enlabs page q4 2019 report · enlabs, q4 2019 enlabs q4 2019 report 6 revenue total 11.2m deposits...

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ENLABS, Q4 2019

ENLABS Q4 2019 REPORT

ENLABS, Q4 2019


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ENLABS, Q4 2019


ENLABS, Q4 2019


Robert Andersson, CEO Adam Jonsson, CFO

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ENLABS, Q4 2019


This is US • Large iGaming company in the Baltics with the main

brand “OPTIBET”, largest in the Baltics

• Strong regulations provide a high barrier to entry

• Headquarters in Riga, offices in Stockholm, Tallinn,

Vilnius, Malta, Belarus and Marbella, a total of about

220 employees within the company

• Three business areas: Gaming, Media and Solutions

• Focused brand portfolio

• Own-developed technology platform

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ENLABS, Q4 2019


Media channels driving traffic

Within iGaming, so called

affiliation

Business to

Business tech

solutions

Business to

consumer gaming

operations

4

Strong diversification reduces risk

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ENLABS, Q4 2019


01. Q4 2019 REVENUE GROWTH IN FOCUS

5

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ENLABS, Q4 2019


6

Revenue Total

11.2M

Deposits

+41%Cash Converstion

100%

Adj EBITDA

3.5MAdj EBITDA margin

31%Sustainable revenue

94%

Fourth quarter• Revenues totalled EUR 11.2 million (8.9), a 25% increase.

• Gaming revenues increased 29% to EUR 10.4 million (8.0).

• Revenues from regulated markets were 94%.

• Total active customers were 41,518 (37,087), an increase of 12%.

• Deposits totalled EUR 33.7 million (23.8), a 41% increase.

• Media revenues were EUR 0.54 million (0.59), a decrease of 8%.

• Number of NDCs in Media totalled 5,040 (1,510), an increase of 234%.

• Solutions revenues decreased 14% to EUR 0.25 million (0.29).

• Adjusted EBITDA was EUR 3.48 million (2.88), adjusted EBITDA

margin was 31.1% (32.2).

• EBITDA was EUR 3.17 million (2.88), EBITDA margin was 28.4%

(32.2).

• Adjusted EPS growth of 15% to 0.045 EUR per share (0.039).

EBITDA to Op Cashflow

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ENLABS, Q4 2019


Record revenues and increased activity• Driven by growth in core business and markets.

• Strong focus on our customers continues.

• Lithuania momentum continues.

• Strong cost control remained, but profitability hit with one-off cost.

• Media declined QoQ prompting a change in strategy.

• Launched Evolution gaming in Latvia.

• Completed the belarus acquisition.

After the quarter

• NPL certified in Latvia in order to launch a second brand.

• Invested in Scout gaming.

• Launched Live sports stream. A first in the Baltics.

GEO. DISTRIBUTION

OF GAMING REVENUE

6% REST OF THE WORLD

94% REGULATED MARKETS

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ENLABS, Q4 2019


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FAST GROWING MARKETREDUCED RISKSSTRONG CONVERSIONDEPT FREE POSITIONHIGH CONTROLHIGH PACE IN PRODUCT

Key strengths• Best in class cash conversion (100% EBITDA to Op Cashflow).

• High barriers to entry for competitors.

• Acting in fast growing markets.

• Clear market focus.

• Diversified revenue model reduce risk.

• Peer leading amount of regulated and taxed revenue .

• Debt free with a solid cash position.

• Full control over our technology secures high margins.

• High pace in product roll-out.

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ENLABS, Q4 2019


9

02. 2020AND THE WAY FORWARD

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Organisation • In Q4 we optimised the organisation for future growth leading to

staff efficiencies.

• Last step in the “one organisation” plan.

• Resulting in a one off cost.

• Leading to resource re-allocations.

• Forward looking organisation with customer and business first mindset.

• Improved internal communication.

• Execution excellence.

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2020 key drivers• New content and games will be added to ensure continued

fast growth in core markets and ensure we have the best

customer offering.

• Roll-out live streaming in the region. A first in the Baltic.

• Launch of complimentary brands in the region.

• Launch online in Belarus.

• Focused launch of Optibet in Finland.

