Earnings Call: H2 2020

Mar 18, 2021

Welcome to the AT and T Holdings Full Year Results Presentation. I will hand you over to Brian Mattingly, Chairman of AT and T. Brian, please go ahead. Thank you, Bertie. Good morning, everybody, and thanks for joining us for the 888's 2020 annual results I'm Brian Mattingly, the Chairman of 888. And I'm joined this morning by John Mendelsohn, our Incoming Chair Ittai Posner, our CEO and Yarif Dafna, our CFO. It gives me enormous pleasure to join this call where Ittai and Yaref will outline what a fantastic year for 888 2020 was and how well the company is positioned for the future. It is my 15th and final year with 888 And it has been great to see the company grow from strength to strength over those years, navigating the changes and challenges in this exciting industry and constantly positioning the business as the digital leader. All of this has only been made possible by the amazing talent in this business. And I'd like to thank each and every one of our people for their commitment and drive to build 888 into one of the leading online betting and gaming businesses. At the end of the month, I will hand over the chair to John Mendelson. Having spent several months working together to ensure a smooth handover, I couldn't be more pleased with the transition, and I couldn't be more confident that with John, the company is in great hands to continue striving. And on that, I would now like to hand you over to John. Thank you, Brian, and good morning, everyone. I'm John Mendelson. As Brian said, I'll be taking over as Chair at the end of the month. This is such an exciting time for the industry With huge new market opportunities emerging and online gambling becoming a mainstream leisure activity across the world. Brian and his team have built 888 into a leading operator with our proprietary and scalable platform. I'm excited about the potential for the business to continue to expand. As Chair, I will continue to reinforce 888's ESG commitments, Supporting the long term sustainability and growth of this business as we continue to build 888 into a leading online betting and gaming operator globally. Before handing over to Ittai to run through the highlights of 2020, I'd like to extend my personal thanks to Brian for both his great achievements as Chair and for the time that we have spent together to ensure a smooth transition of responsibilities. I wish him well for the future. Over to you, Ittai. Thanks, John. And I'd also like to extend my personal thanks to Brian. We've been working together for 15 years now, And it's been fantastic to have your support and guidance as we've navigated many challenges and enjoyed many moments over the years together. On Slide 3 turning to Slide 3, I'll provide some highlights for the year And then hand over to Yariv to discuss the financials. I will then provide an outline of our progress against our strategic priorities in 2020 and our growth plans for the coming years. We will then open up for some questions. Before that before we start, We have a short video in 88 seconds to showcase what an amazing year it was for 888. That video gives a really great sense of the progress we made during 2020. And turning to slide 4, we have some highlights for the year. I joined 888 over 20 years ago and last year was definitely one of the most Amazing years for the company since I joined. Not only did we reach record revenues of 850,000,000, But we saw records across nearly all of our products and various KPIs, which leads me to strongly feel that we're in a really good shape to see continuous growth. Over the next 25 minutes, we'll expand on the factors that led to this record performance, And we will start with Yariv running through our financial highlights. Thanks, Itay, and good morning, everyone. Thank you for joining us today. This is my first time for presenting annual results as the CFO of this company. And as Itay said, this was a record year across most metrics. While I can't take too much credit on this, I'm excited to start with such a strong performance. Turning to Slide 6. You can see the financial highlights for 2020. Revenue were up 52% to €850,000,000 With strong growth in both our B2C and B2B businesses, adjusted EBITDA increased by 69% to DKK156 1,000,000, With the margin increasing to 18.3%, supported by operating efficiency, more than offsetting higher gaming duty in the year as we continue to expand in regulated markets. Cash generation was very strong with the free cash flow significantly up to 146,000,000 This leaves us with a year end net cash position of €116,000,000 after the player balances. The dividend for the year is €0.18 With a final dividend of €0.12 represent the 2 third of our yearly dividend. I will expand on the driver behind the strong performance over the next slides. Slide 7, you can see that our growth in 2020 was broad based across our product. Casino revenue were up 63% to $587,000,000 representing $69,000,000 of Group revenues. It is important to note that this is casino as a product and therefore includes also revenue from casino game within our sport and poker brands. Moving to Sport. Sport is our 2nd revenue contributor product, representing 14% of revenues. 