Ladies and gentlemen, welcome to the Net Gaming Europe Q1 Report 2019. Today, I'm pleased to present CEO Marcus Teilman. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. Marcus, please begin.
Thank you very much, and good morning, everyone, to this presentation of the first quarter 2019. My name is Marcus Teilman. I'm the CEO of the company, and with me today, as always, I have our CFO, Gustav Vadenbring. Let's look at the agenda for this presentation. I will start off with some highlights for the first quarter 2019. Then I will go through Net Gaming in brief. After that, I'll hand over to Gustav for the financials of the first quarter. Then I'll round off with a summary and outlook, and then I'll hand over for a Q&A session. So let's move on to the highlights and slide four. The first quarter of 2019 has been a challenging quarter, with negative impact from regulatory changes in Europe, primarily in the Netherlands and in Sweden, but we've also been impacted by other markets such as the U.K. and Italy.
We are operating in a business where regulatory changes will have an impact short-term-wise, but I would like to reiterate that on the long term, we are really positive at regulations going on, so we look at this only from a positive side. In addition to this, we have also phased out our traffic from paid media channels, which has also impacted top line. Our revenues would be flat, excluding the phase-out of paid media. We have also achieved a more diverse revenue model in line with our strategy, where rev share agreement has increased from 23% to 40% of our revenues. This has a direct impact on the top line, but over time, we expect that the revenue from rev share agreements will start to build up.
On a positive note, we have seen continued growth in North America by 42%, now amounting to 26% of the group's total revenues. EBITDA amounted to EUR 2.5 million, which was a decline of 18%. However, in Q1 2018, we divested Battle of Malta, which contributed EUR 300,000 to the EBITDA last year. EBITDA margin declined by two percentage points when we exclude the divestment of Battle of Malta from last year's comparison figures. Our cash conversion is slightly stronger than normal in Q1 2019, impacted by a positive net working capital, which Gustav will go through later on in this presentation. Let's move on to Net Gaming in brief and to slide six. Net Gaming is operating in the affiliate industry. So we are an iGaming affiliate. But what is an affiliate?
It's just like the travel industry where we see Booking.com, Expedia, Inc., Hotels.com, and TripAdvisor, for example, where we direct our customers or our users to our customers, which is actually the operators in the iGaming industry. Competitors of ours are other large companies in the iGaming affiliate industry, such as Catena Media and Better Collective. Our mission is to always help our users to make the right decisions in a complex iGaming world. That means that we need to guide our users to make the right decisions when they are searching for a specific bonus, a specific casino game, or a specific operator. That's what we do. If we move on to slide seven, we see Net Gaming's growth pillars. We have three growth pillars, which is our long-term growth plan. First one is European online casino affiliation.
We see significant growth potential, where we have approximately only 1% of the market share, and we believe that we can continue to grow in selected countries. One of our focus markets is the U.K., but we also invest a lot now in Germany and in some other interesting European countries that we will also continue to invest. Also, the second growth pillar is U.S. iGaming affiliation, and I would say that we are well positioned for the coming iGaming regulation with our core assets, such as the PokerListings, CasinoGuide, and SportsBettingGuide. In addition to this, we have been building and we will continue to build up local websites and domain names for state-specific purposes, both in casino and also in sports betting.
But we believe that U.S. iGaming affiliation is very interesting in the long run, and we expect that more and more states will continue to open up for regulation. And our third growth pillar is sports betting affiliation in Europe. Last year, we established and started to build up our sports betting assets in Europe. We are seeing some growth in the sports betting segment, however, from small numbers. But in the long run, we believe that sports betting is a great contribution and will be a great addition to our total revenues in the long run. So we believe that this is a strategic move that we've taken to also add sports betting to our revenue mix. With that, I'd like to hand over to our CFO, Gustav Vadenbring, who will go through the financials for the first quarter.
Thank you, Marcus. We would move to page nine, please. Two areas which I would like to highlight before going into the trading and the financials are: one, that we have changed reporting currency to align our reporting to our operational currency, which is euro. Hence, we avoid translation impacts in our operational trading, meaning revenues and operational costs, which are denominated in euro. The second one is that we have finalized the streamlining of the affiliate business in Q4, meaning we only have affiliate revenues in our business from Q1 2019, and we report one segment in accordance with IFRS 8. We have consequently wound down our operator business. Therefore, we disclose the historicals as discontinued operations, excluding the operator business onwards. So that's the financial information you see in our interim reports and also in our analyst presentations onwards.
So on page nine, we see that our revenues declined in Q1 by 6% year on year. And like Marcus said, we are flat, excluding paid media. This is driven by declining NDCs, which we'll see on the coming pages. And that's related to both the regulation on the European markets, but also the phase-out of paid media. It's also impacted by the shift from CPA to revenue share, which is accelerating in Q1 2019, reaching 40%. The second one on this page we'd like to highlight is that we're still operating with one of the highest EBITDA margins in the industry, amounting to 63% in Q1 2019, compared to 65% in Q2 2018, adjusted for the effect of Battle of Malta. Move to page ten. Our underlying revenue base still comprises 85% of casino revenues, with poker being the second largest of 13%.
