Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — H1 2009 Earnings Presentation
66 slides from Evoke's earnings presentation, Sep 1, 2009
Slide 1: Results for the Six Months Ended 30 June 2009
Results for the Results for the six months Six Months Ended ended 30 June 2008 30 June 2009 1 September p 2009
Slide 2: Agenda
Agenda Gigi Levy • Introduction Aviad Kobrine • Financial Review Gigi Levy • Operating Review • Regulation Gigi Levy Le & • Summary S and d Q&A Aviad Kobrine 11
Slide 3: Financial Review
Results for the six months Financial Review ended 30 June 2008 2
Slide 4: Profit and loss account
Profit and loss account $m H1 2009 H1 2008 % Change Total Revenue 117.9 131.5 Other operating income 0 3.8 Total Operating Income 117.9 135.4 (13%) Operating expenses1 41.6 41 6 38.5 38 5 Research and development expenses 11.9 14.0 Selling and marketing expenses 35.3 43.5 Administrative expenses p 2
Slide 5: Total Operating Income
Total Operating Income • H1 2009 - Total Operating Income $118m (H1 2008: $135m), 13% decrease driven by F/X and economic downturn Total Operating Income 2007 – H1 2009 140 120 100 80 $m 135 120 127 60 118 97 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 4
Slide 6: Total Operating Income
Total Operating Income • Estimated FX impact over last 12 months Total Operating Income 2007 – H1 2009 140 10 21 120 100 80 $m 135 127 60 120 118 97 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 Estimated revenue loss due to FX rates change at Jan 08 F/X rates. Assuming no change in player’s behavior 5
Slide 7: Total Operating Income
Total Operating Income • Q2 2009 up 7% to $61m (Q1 2009: $57m) Total Operating Income Q1 2007 – Q2 2009 70 60 50 40 $m 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 6
Slide 8: Total Operating Income
Total Operating Income • Estimated F/X impact over last 12 months Total Operating Income Q1 2007 – Q2 2009 70 1 9 9 12 60 50 40 $m 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 Estimated revenue loss due to FX rates change at Jan 08 F/X rates. Assuming no change in player’s behavior 7
Slide 9: Geographic segmentation TOI
Geographic segmentation TOI • ROW up 22%, Europe (ex UK) down 8%, UK down 11% , Americas (ex US) down 13% Geographic segmentation*, TOI H2 2008 and H1 2009 60 58 H2 08 H1 09 53 48 40 43 $m 20 12 11 9 11 0 UK Europe America ROW (ex UK) (ex USA) * Segmental allocation P2P games Rake based 8
Slide 10: Geographic segmentation TOI
Geographic segmentation TOI • No significant change in regional distribution Geographic segmentation*, TOI H2 2008 and H1 2009 TOI H2 2008 TOI H1 2009 10% 7% 9% 9% 38% 36% 46% 45% UK Europe Americas ROW (ex UK) (ex USA) * Segmental allocation P2P games Rake based 9
Slide 11: Total Operating Income B2C
Total Operating Income B2C • H1 2009 - Total Operating Income $94m (H1 2008: $118m), 21% decrease driven by adverse F/X movement and economic downturn Total Operating Income 2007 – H1 2009 120 100 80 118 $m 60 107 106 95 94 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 10
Slide 12: Total Operating Income B2C
Total Operating Income B2C • Estimated F/X impact over last 12 months Total Operating Income 2007 – H1 2009 120 7 100 14 80 118 $m 60 107 106 95 94 40 20 0 H1 07 H2 07 H1 08 H2 08 H1 09 Estimated revenue loss due to FX rates change at Jan 08 F/X rates. Assuming no change in player’s behavior 11
Slide 13: Average Net Deposit Casino & Poker B2C
Average Net Deposit Casino & Poker B2C • Strong correlation between Avg. Net Deposit and FX rates Average Net Deposit Casino & Poker B2C H2 2008 and H1 2009 Net Deposit per unique depositor EUR GBP 350 2.20 2.00 300 1.80 $ 1.60 250 1.40 1.20 200 1.00 7 8 9 10 11 12 1 2 3 4 5 6 H2 2008 H1 2009 12
Slide 14: Total Operating Income B2B
Total Operating Income B2B • Strong H1 2009 - Total Operating Income up 42% to $24m (H1 2008: $17m) Total Operating Income B2B 2007 – H1 2009 35 30 25 24 20 22 $m 15 17 13 10 5 2 0 H1 07 H2 07 H1 08 H2 08 H1 09 13