2020 was transformational year for sports in which we brought the sport platform in house. Revenue were flat in the first half, but with the return of major sporting event in the second half, we saw significant growth At healthy margin, resulting in growth of 36% for the full year. Now poker. Poker is a great product for us. While it represents only 7% of our revenue, it has much bigger contribution Cross sell to Casino and Sports. Rocket revenue were up 48% to 63,000,000 We saw temporary jump during April May, which was stabilized in June Before seeing structural improvement in the second half, in which we benefited from the Poker 8 launch and the associated marketing campaigns. Bingo revenue, which is now about 5% of revenue, were 10% higher or 5% on a like for like basis if we consider the acquisition of Jet Bingo in March 2019. Having said that, given our increased focus on other product and the lower growth outlook for Bingo. We reassessed the carrying value of our Bingo asset and took an impairment charge of approximately EUR 80,000,000 within the financial of 2020. Moving to B2B. B2B revenue were up 19% to 35,000,000 This growth came from both our B2B Bingo and U. S. B2B Revenues. We are excited about the prospect of our U. S. B2B business Having signed a multiyear extension to the flagship World Series of Poker Agreement that will be rolled out to further states in 2021. So to summarize, overall revenue were up 52%, 19% growth in the B2B and 53% in the B2C, With all our businesses performing well. Slide 8. You can see on the right a clear long term track record of double digit growth. The company is positioned well to become a leader in an attractive, large and growing market and has demonstrated the ability to continuously grow through the rapid evolution that we have seen in the industry. On the left hand side, you can see strong growth in new customer across the product range. This growth is a key indicator of our future growth. Slide 9. You can see the diversification of the business from geographic perspective. 1 of our key goal is build the business to be one of the leading regulated online betting and gaming businesses, we made a good progress in 2020 with 58% Growth in our regulated revenue. This was mainly driven by our strong customer acquisition and the success Revenue has been increasing steadily over the years. We have grown our business in this market and more countries Have implemented regulatory and taxation regime. On the right hand side, you can see the revenue from geographic perspective. The U. K. Remained the most important market with 39% of revenue, following growth of 63% in 2020. Italy revenue were up 69% to €87,000,000 representing more than 10% of group revenue for the first time. There are no other countries that contribute more than 10% of revenue, but we enjoy strong diversified growth across a wide range of regulated market, Including Romania, Sweden and Portugal, as we continue to drive market share gains with our product leadership strategy. Moving to Slide 10. I will walk you through how we convert our revenue into adjusted EBITDA. Our gross profit represent the revenue less variable cost as Gaming Duty and taxes, royalty and rev share to a third party, which would be mainly game providers and payment Which would be mainly game providers and payment costs. You can see that our gross margin dropped by 1% to 66.2%, reflecting an increase in the gaming tax ratio. Marketing. Marketing is the biggest investment we make as a company. We invested in 2020, euros 237,000,000 in marketing using our big data and marketing expertise to drive Efficient and effective customer acquisition across brand and countries. As you can see, our marketing ratio remained roughly Stable at 27.9 percent despite an increase of 42% in customer acquisition. Contribution. We measure the contribution as gross profit less marketing cost. We are presenting this KPI in order to enable further analysis of our result. The contribution margin went down slightly to 38.3%, affected by the small decline in gross margin bundled with a small increase in the marketing ratio. Below contribution, we have all our operating costs, which are more fixed in nature and reflect mainly our people, professional services and technology costs that enable us to operate our business. We saw a nice operational leverage in 2020 with operating expenses as a percentage of revenue Declined by 3.5% to 20% despite an absolute increase of 29% in the operating expenses. Slide 11, you can see the output of the revenue and cost line and how we convert our revenue into EBITDA. So revenue were up 52% with gross margin decreasing slightly. We saw 49% increase in gross profit. Marketing investment increased by 55%, a little bit ahead of revenue growth as we continue to invest in order to drive future growth. Our operating expenses were up 29%, but with the operational leverage I just mentioned, Our adjusted EBITDA margin increased by 1.9 percentage point to 18.3%. As I highlighted earlier, Cash generation was very strong with adjusted EBITDA of $156,000,000 converting after CapEx and tax into cash flow of 140 6,000,000. Next slide. Dividend. The Board proposed a final dividend of 0 point 12 dollars taking the total dividend for the year to 0 point 18 dollars This followed the interim dividend, reflecting 1 third and 2 thirds split between interim and final. Given the strong year, high cash share conversion and strong balance sheet, We are pleased to be able to return significant cash to our shareholder, while still supporting our strong growth ambition, Whether organically or inorganically, and we do see opportunities in the market. Next slide. In Slide 13, I would like to spend a few words about Current trading and outlook for the year. I will start with the revenue. We entered 2021 with a strong momentum, and we are Pleased with the reaction so far to our new product and marketing investment. While thinking on the year as a whole, We expect to see small revenue growth as we need to balance the current positive momentum against Tough comparison, some regulatory headwinds and the uncertainty about player reaction to the expected reopening of retail businesses. Regarding the regulatory matter, there are a range of factors that could impact the year on year revenue growth, Such as the new regime in Germany, further limitation on player as we enhance our game, safer gambling strategy and some other changes in selected countries. On a combined basis, these changes represent revenue Between $70,000,000 to $100,000,000 With the strong momentum that we currently see, we are confident that we can absorb this And still see small revenue growth in 2021 from the record level of 2020. With regard to the EBITDA, we expect the adjusted EBITDA margin before U. S. B2C losses to remain broadly similar in 2021. The negative impact of our increased investment in the U. S. Is expected to be an additional $10,000,000 in 2021, as we gradually scale up our business