Earnings Call: Q2 2021

Aug 24, 2021

Welcome to Better Collective's webcast presentation in connection with the Q2 2021 report covering the period from April 1 to June 30, which we released today. My name is Jesper Zugel. I'm the Co Founder and CEO of Better Collective. And with me today are CFO, Fleming Peterson and Head of IR, Christina Thomson. Thank you for finding the time to join in today. I've been looking forward to share our Q2 results with you. Now let's get going. Please turn to page 2, where we display our disclaimer regarding any forward looking statements in this presentation. I ask you to please pay attention to this. Please turn to page 3. The agenda for today's presentation is structured as follows. As always, we start by going through the business highlights for the quarter. Hereafter, Fleming will walk you through the Q2 financials. Following the financial review, I'll be reviewing our business and fill you in on progress and relevant updates. In the business review, I will recap the highlights from the acquisition of the Action Network that we completed in Q2 and which is by far our largest acquisition to date. We'll round the presentation off by highlighting key takeaways, which will be followed by Q and A session. Please turn to page 4. Following a strong performance in Q1, the 2nd quarter marks yet an all time high for Better Collective. As you shall see during this presentation, the continued strong performance has especially been driven by our U. S. Business and our media partnerships, which saw breakthrough performance. Overall, we are very satisfied with the development of our business. Please turn to page 5. Looking at the financial highlights, growth in Q2 was strong, however, also against a weak comparison due to the significant effect on Q2 last year by the COVID lockdowns. Yet this quarter hit a record high revenue of €40,000,000 which equates a 162% increase of which 47% was organic growth, most profound in the publishing business that saw 75 percent organic growth. Our operational earnings increased by 90% to €13,000,000 Cash flow from operations before special items was €11,000,000 Earnings margins and cash conversion were all highly satisfactory and in line with our financial targets. For the number of new depositing customers in Q2, we established a new quarterly record as we sent more than 197,000 NDCs to our partners, which equates a growth of 179%. Fleming will revert with more information regarding the financial performance, including some insights into the underlying performance of the business. Please turn to page 6. Now, let me share some of the business highlights with you. What really excited me in the recent quarter are the green dots on the slide. Peak was the acquisition of the Action Network that really examines our position in the U. S. I'll speak more about Action later, but we're all very excited to welcome Action's 100 member staff to the BC Group. The Action Network is, in my mind, the number one asset in the U. S. Sports betting industry, and I'm looking forward to see how we together can build this even further. We saw strong performance which exceeded our expectations in our existing U. S. Business. Even though Q2 is low season, We saw revenue and NDCs on par with the high season Q1. A real breakthrough was recorded in our media partnership business. We started this new strategic leg 2 years ago and following last year's proof of concept, we saw the performance really taking off in Q2. The regulatory developments in new markets continued the positive trends. This will be a cornerstone for our future growth and we are preparing for all new market openings, which I'll get back to. As a sports fan, the return of spectators to the arenas was in isolation, perhaps not so important for our digital business, but to me it is the essence of the whole business of sports entertainment that we are part of. So personally, that was a big win during the past quarter. Moving down the traffic light, The paid medium is performing well following the acquisition of Atemi Group in Q4 last year. However, we have made several changes to the business model, seeking growth, while at the same time protecting profits and investing in sending players on revenue share contracts. I can say that we have a world class team in place that have managed to grow the business and demonstrate that they can manage profitability both short and long term. We have seen some challenges in the first half year, but we have managed and I have big expectation that this can become even bigger and more profitable. Q2 showed the way. We continue to see good growth in July, even though the sports win margin was very low and even though it was on the back of a strong comparison last year, where the month of July was quite unusual as many of the big sports leagues had moved their season closings to July because of COVID. That said, it's been a satisfactory start to Q3, though we face some headwind given the low sportwind margin and some comparison factors to take note of this quarter. As the last dot on the slide indicates, we're also facing headwinds in certain areas. In some mature European markets, We're seeing adjustments to existing regulation through higher taxes in Denmark, COVID restrictions on gambling in Sweden and Spain, and in Germany where a whole new regulation is positive, but may provide short term market volatility and adjustments to the way we work. However, as mentioned, the new market openings by far exceed such challenges that have to be expected. So for the overall business, we're really favored by the general regulatory trends. Please