Welcome to the Acroud Q3 2022 presentation. Afterward, there will be a question and answer session. If you wish to ask a question, please press zero-one on your telephone keypad. If you'd like to withdraw your question, you may do so by pressing zero-two to cancel. Today I'm pleased to present CEO Robert Andersson and CFO Roderick Attard. Please begin your meeting.
Thank you and welcome to today's presentation of our Q3 2022. If we start off with introductions, my name is Robert Andersson. I'm the CEO of the company and has been so now for close to three years. With me today I have Roderick Attard. He will be presenting the financials later on in this presentation. If we then get going of today's presentation, we look at the key figures first. Revenue amounted to EUR 6.7 million and EBITDA amounted to pretty much EUR 1.5 million. Profit after tax was -EUR 600,000. This is created by a big amount of one-offs. Rod will disclose those a bit later. New depositing customers amounted to 34,000 pretty much and cash flow from operating expenses was EUR 1.1 million.
We would also like to highlight, although this is after Q3, we would like to highlight the fact that October EBITDA amounted to roughly EUR 1.1 million and that is just in one month compared to the whole quarter EBITDA this time around it was EUR 1.5 million. This is due to that acquisition that we have made and we will go through that in more detail a little bit later. If we move on, we have Q3. We had some seasonal volatility. This means July was pretty much a normal month as where we have had, August was a lot. Well, August was a strange month for us, where revenue really or I'd say profit really was on the decline, due to certain facts, while September everything bounced back and was one of the best month we've had.
That's why Q3 was a little bit weaker than normal. If we move on, affiliation revenue was EUR 3 million. Next step, well, if we look at in affiliation, we are getting ready for the World Cup. Obviously, this is a big deal in our industry. The Gambling Cabin is really ramping up for some exciting times. While we have the next step, SaaS network subscription and models that we bought two years ago is really proven to have some hidden potentials. While we move on, I would like to address the fact that we have successfully executed a very good acquisition strategy where we see that all our acquisitions are performing better or on par with what we expected them to do.
I'd like to talk a little bit about the acquisitions that we did with the just recently announced with the Acroud Media Ltd. I t's an agile company that is driven by media buying and advertisement. This gives us the opportunity to go into markets where we have not been and act on keywords compared with SEO, that everything takes a lot longer time, which you have to build up. Here we can act immediately if something comes up, so it makes it a very agile business model. Also, it's diversified. It makes us less dependent on SEO and Google algorithm updates. This company has had very solid growth through the last couple of years, which means that we expect it to keep growing and this is based on revenue share predominantly.
That means that the accumulated revenue will keep growing. This is a very stable business and stable revenue. If we look at the full year target, we have gone out with financial targets saying we're gonna deliver 20% EBITDA year-over-year. We're at 19% now and with the last push coming in Q4, we will deliver on this. We are on track to deliver EUR 8-9 million EBITDA. Here you can see the group revenue, which is where you can see our revenue has declined quarter-over-quarter. However, Q3 is always our weakest quarter and we have been delivering higher growth than what we did in Q3 2021. If we look at our offering, we are now with this acquisition completing the picture where we did strengthen our PPC and media in-house.
We have our innovative SEO, we have our media advertising and advertising, we have our advertisement networks and media house partnerships, all based on our software and technology. Looking at us, we are rather a house of brands than a branded house. That means that Acroud is a group of companies such as Matching Visions, The Gambling Cabin and, for example, now the newly acquired Acroud Media. We focus on building these groups or rather we focus on building a group with companies that have a strong own identity but also have incentives to work across the board. This helps us really focus on what they are best at. Rather than having acquired them and push our branding into them, we are stimulating their own identity while utilizing synergies.
This has been proven really going really well for us, this acquisition strategy. Now over to Rod.
Thank you, Robert and good morning, everyone. We'll now be looking at the financial details, starting off with revenues. Since Q1 or January 2021, Acroud has been conducting two businesses in parallel. We have the iGaming affiliation business, represented by the dark-colored stacks on this slide and the SaaS business represented by the light color stacks on this slide. We will be covering the performance of each business or each segment in a few slides time. In Q3, revenue amounted to almost EUR 6.7 million, as Robert highlighted and that represent a small year-on-year increase of 4%. In some figures behind that, the growth is driven by the affiliation business, where year-on-year revenues have increased by 12%. That growth has been set off by a decline in SaaS revenues of 2% year on year.