and platform into additional states. Moving to CapEx. CapEx is expected to remain similar to the level that we saw in 2020 as we continue to invest in our platform and product. For tax, we expect a similar to slightly higher tax rate in 2021. I will now hand over to Ittai to tell you a bit more about our strategic priority and growth plan and the factor that support this strong growth profile that we are seeing. Thanks, Yariv. And turning to Slide 15, our strategic priorities. This shows our strategic priorities, and I'll run through the progress we've made in 2020 and show how we are well positioned for future growth in the coming years. Moving on to Slide 16. Our first priority On slide 16 is Safer Gaming. We acknowledge that gambling can cause harm, and we acknowledge that we need to make more Progress in this critical area. This is an ongoing agenda and that we are absolutely committed to Continued progress and improvement on. During 2020, we launched our new comprehensive safer gaming strategy called Safer, Better Together. To achieve this, we devised our 8 commitments to safer gaming that you can see on the screen. I'd like to share a few examples of the progress that we've made here. So commitment number 5 is to provide transparency. At the end of 2020, we rolled out our groundbreaking control center, which gives our players a really quick and simple interface to monitor exactly what they're spending in real time. And this is really important because knowing how much time and money you're spending is where control starts. Commitment number 6, staying in control. The control center makes it really quick and simple for players to control their spend With the same focus we have on UX and design as we have on our other gaming products, we made it very easy and intuitive for players to set different types of limits such as time spent, money spent and more limits. But I think the most important Commitment is commitment number 8, the commitment to continuous progress. This is not a one off change. We're going to get better and better in supporting safer gaming. Turning to Slide 17. Regulated markets and market share gains, the real driver of our business is our expansion into regulated markets. And on the left, you can see our strong progress that we've made in deposits from regulated markets over the last few years. On the right hand side, you can see our market share in some of the key regulated markets. For example, in Italy, you can see that we grew Our revenue is by 69%, and we grew our market share by around 10% during the year. We entered 2020 with a strong growth momentum. Our data driven marketing machine gives us a real competitive advantage, And we have just entered a new product cycle, which is supporting growth both in sports and poker, which I will expand on now. Slide 18. One of the key factors supporting our market share gains In these regulated markets is our product leadership strategy. We recently hosted a product webinar, which I really recommend you to have a look on our website if you haven't had a chance to see it yet. It runs through our product principles and how building the best products is supporting our growth plans. I'll expand on what that means in practice in the next few slides. Slide 19. So turning to Slide 19, our poker product and how the principles that you saw before Actually work in practice. During 2020, we rolled out our latest poker product Poker8 in nearly all of our markets, Taking a couple of highlights from this new product development. So in terms of the usability, the new app loads Twice as fast as the previous one. It's a mobile first app laid out in portrait mode so that our users Can play poker in the same way that they play and browse on other apps on their phones. We measure the UX and UI against the best AT and T. Consumer technology products and not just gaming companies. In terms of entertainment, most of the time in poker is actually spent on the poker table itself. So we made this focus and added fun and interactive items like cool avatars and throwables, which players can throw at each other while playing poker. Next Slide 20. Some of our poker product KPI since the launch. I'm pleased to share that some early indications of the impact of our new Poker 8 product. This clearly demonstrates how effective our proper leadership strategy is. Firstly, on the top left, You can see that since we rolled out our product in October, we have seen really strong trends with first time depositors, which have increased by over 80%. Alongside our product launch, we rolled out a major new brand marketing campaign built around the slogan, Made to Play. This showcases the fresh and modern approach that we brought to the world of online poker. Then on the bottom right, you can see important Player revenue KPIs. The enhancements that we've made to the user experience and content mean that we're seeing better cross sell levels. And at the same time, we're seeing an improvement in the poker gross revenue per player as players are reactive strongly to our new product. And I'm frequently asked if I expect to see the Orbit effect, the Orbit casino effect on Poker 8. Our casino business has more than doubled since the launch of Orbit only 3 years ago. I can't promise that same level of impact, But we have a great new poker product and early indications are very positive and we're aiming to continue growing our poker vertical. Next Slide 21, Sport Product. 