Good morning, and welcome to the Betsson Q3 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to our CEO, Pontus Lindwall. Please go ahead.
Hello. Good morning, everyone, and welcome to Betsson's results presentation for the third quarter 2022. My name is Pontus Lindwall, and I'm the CEO of Betsson. I'm joined here today by our CFO, Martin Öhman. Next slide, please. Here's the outline for the presentation. First, I will go through some of the highlights in the quarter before presenting some progress and activities in the period. Then Martin will talk about our financials in more detail. After that, I will be presenting a trading update for October so far, give a regulatory update, and then conclude the presentation with a summary. We will open up for questions from the audience. Next slide, please. Here are some key figures for the third quarter 2022. This was the best quarter ever for Betsson, driven by both sports and casino. We set seven new records, as you can see on the slide.
All-time highs were reported for group revenue and EBIT, sportsbook turnover and revenue, casino turnover and revenue, as well as for customer deposits. The reported revenue growth was 18%, and organic growth was 35% year-over-year. Again, revenue was driven by the regions Latin America and Central and Eastern Europe and Central Asia, called CEECA. We saw great activity in the sportsbook in the quarter. The gross turnover increased by 29% and the margin was 8.3%. The sportsbook margin is in line with the previous two quarters this year, but somewhat higher than the average of the last eight quarters of 7.7%. The casino product also performed well in the quarter. Gross turnover was up 14% and revenue was up 8% year-over-year.
I'm particularly pleased with the high growth overall, given the fact that we didn't have any revenues from the Netherlands, where our license applications are still being processed. Profitability was at healthy levels despite continued investments for growth. EBIT amounted to EUR 38 million and the EBIT margin was 19.2%. Next slide, please. If we look at our existing markets, Italy has to be mentioned as one of the best performing markets where we are growing faster than the market and taking market shares with our local brand, StarCasinò. It's a locally regulated market, as you know. During the quarter, we launched a new sports betting product, and we entered two additional sponsorships with the football clubs Salernitana and Palermo in the south of the country. This means that we now have sponsorships with six geographically diverse Italian teams.
In addition to the two clubs mentioned, also with Milan, Roma, Torino, and Sassuolo. In the Nordics, we launched a new concept and brand identity for one of our three global brands, NordicBet, around a new TV commercial. The new concept, called Makes Sports Bigger, aims to strengthen the brand's position in the Nordics, not only by showing the passion for sport, but also by representing the supporters' passion for sport in a unique and different way. The new concept is the first example of our new international design and creative hub, which aims to streamline and scale the company's work within brand identity and design across Betsson's markets. In Denmark, we also extended the sponsorship for NordicBet of the Danish Second League in football.
In Lithuania, where we have a strong market position since many years, we extended the sponsorship for another one of our global brands, Betsafe, with the highest basketball league in the country named LKL. Next slide, please. When it comes to new markets, let's zoom in on Greece and LATAM. In Greece, we have continued to see solid performance, and in September, we were sponsors of the Acropolis Rally. Also, we have recently created the Betsson Foundation in Greece. The foundation's website promotes tips on safe and responsible gaming, and also lists the many social impact initiatives that Betsson organizes in Greece. Through the Betsson Foundation, donations will be given to nonprofit organizations in the fields of education, health, and sports. In the LATAM region, Betsson launched its first online casino on the regulated market in Mexico.
This is a soft launch so far, but more marketing will come in the fourth quarter and especially during the next year. In Brazil, a new sponsorship was signed with Club Athletico Paranaense in the Brazilian state of Paraná. Betsson's newest brand ambassador is Zé Roberto. The Brazilian former football player, who has a successful career worldwide, has signed a three-year global contract with all brands in Betsson Group's portfolio. Mario Yepes, the Colombian ex-football player, will be Betsson's official regional ambassador for Latin America. Next slide, please. Today, we announced the acquisition of 80% of the shares in KickerTech Malta Limited from TG Holdings Limited. KickerTech owns a business to business sportsbook operation and has a team of 50 professionals building advanced odds models, trading technology, and sportsbook features. The team is based in Vilnius in Lithuania.
In the last 12 months, ending on the 13th of September 2022, the acquired business generated revenue of approximately EUR 2.6 million and EBIT of approximately EUR 1.3 million. Signing and closing has taken place as of today, and the total consideration for the 80% of the shares amount to EUR 14 million on a cash and debt-free basis. The consideration will be paid in three installments with EUR 6 million in cash as of now, and EUR 4 million in the next 6 months, and another EUR 4 million after 12 months. The last EUR 4 million, either in cash or shares issued by Betsson. The cash portion of the acquisition will be financed with Betsson's existing funds. Sports continues to develop into a larger share of our total business.
