Slide 1: Results for the Half Year Ended 30 June 2020
RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020 1
Slide 2: Agenda
AGENDA Itai Pazner | Introduction & H1 2020 Highlights Aviad Kobrine | Financial Review Itai Pazner | Operational Review Q&A 2
Slide 3: Itai Pazner, CEO | H1 2020 Highlights
ITAI PAZNER, CEO | H1 2020 HIGHLIGHTS 3
Slide 4: H1 2020 Highlights
H1 2020 HIGHLIGHTS ◎ Record revenues, EBITDA and new customers ◎ Enhanced focus on customer protection & safer gambling ◎ Improved marketing efficiencies and disciplined cost control ◎ Continued operation and delivery during remote working ◎ Benefitted from a macro trend of consumer transition to on
Slide 5: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 5
Slide 6: H1 2020 Financial Highlights
H1 2020 FINANCIAL HIGHLIGHTS ◎ Record results, revenue up 37% despite disruption of Sport events, driven by core products and COVID-19 lockdowns ◎ Revenue increase led by Casino and Poker up 48% and 56% respectively ◎ Further progress in regulated markets, up 41% ◎ Regulated and taxed markets compri
Slide 7: Current Trading
CURRENT TRADING ◎ Strong trading continues into the third quarter of the year with revenue increases across verticals ◎ Strong momentum underpin positive outlook YTD Q3 2020* % % Revenue %YoY B2C KPIs %YoY 69% 71% 56% 46% 40% 40% 31% 26% Group Poker Sport Casino FTDs Bets No. Depositors Deposits 7 *
Slide 8: Group Revenue
GROUP REVENUE ◎ Group revenue up 37% to $379m (H1 2019: $277m); up 40% at constant currency ◎ Sport up 2% at constant currency despite restricted events ◎ B2B up 21% driven by Bingo and strong performances by US partners Revenue H1 2020 vs. H1 2019 $US Millions H1 2020 H1 2019 B2C Per Product Casino
Slide 9: Group Revenue
GROUP REVENUE ◎ Half yearly long-term CAGR of 11% ◎ Exceptional H1, up 37% reflecting wider consumer trend towards online consumption and strong customer acquisition in 2019 ◎ 41% increase in regulated markets revenue First Time Depositors H1 2020 YoY% Group Revenue H1 2010 - H1 2020 % $m 379 203% 2
Slide 10: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION ◎ Long-term trend towards regulated markets continues - regulated and taxed markets comprise 73% of Group revenue ◎ Revenue from regulated markets up 41%, with FTDs 55% higher ◎ Low exposure to Germany. In Spain, Casino & Poker up 16% Geographic Segmentation H1 2013 – H1 20
Slide 11: Casino B2C Revenue
CASINO B2C REVENUE ◎ Casino revenue up 48% to $260m (H1 2019: $175m), 51% increase at constant currency with a 72% increase in FTDs ◎ 16% half yearly long-term CAGR Casino B2C Revenue H1 2007 – H1 2020 $m % Casino FTD’s & Deposit 260 175 161 81% 139 147 72% 110 98 107 88 71 59 Casino FTD’s Casino De
Slide 12: Sport B2C Revenue
SPORT B2C REVENUE ◎ Revenue down 1% to $44m (H1 2019: $45m), up 2% at constant currency despite cancellation of Sport events ◎ Sport players overall revenue up 6% as a result of cross-sell to other offerings such as Casino, Poker and Virtual Sports ◎ Positive trajectory with encouraging June and str
Slide 13: Poker B2C Revenue
POKER B2C REVENUE ◎ Revenue up 56% to $36m (H1 2019: $23m) led by high activity during lockdowns and large player base achieved in 2019 ◎ Poker players deposits (including cross-sells) up 49% and Poker FTDs up 103% Poker B2C Revenue & Deposits H1 2020 vs. H1 2019 $m Poker Revenue % Poker Players Dep
Slide 14: Bingo B2C Revenue