Slide 15: Total Operating Income B2B
Total Operating Income B2B • Estimated F/X impact over last 12 months Total Operating Income 2007 – H1 2009 35 30 7 25 3 24 20 22 $m 15 17 13 10 5 2 0 H1 07 H2 07 H1 08 H2 08 H1 09 Estimated revenue loss due to FX rates change FX rates of Jan08 applied. Assuming no change in player’s behavior 14
Slide 16: TOI B2C by Product
TOI B2C by Product • Emerging Offering up 24%, Casino down 13%, Poker down 18% TOI B2C H2 2008 and H1 2009 70 H2 08 H1 09 60 64 56 50 40 $m 30 32 26 20 10 11 9 0 Casino Poker Emerging 15
Slide 17: TOI Emerging Offering B2C
TOI Emerging Offering B2C • Strong H1 2009 - Total Operating Income up 151% to $11m (H1 2008: $5m) • Growth driven by Live Dealer and 888sport TOI B2C Emerging Offering 2008 – H1 2009 12 10 11 8 9 $m 6 4 5 2 0 H1 08 H2 08 H1 09 16
Slide 18: Costs Structure
Costs Structure • Non marketing costs remained virtually constant at $62m (H1 2008: $63m) • Conscious decision to continue investment in the business Costs as % of Total Operating Income H1 2008 and H1 2009 100% 79.1% 82.5% 80% 7% 8% Admin. Expenses 30% S&M expenses 60% 32% R&D 10% Operating expense
Slide 19: EBITDA and EBITDA margin
EBITDA and EBITDA margin • EBITDA* $21m (H1 2008: $28m), 27% decrease as a result of lower revenues at constant investment in the business • EBITDA EBITDA* margin 17% from Total Operating Income (H1 2008: 21%) EBITDA* H1 2008 and H1 2009 EBITDA* EBITDA* margin 30 25% 28 25 20% 21% 20 15% 17% 21 $m 1
Slide 20: Chargebacks & PSP fees - B2C Casino & Poker
Chargebacks & PSP fees - B2C Casino & Poker • CB & PSP at 4.3% from Total Deposits (H2 2008: 3.5%) PSP fees and Chargeback as % of Total Deposits B2C Casino & Poker 5% 4.3% 3.5% 4% 3% 2% 1% 0% H2 08 H1 09 19
Slide 21: Marketing Costs
Marketing Costs • Increased marketing efficiency in H1 2009 – marketing costs at 30% of Total Operating Income (H1 2008: 32%) Marketing costs as % of Total Operating Income 40% 35% 30% 32% 25% 30% 20% 15% H1 08 H1 09 20
Slide 22: Marketing Costs
Marketing Costs • H1 2009 FTDs 152K 16% decrease over H1 2008 • H1 2009 B2C CPA at $171 (H1 2008: $221)* Marketing costs as % of Total Operating Income 50 $44m 100% 6% 3 22% 17% 40 $35m $ 80% 7 8 20% 30 60% 32% $m 14 7 19% 20 40% 7 20 45% 40% 10 20% 14 0 0% H1 08 H1 09 H1 08 H1 09 Affiliates Off-lin
Slide 23: Customer Bonuses B2C Casino and Poker
Customer Bonuses B2C Casino and Poker • Continued trend of increased customer bonus efficiency • Poker bonuses at 5% in H1 2009 similar to H1 2008 • Casino bonuses reduced to 16% in H1 2009 from 19% in H1 2008 Customer bonuses* as % of TOI B2C Casino and Poker 20% Casino Poker 19% 16% 10% 5% 5% 0% H
Slide 24: Strong Real Money Registrations Growth
Strong Real Money Registrations Growth • Registrations increased by 25% from Q2 2008 reaching 6.4 million at Q2 2009 • Quarterly CAGR of 9% between Q1 2002 to Q2 2009 Real Money Registrations Q1 2002- Q2 2009 7 millions 6 5 4 3 2 1 0 2002 2003 2004 2005 2006 2007 2008 2009 23
Slide 25: Balance Sheet as at 30 June 2009
Balance Sheet as at 30 June 2009 30 June 30 June $m 2009 2008 Non-current assets Intangible assets 46.5 42.2 Property, plant and equipment 19.4 17.0 Financial assets 0.5 0.3 Deferred taxes 0.7 0.7 67.2 60.2 Current assets Cash and cash equivalents 102.9 87.9 Trade and other receivables 18.3 22.8 Tot
Slide 26: Cash Flow Statement
Cash Flow Statement $m H1 to 30 June H1 2009 H1 2008 Cash flows from operating activities Profit before tax 9.8 21.1 Share benefit charges 5.1 5.2 Profit before tax and Share benefit charges 14.9 26.3 Depreciation, impairment and amortization 3.9 3.8 I Interest received i d (0 4) (0.4) (2.2) Change
Slide 27: Operational Review
Operational Results for the six months Review ended 30 June 2008 26
Slide 28: So where are we heading?
