Thank you very much, and welcome to today's presentation of Acroud Q3. My name is Robert Andersson. I'm the CEO, and I have been the CEO since March. With me today, I will also later have Gustav, who is our CFO. Gustav will present the financial details in detail, obviously, but first of all, I want to give you a quick overview of the quarter, then talk a little bit about what we do, our market, and the journey ahead, and then I will round off with some closing comments, so to start off with, a quick overview of what we are doing and how the numbers look in the quarter, so revenue amounted to almost €2.4 million, and EBITDA amounted to close to €1 million, and profit after tax was about €300,000, and the NDCs did, though, decrease quite significantly with a minus 57%.
But there is a logic behind this decrease. First of all, we have the Dutch market regulations that we adapted to, and this has led to a decrease in NDCs. But we have also, during our strategic work, refocused our effort in the SEO to actually rank on high-value keywords before we have ranked on volume keywords such as free, which means free deposits, free bets, free spins, etc. These bring a lot of NDCs but not necessarily money. So we have done a shift there, which you will also notice going forward. And what I can see is that we have really turned the trend in October in terms of NDCs as well. So that gives me confidence that we are doing the right things here. Also, cash flows from operating activities was over EUR 700,000. So moving on, what happened during and after the quarter?
We changed the name to Acroud. This is kind of the starting point in this whole work with the company. We have calibrated our strategy. Part of that was the keyword strategy. We have a lot of other things as well that we have worked with. We did restructure operations as well. We migrated all sites to one platform, which is going to improve operational efficiency going forward. Five new licenses in the U.S., which is great. We're still pending a few licenses that we have applied for, but we're moving ahead. We have added new revenue streams in the sense that we are doing a lot stronger upsales to our business-to-business partners. We have also continued to build a strong M&A pipeline. As you have seen, we have signed two letters of intent, and we're actively working on this.
Having had the strong M&A pipeline has given us the choice of basically cherry-picking two, and we are intending to continue working on this going forward. So with that, a little bit about the company as such. So Acroud, formerly NetGaming, is actually established in 2003. It has a presence in a lot of countries in many languages and also lately a strong focus on the U.S.. Basically, we are an affiliate. An affiliation I will describe in more detail later. But we help the user find their partner or operator, in this case, as we are active in the iGaming space. And here we have some of our key brands. PokerListings is a really big brand for us. And we then have also CasinoSpielen, CasinoToplists, CasinoGuide, MaxFreeBets is a sports betting brand, CasinoTop10, and CasinoGuide, for example.
We have more, but we find a strategy where we focus on these brands, and we focus on fewer brands to actually build them. Quite successful. So we will continue doing that. And what's our mission then? Well, we are connecting people and businesses. Our vision is to reshape the industry for the good of all. And our goal is to build the media house of the future. And with the strategic initiatives that we have taken over the last three months together with the M&A that we are doing, I feel that we are on a good track doing this. And our driving forces here behind all of what we do is that we enable synergies between people and companies, obviously, but also between businesses. We nurture talent in our culture.
This is a really big part of our future where we help people grow and become the best they can be. And our products and our way of working, we inspire confidence. And that's also how we build long-lasting relationships. Going into explaining affiliation a little bit, I'm sure that if you are actually watching this presentation, you do have a good understanding about what affiliation is. But I'll give it a go anyway. So basically, we have an online product that gets visibility and visits that turns into leads, that turns into conversions with a partner, and they will do a transaction with the partner. And in that sense, if we look at the visits, they come predominantly from search engine traffic, but also from emails, social, etc. And they find our product. They use the product, and hopefully, they will then find what they are looking for.
Then they are actually turning into a lead, and we convert them to the most suitable operator where they then make a deposit. Then they become a customer there, for example, with Unibet or Mr Green. And after that, when they have made a deposit and they have played, there are transactions. And this is when we make money. We basically make money on a revenue share structure, which means we get paid when our partners get paid, and we share that. We also have what's called the CPA, which is cost per acquisition, where we do get paid on the upfront payment when they do actually do basically the first transaction. But then it's not the recurring revenue for us. So in that sense, we do prefer rev- share because that is recurring revenue. And we have predominantly recurring revenue in our company.
