41: Eight Magazine
Eight Magazine Th offline The ffli extension t i tot 888’s 888’ online li experience i Revenue-generating tool increasing readers’ loyalty Significant positive effect on 888 888’s s brand perceptions Strong return on investment Currently available in the UK - will be rolled into additional
Slide 42: UK unaided Awareness – first mention
UK unaided Awareness – first mention: 888.com is the most top of mind online gaming and betting site! What online gaming and betting web sites have you seen, read or heard about? Difference Difference Difference Gamblers % from 2006 Potentials % from 2006 888.Com customers % from 2006 % % % 888.com
Slide 43: Our 2007 achievements – our B2B business
Our 2007 achievements – our B2B business
Slide 44: Our strategic partnerships business
Our strategic partnerships business RileysPoker 2007 Land-links Partnership of the Year (egaming Awards) Successful poker league in club ending in an online tournament New integrated acquisition campaigns with Rileys marketing arm Tower Torneos Deepening our foothold in the LATAM region
Slide 45: Our strategic partnerships business
Our strategic partnerships business LuckyAce – strong successful launch Currently already supporting three languages Acquisition rate significantly surpassing the business plan Annual run rate already above $10M $
Slide 46: RileysPoker.com website
Home Club Finder Competition Poker League Calendar Of Events snooker & Pool How To Register How To Deposit FAQ's Poker School SPECIAL RILEYSPOKER.COM OFFER Register for a Money — Welcome Play account and receive onus up to a voucher worth £5 : towards a live cash game at your local Rileys club on yo
Slide 47: Tower Torneos website
of > powered by 888..cm Descargar Cémo jugar Depositos, Retiros y Bonus Seguridad y privacidad Contacto Blog 25% DE BONUS HASTA QUEDAS INVITADO A EN TU PRIMER DEPOSITO PARTICIPAR DE TODOS LOS NUEVOS BENEFICIOS QUE ESTA ASOGIACION TE OFRECE: Tomeos desde 0,50 centavos de dolar Torneos de Mesas Multip
Slide 48: LuckyAce Casino website
luckuAcelasinoe.om lot the games begin LOOT F/R gy Ps ‘Ss Download| Home Getting Started Help Security and Privacy Players Club Affiliates 24/7 Support Qim here to make sure you'll have a wondertul time... Qnin, th idol lll ey PEI Download FAQ Getting Started Customer Care +350 77 602 é.
Slide 49: Our growth in 2008 and beyond
Our growth in 2008 and beyond be ond
Slide 50: Where will growth come from
Where will growth come from Ongoing growth in our core B2C business Quick growth in the B2B (strategic partnerships) business Strategic deals which will potentially change our business in some areas such as: New licences in different countries Forming local joint ventures in specific marke
Slide 51: Our 2008 Strategy Focus
Our 2008 Strategy Focus Our proven strategy remains valid for 2008 Accelerated A l t d product d td development l tbbased d on 2007 infrastructure improvements Broadened innovative marketing in more geographies Further increase in cross-selling and up- selling Additional entertainment and
Slide 52: A taste of 2008
A taste of 2008 om —Enjoy tHe gpn—
Slide 53: we ® fo,
we ® fo, ¢ FREE \ S102. To claim your free S10, simply enter the code STI. Everybody BBS to be "§ Win a £5,000 shopping spree. duit login nirlticondbratdleke 16th for a chance to shop ‘tl you drop with & peronal shopper —Enjoy Hae jane
Slide 54: 888ladies website
833) Wil Naas bl so” ad? com Member Login Username: Password; Qur Progressive Jackpot Total £934.58 | ea erenene rena! PLAY BINGO NOW! A. 4] No Dovsr ] ms F —Cnyj04 TAL SAW — ; ew, Forgot username/p nload Required Se "Ho Pye aye ae ae] | ne a | | ae st Winners ‘REGISTER GAMES OMOTIONS LADIESLOUNGE G
Slide 55: 888zhenren
888zhenren Zhenren is “Live” in Chinese 888zhenren is 888’s Asian brand Asian A i sportt betting b tti Live dealer casino Two local partners Entertasia (Macau/Pillipines) – live dealer technology E-skyy ((Malaysia) y ) – Asian sport p betting g
Slide 56: — Enjoy tae gpm
om — Enjoy tae gpm
Slide 57: sssé.n
sssé.n —En} mjoy The $ave —
Slide 58: 888sport
888sport
Slide 59: 888sport
ATE PROGRAM 888sp07t Enjoy Har sane wv J F1 Grand Prix ‘ oh de Australia 888sp ort Enjoy Hee. sae PRICES ON ALL THE RACES 9 AVAILABLE NOW! ee: Cheltenham airs ines on Crane # to cefeorate im i i i SIX re lari RUGBY TO N WHISTLE jHaz clic equi para apostar ahora!