So where are we heading? • Maintaining and enhance our position as a leading B2C operator and return B2C to growth • Grow B2B market share to cement our p position as a leading B2B provider 27
Slide 29: Operational Review B2C
Operational Results for the six months Review ended B2C 30 June 2008 28
Slide 30: 888 Poker League
888 Poker League • First Australian Poker League that fully integrates In-Venue poker play with Online Poker Play • League is present in 1,200 venues weekly in 3 states • 888pl 888 l online li provides id 8 regular l d daily il tournaments • Players y p play y for p points that will q qualify y them
Slide 31: Poker Ashes
Poker Ashes • The ‘Poker Ashes’ was a poker tournament featuring the biggest names in Australian and English Cricket facing off against each other over the Poker Table • 2 Online Qualifiers and 4 Cricketers on each team • Broadcasted so far on Sky Sports UK and others • Poker Ashes was broadcast aro
Slide 32: Leo Margets – WSOP
Leo Margets – WSOP • Leo Margets makes history at the World Series of Poker (WSOP) in Las Vegas • The player sponsored by 888.com was the last woman standing in her first major international tournament 31
Slide 33: Bingo
Bingo • Q2 - re-launch TV campaign in the UK ‘Bingo Super Star’ • TV and National and women's women s press • 17 New Instant Games • Free Bingo introduced in Q2 with Over 1000 players participating p p g daily y 32
Slide 34: Sport campaigns
Sport campaigns 8885057 IT'S: IN! Free Wimbledon b ls UP ‘0 50s} IT’S IN! FREE WIMBLEDON BETS UP To « BN te We've gat TWO grvat tennis of ers for peu this summer + PLACE Bet + FIFTH SE + FREE BET He Shoots, You Score Upto #amount# + PLACE NET wt vehat hap 4 aid Barrolone bigget Champ! sport... Wi ga
Slide 35: SEM/SEO continued leadership
SEM/SEO continued leadership 34
Slide 36: Operational Review B2B
Operational Results for the six months Review ended 30 June B2B 2008 35
Slide 37: Racing Post
Racing Post ► The market leading specialist racing and betting newspaper and website ► Total Gaming Services ► White label solution across casino and poker ► Includes cashier and ePayment solution via single wallet application ► Speed to market - live in weeks ► Signed 30th March – Live 7th May 36
Slide 38: Phumelela
Phumelela ► One of the world’s largest pari-mutual horseracing and tote betting g organisations: g ► Significant distribution and marketing outlets across nine provinces ► 11 racecourses, 400+ Tote outlets ► 3 telephone betting centres and 2 online Tote betting sites ► D Dragonfish fi h tto provide:
Slide 39: El Cartonazo
El Cartonazo ► Strengthen the partnership with Daub ► Current owners of Wink and Posh Bingo g networks ► Launched first fully localised Spanish bingo network ► In partnership with Los Morancos ► Advanced chat and community feature ► Spanish “Dicciochat” ► Pl tf Platform for f new international i t t
Slide 40: Loper Gate
Loper Gate ► Loper Gate Ltd ► Powerful media player in the Balkans market ► Created new online gaming brand www.848poker.com and www.848casino.com ► Planning a multi million launch campaign across broadcast, online, outdoor media and ppublic relations ► Dragonfish to provide ► Casino and poker softw
Slide 41: Three New bingo partners
Three New bingo partners ► Dragonfish cements its place as the leader in bingo software provision with the signing g g of three new bingo g ppartners: ► 1. Costa Bingo 2. Moon Bingo 3. Bingo Hollywood ► Total offering includes provision of chat moderators, ePayments systems, customer care, hosting a
Slide 42: Launch new GameOn brand
Launch new GameOn brand ► Dragonfish launched the new GameOn brand for Littlewoods (Sportech plc) ► Integrated successful TV campaign and outdoor campaign on London buses and national newspapers with online viral campaign across Twitter, Facebook and YouTube 41
Slide 43: Probability
Probability ► Business Development – new channel ► Probability ► AIM quoted mobile gaming specialist ► Strategic Agreement ► Probability and Dragonfish will cooperate on an exclusive basis to develop and execute opportunities for mobile gaming and mobile Lottery services in a number of territories w
Slide 44: Our Offering
Results for the six months Our Offering ended 30 June 2008 43
Slide 45: Casino - Recession Oriented Gaming
Casino - Recession Oriented Gaming • New Games Tab with no download Web games • Cross sell as well as Acquisition components • Multi-language & Multi-currency support • 35 games • B2C release - 888 Games in Sport • B2B release - GAMEON Quickplay 44 44
Slide 46: Continues release of in-house games VS’s
Continues release of in-house games VS’s 45
Slide 47: Live Casino