BINGO B2C REVENUE ◎ Revenue up 8% to $21m (H1 2019: $19m); up 12% at constant currency; flat pro-forma ◎ New customer acquisition up 43% (up 26% pro-forma) Bingo B2C Revenue H1 2020 vs. H1 2019 $m % 21 9.1% 8.8% 19 H1 2019 H1 2020 Bingo Active Players Bingo Deposit (GBP) 14
Slide 15: Effective Marketing
EFFECTIVE MARKETING ◎ An unprecedented increase in customer recruitment at decreasing cost per acquisition reflecting improved efficiencies ◎ Record-breaking FTDs – surpassing 750K threshold for the half year, driven by regulated markets ◎ Constant improvements in CPA, by focusing on channel blend b
Slide 16: Marketing Investment
MARKETING INVESTMENT ◎ Marketing ratio improved to 28% (H1 2019: 30%) despite considerably higher marketing investment ◎ Strong 49% increase in new customer acquisition ◎ Effective overall CPA decrease year over year, reflecting efficiencies Marketing Cost H1 2020 vs. H1 2019 $m Marketing Costs % Ma
Slide 17: Cost Structure – Operational Gearing
COST STRUCTURE – OPERATIONAL GEARING ◎ Margin expansion with total costs decrease to 81.5% of revenue (H1 2019: 83.8%) ◎ Higher gaming duties share is a result of strong growth in regulated markets ◎ Clear operational gearing across cost items, a result of volume increases and cost control Cost as a
Slide 18: Adjusted EBITDA & Margin
ADJUSTED EBITDA & MARGIN ◎ Significant Adjusted EBITDA increase ◎ Adjusted EBITDA at $70m (H1 2019: $45m) and $74m at constant currency ◎ Adjusted EBITDA margin at 18% (H1 2019: 16%) Adjusted EBITDA H1 2020 vs. H1 2019 $m Adjusted EBITDA % Adjusted EBITDA margin 70.1 18.5% 44.9 16.2% H1 2019 H1 2020
Slide 19: Dividend
DIVIDEND ◎ Dividend at $3.2c (H1 2019: $3.0c) plus an additional one-off Dividend of $2.8c (H1 2019: nil) totaling at $6.0c (H1 2019: $3.0c) Dividends H1 2012 – H1 2020 Total Dividend 6.0 4.2 3.8 4.0 3.5 3.5 3.0 3.0 2.5 H1 12 H1 13 H1 14 H1 15 H1 16 H1 17 H1 18 H1 19 H1 20 19
Slide 20: Itai Pazner, CEO | Operational Review
ITAI PAZNER, CEO | OPERATIONAL REVIEW 20
Slide 21: Business Momentum
BUSINESS MOMENTUM ◎ Strong momentum has continued well into the second half of the year ◎ Growth is well diversified, with regulated markets at the lead Deposits Trend 2010 – 2020 500% Regulated Markets 450% Non-Regulated Markets 400% 350% 300% 250% 200% 150% 100% 50% 0% 1 2 3 4 5 6 7 8 9 10 11 12 1
Slide 22: Regulated Casino Growth Engine
REGULATED CASINO GROWTH ENGINE ◎ High growth in new player acquisition across regulated markets ◎ Growth across brands supported by the ‘Orbit’ product and 888’s marketing proficiency ◎ Italy & Spain new customers up 57% and 34% respectively despite marketing restrictions ◎ Strong progress in Romani
Slide 23: Regulated Poker Growth Engine
REGULATED POKER GROWTH ENGINE ◎ UK new customers up 205% reflecting the Group’s successful recreational player acquisition strategy ◎ Spain new customers up 67% reflecting successful shared liquidity network across Spain and Portugal ◎ Hyper growth in Romania with a 278% increase in Poker new custom
Slide 24: Safer Gambling
SAFER GAMBLING ◎ 888 safe gaming strategy: Safer, Better, Together ◎ Implemented voluntary COVID-19 policies across multiple regulations ◎ Raising awareness to customers and public in order to help prevent gambling-related harm Safe Safe NEW Gambling 20% increase Gambling 888 Control Tools usage in
Slide 25: Product Driving Growth
PRODUCT DRIVING GROWTH ◎ Our long-term goal: to create a seamless, personalised and safe cross-product customer experience ◎ Creating a coherent vision and “language” across all 888 products and markets ◎ A friction-free customer acquisition and communication experience ◎ Repeat the Orbit casino suc