2020 was a landmark year for 888. And after 10 years of operating and growing the sports betting vertical, we've rolled out our in house proprietary sportsbook platform. This completes our journey to a full product suite of the 4 main verticals developed in house and owned by 888. Owning our platform gives us critical capabilities to take our sports business to the next level, in house pricing, Risk and trading that we can easily connect to our local marketing initiatives and create a differentiated and attractive proposition for our customers in the different territories. A couple of examples of how our sports book is taking a giant leap forward. In terms of entertainment, we're using similar modern app engagement features like our customers are used to seeing on other leading apps, such as Our bet feed, which provides real time recommendations with the top bets for you, our top 10 bets in your country. These bring trending features like people are used to seeing in other leading social and consumer entertainment products to the world of sports betting. Our BetFinder has a great enhanced search capability supported by our proprietary AI platform, So even I can find a winning horse this week. And coming next to 888 Sports, it's rolling out 2 more remaining markets that we have, but we're also going into new markets with the new sports. And the more most important one And this aspect is the U. S. Market where we're planning to launch the platform during Q3 this year. Moving on to Slide 22 to see some of the KPIs that we've experienced since launch. While it's early days in the new sports product rollout, I'm delighted to share with you some early indications about our success and why we're optimistic about the future in sports betting. Firstly, you can see on the top Left chart that during the second half, we gradually migrated more and more sports business, and we now have the majority of our sports bets and players and volumes over our new in house platform. Secondly, on the bottom left, you can see key KPIs have all continued to see solid growth during the migration With more active deposits in FTDs, with an entirely new product set and a change in our front end, We are particularly pleased to see that the migration went very, very smooth. On the top right, You can see that as well as seeing improving trends for sport, we're also seeing strong trends in our multi product play With over 40% more customers playing multiple products, that means on casino and on our poker products. And finally, on the bottom right, one of the risks while bringing a sportsbook in house is around Trading and Risk Management. And here, you can see that our football margin has been very stable, and we're delighted to see how the team there are managing the risk. So the new 88 Sport not only looks great, but we're seeing really positive indications of its performance. Moving on to the next Slide 23, Our data driven marketing. We saw how product led strategy is a significant growth driver for our products. I'll now expand on how our data driven marketing machine helps us attract customers in an efficient manner and complement our product led strategy. So on the left hand side, you can see that customer acquisition trends In the last 4 years, with strong growth of first time depositors in our different regulated markets. We have achieved this while being really efficient with our marketing spend and actually seen a reduction in our cost per acquisitions over the years. As a data driven company in its DNA, we utilize the scale of our data, our in house and third party marketing technology systems to create marketing machines that continuously Aim to optimize and grow our marketing investments. This acquisition strategy is accompanied By a brand led strategy for each of our core brands, 888 Casino, 888 Sports and 888 Poker and Bingo, and in order to create a highly efficient marketing spend while building leading global brands. In 2020, we invested well over 200,000,000 in marketing. AT and T. And on the right hand side, you can see that we split this across 8 different marketing channels. We have really strong teams across the different marketing channels With no major reliance on one individual channel, this is very important for us in order to optimize our spend, But it becomes even more important these days when traditional forms of advertising and sponsorships are becoming limited in various markets in Europe. Moving on to Slide 24, I'll now expand on how We are doing in the U. S. On Slide 24. So everything I ran through up till now, our Safer Gaming, product leadership strategy, Data driven marketing will all be shortly deployed in the US. We made a huge effort to upgrade our systems and capabilities in the last 3 years and we're now moving all of this to the US. In the chart, you can see that our average active players in New Jersey, which is in a constant growth trend and grew by nearly 50% in the last couple of years. This is good, but we feel that we can do much better here. During 2021, we will more than double our investment. We will build cross organization dedicated team with over 200 staff focused solely on the execution in the U. S. Market. We're continuing to pursue our B2C sport led In our b2b gaming led strategy in the market, by doing this, we're increasing our market reach to many regulated gaming and sports betting states in the US. We're planning to launch the WSOP poker through our partnership, our B2B partnership with Caesars in Pennsylvania and Michigan in the next few months. We're also planning to launch our new sports betting product under our B2C licenses, which we have obtained in Colorado, in Indiana, and in Iowa, and we are in the process of securing further licenses in the U. S. The U. S. Is a very big part of our focus and plans, and I believe that with the unique leading products and technology, Our data driven marketing capabilities, our B2C, B2B strategy there, we can make a real impact there in the next 3 years. Slide 25. So just to wrap this up, 2020 was a record year for 888, which I was particularly pleased with given the disruption from COVID, and I'm delighted with how our teams responded to this. Our product leadership strategy is working, and we are at the beginning of a new growth cycle in sports and poker. These capabilities are now ready to be deployed in the U. S. As we're opposed to start rapid expansion there. Our strong cash flow and balance sheet leaves us well placed to supplement our growth through M and A. The business momentum is strong as we enter this year and we remain positive about the outlook. With that, Yariv and myself will be happy to now take some questions. We've got a question from David Brohan. David, please go ahead. Good morning, guys. Just