• M&A firepower of around 50 million EURO.

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ENLABS, Q4 2019


12

JOYCHANGEENTERTAINMENT

Communication • Key focus over the last year to put Enlabs on the “map”,

leaving Nordic leisure behind.

• This Q4 marks the crescendo of our launch plan for the Enlabs brand.

• It has resulted in a significant increase of awareness around our company.

• Easier to hire talent, and staff turnover is reduced.

• Always finding new ways of creating entertaining communication.

• Transparent and honest.

• Always staying true to our core values of Joy, Change and Entertainment.

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ENLABS, Q4 2019


New platform allows even greater customer focus

Future Oriented Progressive development languages (Typescript, GoLang), Micro service-based Architecture, Industry-standard setup (JSON, API driven), Scalable messaging (RabbitMQ)

1

Customer Oriented Simple, Omnichannel, KYC and direct Payments integration and options, efficient Casino Provider integration, Bonusing Supportive.

2

Expansion Oriented Scalable, Fast, Stable, Reliable3

Compliant Customizable, Multi-brand, Multi-language, Multi-currency, Responsible, AML, Fraud prevention

4

With constant improvements, there is much more to come13

Own technology secures high margins and organisational efficiency

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ENLABS, Q4 2019


KEY MARKETS

14

02. BALTICS AND BEYOND

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ESTONIA • Total gaming market

approx. 170 MEUR • Sixteen (16) online licenses • Gaming tax 5% • 2nd in the market

LATVIA • Total gaming market

approx. 350 MEUR • Ten (10) online licenses • Gaming tax 10% • Market leader

LITHUANIA • Total gaming market

approx. 500 MEUR • Seven (7) online licenses • Gaming tax 10% • Nr 5 in the market

• Strong regulations provide a high barriers to entry

• Fast developing, fully regulated markets

• Total gaming market estimated over 1BN EUR

• High annual compound growth rate

• Optibet obtained the first online

license in Latvia in 2008

• Strong brand recognition and the

largest player in total in the Baltics

• Regulators are active in combating

unlicensed operators

Welcome to our home

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iGaming regulation overviewMARKET CHARACTERISTICS LATVIA LITHUANIA ESTONIARegulator Gambling Supervisory Inspection

reporting to Finance MinistryGaming Control Authority, reporting to

Finance MinistryEstonian Tax and Customs Board

Market regulated since 2006 2015 2009

Licensed operator count 10 7 16

Share capital requirement € 1 400 000 € 1 158 000 € 1 000 000

License fee € 200 000 € 479 € 80 000

Required offline presence n/a 20 betting shops or 1 casino n/a

Gaming tax (base: bets – wins) 10% 10% 5%

Licensed market size (H2GC data) € 56.8 € 31.8 € 31.1M

Unlicensed market size (H2GC data) € 35.4 € 14.5 € 10.4M

PLAYER PROTECTIONSelf-exclusion registry Yes Yes Yes

Game certification Yes Yes Yes

Player funds segregation Yes Yes Yes

KYC rules Yes Yes Yes

GDPR rules Yes Yes Yes

LICENSEE RESTRICTIONSAdvertisement Prohibited Permitted with limitations Permitted with limitations

Campaigns and bonuses Significant restrictions Insignificant restrictions Insignificant restrictions

Payment options Only banks Banks and PSPs Banks and PSPs

Product offering Limited Limited Full

Minimal gambling age 18 18/21 18/21

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ENLABS, Q4 2019


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Belarus • Population: 9.5M people.

• Capital city: Minsk with 2M people, 200 km from Vilnius.

• Official languages: Belarusian & Russian.

• Belarus is a land dominated market with iGaming.

emerging only very recently. iGaming market share

is <10% from total gambling.

• iGaming is heavily focused on sports betting.

Casino offering is close to non-existent.

• Online regulation came into force on April 1, 2019.

FUTURE GROWTH MARKETS

Finland • Unregulated with no regulation expected.

• Finns rank fourth among the world’s biggest

gamblers.

• Population: 5.5M.

• Internet penetration: 93%.

• Mobile usage: 55%.

• Facebook users: 2.8M.

• Gaming market: Approx. 1,760 MEUR.

Ukraine • Monitor development.

