Q2 2016

GUSTAF HAGMAN

VIKTOR FRITZÉN

Group CEO and Co-founder

Group CFO

2

Presenting today

The greatest gaming experience

Number one in mobile gaming

3

Vision

4

LeoVegas’ Agenda Today

•  Quarterly report – highlights •  Events •  Business KPIs •  Financials •  Targets & Summary •  Q&A

Quarterly report

Highlights and events  

5

Revenue since start

-

 5.0

 10.0

 15.0

 20.0

 25.0

 30.0

 35.0

2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

31.0

MEUR

Revenue:

31.0 MEUR +12.5 MEUR  

EBITDA:

-2.5 MEUR -7.9 % margin

 

Deposits:

100.6 MEUR +79 %

 

Organic growth:

+67 %  

Mobile deposits:

65 %      

7

Q2 2016 Highlights

8

“LeoVegas’ strategy is to prioritise growth. In connection with the launch of LeoVegas Sport, we will increase our investments in marketing and act upon the new opportunities during this major year in the world of sport. This venture represents an exciting growth opportunity and the addition of new customers, even though we will likely see a decrease in profitability in the near term. Our investments in LeoVegas Sport and Live Casino should be viewed from a long-term perspective.” – LeoVegas Q1 2016 report

From Q1 report

9

  Big increase of new customers, almost double the amount from last quarter – 109 718!

  Launch of LeoVegas Sport

  Launch of LeoVegas Live Casino

  Won 4 industry awards

Events and highlights – second quarter

Revenue:

31.0 MEUR +12.5 MEUR  

Number of new depositing customers:

109 718 +235%

 

10

Q2 2016 Highlights – Customer Growth

0

20,000

40,000

60,000

80,000

100,000

120,000

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

New depositing customers (NDCs)

11

Introduction – LeoVegas Sport and LeoVegas Live Casino

12

  Sports betting is a 5.9 bn Euro market that is growing with high mobile penetration; 43% in Europe 2015

  LeoVegas Sport successfully launched with the aim to take and win the mobile position in Sport

  Strong platform for further growth and cross-selling

  LeoVegas Sport has been well received by both new and existing customers

LeoVegas Sport

FINAL:

5000+ Customers placed a bet

 

Number of depositing customers:

176 615 +147 %

 

% of NGR before bonus costs

4.6%  

80% Of NGR before bonus costs on Mobile  

13

EURO 2016 Highlights

14

  We are now live with the first version of LeoVegas Sport, and we are already working on accelerating our strengths:

  Speed – even faster loading than today

  Interface – simplified navigation

  Personalization – offers and content based on customers’ preferences

Development of LeoVegas Sport

15

  The Live casino market is the fastest growing segment within online gambling*

  In Europe this market represents 24% of the total online casino market*

  Broadest live casino offering in the industry

  Live streams from both studios and land-based casinos

LeoVegas Live Casino

*H2 Gambling Capital

16

  We will continue to add more suppliers, 6 today: Evolution Gaming, NetEnt, Extreme Live Gaming, Portomaso Gaming, Ezugi and Authentic Gaming

  In Q2 the Live Casino product area had a 134% growth compared to last year and 48% compared to Q1

LeoVegas Live Casino

*H2 Gambling Capital

17

From Casino to a seamless experience in Casino, Live Casino and Sports!

18

LeoVegas’ offering is based on gaming as a fun and attractive form of entertainment. Some people are at risk of developing gaming-related problems. LeoVegas takes this very seriously. Responsible gaming is a fundamental principle in all we do.

  Responsible gaming training and certification for all employees.

  Sophisticated player tools and measures for limiting deposits, time, wagering, losses etc. Information and tests for both players and relatives. Self exclusion measures and forced exclusion by us when gaming related problems discovered.