On a quarter-to-quarter, revenues have decreased and that's the effect of seasonality impacting both segments. Worth highlighting is the strong, exceptionally strong performance of the DreamStream network in Q3 last year, which in a way has hidden or reversed the seasonality effect in 2021. During Q3 2022, 45% of the group revenues came from the iGaming affiliation business, whereas this has generated 55% of the revenues. Switching our focus to the right-hand side where we see NDCs. Acroud keeps delivering high number of NDCs, new depositing customers, to our partners via our different products. The decline of 15% year-on-year is again related to the exceptionally strong performance of the DreamStream network in Q3 last year. More importantly is the continuous growth in NDC generated by the iGaming affiliation business, which now have exceeded 21,000.
In the previous slide, we have again seen that revenue year-on-year has increased by 4%. Here, we're breaking that growth down by the different products we have in our portfolio. The main growth drivers year-on-year have been poker and casino products within the iGaming affiliation business and the subscription product within the SaaS business. Such growth has been partly set off against the decline in network model revenues. Switching our focus on the cost side. Here, we're comparing Q3 versus Q2 and we can see that quarter-over-quarter, our cost base have decreased. Two main drivers here. We have a decline coming in cost base coming from the network model payouts. This is a direct variable cost, meaning it moves up and down with revenue.
Following the decline quarter-over-quarter in network revenues, consequently, the network model payout cost has also decreased. We also have had a decrease in personnel costs amounting to EUR 82 thousand and such decreases have been partly set off by the increase in other net operating costs. This is mainly coming from lower CapEx quarter-over-quarter. We have also had a marginal increase in other external costs. This is driven by increased investments in growth initiatives, particularly the iGaming affiliation business, which we're gonna cover in a few slides time. We will continue to focus on cost control in order to run our operations with a higher margin. EBITDA at group level during Q3 amounted to EUR 1.5 million, representing a growth of 19%.
The affiliate business during Q3 operated at an EBITDA margin of 37%, whereas the SaaS business operated at an EBITDA margin of 15%, thus resulting in a blended group EBITDA margin of 22%. During the quarter, we didn't have any one-off operational income or operational costs impacting EBITDA. We did, however, some one-off items impacting the group's profitability and those are related to the refinancing process and tax. More information about those can be found in our interim report. In the next few slides, we're gonna focus now just on the affiliate business, starting off with revenue. Revenue during Q3 amounted to just over EUR 3 million, representing a year-on-year growth of 12%. Such growth is coming from organic initiatives and growth investments in regulated markets, particularly in the United Kingdom.
The drop of 5% quarter-on-quarter, that's coming from seasonality effects. Two points which I would like to highlight or share with you. First is about the casino performance of our casino products. Historically, for a number of quarters, our casino revenues have been declining quarter-on-quarter. That trend has been stopped in Q4 last year and since 2022, we now see our casino revenues increasing year-on-year. Q3 was not an exception, where casino revenues year-on-year have increased by 12%. The second highlight, which I would like to share with you, is the revenue diversification within the affiliate business. If we compare, for example, Q3 2022 to Q1 2020. Back then, 72% of the affiliate revenues came from casino. Now, casino revenues in Q3 represented 51%. Clearly, from this chart, we can see that our affiliate revenues are more diversified.
So we're not too dependent on one product. Another form, let's say, of diversification is traffic sources. Back in Q1 2020 and even 2021, 100% of our affiliate revenues came from SEO products, our SEO websites, compared to 87% now in Q3 2022. The remaining 13% is coming from social and community-based affiliation, which is a different way of doing affiliation compared to the traditional SEO business. Now, with the acquisition of Acroud Media, we're gonna add or introduce the third way of doing affiliation business. Hence, keep diversifying our traffic sources and revenue. More information about revenue diversification. 38% of Q3 revenues came from revshare deals, compared to 31% coming from cost per acquisition or CPA and another 31% coming from other.