• Search for potential M&A.

• Large Market opportunity 2021 and beyond.

• High barriers to entry

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ENLABS, Q4 2019


03. Q4 2019 TRENDS IN EACH BUSINESS AREA

18

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ENLABS, Q4 2019


19De

posi

ts, M

EUR

0

8

16

24

32

40

Activ

e cu

stom

ers

0

11,250

22,500

33,750

45,000

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Active customers Deposits, MEUR

• Betting margin lower than expected. However we see that January is showing “back on track”.

• Maintained momentum with solid performance across all products.

• Casino leading the way with 14% increase from previous quarter.

• Active customers over 40K for the first time.

• The trend for deposits is clearly positive.

Activity to the next level

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ENLABS, Q4 2019


20N

DC

0

1200

2400

3600

4800

6000

Reve

nue,

MEU

R

0

0.2

0.4

0.6

0.8

1

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Revenue, MEUR NDC

• Impressive quarter in terms of NDC’s

• However, revenue did not follow suit.

• UK and Sweden has historically been the majority of revenue.

• Moving away from investing in paid media and Nordics as a market

• Focus on core Markets and key brands and organic traffic

Analyze, adapt, execute

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ENLABS, Q4 2019


21EB

ITDA

mar

gin,

%

0

10

20

30

40

50

Reve

nue,

MEU

R

0

0.1

0.2

0.3

0.4

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Revenue, MEUR EBITDA margin, %

• Enlabs new platform, NPL, was certified in Latvia.

• Ongoing with a first potential customer have already taken place and the

plan is to go live in 2020.

• Stable revenue, corresponding to 2% of Group total.

• As a result of efficient processes and lean team Solutions is performing

high EBITDA margin of 46%.

Business as usual

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ENLABS, Q4 2019


04. Q4 2019FINANCIAL UPDATE

22

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Organic revenue growth: • +11% QoQ• +25% YoY

Adj EBITDA development: • +12% QoQ• +21% YoY

adj EBITDA margin development: • 31% in Q4’19 vs 31% in Q3’19• 31% in Q4’19 vs 32% in Q4’18

Focus on growthCONSOLIDATED PERFORMANCE

-0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

MEU

R

0

1

2

3

4

5

6

7

8

9

10

11

12

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Revenue EBITDA adj EBITDA marginadj EBITDA

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ENLABS, Q4 2019


• EBITDA to Net profit transition: 6 percentage points. • Reasonable amortization charge, no interest expenses,

minimal FX exposure, favorable corporate taxation.

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• 11% adj EPS growth QoQ & 15% YoY. • ’19 vs '18 32% annualized EPS growth. • No share dilution.

NET PROFIT VS EBITDA MARGIN

0%

10%

20%

30%

40%

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

adj EBITDA margin adj Net profit margin

33

25

3532

3033

32 3131

252628

25212324 25

31

26

31

Smooth transition to net profit

adj EPS DYNAMICS

EUR

0

0.013

0.025

0.038

0.05

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

EPS LINEAR (adj EPS)adj EPS

+32% Annual

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ENLABS, Q4 2019


Solid cash conversion

25

Q4 2019

EBITDA 3.2 MEUR 116% Operating cash flow 3.7 MEUR Net profit 2.5 MEUR Free cash flow 2.9 MEUR115%

2019

EBITDA 11.6 MEUR 100% Operating cash flow 11.6 MEUR Net profit 9.4 MEUR Free cash flow 7.6 MEUR80%

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ENLABS, Q4 2019


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COST DYNAMICS

0%

25%

50%

75%

100%

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

31%31%31%31%32%33%30%32%35%33%

19%17%18%17%17%17%17%

18%15%18%

10%9%10%10%9%9%9%

8%8%8%

19%17%16%16%15%14%

14%13%12%10%

12%15%17%17%15%16%18%18%

15%20%

9%10%10%9%11%11%12%11%15%11%

Other expenses Personnel costs Marketing expenses Gaming tax Cost of sales adj EBITDA

• Strong adj EBITDA margin retained.

• +1.5% in Marketing – growth investment.

• +1.8% in Cost of sales – investments in exclusive

games.

• -3.2% in Personnel costs – scalability effect.