Moving on, if you want to look at how this value chain and what kind of traffic we do drive across the iGaming value chain for us, it's 73% casino. We have 20% poker and roughly 5% sports betting. As you will see, when we look at the market a little bit, we see a huge potential in sports betting for this company if we look on a global scale. I will get back to that shortly. Pretty much right now, since we are going to go through the market a little bit. Here you can see the online versus offline. Clearly, there is huge growth potential in the online segment here. Offline consists of roughly 90%, perhaps a little bit lower nowadays since we have corona.
And then, if we look at the diagram to the right here, which I believe is really interesting, as you see, we had 70-plus% in casino, while globally sports betting is the big category, and we only have 5%. So we have really good space to grow since we are online, that's eating up offline. And we have a lot of casino revenue, but we could become significantly better on the sports betting side. So there is something for us to work really hard on. And I think you will see our repositioning towards that from now on. If we look at growth, we can see that the market has had good growth at CAGR, and it's actually estimated to accelerate.
And if we see that underlying trend is a shift from land-based to online, it is happening due to the fact that we also have the smartphone and tablet penetration increasing with the capability of those devices, as well as new marketing opening up and regulatory changes happening, which in the long term will be very good for the industry. The underlying market is expected to demonstrate growth for a long time to come and has had a long time of uninterrupted growth, which is very positive. So looking at us a little bit and our journey ahead in more detail. So if we look at Acroud and what we want to achieve and what we want to do, we are very strong in Casino Europe. This is kind of our bread and butter. Then if we look to the top right, we have emerging markets.
I would also say that the U.S. is an emerging market, but we have lifted it out here, especially since the U.S. is a very important market, and U.S. expansion in its own needs to have strong focus. And I think we have proven that now with expanding our license portfolios, and we have products there already, so we are ready to go, and we also announced a letter of intent focus on U.S. expansion, and then if we do look at the lower right here, which is sports betting, the acquisition, or I shouldn't say acquisition yet, but the letter of intent sits well with the U.S. expansion and sports betting, and if we look at emerging markets, which there are a lot of markets that's growing very quickly in the online space at the moment.
So the other letter of intent that we have signed is focused on emerging markets and sports betting. So in this sense, we have the core. We are significantly working on improving our core business as well and grow that organically. And the other three are really areas of heavy expansion for us. And we will do this through what we call less is more. We have had too many sites and been spread too thin before. So part of this is scaling the amount back and really putting efforts into less products. I think that is really important. We need to diversify our revenue streams. We have started doing that by upselling on our existing business.
With the new letter of intent for the U.S. business comes also a new revenue stream where we are actually not making money off the operator, but the actual user of the site is buying access to the latest information on the site. We will also continue our growth through systematic M&A, which you have seen with those two latest letters of intent. The U.S. rollout is fitting together with all that I just mentioned. With this, we aim to do a strategic repositioning from a few markets and a single business model with a strong focus on casino. We are going to go after a higher- barriers market. We are repositioning ourselves to be more diversified with a stronger focus on sports betting and multiple revenue streams. There is a shift happening.
I'm happy to say that I really feel that we are in a good way towards this. I've highlighted it before. 2020 is a year of transition for us from the old to the new. But I am very, very pleased to where we are. It feels really good to, in October, see that we are getting the results and we're starting to see the results of all the hard work that we've been doing. I'm very positive going forward. I mentioned these two acquisitions that we have signed letter of intent with, one of them being focused on sportsbook in emerging markets. It has very fast growth. It has a competent team that I have known for a while as well. I'm very happy with that.
And I know that they will be able to bring knowledge into the company as well as not just great products. And in terms of the second LOI that I mentioned, it's sportsbook focus, but it also brings the new direct-to-consumer business model. And what's interesting there is that it is actually not subject to regulation in the same sense. So you can sell to everyone in the states. And with this comes also, of course, that you can position yourself in every state that's due to open up. And of course, when you can then add on affiliate traffic, which we can do with our core knowledge and our licenses to this, it will become a very interesting positioning for the affiliation business and our core business as well. So in summary, we are taking strong steps to build future growth here in key verticals and markets.
I'm very pleased with where we're going, as I said. For Gustav, it's now up to you to go through some financial details.
All right. Thank you. We'll switch to page 27, please. I'm going to try to give you a flavor of the financial development in Q3 and where we're heading. In Q3, we have seen that the previous uptake in traffic from Poker & Casino has slowed down somewhat in Q3. That's after the COVID-19 outbreak that was very strong in April and May. In addition, we also see that we've been impacted by the way we're taking measures and adapting to the Dutch market, which also impacted our revenue level in Q3. The Dutch market will be regulated then in 2021, which is. We see an upside in comparison.