turn to page 7, where I'll pass on the word to Fleming. Thank you, Jesper. Now let's take a deep dive into the financials for Q2. So please follow me to Page 8. Revenue growth in Q2 was strong compared to the same quarter last year and marks a record high. Total revenue for Q2 was €40,000,000 which is a 162% growth compared to the same period last year. Though as Jesper mentioned, Q2 2020 is a weak comparison due to the COVID lockdowns. The organic revenue growth was 47% and the split between publishing And paid media was 65% in publishing and 35% for paid media. Revenue share accounted for 47% of the total growth of the total revenue with 40% coming from CPA, 5% from subscription sales and 8% from other income. Overall, the income from revenue share increased to almost €20,000,000 in Q2. Adding to that, our U. S. Business also includes increasing Revenue from subscriptions implying solid growth in the total recurring revenue base. We saw an all time high number of NDCs 197,000 in the quarter, growth of 179%. An increasing number of NDCs are sent on revenue share and hybrid deals, including the NDCs that we sent from the paid media. And as Jesper mentioned, we saw a real breakthrough from our media partnerships where we sent more than 38,000 NDCs. Please turn to page 9. Operational earnings in Q2 on EBITDA increased 90% to €12,700,000 The group EBITDA margin was 32% compared to a margin of 44% in the same quarter last year. For 2021, the margin is affected by the addition of the lower margin in the paid media business that we added from Q4 last year. The EBITDA margin for the Publishing segment was 43% and if we allow ourselves to include the 1st month of Network it was 46%. Overall, the cost base is impacted by increases following the 2020 acquisitions of Atemi as well as the addition of the smaller mine way as from January 1st and Action Network that was included from May 2021, so only 1 month. Excluding the acquisitions, the cost base was almost unchanged compared to Q1, with a small increase in publishing and a corresponding decrease in paid media. Please turn to page 10. Moving on to the cash flow and balance sheet. In Q2, operating cash flow before special items was €11,000,000 and cash conversion with a cash conversion rate of 93%. While acquisitions and other investments reduced cash With €183,000,000 in Q2, a capital increase covered part of that with €146,000,000 By the end of the Q2, Better Collective's capital reserves stood at €69,000,000 including cash of €40,000,000 and unused bank credit facilities of €29,000,000 The ratio of net debt to EBITDA ended at 1.85, well below our financial target of 3.0. Please turn to page 11. Coming back to revenue and growth, let me take walk you through 2 of our internal key performance indicators. On this first slide, we look at the sports wagering, which is growth in the underlying betting volume on revenue share accounts. Here we have as usual added the historical numbers from acquired companies and indexed them all with index 100 starting in Q1 2018. Please note that the figures represent Better Collective's aggregated data sources accounting historically for certain percentage of Better Collective's annual commission earnings. As can be seen from the graph, the underlying betting volume in these revenue share accounts increases over time with growth in recent quarters that we mainly attribute to the many indices that we have been sending in previous years. The COVID effect is notable in Q2 last year. In Q3 and Q4 of 2020, we saw high performance in terms of wagering in our European revenue share counts and Q1, 2021 landed on an all time high. For Q2, we see a continuation of this up going curve And Q2 landed again an all time high of index 207, aided by the activity during we saw during the Euro 2020 tournament. This is very encouraging and it is a strong indicator for the increased value in the player databases that we have built. And as mentioned before reflected in the absolute income from revenue share accounts. Please turn to page 12. In addition to the betting volume, our 2nd internal key performance indicator is the average sports win margin in the same revenue share accounts. In other words, what percentage is paid out on the volume. You have used the same indexing as in the graph before And what can be seen is that the margins fluctuate over the quarters and that Q2 was at index 84.8. The average index number in the quarter shown is 83.6 and as such Q2 lands slightly above the historical average. The volatility in sports wind margin is something we view as being transient, but it can of course affect short term financial performance up or downwards. With this review, please turn to page 13 and the word back to Jesper. Thanks, Fleming. As something new, we have incorporated a business review of our publishing paid media segmentation and of our geographical split between the U. S. And the rest of the world. In the following, I'll walk you through updates, relevant news and regulatory changes relating to these four segments. At the end, I'll return with my perspective on the acquisition of Action Network. Please turn to page 14. Our Publishing segment includes revenue from Better Collective's proprietary online platforms and media partnerships, when the online traffic is coming either directly or through organic search results. Revenue grew 79%, of which 75% was organic growth to €26,000,000 The Publishing segment constituted 65% of the group's revenue in Q2 and 88% of the EBITDA. Q2 saw the expected strong performance, including the biggest sports betting event Euro 2020 that took place following