Live Casino • Fully integrated into Casino-On-Net • Available for real money players only, in Multi Currency ($, £, €) • Available in English, German, Spanish, Danish, French, Swedish, Greek, Dutch, Italian and Japanese • Will become available for B2B partners 46
Slide 48: Poker
Poker • Poker Loyalty Club • "Quick Seat" poker lobby wizard for beginners • Player-to-player money transfer • Major multi-tabling improvements 47
Slide 49: Poker - Quick Seat Wizard
Poker - Quick Seat Wizard Shout 888 from the rooftops. BBD Available Money: and get $50! Ab Money on Tables: . Sn AAS eee Quick Seat "Ring Games Sit & Go i Mutti-table Jackpots Americana pe, then the tournament type and finally choose the buy-in ste kezea5e 72,627 @ Pl jari33 18,178 & BLANes43 8,032
Slide 50: Poker Loyalty Club
Poker Loyalty Club CTWATAS FSKER [ei Hello Welcome to your very own personal rewards page. Here you can keep track of your reward activities at Pacific Poker, This page is totally unique to you, with updates and all the latest information from accumulation of Status Points, to the number of Reward P
Slide 51: New Bingo Instant Games
New Bingo Instant Games • 18 new Bingo instant games • Will grow instant games revenues in the different Bingo networks • Will enrich the 888 instant games offering to over 60 games available for immediate use • New ggames includes 15 video-slots,, 2 scratch-cards,, and 1 Roulette • All games are we
Slide 52: New Roulette and Scratch Cards Games for Bingo
New Roulette and Scratch Cards Games for Bingo 51
Slide 53: New Live Betting (in Running) Application
New Live Betting (in Running) Application • Supporting wide variety of events and markets around the world • Already increased the football in running turnover in over 50% • Tennis in running turnover already exceeding 75% 52
Slide 54: Games in Sport
Games in Sport • A website with Flash games for casual gaming • Over 30 new games with ‘play for fun’ and money play versions • No download required • Customized homepage 53
Slide 55: 888Football Pools
888Football Pools • Official UK pool of the premier league • Include 3 games offering – premier 10, classic pools and Soccer 7 54
Slide 56: Trust-e – First Gaming Partner
Trust-e – First Gaming Partner 55
Slide 57: New local payment methods
New local payment methods • Allowing members from more then 23 countries to deposit using localized familiar payment methods that is bypassing the cards schemes challenges • New payment methods that are included • Australia (POLi), New Zeeland (POLi) – (coming weeks) , UK (POLi) • Netherland (iDeal)
Slide 58: Regulation
Results for the six months Regulation ended 30 June 2008 57
Slide 59: Regulation
Regulation • EU • Move towards liberalization: Spain, Sweden, Greece, Denmark, Belgium • Regulation under way: Italy, France • Rest of the World • WTO – Settlement pending • Other countries in LATAM, APAC • US • Federal ede a legislation eg s at o initiatives t at es • State – local moves 58
Slide 60: Future Plans
Results for the six months Future Plans ended 30 June 2008 59
Slide 61: Our B2C focus
Our B2C focus • Further product expansion: • Focusing ocus g oon cchoice o ce • Lighter side of gaming • Innovative features • New Casino and Bingo brands for new segments • Emphasis p as s o on tthe e soc social a eelement e e toof ga gaming g • Unique Casino, Bingo and Poker campaigns • Focus on r
Slide 62: Our B2B focus
Our B2B focus • Continue the separation to a stand alone B2B business • Grow the business: • Cross sell to existing licensees – new products/services • Sign new licensees • Proactively help licensees with growing their business • Take a significant g share in the newly y regulated g markets • Focus
Slide 63: Product high-level plans
Product high-level plans • Casino, Bingo and Games: • Focus on choice and varietyy • Tens of new and localized games • New areas: softer games, scratch cards, enhanced live gaming • Poker: • New features and games g • Innovative concepts to be launched in the coming quarters • Sport - continued plat
Slide 64: Additional focus areas
Additional focus areas • M&A: • Focus on executingg deals in the comingg qquarters • Main areas: • B2B enhancing acquisitions • B2C segmental presence enhancing acquisitions • At least one deal in advanced stages • Responsible gaming: • Continue leading the industry in proactive responsibility • Exp
Slide 65: Summary and Q&A
Summary Results for the six and months Q&A ended 30 June 2008 64
Slide 66: Summary
Summary • Solid performance given currency and financial crisis impacts • Encouraging 7% growth Q-on-Q Q on Q • Reassuring summer trading • Proven, market validated dual B2C-B2B strategy • Rich product roadmap • Extensive B2C marketing and CRM plans • Strong B2B performance with deep pipeline • Vari