• -0.6% in Other costs – scalability effect.

Stable profit margins

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ENLABS, Q4 2019


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GAMING PERFORMANCE

0%

5%

10%

15%

20%

25%

30%

35%

MEU

R

0

2.75

5.5

8.25

11

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Revenue adj EBITDA adj EBITDA marginSustainable Revenue

• 100% organic development.

• Revenue up 13% QoQ & 29% YoY.

• adj EBITDA up 16% QoQ & 36% YoY.

• 33% EBITDA margin.

• 94% sustainable revenues.

• All products contributing to growth.

• Lower sportsbook margin than expected.

High performance across all products

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ENLABS, Q4 2019


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GAMING ACTIVE CUSTOMERS & DEPOSITS

DEPO

SITS

, MEU

R

0

7

14

21

28

35

ACTI

VE C

USTO

MER

S

0

10,500

21,000

31,500

42,000

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Active customers Deposits

MONTHLY REVENUE PER CUSTOMER, EUR

0

25

50

75

100

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

• Active customer = depositing customer.

• Active customer count increased 10% QoQ & grew 11% YoY.

• Deposit amount increased 13% QoQ & 41% YoY.

• Monthly revenue per customer 84 EUR, +16% YoY.

Record activity

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ENLABS, Q4 2019


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MEDIA PERFORMANCE

NDC

CO

UNT

0

1,375

2,750

4,125

5,500

MEU

R

-0.1

0.2

0.5

0.7

1.0

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Revenue EBITDA NDC

• Media revenue accounts for 5% of Group total.

• 10% QoQ decrease in Revenue & -14% EBITDA margin.

• NDC count continues to grow +42% QoQ & 234% YoY.

• Challenging market climate affecting legacy assets.

• New strategy in place to increase profitability.

Revised strategy

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ENLABS, Q4 2019


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SOLUTIONS PERFORMANCE

EBIT

DA m

argi

n

0%

13%

25%

38%

50%

MEU

R

0

0.1

0.2

0.3

0.4

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Revenue EBITDA EBITDA margin

• Solutions revenue accounts for

2% of Group total.

• 7% QoQ decrease in Revenue & 2% QoQ.

increase in EBITDA with 46% margin.

• Continue stable business segment with

synergies.

Solid profitability

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ENLABS, Q4 2019


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0

12.5

25

37.5

50

Assets

19.4

2.93.3

21.6

Intangible assetsProperty, plant & equipmentTrade & other current receivablesCash

0

12.5

25

37.5

50

Equity & liabilities

4.80.91.4

40

EquityDeferred tax liabilityPlayer depositsTrade payables & other liabilities

STATEMENT OF FINANCIAL POSITION AS AT THE END OF 2019

• 19.4M EUR cash balance, 41% of total assets.

• Intangible assets consist of Brands & domains,

gaming platform, gaming licenses, player

databases and goodwill.

• No interest-bearing liabilities.

• Equity ratio 85%.

Clean balance sheet

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05. Q4 2019CLOSING NOTES

Main objectives: In 2020 NLAB shall deliver at least MEUR 20 EBITDA and an Earnings Per Share (EPS) growth during the period of at least 40% annually through a combination of organic growth and acquisitions.

Value creating: EPS growth of at least 40% annually. Profitability: EBITDA of at least MEUR 20 in 2020 with 20-30 EBITDA-margin.

Growth: Organic growth of at least 25% annually in combination with smart acquisitions.

Financial leverage: Net debt/EBITDA shall not exceed a ratio of 1.5.

Hitting new heights

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1. Drive organic growth of current and new products.

2. Geographical expansion in fast growing markets.

3. Actively partake in consolidation.

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ENLABS, Q4 2019


Summary

•High barriers to entry for competitors.

•Debt free with a solid cash position.

•Strong cash conversion.

•Strong cost control has remained.

•Full control over our technology secures high margins.

Going forward

•Build a world class company and culture.

• Increase group synergies.

•Focus on further growth.

•Deliver on our 2020 targets.

34

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ENLABS, Q4 2019


enlabs page q4 2019 report · enlabs, q4 2019 enlabs q4 2019 report 6 revenue total 11.2m deposits...

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