two questions for me. Firstly, on Italy, 69% growth is a hugely impressive Number, given the kind of advertising restrictions there, could you guys just give us some color in kind of terms of what is driving that? And then just also on the kind of headwinds you call it year on year. On the UK side, could you give some color on the enhanced measures you're taking in the UK and how we should be thinking about that? Thank you. Thanks, David. So I'll take Italy and we'll split it and Yaurif will take the UK. So in Italy, we did indeed see a very strong trend of growth during 2020, which is Also continuing in 2021. And indeed, there are marketing restrictions in that market for the last few years. Italy has been growing for us before 2020. Actually, Since restrictions have been placed there, we haven't stopped growing. I think one good explanation for that Is what we spoke about kind of more of our online Direct response mechanisms of marketing. So we have very good positions on Google in Italy, which help us grow Our business through demand coming from customers, our SEO is doing very well there. We have managed to build a brand before The company the country basically limited the marketing and the focus that of the product. And I think when marketing is limited, then players choose by product and the Italians are definitely Making a very clear choice in choosing specifically our casino product, but not only poker and sports have also been doing well in Italy. The second question, maybe Arif you want to take. Yes. David, with regard to the U. K, So U. K. Performance was very strong also in 2020. Actually, it's linked to what Itay just mentioned about Italy. I think there is a significant proof also from what's happened in Italy that there is a strong impact on our product and platform enhancement to the different product. So remind me, did you ask something about U. K. In 2021 or 2022? Just in 2021, in terms of The kind of the year on year headwinds from enhanced protection measures. Just any color you can give around that? Sure. So As we mentioned here today, we have a strong commitment to enhance our safer game blink framework. And therefore, We are actually expanding our framework and imposing some new limits on our as part of our strategy. And this is obviously will have also some impact on our ability to grow in the U. K. During 2021. This is part of the SEK 70,000,000 to SEK 100,000,000 that we mentioned as regulation issue that affecting the focus for 2021. Okay. Thanks, guys. Very clear. We have another question from Ivo Jones. Ivo, please go ahead. Good morning. You talked about the, an expectation of a slowdown as we got into the summer and as we get T. Could you talk about your experience during last summer, maybe specifically in the UK, where there was a definite Ending of restrictions, did you see a sharp slowdown then? What was the seasonality like? That was my first question. Second question, in the presentation, you haven't talked about special dividend than normal dividend. So is $0.18 the new base For the year that you expect to grow from or is there still a special component of that in your mind? Third one was The cost benefits of moving to your own sports platform, does that come through mainly in 2021 Or is it something still to benefit the income statement in 2022? And coming back to Sport, You've talked about sports as not exactly a new business, but obviously a business that's growing strongly and now you've got the new platform. Could you talk about sport geographically? Is it mostly the UK and you've yet to add it to Spain and you've yet to add it to Italy and you've yet to add it to other Territories or is it evenly distributed across the territories? And then the last thing was when you talked about Pennsylvania and Michigan, You only talked about WSOP. Will there be 888 poker in those states? Or is there a reason in the agreement that you won't do that? Or is it a strategic reason? Thank you. Okay. So, Eivar, as usual, I think you think this time you've actually exceeded and you have about 6 questions. Usually, your average is around 4. But I'll take the 3 of them and I'll leave a review with a special dividend and cost benefit of sports, if that's okay. Yes, you're not the only one that's outperforming. Sorry? You're not the only one that's outperforming. Okay. So first of all, summer slowed down. So what we saw last summer, and I'm not sure we can relate this summer to last Summer, because hopefully this summer will be the beginning of the end of the COVID. And from that, You know, COVID will only disappear more and more. And last summer was kind of a break, and then it came back very, very strongly. So You know, difficult to predict, but the trend that we saw last summer was actually some of our products Exceeded casino and sports exceeded performance during the summer. Poker slowed down during the summer after a huge peak in Q2. But what happened, casino discontinued a very strong momentum in sports. We had a lot of events that were pushed over To the summer and people were probably waiting and eager for sports to come back. So we saw a really strong summer And Q4, for that matter, in sports, this summer, we do think And as you can see, we're sitting in a room. This is not a virtual room. I'm sitting here near Yariv, and we're already starting in this part of the world in Israel to experience What coming out of the COVID looks like, it's pretty fast actually to tell you the truth. And I expect people this summer to spend more time Outdoors, we expect people more time traveling as restrictions will allow because of this very long hibernation Period. I think this will slow down our business moderately during the summer, but I think that going back into Q3 and Q4 will go back to this new level of what we call new level of normality. So that's my personal prediction. But it also very much depends on the different pace of countries coming out of lockdown. I'll answer the sports, if it's mainly UK or outside the UK. So first of all, we our sports product Our sports product over Kami, the previous one and the new