Other revenues represent upsales, banner, fixed fees and new marketing products we are offering to our partners. I n terms of geo split, Europe remains our strongest continent, the strongest region. The good news or the biggest advantage with Europe is that many European countries have now regulations in place, meaning that the iGaming market is a regulated market, thus guaranteeing more stable revenues and less political or legal risk in the future. North American markets have decreased to 11% year-on-year. Decreased 11% compared to 21% last year. Other or rest of the world, have increased to 15% and that's coming from growth we're seeing in emerging markets, for example, the LATAM region. As we have highlighted previously, NDCs within the affiliation business keeps growing quarter-on-quarter, reaching 21,375 in Q3.
This is the highest figure achieved by this segment in the company's history. EBITDA in Q3 amounted to EUR 1.1 million, representing a drop of 8%. Despite the twelve percent increase in revenues, EBITDA has gone down and that's, of course, coming from the cost base, which leads me to the next slide. Year-on-year, the affiliation cost base has increased by 9%. Personnel costs have decreased by 28% year-on-year. That has been set off by the increase in other external costs, increasing year-on-year by 27%. The increase or the driver behind that is investments, further investments or increase in investments in growth initiatives to keep fueling the top-line growth. Now we're gonna switch our focus on our second business, the SaaS business. Revenue for Q3 2022 amounted to EUR 3.65 million and that represents a drop of 2% year-on-year.
The drop is mainly driven by network model revenues, as we have seen in previous slide, which year-on-year represented a decline of 4%. This, however, has been partly set off by increase in subscription revenues, which year-on-year have increased by 36%. EBITDA generated by the SaaS business keeps at the level higher than half a million, which in Q3 amounted to EUR 539 thousand, representing a growth of 99% year-on-year. RGUs or Revenue Generating Units represent the number of entities serviced by this segment, which as we can see from this slide, is stable at around 400 entities. In Q3, it amounted to 3, marginally decreased to 395. Going back to the group picture now covering our financing and cash flow. Gross debt in Q3 amounted to almost EUR 21 million.
Net debt to EBITDA ratio in Q3 amounted to 3.1. The increase from Q2 is driven by the increase in gross debt, partly set off by increase in EBITDA. With the acquisition of Acroud Media, we expect to have higher EBITDA, thus decreasing the net debt to EBITDA ratio in the coming quarters. Last finance slide about cash flow. Cash flow generated from operating activities amounted to just under EUR 1.1 million during Q3. Cash conversion has increased to 83%, compared to 74% we have had in Q2. Our net working capital is still negative and that's a focus area we need to work on in Q4 and that's what we're doing. Cash flow from investing activities represent the funds advanced in preparation of the acquisition of Acroud Media, which as Robert highlighted, was concluded in October 2022.
Cash flow from financing activities is characterized, of course, by the refinancing process. We have had a cash inflow from the new financing amounting to EUR 12.1 million coming from new investors in our bond. These were used to pay EUR 10.3 million to the old bond holders which have decided not to roll forward the bond and to pay issue costs which amounted to around EUR 750 thousand. With that, I conclude the finance section and hand over the word back to Robert.
All right, let's round this off. I would say that what we have done is closed, I would say almost closed. Was the last time we presented, if you will, the old Acroud in the sense with this acquisition going forward, you will see that pretty much a lot of our KPIs will double as well. We are really excited for what this new group will be able to generate with the Acroud Media and we see a lot of synergies as well. Although Q3 didn't really live up to our own expectations due to seasonality and a few other things, we are still very excited about the future and what we can do now with the Acroud Media in the house. I do really look forward to presenting Q4 when that time comes.
I hope you will be listening in February when we present that. With that said, we are opening up for questions now.
If you wish to ask a question, please press zero one on your telephone keypad. We will now have a brief pause while questions are added to the queue. Our first question comes from Oliver Eliassen from Pareto Securities. Oliver, please go ahead.
Hello, Oliver here from Pareto Securities. Thank you for the presentation. I would just like to hear your thoughts on whether you're seeing any effects of inflation on your business, in the form of a weakening consumer demand, putting pressures on revenues or any wage inflation, putting margins at risk. Thank you.