a 1 year postponement. The U. S. Business outperformed our expectations as NDCs and revenue performed on par with Q1 despite Q2 normally being low season for U. S. Sports. On top of this, the newly acquired Action Network was consolidated into the group with 1 month only, including revenue of €1,800,000 and 0 profit. The inclusion of Action reduced the EBITDA margin in publishing by 3 percentage points in the quarter. Following the proof of concept for our media partnership strategy last year, we are now seeing very strong performance from this business area that includes partnerships with the Daily Telegraph, nj.com and 3 newly signed partnerships. As mentioned earlier, the partnerships delivered more than 38,000 new processing customers in Q2, which is 42 times over last year. Updates to search engines continue to favor branded assets with strong content and this trend is expected to continue. This trend supports our strategy of having a strong portfolio of media brands, including HLTV, Action Network, Vegas Insider, Road to Grinders, etcetera. And we are really experiencing the value of investing in brand building through relevant content and strong technology that facilitates the best user journeys. Please turn to Page 15. The revenue in the Paid Media segment was €40,000,000 in Q2 this year, with good growth following the acquisition of Atemi in Q4, 2020. The organic growth for Q2 was 13%, where a very strong Q2 in 2020 for Atemi provided for a strong comparison. Note that Atemi historically was mostly focused on online casino that saw great performance during last year's COVID lockdowns. The paid media segment is currently impacted by our decision to switch more NDCs from pure CPA to revenue share contracts or hybrid revenue models. Whereas the switch is expected to have a positive impact, in the longer run, the revenue and EBITDA margins are impacted negatively in the short term with EBITDA for Q2 of €1,500,000 and an EBITDA margin of 11%. Paid Media delivered 35% of the group's revenue in Q2 and 12% of EBITDA. In Q2, we continued our efforts with paid media in the U. S. After having improved partner contracts following initial successful campaigns. Please turn to page 16. The geographical segmentation is new from Q2 this year and is caused by the fact that the U. S. Market isolated is expected to constitute more than 20% of group revenue on an annualized basis and is a key market going forward. Key U. S. Brands within sports betting include Action Network, Vegas Insider and Scores Scores and Arts, whereas Roto Grinders is focused on daily fantasy sport. The U. S. Market overall delivered strong performance, even considering the low season and was especially driven by Bigger Sensider and Rotor grinders. Revenue in the U. S. Segment was €6,900,000 in Q2 this year, more than 5 times the revenue in Q2 last year. The acquisition of Action Network is included as of May 29 and contributed with revenue of 1.8 €1,000,000 and neutral EBITDA for the period until June 30 this year. Excluding the 1 month of Action Network, The EBITDA margin for the quarter was 36%. Regulatory updates for the U. S. The U. S. Is a key market for Better Collective to expand our geography in the coming years and to establish a base from which to grow organically. Most of our business is based on the affiliate marketing model and in recent years we have started adding new revenue streams making us a broader based media group. Better Collective became a licensed vendor in New Jersey in 2014, and since then, our presence in the U. S. Has grown tremendously. Betaclective is currently live in 11 states, while a launch in Washington DC is in preparation. Arizona is expected to launch mobile online wagering on sports events in this year. With its regulatory structure, Arizona opens for a user friendly market. And as a result of this liberal legislation, We see Arizona as an important state moving forward. Retail only states led by New York, North Carolina and Mississippi will be looking to authorize mobile wagering, while Illinois is expected to permanently eliminate in person registration in 2022. Given the continued pace of new stage regulating, Betacollective expects the U. S. Market to continue growing fast and its U. S. Revenues to surpass $100,000,000 by 2022, with positive and increasing operational earnings. Market analysts expect the total U. S. Sports betting market to expand more than 4x until 2025 and more than 20x in the next decade. Please turn to Page 17. The Rest of the World segment includes other markets of which the European markets are historically strong, but also more mature markets. New opportunities in focus include Latin America, Canada and the Netherlands, as upcoming regulation of these markets of new opportunities. Revenue in the rest of the world and markets more than doubled in Q2 to €33,000,000 As mentioned earlier, an interim regime to govern gambling in Germany was implemented in October 2020 And the new interstate treaty on gambling came into force on July 1 this year, which runs in line with Betacollective's expectations. For more than a year, we've been preparing for the new regulatory framework and have been adapting our business model in collaboration with our partners to comply with the new regulations. While some market adjustments are to be expected in the short term following the implementation of the new interstate treaty, the overall commercial outlook is slightly better than anticipated for better collective. We have included a more comprehensive description of the new German regulation in our Q2 report. Zooming in on the Netherlands. The Remote