one, has been rolled out into all of the regulated markets that we operate in. So we have sports in Italy and in Spain and in Romania and Sweden. And so we have sports everywhere. It is The U. K, it is was a big focus growth focus for us, and it's big in the U. K. It's also actually in terms of market share, I think the biggest market share we have is In Spain, in terms of market share, and we definitely see this as a very A significant growth potential for us. First of all, because we see the product is performing very well. We know that we're starting from a relatively low market share, which is Somewhat easier to grow from that basis, and we have a lot of enhancements that we're planning to put on the new platform that I think can help us grow further. So from us, growth is a really, really great Growth opportunity overall. The last question about Pennsylvania and Michigan and WSOP. So indeed, We have prioritized the WSOP launch in both those states. That doesn't mean that we will not launch 888 Poker In those states, it's just not in the plan for the first launch of this year. We want to get the WSOP, which is a leading in the market today, it's the leading brand in the US. We want to get it off the ground as soon as possible in those markets, and therefore, we prioritize it first. But we're also planning to launch during the summer our first sports betting market over the new Spectate platform in the U. S. And from them there on, we will start launching more and more sports betting markets in the UK based on the licenses that we've acquired. Okay. Hi, Bor, good morning. So I will start with the dividend. So the dividend for the full year is $0.18 And it's split between interim to final 6 12, but if we take the split on regular and special, so it was 0.136 dollars regular dividend and $0.04 as a special dividend. There are just as a reminder, the regular dividend is based on our policy to distribute 50% of our adjusted profit after tax. Of course, looking forward, it's you can easily focus the regular. The special, of course, depends on the decision to be made from time Brian, by the Board. In terms of the benefit from having the spot book in house, So I would say that for the short term, you need to look at that as neutral. You need to look at that only from the ability To take some of the costs that today are part of the cost of sale, which are now moving to be operating costs Because we will pay less royalty, however, we are increasing our Dublin site and the R and D flows there in order to continue develop and Enhance the platform. Looking forward, obviously, we will get the benefit from the scale and we will start to see A big benefit coming financial benefit coming from having the sport book in house. Just maybe to add just Itay mentioned about where we operate sports. So we do have also sport in New Jersey, in fact. Thank you very much for that, all of that. Can I just follow-up on the sports side? Will you tell us the percentage of sports that's coming from UK and Spain. If I want to get a sense of the opportunity for sport to grow in Italy, Romania, Ireland, all the other markets, it will be helpful to know how concentrated it is now. So we don't split out Verticals per market, as you know, but diversification is continuing. U. K. Is the largest market. 2nd largest market is Spain, as I mentioned. And then Italy is doing well. Romania is doing well. Sweden is starting to grow. So we're diversifying. It's not very, very different From the spread that we have in other products, I would say maybe slightly more skewed towards the U. K, but not dramatically. That's helpful. Thank you. We have another question from Simon Davies. Simon, please go ahead. Can you hear me? Yes, I'm here. Okay, perfect. Sorry for that. 3 from me please. Firstly, you talk about the 70,000,000 to 100,000,000 of headwinds from a regulatory standpoint. Can you break that down in terms of how much of that is down to your tighter Responsible Gaming Measures. And where do you think that will leave you positioned relative to your peer group? Does that bring you in line with them or do you think you'll be broadly best in Glass. Secondly, exceptional customer recruitment numbers for the year, 1,500,000 FTDs. Can you provide some context in terms of growth in average active player numbers for the year? And what do you see happening to your lifetime value per customer given the shift towards a more recreational customer base. And lastly, in terms of regulated market mix, obviously, a number of your unregulated markets are going to regulate over the next couple of years. How long do you think it's going to take you to get to say 90% plus regulated market revenue split. Okay. So I will start with the €70,000,000 €100,000,000 So Again, we don't provide the full breakdown of what is behind this, but I think it's fair to say that a significant part of this is Germany, which is well known, changing completely the regulatory regime in Germany and another significant part of this is the UK. With the UK, there is no clear rule now about the new regulatory regime. However, As part of our commitment, we are imposing some additional limitation to our safe gambling. And therefore, part of this is embedded into this number. So within Germany and U. K, significant part of this amount are covered. Just maybe to touch the last question about the regulation. So we were 73% revenue coming from regulated and taxed market. We know about A few markets which are in process to get into regulation, Germany, Netherlands and Canada are the most important out of them. Austria is Small, but it's also a candidate to become a regulated market. And if all this market today, which are In process to be regulated, there is a good chance that by 2023, we are about 90% of the revenue from regulated markets. I leave it tied to this. Yes. So We did show some indications of active players in the slides, specifically after the migration of And the new poker. But overall, actives are have increased over the last year and going into this year In line with the growth in FTDs, we are not seeing any higher