MRG sees strong organic growth complemented by acquisitions in Q3

MRG sees strong organic growth complemented by acquisitions in Q3

Friday, October 26, 2018 Posted by News Team
Finance
Sportsbook revenue grew 439% during the quarter

MRG has reported a 50.9% increase in revenue for the third quarter of 2018, described by CEO Per Norman as due to strong brands, an attractive product offering and effective customer communication.

Revenue grew to SEK445.2m (€42.8m), with Western Europe established as the most lucrative region, contributing SEK178.9m of the total. The Nordics, previously the company’s key territory, generated a further SEK160.7m. 

Regulated markets were responsible for 17.1% of total revenue, though by markets in which MRG pays VAT or makes provisions for betting duty accounted for the largest share of revenue (35.2%).

Markets in the process of becoming regulated generated 24.5% of revenue, with other markets making up the remaining 23.1%. 

While the vast majority of MRG revenue still comes from its casino brands, it has seen sportsbook make an increasingly significant contribution, albeit from a low base. The vertical saw revenue grow 439% year-on-year, and it now accounts for almost 10% of group revenue. During the quarter MRG secured sports betting licences in Denmark and Ireland, for the Redbet brand. 

Customer deposits for the quarter grew 72.3% year-on-year to SEK1.48bn, while depositing customers were up 47.3% to 193,273 people. New depositing customers rose by 38.9% to 73,174, and returning depositing customer numbers were up 52.9% to 120,099.

Costs of services sold rose sharply, up 65.6% to SEK155.1m, with marketing expenses growing to SEK129.6m. Personnel costs were up at SEK57.3m, due to the consolidation of Evoke Gaming and 11.lv, the operators acquired by MRG earlier in 2018. The integration of Evoke was completed during the quarter.

Other operating expenses, including a fine for illegal activity in the Netherlands, grew to SEK52.9m.

Earnings before interest, tax, depreciation and amortisation for the quarter climbed 49.4% to SEK75.5m, which the operator credited to strong revenue growth and lower relative marketing costs.

Once tax, depreciation, amortisation and other finance-related costs had been subtracted, MRG posted a profit of SEK40.4m, up 31.9% year-on-year. 

For the first nine months of 2018, revenue was up 44.2% to SEK1.24bn.

Looking ahead, chief executive Norman said the operator would deliver on its 2018 guidance by delivering revenue growth of at least 40%, with an EBITDA margin of around 15%.

“We are also confident in our financial targets which entail that, by 2020, we are expected to achieve annual revenue growth of 25 per cent and an EBITDA margin of 15 per cent,” he said. 

“MRG is experiencing strong growth momentum,” Norman continued. “We have highly skilled employees and solid management teams that are driving the development of new products and are continuously improving the user experience. 

"This, combined with our strong brands, effective marketing and cost focus, generates our growth and improved profitability.”

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