Slide 26: Poker8 – Made to Play
POKER 8 – MADE TO PLAY ◎ Soft-launched earlier this year ◎ Recreational-focused game play with advanced marketing mechanisms ◎ Portrait app: new portrait table, dynamic table layouts, multi-tabling swiping experience ◎ Content rich - avatars, emojis ◎ Seamless navigation between games, arenas and ta
Slide 27: Introducing the New 888sport
INTRODUCING THE NEW 888SPORT ◎ Strong recovery post COVID-19 shut down ◎ Following 888sport.se launch in April, ‘Spectate’ platform rollout is progressing well ◎ Dublin site established as the new 888sport hub ◎ The new 888Sport product will be localised for each 888 market ◎ Continued development o
Slide 28: Bingo
BINGO ◎ Dragonfish platform continues to push bingo and instant games innovation ◎ A healthy pipeline of new B2B opportunities both in UK and other global markets Key Milestones FTD & Conversion Rate Full 123 Deployment of new NEW GAMES Client 17 UK Regulation 1 2 3 4 1 2 NEW PREMIUM 2019 2020 IN-HO
Slide 29: The 888casino Ecosystem
THE 888CASINO ECOSYSTEM BIGGER PROPIETARY DAILY JP GAMES 391 NEW NEW LIVE GAMES LOBBY 19 25 NEW PROVIDERS NEW PREMIUM IN-HOUSE GAMES 29
Slide 30: What Would You Like to Play Today?
WHAT WOULD YOU LIKE TO PLAY TODAY? ◎ Improving first day interactions with customised preferences ◎ Multiple AI models running concurrently ◎ New live casino lobby with four different 3rd party providers ◎ 8 out of the top 20 performing games were developed by Section8 30
Slide 31: The US
THE US ◎ Growing in our existing markets – NJ, NV and DE ◎ Delaware Lottery contract extended ◎ First-ever pure online WSOP multi-state tournament, powered by the 888-poker platform ◎ Healthy pipeline of additional states ◎ Major platform and product upgrades into 2021 ◎ Introducing the new 888sport
Slide 32: Summary & Outlook
SUMMARY & OUTLOOK ◎ Record growth across key regulated markets and products in H1 ◎ Product-centric strategy and operational discipline delivering results across all four verticals ◎ Safe gaming and compliance embedded across company technology, practices and global sites ◎ COVID-19 environment set
Slide 33: Q&A
Q&A 33
Slide 34: Appendix
888 Appendix
Slide 35: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $US Millions H1 2020 H1 2019 Revenue 379.1 277.3 3 Operating expenses 94.9 69.8 Gaming duties 69.6 44.9 Research and development expenses 18.5 17.3 Selling and marketing expenses 105.2 84.3 % of Revenues 28% 30% 4 Administrative expenses 20.8 16.1 2,4 Adjusted EBITDA 70.1 4
Slide 36: Balance Sheet
BALANCE SHEET ◎ Strong balance sheet with low leverage $US Millions H1 2020 H1 2019 Non-current assets ◎ Ample liquid resources Goodwill and other Intangible assets 241.5 240.4 Right-of-use assets 31.6 33.3 Property, plant and equipment 15.5 13.0 Other non-current assets 3.6 3.4 Investments 0.2 0.9
Slide 37: Cash Flow
CASH FLOW $US Millions Period Ended 30 June H1 2020 H1 2019 ◎ Net cash generated from operating activities 135% of Cash flows from operating activities Adjusted EBITDA Profit before income tax 50.9 22.2 Exceptional items (1.3) 1.6 Share benefit charges 2.3 3.3 Depreciation and amortisation 16.7 15.3
Slide 38: Operational Agility
OPERATIONAL AGILITY Methodology Training Collaboration Home office for maximising managers platform IT equipment WFH/WFO and employees (MS Teams) End of 2020 Productivity Legal ‘Distribute Hiring’ Check point & measures aspects model finetune 38