What we would like to highlight is the shift to North America from Europe. In Q1, end of Q1, we had almost 26% of our revenues comprising North American revenues, and we grew with 42%. Move to page 11. The SEO development is somewhat disappointing. At the same time, we decreased by 50% year on year. That's mainly driven by the European regulation, but also the phase-out of the paid media. We'll move to page 12. Positive for us is this revenue split and the diversification of the revenues, now reaching 40% revenue share. This impacts our growth in Q1 negatively, but we see that it impacts us positively in the long run. This is a strategy we've been working on for almost a year. Move to page 13, please. Show our P&L for the group.
I would like to highlight a few areas regarding the full P&L on this page. We continue to work closely, following our cost base very closely, and working with cost efficiency, resulting in high margins. The operating costs, you can see, amounting to EUR 1.5 million are impacted in Q1 2018 by the capital gain of the divestment of Battle of Malta. Excluding that, in Q1 2018, our cost base is more or less flat, even if we are continuously growing and improving our business. The financial net decreased in Q1 2019, impacted by translation effects related to reporting the bond loan in euro instead of translating that from SEK. We move to page 14, please. For the strong EBITDA generation and the high cash conversion level in the business model, we continue to deleverage in a relatively fast pace.
We moved down to 2.1 now, and we still have the target to be debt-free at the end of 2020. Please move to page 15. Show our cash flow of the business. As you can see on the cash flow, we continuously produce a lot of cash, reaching a cash position of almost EUR 12 million at the end of Q1 2019. We have a very high cash conversion of around 102% in Q1 compared to our general level, which is around 85%-90%. This is mainly impacted, like Marcus said earlier in the presentation, by positive net working capital changes. These changes are, in turn, related to that our debt collection has improved in Q1, resulting in a positive net working capital change. Move to page 16. We continue to operate with a relatively light balance sheet without any large movements in Q1 2019.
We can highlight that our net working capital level is decreasing somewhat in Q1, and our equity ratio continues to improve, reaching 38% at the end of Q1, and by that, I hand over to Marcus.
Thank you very much, Gustav. We will continue this presentation by moving into the summary and outlook part. Let's move on to page 18 and our financial targets. As you've already noted, we are currently operating below our financial targets. We are operating in a business where political changes can impact us in the short term and currently seeing changes with regulatory updates in Europe that are affecting us now. It might continue to affect us for some quarters going forward. However, we have a long-term growth plan that I'm convinced that will make us execute on our financial targets in the long run. These financial targets should also be seen in the long run and not isolated quarter on quarter, so to speak. I'm convinced that in the long run, we will execute on our financial targets.
With that, let's move on to page 19 and the summary of Q1 2019. To summarize the first quarter, it has been a disappointing from a top-line perspective, where our revenues have been negatively impacted by both regulations across Europe, but also an accelerated shift in revenues to a higher portion of revenue share agreements. In addition to this, the phase-out of paid media also impacted our organic growth negatively. We have seen growth of 42% in North America, now 26% of our total revenues. Our cash conversion remains strong, and our capital structure and equity ratio have further improved to 38%. Our M&A department has been strengthened and is increasing its focus on strategic acquisitions in key markets. Let's move on to page 20 and the future outlook. As I've already stated, regulatory changes will continue to affect the iGaming and the affiliate landscape in Europe for some quarters.
We continue to diversify our revenues to ensure future growth and to reduce the dependency on casino in Europe. Consequently, we continue to invest a lot in our US expansion. However, we now see an increasing competition in that market that could have a short-term impact on our revenues. But further to our long-term growth plan, we also work hard to expand our new betting vertical in the European market. In summary, our long-term growth plan rests on our three growth pillars: European online casino affiliation, US iGaming affiliation, and sports betting affiliation in Europe. In addition to organic growth in these areas, our M&A department is now gearing up and getting ready to execute on some bolt-on and strategic acquisitions that fit well with our growth pillars. And with that, I'm now ready to hand over to the operator to the Q&A session.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad and you'll enter a queue. And after you're announced, you can ask your question. There'll be a brief pause while any questions are being registered. And just as a reminder, if you did wish to ask a question, please press zero one on your telephone keypad now. And as there are no questions, I'll hand back to the speakers.
Thank you very much. It's been a disappointing quarter for Net Gaming Europe, but I'm committed to deliver growth in the long run, and I'm happy to be presenting the second quarter back in August. Thank you very much, and have a nice day.
This now concludes our conference call. Thank you all for attending. You may now disconnect your.