  Company culture and attitude

A Continues Focus on Responsible Gaming

19

compared to July last year

Current Trading – Start of Q3

12.8 MEUR

68 %

NGR in July

an increased of

Business KPI’s

20

•  New depositing customers (NDCs) reached an all time high, driven by increased marketing in combination with the launch of LeoVegas Sport

•  The mix of NDCs in Q2’16 is quite different from the mix in the past as LeoVegas has attracted a much broader set of customers, which includes Sports customers as well as new types of Casino customers that in general have lower life time value (LTV) but have also been cheaper to acquire (lower CAC)

•  The returning customer base (RDCs) continued to grow on trend in Q2’16

•  The number of active

customers, which includes customers making bets only with bonus money, increased 12% from the elevated level in Q1’16

Depositing customers, new and returning Active customers and depositing customers COMMENTS

21

Customer base

0

20,000

40,000

60,000

80,000

100,000

120,000

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

New depositing customers (NDCs)

Returning depositing customers (RDCs)

0

100,000

200,000

300,000

400,000

500,000

600,000

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Actives customers Returning depositing customers (RDCs) New depositing customers (NDCs)

109 718

66 917

540 276

•  Average deposit per depositing customer decreased by 14% compared to the first quarter

•  Average NGR per depositing customer decreased by 28%

•  The decrease in average deposit per customer was mainly driven by the larger proportion of new customers in the quarter, which on average deposit less, and due to the change in mix of NDCs in the quarter

•  The larger decrease in NGR compared to deposits was driven by bonus costs for Sports in connection with the launch and on due to an increase in the mix of new Casino customers

-

 50

 100

 150

 200

 250

 300

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1

NGR per depositing customer

22

Average spend per customer

COMMENTS Deposits EUR per depositing customer NGR EUR per depositing customer

-

 100

 200

 300

 400

 500

 600

 700

 800

 900

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Deposits per depositing customer

-

 50

 100

 150

 200

 250

 300

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

NGR per depositing customer

•  Marketing spend increased by 50% from Q1’16 to 18.7 MEUR in Q2’16

•  During the same period NDCs increased by 80%

•  The increase in marketing was a strategic choice to capitalize on the long-term opportunity presented by the launch of LeoVegas Sports in combination with the trying out new marketing channels

•  There were material increases both in LeoVegas own marketing and marketing by affiliates

•  The launch of the Sports vertical has opened up the opportunity for LeoVegas to work with many more affiliates than previously, which contributed to the increase in marketing in the quarter

•  Despite the largest increase in marketing in LeoVegas history the Customer Acquisition Cost (CAC) reached its lowest point ever

23

Marketing and customer acquisition cost

COMMENTS Marketing spend and NDCs indexed to Q1’15 in relation to marketing per NDCs

 150

 200

 250

 300

 350

-

 50

 100

 150

 200

 250

 300

 350

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Marketing Indexed to Q1'15

NDCs Indexed to Q1'15

Marketing / NDC

+50%

+80%

-17%

109 718

18.7 MEUR

•  The Marketing to Revenue ratio is the key determinant of the margin development at LeoVegas

•  The Marketing to Revenue ratio in Q2’16 of 60% was significantly higher than in previous quarters and hence the EBIT margin decreased to -9.0%

•  The Marketing to Revenue ratio increased 18.0 percentage points from Q1’16, while the adjusted EBIT margin decreased by 21.5 percentage points; the difference between the two of 3.5 percentage points comes from a mix of higher personnel expenses, opex and slightly lower gross margin

24

Marketing spend and margin

COMMENTS Marketing to revenue % (negative scale) and Adjusted* EBIT margin %

*Adjusted for IPO-related expenses in Q4’15 and Q1’16

-70.0%

-65.0%

-60.0%

-55.0%

-50.0%

-45.0%

-40.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16

Adjusted EBIT-margin, % (LHS) Marketing expenses, % of revenues (RHS)

25

•  In Q2 the UK, Rest of Europe and Rest of World all increased their proportions of total deposits somewhat, while the Nordics decreased although all regions saw strong sequential growth