Gambling Act of the Netherlands legalized online gambling in the country and entered officially into effect on April 1 this year. The online gambling market in the Netherlands is expected to officially go live On October 1, Betacollective is in dialogue with relevant operators and is preparing a number of products for launch. With a population of more than 17,000,000 people, relatively attractive regulation, high GDP and high interest in sports, We believe that the Netherlands will become a very large market for Better Collective in the years to come. On Canada, following the approval of the new legislation Legalizing single game wagering, Canada's 1st provinces and territories are expected to allow online betting from the end of the year this year. Better Collective is preparing to roll out key U. S. And international brands in Canada as soon as regulation allows. In Spain, the royal decree came into effect on November 5, 2020, imposing limitations on the advertising of gambling activities, including a ban on customer acquisition promotions, I. E. Sign up bonuses. Some aspects of the decree have different implementation timing. For instance, the ban on sign up bonuses came into force in May this year, meaning that our future advertising activities on the Spanish market will be evaluated and implemented in the coming months. Similarly, in Sweden, the regulators are restricting bonuses to SEK100 and applying weekly deposit limits for casino games at SEK 5,000. The duration of these restrictions is currently on debate, but is expected to be lifted in November this year. Please turn to page 18. Now, I'll finalize the business review with a brief look on action. Building on our U. S. Success and the large potential in the continued regulation, we have completed our largest acquisition to date. The acquisition of Axon consolidates Beta Collective's leading position in the affiliate and customer delivery verticals within online sports betting enabled through these strong product platforms and their market leading reach. In a highly competitive landscape and with the vast growth scenarios that we are looking into, Adding a content rich household media brand gives us a unique and market leading position. The acquisition of Action Network creates a strong foundation for benefiting from the continuous regulation of the U. S. Betting market. And the performance of Action since the time of consolidation has been strong across KPIs, including a significant audience growth. Most of our business is based on the affiliate marketing model. In recent years, we have started adding new revenue streams, making us a broader based media group. This transition signifies an increased focus on our branded products and ongoing changes in how we interact with our users. Adding action, which we deem to be the absolute best and most complete product for the U. S. Market, clearly strengthens our positions and secures market leadership. Since our foundation, we have aimed to make sports betting and gambling entertaining, transparent and fair for the global network of online betters, which aligns very well with Action's mission to make sports fans smarter about betting through credible sports betting products and information. Please turn to Page 19. Founded in 2017 and launched in 2018, Action is uniquely positioned in the U. S. Market as a premium sports content and product destination for U. S. Sports bettors. A trusted source for sports fans, Action's media platforms provide an enhanced experience for its users through original sports news content, premium insights, deep menus of arts and proprietary betting tools and data. Action is the premier content and product destination for U. S. Sports bettors and does this in 2 ways through: 1, award winning content and media assets built across audio, video and award winning apps and platforms technology with assets around informing U. S. Sports betters and allowing them to track their picks, follow ups and engaging content. Combined, these two angles produce the most qualified and highest intense sports betters in the United States. Action's diverse revenue model includes a rapidly growing affiliate marketing business focused on customer acquisition for betting operators in the U. S. As well as subscription products anchored by Action Pro, Action Labs and Fantasy Labs. I'm truly looking forward to present the performance of Axon in the coming quarters. And as our team says, there are only 17 days to the NFL kickoff. Please turn to Page 20. We have now reached the end of our Q2 presentation. Please turn to the next page and I'll walk you through our takeaways for Q2. Q2 delivered strong performance with a record high revenue a record high number of unipotent customers. In Q2, we saw a real breakthrough as our media partnerships delivered more than 38,000 uniprostatements, while we also landed 3 new media partnerships. Additionally, I would like to mention that we currently are preparing for more of such partnerships. I'm particularly proud of welcoming action to the BC Group And I'm happy to see how the 2 organizations already have created an infinite pool of knowledge and industry know how. Looking to the U. S, we saw an unexpectedly strong growth during the quarter and we predict an even stronger growth followed by many more opportunities in the U. S. Affiliation business. I'm happy to see that the momentum in regulatory developments all over the world currently are favoring our business and as such will enable us to power Betaclecta's future growth. Q2 has indeed been a fast paced and game changing quarter. And I would like to thank all employees