If we look on Q4 in total, what we are standing for, we'll see an uptake in revenues. It's a mix of both our strategic acquisitions, but mainly it's the NDC development we're seeing is taking uptake in October. That we see in the growth to the right as well, that NDC has been somewhat lower in Q3 2020, but we see a significant uptake then in October that we're confident with. We'll switch to page 28, please. We also see that regarding our vertical split, that our poker is increasing in importance. It's now comprising almost 19% in Q3. That's also related to our series of poker. PokerListings.com is developing well. We also see that sports betting, as Robert mentioned, comprises 5%, but there will be a significant growth onwards. We see NDCs also increasing within sports betting at the moment.
So the share of sports betting will definitely increase where we are heading. We also see that the North American market in the growth to the right, that it's increasing in importance. So that's definitely in accordance with our strategic plan and also comprising approximately 23% of revenues in Q3. So if we switch to page 28, please. We continue to work with our revenue diversification. That's important for us. And one important step with the revenue diversification has been the strategic shift to rev share, which has impacted us, as you see, the last quarters or during 2018, 2019, when we had a shift towards rev share, which now has stabilized around 55%-65%, which we think is a sound level. So we are happy with that.
We also see that the new revenue streams in Q3, which Robert was talking about, the upselling is really giving an impact for Q3 and that we will continue to work with. We switch to page 30, please. Regarding our cost base, we work with that actively. We can see that the cost base is decreasing quarter on quarter. We continuously work with our cost efficiency. One important step that we're doing in the strategic work is we are allocating costs to cost as content and link building, etc. We have more marketing costs, which have a direct correlation to revenues. That we will see the impact of in coming quarters, we're sure of. I can also say that we will see also impacts of our cost levels during Q4 and onwards. We switch to page 31.
We continue to work with our EBITDA margin, which is strong, around 40%. As our revenues have decreased somewhat, the EBITDA margin has decreased as well, but we are confident that we will increase the EBITDA margin coming quarters. That will be both through that we will have a lower cost base and also that our revenues will increase. If we switch to the next page, 32. If we look on our financing and our debt, we have a business model which deleveraged very fast. We have a cash conversion generally around 80%, a little bit lower now in Q3, but this kind of business model has very high cash conversion and low CapEx, which you will see soon on the next coming page, but that means that we deleverage our debt, you see on the bottom right graph, relatively fast, and that's through amortizations.
Also we have repurchased bonds during a few quarters during both 2019 and 2020. We will continue to work with the EBITDA goal, net debt EBITDA goal that should be down to two over time. That's our financial target. We will see that we will deleverage and have a lower net debt EBITDA margin ratio during 2021. We switch to the next page, please. Cash flow development is, as I mentioned, the cash conversion is high in this business model. A few points I would like to highlight for Q3. If you read in the interim report as well, you can find even more details there. But operating cash flow amount to EUR 738,000. We had an impact of cash flow from investments that we settled one earnout of EUR 600,000 from our acquisition in 2019. And we were impacted also then by cash flow from finance activities.
That's mainly amortization and interest payments for our financing and our bond. We switch. There's just additional figures for the ones who are interested. We won't go into them, but you'll find them online later if you want to dig into them. I'll switch over to you, Robert.
All right. Let's do some closing comments before we get into the Q&A. Summarizing, we are fast moving and we are relevant. New management in the sense that I've joined the company and we are restructuring the way we work across the board. We have added new revenue streams and we will continue to do so. We are seeing a strategic repositioning and shift. The M&A pipeline is strong. I'm really happy to say that we are, as I said, able to choose some really good assets to have at least now signed LOIs with.
We will always have increased shareholder value in focus, and to reiterate a little bit what Gustav said, the business generates strong cash flow from operating activities, so that's also very good, so going forward, in summary, we are very positive. 2020 has been a challenging year in many ways for many people, but I'm really optimistic for 2021 and 2022, and with that, we open up for Q&A.
Thank you. If you do wish to ask an audio question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Simon Jönsson from ABG. Please go ahead.
Good morning.
Morning.