•  The NGR mix changed much more dramatically

•  The UK saw its share of NGR decrease from 18% to 13%, this was driven by a low gaming margin in the quarter in combination with high bonus costs associated with a very high level of customer acquisition both in Sports and Casino

•  The deposit mix, however, is a better gauge of the development of the regions on a more fundamental level

Regional split

COMMENTS

Nordics 62%

United Kingdom

19%

Rest of Europe

11%

Rest of World

8%

Deposits 2016-Q2

Nordics 66%

United Kingdom

18%

Rest of Europe

9%

Rest of World

7%

Deposits 2016-Q1

Nordics 62%

United Kingdom

13%

Rest of Europe

13%

Rest of World

12%

NGR 2016-Q2

Nordics 60%

United Kingdom

18%

Rest of Europe

10%

Rest of World

12%

NGR 2016-Q1

26

100

MILESTONE

MEUR IN DEPOSITS Q2 2016

•  Total deposits in the quarter surpassed 100 MEUR for the first time

•  Deposits in Q2’16 grew by 25% compared to the Q1’16, which is the fastest growth rate in six quarters on a sequential basis

•  On an annual basis deposits in Q2’16 for the group grew 79%

•  Growth rates per regions: •  Nordics 52% •  UK 97% •  Rest of Europe 299% •  Rest of World 199%

•  Deposits increased by 44.3 MEUR of which the regions accounted for:

•  Nordics 21.5 MEUR •  UK 9.2 MEUR •  Rest of Europe 8.2 MEUR •  Rest of World 5.4 MEUR

•  All markets grew deposits in absolute terms at a faster pace than in Q1’16 on a year on year basis

27

Deposits

COMMENTS Deposits MEUR Deposits % of total

-

 10.0

 20.0

 30.0

 40.0

 50.0

 60.0

 70.0

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Nordics UK Rest of Europe Rest of World

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Rest of World Rest of Europe UK Nordics

8%

11%

19%

62%

•  Deposits from mobile devices continued to grow its share of total deposits in the second quarter of 2016

•  Mobile devices accounted for 65% of deposits in the quarter

•  Deposits from mobile devices grew 112% year on year, while the same for computers grew 38%

50%

52%

54%

56%

58%

60%

62%

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1

Mobile deposits as a % of total

28

Mobile share of deposits

COMMENTS

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Mobile deposits as a % of total

29

FINANCIALS

0.8

31.0

“Underlying” NGR

30

•  In the second quarter there was an unusually high level of corrections, which mainly consist of removing transactions that are not in agreement with LeoVegas’ terms and conditions

•  Corrections mainly consists of multiple player accounts and situations where customers have tried to engage in bonus abuse

•  Adding back corrections to NGR gives a more accurate picture of NGR in the quarter, since it in effect reverses the transactions that aren’t permitted as if they had not happened

•  Movements in local jackpots and other movements combined added 0.3 MEUR to revenue

From NGR to Revenue

COMMENTS MEUR

 25.0

 26.0

 27.0

 28.0

 29.0

 30.0

 31.0

NGR Corrections Movements in local Jackpots

Other movements Revenue

29.8

-0.1

0.4

 25.0

 25.5

 26.0

 26.5

 27.0

 27.5

 28.0

 28.5

 29.0

 29.5

 30.0

Revenue in constant currency

Currency movement Reported Revenue

31.1 31.0

31

•  Revenue in constant currency would have been 31.1 MEUR

•  Negative currency effect from strengthening euro was 135 KEUR, decreasing revenue by 0.4%

Constant Currency Revenue

COMMENTS MEUR

-0.1

 25.0

 26.0

 27.0

 28.0

 29.0

 30.0

 31.0

 32.0

Revenue in constant currency

Currency movement Reported Revenue

•  In Q2’16 EBITDA was -2.5 MEUR, representing a -7.9% margin

•  The decrease in EBITDA is dominated by higher marketing spend in relation to revenue

