The latest pickup by the operator of the MGM Grand and other properties reported a hit to its profits in the fourth quarter amid higher costs connected to running its online casino and sports betting sites.
MGM Resorts' prize 2022 Swedish acquisition, LeoVegas AB, saw its fourth-quarter adjusted EBITDA drop by 77% year-over-year (YoY) to €3.7 million ($4.0 million) as compared to €11.6 million ($12.4 million) registered in Q4 2021.
As part of its Q4 earnings report released this week, LeoVegas also reported that Q4 revenue rose to €99.5 million ($106.4 million), a negligible YoY gain of 1%. More significantly, the operator registered an operating loss of €2.5 million ($2.7 million) in the fourth quarter as compared to a profit of €6.1 million ($6.5 million) in the same period a year ago.
Correspondingly, the Stockholm-founded company posted a net Q4 loss of €7.8 million ($8.3 million) compared to a profit of €4.2 million ($4.5 million) in the final quarter of 2021. Gross profits were virtually unchanged YoY, rising from €65.3 million ($70 million) to €65.8 million ($70.3 million).
Sweden, UK, and Spain register healthy gains
The best news for LeoVegas came in the form of a healthy increase in net gaming revenue, (NGR), which is equivalent to gross gaming revenue but with player bonus payments and taxes deducted.
"In the Nordic countries, NGR increased 9% year-on-year," the LeoVegas earnings report stated. "Sweden posted another good quarter driven by new records for the brand Expekt.
"In the Rest of Europe, NGR increased 4% year-on-year. The UK and Spain posted healthy growth during the period while Germany continued to negatively impact the region’s sales."
A costly quarter
The quarterly earnings results posted by LeoVegas this week marked the operator's first such report after being folded into the MGM group that purchased the European outfit for €607 million last year.
LeoVegas attributed the disappointing quarterly loss to a €5.9 million ($6.3 million) year-over-year (YoY) rise in operating expenses which jumped to €16.5 million ($17.7 million), a substantial 56% increase from the €10.6 million ($11.3 million) in costs recorded in the same period in 2021.
Personnel costs soared by €3.7 million ($4.0 million), a YoY increase of 26% that accounted for the lion's share of the overall quarterly loss while gaming taxes rose by €1.5 million ($1.6 million) as compared to Q4 2021. Increased YoY quarterly marketing expenses of €0.9 million ($0.96 million) also contributed to the overall Q4 loss.
MGM focused on global gains
One of the most important takeaways from MGM Resorts' year-end earnings call held earlier this month is that CEO Bill Hornbuckle made a point of ending all speculation regarding his company's rumored takeover bid for Entain.
And although BetMGM, a 50/50 joint venture between MGM Resorts and Entain, remains an attractive acquisition target for MGM Resorts, Entain as a whole is no longer in play.
In his remarks to industry analysts, Hornbuckle also indicated that LeoVegas will be the principal instrument of its international expansion plans.
"While we remain highly focused on BetMGM’s business through our partnership with Entain and making sure that business continues to grow, we see great potential in LeoVegas expansion capabilities," said Hornbuckle.
"We value BetMGM, but as it comes to the rest of the world, we’re going to move forward with a different proposition."