Slide 60: 888sport in-play betting and snooker championship
THE BIGGEST RANGE OF I IN PLAY BETTING ON EVERY FOLLOW THE ACTION LIVE « °888..om « °8882_, J WORLD SNOOKER » Pe CHAMPIONSHIP HOME PRIZEDRAW TRICK SHOT COMPETITION BET NOW 24 HOUR SUPPORT 888.com World Snooker Championship Draw Webcast . Enter the Prize Draw Competition . and'you could win... 2 By T
Slide 61: World Poker Crown
888.com Enjoy Pre same J J $3 MILL C=3 1A = RTS Se he he he he ANYONE CAN TAKE IT Home WPC Schedule Final event This week's special How to play FAQ T&C's $3 million prize pool guaranteed Take the crown and the throne of worldwide poker dominance! The World Poker Crown (WPC) is 888.com's biggest ever
Slide 62: Responsible Gaming
ponsible Gamino 888m —Enjoy tae gpn—
Slide 63: Responsible Gaming
Responsible Gaming Led by a dedicated full-time executive Huge progress in the field: Gamcare certificate Better training of our employees Closer ties to organizations dealing with problem gaming Next generation automated systems we will use to detect problem gaming in development stages
Slide 64: Regulatory developments
Regulatory de elopments developments
Slide 65: Regulatory updates
Regulatory updates USA – no change EU: Placanica Pl i Infringement letters Move toward licensing Other: Most jurisdictions evolving toward a properly regulated environment Some jurisdictions remain vague
Slide 66: Summary
sssé.n —Enj mjoy The $ave —
Slide 67: Summary
Summary Very strong year Great infrastructure for growth in 2008 and beyond Closed most product gaps Positive regulatory development Major achievements in responsible gaming Overall a great year Confident of further growth in 2008
Slide 68: Thank you!
sssé.n —Enj mjoy The $ave —
Slide 69: Appendix I Industry accolades
Appendix I Ind str accolades Industry
Slide 70: Industry Awards 2007
Industry Awards 2007 B tB Best Betting tti and dGGaming i Company C Leisure L i Report R t Awards 2007 Named a ed "Best est Betting ett g aand d Ga Gaming g Co Company" pa y at tthe e Leisure Report Awards 2007 in London. The Leisure Report Awards are given to companies whose vision, originality a
Slide 71: Industry Awards 2007
Industry Awards 2007 Casino of the Year Egaming Awards 2007 888.com scored a hat-trick at the 2007 eGaming awards, a a ds, bea beating gooff sstiff co competition pe o a and d winning g Best es Online Casino for the third year in a row, thanks to "technical excellence and reaching for the highes
Slide 72: Appendix II Quarterly KPIs
Appendix II Quarterly KPIs 71
Slide 73: Casino and Poker KPIs
Casino and Poker KPIs NGR for Q4 2007 is $56.7m $56 7m 40% increase from Q4 2006 and 19% increase from Q3 2007 Casino and Poker Quarterly NGR Q1 2005 – Q4 2007 60 50 40 $m 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 72
Slide 74: Casino and Poker KPIs
Casino and Poker KPIs Casino and Poker active customers in Q4 2007 at 209,918 209 918 11% increase from Q4 2006, the same as Q3 2007 Casino and Poker active customers Q1 2005 – Q4 2007 250,000 200,000 150,000 100,000 50,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 73
Slide 75: Casino and Poker KPIs
Casino and Poker KPIs Q4 2007 NGR per active customer is $270 26% increase from Q4 2006 and 19% increase from Q3 2007 Casino & Poker NGR per active customer Q1 2005 – Q4 2007 250 230 210 $ 190 170 150 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 74
Slide 76: Casino KPIs
Casino KPIs Casino NGR for Q4 2007 is $35.3m $35 3m 60% increase from Q4 2006 and 22% increase from Q3 2007 Casino Quarterly NGR Q1 2005 – Q4 2007 40 35 30 25 $m 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 75
Slide 77: Casino KPIs
Casino KPIs Casino active customers for Q4 2007 at 73,737 73 737 79% increase from Q4 2006 as a result of revised KPI, 1% increase from Q3 2007 Casino active customers Q1 2005 – Q4 2007 80,000 60,000 40,000 20,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 76
Slide 78: Casino KPIs
Casino KPIs Q4 2007 NGR per active customer is $478 20% up from Q3 2007, 11% decrease from Q4 2006 as a result of revised KPI Quarterly NGR per active customer Q1 2005 – Q4 2007 600 550 500 450 $ 400 350 300 250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 77
Slide 79: Poker KPIs
Poker KPIs Poker NGR for Q4 2007 is $21.4m $21 4m 17% increase from Q4 2006 and 15% increase from Q3 2007 Poker Quarterly NGR Q1 2005 – Q4 2007 25 20 15 $m 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 78
Slide 80: Poker KPIs
Poker KPIs Poker active customers for Q4 2007 at 170,401 170 401 15% increase from Q4 2006 and 1% increase from Q3 2007 Poker active customers Q1 2005 – Q2 2007 180,000 150,000 120,000 90,000 60,000 30,000 , 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 79
Slide 81: Poker KPIs
Poker KPIs Poker Q4 2007 NGR per active customer is $126 1% increase from Q4 2006 and 14% increase from Q3 2007 Quarterly NGR per active customer Q1 2005 – Q4 2007 150 130 110 $ 90 70 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2007 80