I have three questions from Erik Moberg. First, could you perhaps give us some flavor on potential contribution from the letter of intent you signed regarding the acquisition of sports betting assets in Latin America, Africa, and Asia?
We will disclose all of this once we have signed the deal. At this moment, I don't want to comment on that as we haven't published on it.
Okay. Thank you. Next one. We understand you are in a turnaround phase.
Yes.
Yes, you are facing easy comparables year over year, while Q2 performance wasn't that great either.
Yep.
You are seeing quite a drastic drop both year over year and quarter over quarter. So could you elaborate a bit more on what's going on here and also add some flavor on what exact measures you are taking to get back to growth?
For us, the core revenue drop came from kind of repositioning ourselves on the Dutch market to be able to participate in the market after the regulation because there is a cool-off period. So we have now gone into a wait state where we are not active in the market anymore. That is the main explanation. And the measures that we are taking is to put a lot of focus on other products. I think that the strategy for ranking has been also not entirely optimal. So we are changing and updating to a more modern SEO strategy. And I think we are already starting to see the results of that, especially now late September, early October. It's something where we or late September and the whole October, we are seeing some really nice results from our work during the summer.
Okay. Thank you. So I have a follow-up on that one. It's about the Netherlands.
Yep.
Will you be prevented from operating in that market once the market becomes fully regulated?
No.
Or okay. So the cool-off period is going to make you be able to.
Yes. In the sense, this was a voluntary thing to ensure it as we are an affiliate. It's not the same as with the operators, but this was a choice we made in order to ensure that we don't run into anything. It's still, so to say, we are not an operator and don't fall under that, but we anyway decided to ensure that we would be able to operate on day one.
Okay. Thank you.
The next question comes from the line of Jan Bodegaard from Nordic Corporate Investments. Please go ahead.
Yeah. Good morning and thanks for the presentation. I have a question about your M&A strategy because if I look at all key parameters in your performance, EBITDA, NDC, cash flow, that has over the last three, four quarters worsened quite significantly. And your current gearing is at 3.2 times, so pretty high. So when it comes to your M&A, how do you envisage to finance that? Is that through cash or is it only share deals? Because your cash position is pretty weak at the moment. So what's your strategy?
Before I can't disclose anything more than that's publicly disclosed, but what we are doing is we are going to pay the acquisitions in a fair amount of shares and then some cash. That's the plan. The detailing of the financing, I can't go into at the moment.
No. And a different question about your gearing at 3.2 times. Are you pretty certain that that is the peak of your gearing going forward?
Gustav, do you care to comment?
Yes. I can hear you now. Yeah. That's absolutely what we're aiming at. So the answer would be yes, that's what we're aiming on.
Okay. Thank you.
And we have one more question from the line of Vidar Thorlaksson from Nordic Corporate Investments. Please go ahead.
Hi. Thank you for the presentation. I have two questions. The first is the upselling. Can you say a bit more about that in simple terms? What does it mean? And the second question is the other revenue you mentioned of 12%. I understand that's the new area. What is it specifically since it's not regulated? Is it data you're selling related to sports betting or what is it?
Right. So I can start off with the upselling. It is quite simple measures where we also not just basically have reviews, but we also have advertisement space, which we can sell to the operators for extra exposure on our sites. It's as simple as that. Email marketing has not been done before. So there are these quite simple tweaks at the moment where we do upsell both towards the user and our operator. It's in its start, so to say, but it's not been done before in this company. But it's not rocket science. When it comes to the revenue stream in the US that you were wondering about, what we basically sell is or what that company sells is its own tips. Basically, you can buy a package of information saying you should bet this on that game and this on that game because this and that.
You basically have experts providing you a tip that you can buy from that person or that tipster then.
And do they pay a one-off? Do they pay once in a while when they want this, or do they pay monthly for access to that?
The current business model is that you pay for when you want it and for that package that you want. But there is, of course, significant upsides in potentially changing or adding possibilities to the business model in terms of having recurring revenue with subscription models, etc.
Okay. Okay. Thank you.
And as there are no further questions, I'll hand it back to the speakers for closing remarks.
I gave my closing remarks. For me, I'd like to say thank you for those who've been online and listened and to all the investors that are sticking by our side during 2020. I'm sure, as I said before, that we are looking at the great 2021 and 2022. I'm super excited about the journey ahead. This feels really good for me.
This now concludes our conference call. Thank you all for attending.