across the group who again have raised the bar for our performance, which lays the foundation for a promising and exciting future for better collecting. This concludes our webcast presentation for Q2 2021, And I'll now pass the word back to the operator and open for questions from the audience. Thanks for listening in. Thank We are taking our first question from the line of Erik Morberg at ABG. Please go ahead. Hi, and thanks for taking my questions. Just to start off On the trading update, I mean, given the dynamics with the sports calendar and the year over year comps, the July performance should come as no surprise to anyone. And you also reiterated your full year guidance. But could you just perhaps explain the dynamics you foresee for the remaining part of the quarter When it comes to activity levels? Yes. Hi, Erik. And as you rightly Point out that in July, we had a very low sports win margin. And on the comparison, we had the postponement of tournaments last year, leading to quite a lot of activity in July last year, which we didn't see to the same extent this year. Now sort of here in August, we have all the leagues running again and activity levels coming up. So there will be a pickup in the quarter and especially September with the start of the NFL will benefit our U. S. Business a lot. And then finally, sort of in terms of activity levels, Q4 will be the main quarter with full sports in both Europe and the U. S. Understood. And just to get a better sense on the underlying performance, is it possible to sort of Give an indication of if you sort of normalize the sports book margins, how much you grew in July then? Yes. I think on the sports book margin, if we sort of look to historical average, we are looking in revenue terms, it's Between €1,500,000 and €2,000,000 lower because of the margin itself. Okay. Understood. All right. And on the European side of the business, Just curious to get a better understanding on Germany and how it developed during Q2. And also, what do you see there for Q3 and Q4? And whether or not we should expect Q2 to be the low point here when it Comstio contribution from Germany? I think that it's important to understand that there's, of course, a Pretty big change in the way that we can monetize now that we have crossed the 1st July. So on new players, we were not able to work on revenue share anymore. So that is being shifted to CPA, still with ongoing conversations as to how we can actually build new potential models of partnership, which is more related to actually the performance of players. But that's ongoing conversations also, depending on the regulators in the German market. But our assets are still sort of from a traffic perspective, they are strong and very powerful in the German market. So we see a lot of traffic. We have strong rankings. So in terms of the product we can offer to our partners, It's still great and we experienced strong demand. But as said, the models are being shifted due to the change in legislation. Got it. And in regards to Netherlands, this will obviously be a tailwind for Q4. Could you perhaps just give your thoughts on what to expect from this market, both in terms of the underlying affiliate market in itself as well as What sort of position you're in to grab? Yes. So it's going to be very interesting with Holland because of the starting 1 October. It will be sort of a slow start because there will be Approximately 6 or 7 operators getting a head start. And then 6 months later, we'll see more operators coming into the market. But what we know is that affiliation will be available from day 1 and that is what we are preparing for. It's a market, especially on the sports betting side, where we think there will be really a land grabbing because Very few players, they hold and have been able to hold accounts with private operators. So we're doing our utmost to be ready with our products and services in the Dutch market. And we view that long term as a big opportunity for Better Collective and that it should also have a short term impact. Understood. And on the U. S, I mean, we all understand the potential here that lies ahead and expect a further ramp up now when we're embarking on the peak season for U. S. Sports. But it would be interesting to get a sense on what you see when it comes to demand for more mature markets such as New Jersey and Pennsylvania. What we have experienced this year, I would say, is very about New Jersey, where there is strong growth in that market. So based on market numbers, as I recall, we were at more than 40% growth year on year in New Jersey in the early months, sort of not affected by COVID-nineteen. And it's a similar picture that we see in our business that New Jersey performs well. We have the partnership with nj.com, and that is performing very well. So there's really No signs that we should view the early states, the regulated as mature states. They are still growing quite rapidly. Understood. Thank you. That's all for me. Thank you very much. Thanks, Haire. We are taking our next question from the line of Gjellmar Alberg at Redeye. Please go ahead. Thank you. Maybe first a question on the inclusion of Action Network and the cost base there, just to understand how to Look at this for Q3, so you had the personnel and other costs basically included for 1 month. So basically, if they did increase from Q1 to Q2, you should Take that times 3 to get to the Q3 level. Is that a similar is that a fair approach you would say? If I understood the question We have as you said, we have only included action with 1 month performance in this, you can say, low season basically €1,800,000 and as we say with 0 profit, action is, you can say, forecasted to turn profitable. And as we have also communicated later this year going into the high season of Q3. So we expect to see strong growth in action And also when it comes to profitability. So that has been the is the business case we're looking into. And of course, Also fueled by the fact that the U. S. Sports, as Jesper mentioned, start the high season here in with With the preseason in late August and then of course with the NFL starting in September. So we expect growth from here. Got it. And maybe a follow-up kind of on the seasonality for U. S. And Action Network. As you said that U. S. Was outperforming your expectations. I guess, I mean, you had a $40,000,000 guidance for action for 2021. And I guess Q1 was a strong quarter for them, then Q2 a little bit slower, and then Q3 and Q4 should be higher if you look at the seasonality, if that's correctly understood? I think you cannot look at action as sort of a linear case. It is an asset that is that we have acquired in, you can say, where they are supposed to be on a strong growth trajectory from here. So you're right that Of course, the seasonality favors Q1 and Q4 and to some extent Q3. But action in itself, I mean, is an asset that is fundamentally growing and has been on a growth trajectory. So it's We don't expect it to be sort of a linear case. Got it. And regarding the media partnerships, Looks like to yield really nice numbers in terms of NDCs. Could you give any indication of how the commercial terms for these partnerships look? Sorry, on the conversion? Commercial terms. Yes. Yes. Yes. Is it like do we get the revenue share from you? Or does that work? I mean, it is so that the Better Collective holds all the relationship with the operators. So All the accounts basically are managed and owned by Better Collective. And depending on which media partnership it is, we Either pay a fixed fee or if it's pending performance, we also share some of the revenue. So we have not given the exact commercial details for each partnership for competitive reasons, but they are organized in that way. Got it. And maybe just a last question on if you compare them in the Publishing Business and paid media, You are transforming the 10 Midyear's gross revenue share and the EBITDA margin is a bit lower. Longer term, would you Similar profitability in the 2 segments? Or will it always kind of be a bit lower in the paid media segment? I would say, In nature, it is a lower margin business in paid media because of the high acquisition costs. So it is a quite different business model. So, I mean, we would aim to get back to the 15%, 20%. Also, you can say, When revenue share starts to be more meaningful, you saw an uplift in the margin in Q2 from Q1. So we are starting to see some effect from the revenue share databases. But the publishing with the organic traffic clearly normally would have a much higher profitability and you can also see that historically. Okay. Thank you. That was it for me. We are taking our next question from the line of Erik Lindholm at Nordea. Please go ahead. Yes. Hi, Jesper. Hi, Fleming. So I guess looking at your full year targets here, I mean the revenues need to be almost 40% higher for the coming months compared to July and the rest of the year in order to meet sort of the target of €180,000,000 I guess, what gives you confidence that you can reach this level? And do you think there is any risk that you need to lower this target? Thank you. Yes. Of course, if you take July, it is the absolute low month of the year. So we certainly don't expect that to be the norm and that is normally not the case. We have tried to give some flavors to the comparison towards last year, There was some you can say Q4 lows and high in July. But Clearly now we are moving into the higher season and especially Q4 is normally our peak season. And also adding to that, as mentioned earlier, the growth in continued growth in U. S. And especially Action It's also you can say built into the forecast. So that's the expectation and we don't expect to make any changes to the guidance. Perfect. The Teradata business, it had a bit slightly lower revenues sequentially compared to Q1. Is this mainly an effect of seasonality? Or is there any other drivers behind this? We mentioned we have seen a few headwinds in the business. To mention one is that we experienced a customer in the U. K. That due to Regulatory effects on that particular customer had to reduce the spend with us. And at the same time, we're also managing from the margin perspective to sort of control Short term margin, not too much at the expense of long term. So it's that balance we're striking. And with A few headwinds in the first half of the year, we sort of removed the foot a bit from the gas pedal in Q2. But now we actually, especially in July, felt that we're regaining momentum for the Pay business and look optimistically at the second half of that segment. All right, perfect. So you expect A sequential improvement here in Q3 in paid media then, I guess. Yes. We expect continued It is so that also when we do paid media campaigns initially, they are costly to run. And when we sort of have a grip A new campaign or a new market, then we optimize the commercial terms with our partners and basically demonstrate the value of the traffic. So it is a bit, I would say, when we are growing the business, initially it comes at That expense and then once it's manageable then we give it more speed. So We expect growth also in the paid media going forward in second half definitely. Perfect. And then, I