•  The higher marketing level was primarily driven higher spend both in direct marketing and in affiliates marketing in connection with the Launch of LeoVegas Sport and new marketing opportunities

•  Cost of sales increased sequentially by 0.7 percentage points due to a change in mix in revenue

•  Personnel expenses increased as LeoVegas increased staff for the launch of LeoVegas Sport and Live Casino

•  The relative increase in opex was also mainly driven by the launch of LeoVegas Sport and Live Casino

32

P&L per quarter adjusted

COMMENTS P&L MEUR adjusted* P&L ratios adjusted*

- 0.5

- 2.5

 9.1  10.8  11.9

 13.3

 12.5  18.7  1.4

 1.8

 2.7

 3.1  2.9

 3.6

 1.4

 1.8

 2.2

 2.4  3.3

 3.7

 3.8

 4.5

 4.7

 5.6

 6.9

 7.4

- 5.0

-

 5.0

 10.0

 15.0

 20.0

 25.0

 30.0

 35.0

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA

1.0%

-2.6%

4.9% 6.7%

13.5%

-7.9%

57.4% 58.6% 52.6% 50.9%

42.3%

60.4%

8.8% 9.9%

12.0% 11.8% 9.9%

11.7%

8.8% 9.6% 9.7% 9.1%

11.0% 11.9%

24.0% 24.5% 20.7% 21.6% 23.2%

23.9%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA

*Adjusted for IPO-related expenses in Q4’15 and Q1’16

33

•  The main item on the asset side is cash

•  Current assets are dominated by receivables at payment service providers

•  Intangible assets consist of capitalized development costs

•  On the equity and liabilities side equity is the largest item

•  Payables and accruals decreased compared to the first quarter as payables to suppliers decreased materially, which was expected

Balance sheet

Balance sheet total 52.2 MEUR

COMMENTS Assets MEUR 30 June 2016 Equity and liabilities MEUR 30 June 2016

Cash and cash

equivalents,  39.2

Current assets,  7.1

Property, plant and

equipment,  1.1 Intangible

assets,  4.9

Equity,  32.0

Payables and

accruals,  16.1

Other current

liabilities,  3.3

Other liabilities,  

0.9

 30.2

 -2.5  0.2

 -2.5  -0.4 -0.8

 15.4

 -0.4

 39.2

-

 5.0

 10.0

 15.0

 20.0

 25.0

 30.0

 35.0

 40.0

Cash and cash equivalents at beginning of

period

EBITDA Adjustments for non-cash

items

Change in working capital

Investments in tangible assets

Investments in intangible

assets

Net proceeds from share

issue

Effects from exchage rate movements

Cash and cash equivalents at end of period

Cash flow from operating activities -4.7 MEUR

Cash flow from investing activities -1.2 MEUR

34

Cash flow

•  Cash increased by 9.0 MEUR in the quarter

•  Cash flow from operating activities decreased by the EBITDA result and an anticipated negative movement in working capital

•  Investing cash flow mainly consisted of capitalized development costs and investments in new office space

•  The net proceeds from the capital raise during the IPO were received in the quarter and increased cash by 15.4 MEUR

COMMENTS Cash flow MEUR Q2 2016

Total increase in cash 9.0 MEUR

35

Targets & Summary

  LeoVegas targets to reach EUR 300 million in revenue by 2018   Long-term organic growth above online gaming market

  LeoVegas targets to reach an EBITDA margin of approximately 15% in 2018   Long-term at least 15% EBITDA margin assuming 100% regulated markets

  LeoVegas dividend policy is to distribute a minimum of 50% of net profit over time   No dividend in 2016

36

Financial targets

Organic growth of 67% and EBITDA of -2.5 MEUR

Launch of two new product verticals – LeoVegas Sport and LeoVegas Live Casino

  Strong growth in new customers adding around 110 000 new depositing customers Great start to Q3, July NGR of 12.8 MEUR, 68% growth

37

Summary Q2 2016

Q&A

38

Q&A