I can answer that. I can only refer to our October results that we have gone out with, which are the strongest we've ever delivered. Obviously, this is together with the acquisition that we have made but we are not seeing any effects so far. Maybe that's you know too close to call. At the moment we are seeing zero effects that we can relate to inflation or a weaker economy.
Okay. Thank you. Regarding the EUR 1.1 million figure for October, is this figure minority adjusted due to the 60% ownership?
Rod, could you clarify this?
From an accounting point of view, the EBITDA is showing 100%. We're calibrating, of course, the accounting treatment. That's something we will disclose more information about in Q4. That represents 100% as is expected f rom IFRS requirements.
Thank you. Also, I have a question regarding the future planned earn-outs coming up. As far as I know that 50% of those are due in cash. Could you help me understand the timing and amounts of these earn-outs coming up?
Well, at the moment, timings are during next year. It depends a little bit on when it is closing and obviously, we have a payment schedule to Cape and we don't want to comment anything regarding the actual sums, et cetera, at this point. It's too early, so we'd like to not dig into that now because we still have work to do in order to get to those figures and it would also disclose a little bit too much information of what we expect to happen in Q4.
Okay. Could you please just verify the amounts provisioned for in the Q3 report regarding the acquisitions?
That you can do, Rod.
What the question was?
I'm wondering what the provisioned amount for earn-outs? What the amount is on the balance sheet as of Q3.
EUR 9.5 million.
Okay. Thank you. I don't know if there's time for a few more questions.
Yeah. Well, I have time.
Oh, okay. Great. Thank you. Looking at the CapEx as of Q3, I could see that they were at EUR 223,000. Would you say that this level is reasonable to expect going forward? Does this, the intangible CapEx, do they mainly relate to growth initiatives or should I view them as maintenance?
Can I take that, Robert?
Yes, please.
We, during the past quarters, we have been investing a lot in our websites, particularly iGaming affiliate business. That's maybe revamping our websites but also introducing new ones targeting new markets. Definitely, part of it is maintenance but majorly is coming from growth initiatives. Quarter-over-quarter, Q3 have decreased compared to Q2, so now we're getting closer, yes, to maintenance levels of CapEx rather than the high amounts we have had during the past quarters where we have invested a lot in growth.
Okay. If you could please help me understand a bit. You mentioned the new acquisition will allow you to diversify your user acquisition. Could you please tell me a bit more about the pros and cons of media buying as compared to your traditional SEO model?
Yes. If you look at SEO, what you need to do is there is a lot of hard work going into ranking a website and making sure it gets the visibility in Google in order for you to generate revenue from it, right? You need to build a product that's good. You need to let Google do its work. It usually takes, you know, one year to two years if you do it well and invest hard to get it to the front page and that's when you start making money. You need to maintain it there and defend it. If you look at paid media, we could basically choose to go into a market and test out advertisement on different keywords in that market tomorrow pretty much.
If there is a sports event coming up, we could target specific keywords for that sports event, et cetera. It does give an adaptability that's much quicker compared to SEO. I would say that that's one of the real strengths of paid media is how agile it is.
Related to this, you mentioned the World Cup event coming up. Could you describe more, a bit about your expectations on the event affecting Acroud's business?
Well, we're not expecting major differences in our business and this is actually due to the fact that normally, World Cup is running through summer, which is normally a low activity season for sports. However, this time around, World Cup is actually cannibalizing on the normal football season, so Premier League, et cetera. In that sense, we don't see an upside nor a downside but this is a very different type of World Cup since it's running basically in the middle of autumn, winter.
Thank you. Looking at the new depositing customers figure, it was down slightly in the quarter. Would you say that this is related to seasonality or is it lower marketing spend than usual or how?
No. This I would say is down to seasonality. If you compare to last year, that is due to the DreamStream in Q3 in 2021 extremely large intake. I would say that this is a seasonality effect.
Okay. Thank you. Those honestly are the questions that I had. Thank you so much.
We seem to have no further questions from the phone conference. I give the word over to you speakers for the closing remarks.
All right. Well, I think I rounded it off before but thank you for listening and thank you to Pareto and Oliver for a bunch of intelligent questions. With that, we will be back with you next quarter. Thank you.