level of churn than we have in the past. There were some expectations at the beginning of COVID because there was such a big boom in FTD that there will be a very fast, Let's say, a churn rate apart from sports, which was closed down for Q2. So the rest of the products, I think, Actives are growing in line with growth in FTDs and with the enhancements that we're doing to our products. We're doing a lot of activities To bring back customers that played with us in the past or experienced the new products that we've launched as well. So actives are doing well. And LTV, yes, there is a slight reduction as we go into more and more mass market And higher level of acquisition, there is a flattening of the lifetime value of players. We're going more through recreational players. I think this fits well with our overall strategy to put less focus on the VIP segment, Specifically in all of the European markets. And we are seeing Slightly slight changes in lifetime value depending on the product, but I think that overall fits well with our Recreational Approach. Sorry. Just on responsible gaming measures, do you think that brings you in line with the market or ahead of the in terms of the conservative nature of your framework. First of all, I assume you're speaking about the UK. Yes. So obviously, we operate in many markets and we're completely aligned with every regulatory request All of the markets that we operate in. In the U. K, it works a bit differently. And the operators have to take, Let's say an approach based on their understandings of where limitations should be set. I can't quote if we're in line or if we're not in line. We do everything that we think we need to do in order to keep our customers safe in the UK. And it's less important for me if we're in line, at the top, at the bottom, we do whatever we can do. And maybe once when there will be clear guidelines in the U. K, everyone will be aligned. But until that point, we do whatever we think is the right thing to do in order to put the limits in the right place. Great, thanks. We have another question from James Whitcroft. James, please go ahead. Good morning, Ittai. Good morning, Yareef. Three questions if I may please. Firstly, have you got a feel for sort of sense of direction or any feedback from the current UK regulatory review and your sort of your submissions, etcetera? Secondly, if you look at 2020, there were multiple avenues of growth. And I was wondering whether you could sort of hone that down in 2021 in terms of the things that you're Particularly going to focus on maybe poor call out a handful of opportunities maybe by product or geography. And then lastly, just in terms of the additional investment in the U. S, You're talking about maybe further access agreement in due course. Would that be incremental what I describe as good downgrades? And when can we expect that? Sorry, just on the last question, could you repeat the question, the U. S. Licenses? So as you gain more market access in the US, I'm just want to understand whether that sort of you've given us some guidance about incremental investments in the US. Will those additional Areas of market access mean to further downgrades. I described those as good downgrades because they're obviously more Okay, okay. I got it. Yeah. So I'll try to answer the 3 questions. So first of all, from a UK Regulatory perspective, we are proactive. We did submit a very comprehensive response To the UK GC about the consultation process, And we are working as close as possible possibly can with the industry bodies, with the regulators where we can with the government In order to take a proactive role in this in these processes and to make sure that they're done on a fact Basis, we have a lot of data to support the things that we're saying and we're claiming. So we want to use that data In order to help them or support the decisions that are being made, that are made on a factual basis. So we don't know where exactly it's going to land. We hope that the consultation will be part Of the review of the Gaming Act, they'll use all of the evidence, and there's a huge amount of evidence that was gained in the consultation process, [SPEAKER BIEN DE MONTESSUS:] And they will use that in order to make decisions on the review of the Gaming Act. And obviously, we support Every change of regulation as long as it's done in transparency and it works across all the industry in the same way. And we believe, like we signed other markets, that when these things happen and they're implemented across everyone in a fair and transparent way, We know how to work well and to continue to grow and progress in those markets. So that's our approach on the changes in the UK. In terms of 2021 focuses, so it's funny because we're at the beginning of the growth, what we call a growth product growth cycle in both Sports and poker and casino is I think we have the leading product out there and it's working very, very well. So all products are In a growth positive growth momentum, and we don't want to stop that. From a territorial basis, we're definitely focused on U. S. And taking all of the great things that we saw and we presented that we did in Europe into the U. S. In order Mark, our position there in the market, and I think it's about time that we do that. And 2021 is What I call a new beginning of an era in the U. S. With our new platform, Our new products, licenses that we acquired and hopefully some other interesting developments that will happen in the market, the extension of the B2B contract that we did with Caesars is also very important for us. It's a 5 year extension as poker is opening up in more and more markets. So there's a lot for us to do in the U. K. But from a territorial basis, there's also developments in Europe. Netherlands is AT and T. This year for regulation. That's an important market for us. Germany is going through a phase, which will hopefully allow us to go back And to invest and grow there in the future. So there are various prospects, but if I had to feature 2 of them, it's sports And the U. S. Are the biggest investment areas for us. And