guess, this update to search engines, as you mentioned, Sabre's branded assets mainly. I mean, I guess, this is a long term Trend, that's positive for you guys. But has this I mean just started to have a positive impact or is this more something you see sort of accelerating going forward? And there's no doubt that looking at the last 12 months that development is ongoing. And as said, we have assets that are benefiting from this. We also have the media partnerships where We believe that they are being favored by this. We also have sort of a commercial part of the business that has been slightly negative impacted. But overall and long term, this is a positive development for us on a net basis. Perfect. And then, I guess, the increase here in operating expenses compared to Q2 last year, Is this mainly an effect of sort of temporary costs, COVID savings coming back now? And then also Action Network being included, of course? Or Is there any driver behind the increase in operating expenses here year over year? I think comparing to the Same quarter last year is almost yes, it doesn't make any sense because we basically cut a lot of cost because of the lower Activity in Q2 is perhaps more relevant to compare to the previous quarters Q4 and Q1 where we have seen a moderate growth in the cost base again. We have communicated that for Publishing, we want to be at About 40% EBITDA margin. And in the previous quarters, we were actually above 50 And that's slowly coming back where we are investing again with when we have seen the revenue base coming back with strong growth. So that's basically, but it has been you can say quite moderate growth of cost in Publishing from Q1 and a bit of reduction actually in paid media, Netting out the rest of the cost increases come from acquisitions of Atemi and also now with 1 month of action. Right. And I guess the final question here. So just on July, I mean, Many operators have actually seen quite a strong sports book margin in the last games of the Euro 20 20. Can you elaborate a bit more on why sort of the sports book margin was slow for you guys? And have you seen any Same here into August? We can't really like the numbers we see and also get from the operators were not good for July. So To be honest, it's a bit hard for us to comment on that because it was a low sports win margin for us in the revenue share accounts in July. And like we don't comment on August since it's yes, it's still ongoing. All right, perfect. Thank you, guys. Thank you. Thank you. There are no more questions on the line. Please continue. We also have some questions online. The first question coming from Matthias Burkett. Regtech recently announced the acquisition of Online Cricket, Betting.net, India's biggest affiliate asset targeting cricket. How do you review the Indian market and especially the high potential in the cricket vertical. Best regard, Matthias. I think we look globally at attractive markets and sports. And as the question alludes to, cricket is a big global sport and obviously, therefore, of interest to us. So fundamentally, it's a market where we would like to get involved long term. The next question from Thomas Bess. The Q2 statements are all very impressive. However, the current stock rate outcome of Today and year to date is a disaster. The shareholders' investments are significantly diluted. Can you explain further Why should investors keep the hard earned monies in your company? I myself is one of the largest shareholders in Betacollection together with my co founder Christian Rasmussen. And We fundamentally believe long term in the potential of better collectors. Just to put the record right, I think we started at a share price of $1.50 I haven't looked at it this morning, but it's a bit down, but year to date actually, it's up. But of course, it's fluctuations that we are not as a company The next question comes from Carlo Cirelli. Why 0 profit for Action? What was revenue growth of Action? What is outlook for EBITDA margin of Action short and medium term? Yes, Fleming here, I can take that. I can say action is as we have communicated earlier, it's a company that has, you can say, During its previous ownership, I can say, all the development and build up of the business. Now this year, we are turning into profit And I can say with second half action is expected to become a profitable business. You can say June is a low season for Axne. But moving forward, We definitely have high expectations for that. Axon will be one of the strongest assets in the U. S. Margin And basically performing on par even above the earning margins of the rest of the Publishing business in BetterPlex. And the next question comes from Edipan Bank. In the longer term, I. E. 2025. What split would you like to have between revenue share CPA and subscription services? I think ballpark figures would be revenue share of about 50%, potentially slightly higher, but about 50% CPA around 30% of our rack in and subscription services, then including also fixed fee selling for the remainder. And the next question from Carlos Sereni, Where do the NDC revenue contribution of the paid media show up? If I understand the question In the right way, we have part of the revenue stemming from CPA payments, which is immediate. So include them immediately, but then we also have to a growing extent revenue share, which is over the lifetime of the players where we get monthly And the next question again from Eddie Poundsbank, How much do you need to recruit in order to keep up with your growth pace? What is your view on BetCo's level of OpEx and scalability in the coming years? Yes, I