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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
Robert Andersson, CEO Adam Jonsson, CFO
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
01. Q4 2019 REVENUE GROWTH IN FOCUS
5
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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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
ENLABS Q4 2019 REPORT
9
02. 2020AND THE WAY FORWARD
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ENLABS Q4 2019 REPORT
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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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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
11
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
KEY MARKETS
14
02. BALTICS AND BEYOND
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
15
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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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
16
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
ENLABS Q4 2019 REPORT
17
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
ENLABS Q4 2019 REPORT
03. Q4 2019 TRENDS IN EACH BUSINESS AREA
18
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
04. Q4 2019FINANCIAL UPDATE
22
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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
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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
ENLABS Q4 2019 REPORT
• EBITDA to Net profit transition: 6 percentage points. • Reasonable amortization charge, no interest expenses,
minimal FX exposure, favorable corporate taxation.
24
• 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
ENLABS Q4 2019 REPORT
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
ENLABS Q4 2019 REPORT
26
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
ENLABS Q4 2019 REPORT
27
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
ENLABS Q4 2019 REPORT
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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
ENLABS Q4 2019 REPORT
29
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
ENLABS Q4 2019 REPORT
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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
ENLABS Q4 2019 REPORT
31
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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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
32
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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ENLABS, Q4 2019
ENLABS Q4 2019 REPORT
33
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
ENLABS Q4 2019 REPORT
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 REPORT
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