lastly, the market The implications on the P and L in the U. S. So we have acquired at the end of last year, we announced that we acquired 3 additional licenses last year in Colorado, in Indiana and in Iowa. And we are planning to launch them, hopefully, all 3 of them this year. Also, when we launch our B2B products, We also have to go through a licensing process, certification process, and therefore, we're going to be busy. So overall, we're going to launch about 4 or 5 states in the U. S. This year, which I think is very impressive. And we're working on Further market access deals in order to have more markets to launch into 20222023. At the end of the day, we want A good wide footfall in order to be able to take a nice chunk of the American TAM. And in order to do that, we need to have licenses either through B2C or through B2B. Thank you very much. We have a question from Bridy Barrett. Bridy, please go ahead. Morning. Morning all. Just one question. Hi. Yeah. Just just one question, if I may. I'm thinking, I mean, you've talked about the potential impact on marketing and a little bit about your marketing mix, which is quite helpful. But can you talk a bit about the possible disruption that you might see from the phasing out of 3rd party And cookies from Google. Is that something that you're planning for yet? And, you know, what what potential issues can you see from that happening? Thanks. Yes. We're obviously planning for that. That will have an impact On direct marketing activities, these kind of changes at different levels Happen every few years in marketing, in online marketing. They happened in Facebook in the past, and Google changed Their policies in the past, and they will have an impact, but I think we will be able to work through that. And We don't see a major impact on our acquisition channels. I think I showed in one of the Slides, our marketing mix is split between 8 different channels with very good diversification. So it could be that Some of them will be impacted and others will be less impacted, but we don't see any material risk coming from that area, and we haven't adapted our marketing plan for this year based on that. Thank you. Presumably, it's the remarketing aspect that's more exposed. Are you able to share With us. Yes, there's very limited that's true. There's very limited remarketing in gaming Because many of the publishers that we work with do not allow on their platforms to do remarketing, and therefore, there's not going to be a huge impact. On the other hand, Google announced a couple of weeks ago that they are opening their Play Shop for apps, I think that has a very positive impact, specifically again on companies like us that Really know how to monetize those kinds of opportunities. Well, up till now, we were limited. We couldn't there was no apps In the Google app shops that also helps player retention in some of our markets like Spain, Android is 90% of the phone population. So I think there's ups and downs, and Google Play is definitely an up for this next year. Thank you. We have a question from Richard Stuber. Richard, we have time for one more question. Please go ahead. Richard, you're on mute, I think. You need to unmute, Richard. Hello. Sorry, can you hear me now? Yes. Yes. Sorry about that. Good morning. Just two questions for me, please. First is, could you give a bit more color On the P and L in the U. S, and in particular, there's £10,000,000 incremental losses. Is that going to be mainly from increased marketing, increased tech, increased How we should think about that? And the second question on your balance sheet, you have over $100,000,000 of Your Own Cash. In terms of M and A and what you look to do with it, obviously, you have your own proprietary technology for most Interested to know your thoughts on the likes of esports that some of your competitors are looking into. Thank you. So Richard, I would start with the U. S. P and L. So we lost about 8,000,000 On the B2C U. S. In 2020, and as we indicated, we are expecting this to grow by additional $10,000,000 in 2021. So we are Expecting about $18,000,000 losses in the B2C of the U. S. This is obviously coming from Mainly increasing marketing in order to penetrate the new states that we are going into them. The question about the cash and M and A, I will defer to Itay. Yes. So Richard, indeed, we have a very healthy amount of cash on our balance sheet. We have no debt. And like we said in the past, we're planning to use The cash that we've generated to grow further organically, so invest both in growth in areas like the U. S, Investing in our continuing investing in our products in order to make sure they are the best in class and we can continue with a competitive advantage on our product suite. But we are also looking definitely at AT and T. M and A opportunities, I think this year proved how Scaling up our platform, which was a theme that we always spoke about, how when you add scale to our platform, which is a very successful platform with Strong products. Immediately, you have a good drop to bottom line and you have an increase in your margins. And we saw that effect Organically this year, this gives us this and the fact that we managed to do a very successful migration to the sports product, A smooth migration. You saw some of the KPIs. So I think we feel that we're in a very good position to also benefit from on organic Growth from all the directions, product capabilities, balance sheet, and we will be looking to do on organic activities in the future. Thank you. Just any specific comments about esports and whether you like that, Chano? Not a major part of the focus that we're looking at. I think we have bigger fish to fry at the moment. But in the future, I think esports will be interesting. Thank you very much. Ittai, we have no more questions. So I'll hand back to you for some closing remarks. Okay. Yes. So thank you, everyone, for joining us today. It was 2020 was indeed a Spectacular year. 2021 also started very well, and we're happy with the overall performance. Thank you again for taking the time and joining us today.