can try to answer that. We are basically scaling with growth. We are as we have Communicated now for more than 3 years, we are very focused on maintaining And operational margin above 40% in the Publishing business. And that basically has at least until now allowed us to do the right investments in our technology and our brands. So I think really you can say the cost base is a reflection on also how we monitor growth in the business And scaling the business, you can say, we have added both organically and through M and As, A lot of new talent and employees to the company. So we definitely expect strong growth in the organization and also growing the top line and of course to some extent the cost base will follow, but with the margin guidance that we have followed now for more than 3 years. And the next question from Following the large acquisitions, how are you working to retain the BetCo culture? Are you measuring employee satisfaction by Net Promoter Score or similar? We actually work a lot with sort of the integration of the different teams and bringing them together. And then on top of that, we have for both founders and directors in the various acquired businesses, We host summits where we bring them together in order to share best practices and really try to build the BetCo values into all employees and how we run the company. We AGI is being managed centrally from Copenhagen with sort of the practices that we then implement in most of the acquired businesses. There are a few on a standalone basis. For now, action is an example of that. But long term, we work closely together to develop the HR practices and also fundamentally the values that Betaflexive stands on together. And a question from Carlos Sarani. Acquisition projects for the rest of the 20 of this year. Acquisition is part of the strategy and that hasn't changed. So we have a dedicated team working with that and we have a pipeline that we work with. Acquisition is, of course, opportunistic by nature. So timing is not something we can really comment on, but it is something we work on a daily basis basically. And the next question is from last year, Anaras Busen. You raised €145,000,000 overnight to finance the acquisition of Action Network with a big discount in the marketplace at SEK 218. It seemed as too many short term speculative investors got stuck and afterwards slaughtered your stock. What is your own comment on that? And what have you learned? Did you use the wrong broker? Yes, I can try and answer that. It's of course not for us to speculate and to be easy and say what investors do with the stock When they buy it, we basically use advisers that we think are professional and good in this space. So it's difficult for us to comment on any individual investors' behavior afterwards. So what we have learned from even say advisors and others is that we saw a quite normal picture. But of course, We as also being shareholders, we also like to see share price increases. But I think we Also have to, you can say, manage the company's balance sheet and we thought this was the right time to take in funds. So for us, it's more long term thinking. And a question again from Thomas Bess. I previously submitted a question with regards the stock market reaction of the quarterly results today. Would you kindly comment on future expectations for existing investors? Again, it's not for us to comment on share price reactions. As we all know, we are also shareholders in the company. Management Board are pretty big shareholders. Management are the biggest shareholders in the company. So we also expect our value to increase as we have seen over time. We will, of course, see volatility and ups and downs as old companies, but I don't think we can give any guidance for how the share price will react and move in the future. And then a question again from Carlos Serenni. Is there a different value for an NDC client from paid media compared to your old business? No, we actually expect depending on the niche and geography that Often paid acquired customers could be of higher value than publishing. At least we know to a more granular level what the value of such players are. And again from Carlos Areni, your capital placements in 2020 2021 have been very poor. Why? What can you do to improve for future placement success? And I think the one in 2020 was actually not it was a secondary sale by Christian and myself predominantly in a secondary transaction where at least now the share price is still significantly higher than when we sold and Fleming has already commented on the most recent one. And a question from Florian Leante. Would you please explain why the cash flow increased only 7% while EBITDA increased over 90%? How to explain this weak cash conversion? Yes, it's a good question. It's actually not a weak cash conversion. But Last year, we had in Q2 an exceptional cash conversion due to the COVID lockdowns where a lot of, you can say, 1st and foremost, accounts receivable went down significantly with revenue. And also there was a lot of payments that were, let's say, postponed by law. So it is not really a good thing to compare the 2 quarters. I would say this quarter, it's normalized. Last year, it was really an abnormal situation where we had an exceptional high cash conversion because of the COVID situation. Yes, I think to give an example, we had the postponement of tax payments from various states And of course, the revenue down reducing accounts receivable. So this time this quarter is normal. Last year was abnormal. And that was the last question. Thank you very much for listening in and have a nice day.