This acquisition will contribute sportsbook functionality, tech development capabilities, and new B2B clients, and will both strengthen our position as one of the leading B2C sportsbook operators in the market and complement our highly competitive B2B sportsbook proposition. Next slide, please. We continue to invest resources into development to secure that we have a competitive product and scalable technology for all our markets. Betsson has its own proprietary technology platform with a so-called player account management system, or a PAM, which is the core of the offering, and player experience. The platform is integrated with our own in-house sportsbook, as well as with external third-party casino game providers and payment service providers. In the third quarter, a new sportsbook app was introduced on several markets in the Nordic region and Latin America. Also, the horse race betting product on RaceBets brand was strengthened.
New payment solutions were integrated for the German market, and live streaming was introduced for South African racing. Further development and adaptations of Betsson's technological platform and sportsbook have also continued to be made to support a B2B sportsbook offering. Next slide, please. Apart from the positive financial development in the third quarter, we also won a number of industry awards in different categories related to the strong core products for both sportsbook and casino, as well as a great workplace for our team. Next slide. This slide illustrates some of the activities during the quarter related to sustainability. For example, Betsson launched a responsible gaming themed TV commercial in Greece with the message, "Athletes should go all in. Maybe you shouldn't," where Betsson encourages customers to set boundaries and reminds them that the game is only for fun when it's played responsibly.
Recently, Betsson also participated in several seminars on responsible gaming, organized as part of the yearly European Safer Gambling Week, organized by the European Gaming and Betting Association. We also hosted two diversity and inclusion conferences, one in London and one in Valletta, focusing on topics such as inclusive leadership and best practices in diversity and inclusion. Now I will hand over to Martin, who will take a closer look at the financials in the quarter. Operator, next slide, please.
Thanks for that, Pontus. I will now take you through the financials of the third quarter, which was another good quarter following the good trend we have seen in previous quarters. In Q3, we see growth in active customers year-on-year by 7%. Deposits up 24% at all-time high levels. All-time high in sportsbook turnover, sportsbook revenue, casino revenue, and also all-time high in reported and organic revenue. Overall, we are very proud of the results achieved and the performance of the organization in the quarter. Reported revenue for the third quarter amounts to EUR 200.3 million, an increase of 18% year-on-year, with 35% organic growth amounting to EUR 229 million.
Both B2B and the B2C business contributed to growth with SEK 155.2 million in revenue coming from B2C, and SEK 45.1 million coming from B2B. Casino turnover increased by 14% year-on-year and was all-time high in the third quarter. Casino revenue was SEK 135.4 million, an increase of 8% year-on-year, and also at all-time high. This, despite that Betsson stopped accepting Dutch customers in the third quarter in 2021. The gross turnover in sportsbook across all Betsson's gaming solution was EUR 1,058 million, which is a new all-time high, an increase of 29% compared to the third quarter last year.
The European football leagues and cups started two weeks earlier than usual because of the upcoming World Cup in November and December, which also contributed to the increase in activity in the quarter. Sportsbook margin was 8.3%, which is higher than the 7.8% margin last year, and also somewhat higher than the two-year rolling average margin of 7.7%. Sportsbook revenue increased by 45% compared to last year and amounts to SEK 61.9 million, which is a new all-time high. Sportsbook revenue represented 31% of the group's total revenue in the quarter. Next slide, please. Breaking down revenue by region, we see a decrease in Western Europe, while the Nordic, Latin America, the CEECA region, and the rest of the world region show growth.
Starting off with the Nordic region, we see a slight increase of EUR 0.4 million, representing 1% year-on-year, explained by increased sportsbook revenue in Finland and all-time high in Denmark, driven by casino operations. The Nordic region represented 27% of the group's total revenue in the third quarter. Revenue from Western Europe decreased by EUR 15.5 million, affected by decreased casino revenue, and is explained by the decision to stop accepting Dutch customers as of end of September last year. We have described the regulatory landscape in the German market in the past presentation and reports. Revenue from that market is following the same trend as in the past quarters and years, and continue to decline for Betsson. The Italian market is continuing to perform well and reported all-time high in deposits and revenue during the third quarter.
As we heard Pontus mentioning, a new sports betting product was launched during the quarter. This to broaden the customer offering and to strengthen the local brand StarCasinò in the Italian market. The Western Europe region represents 13% of total revenue in the quarter. The CEECA region increased by 48% and reports a new all-time high. This driven by high underlying activity in both casino and sportsbook operations. Croatia and Greece showed continued positive trends in activity and revenue performance. The Baltics continued to perform well during the third quarter, where Lithuania and Estonia reported growth for both the casino and the sportsbook products. Latvia reported decreased revenue in the quarter, mainly driven by lower casino margin compared to corresponding period last year.
Georgia reported both growth compared to previous quarter and the corresponding period last year, mainly driven by the casino product. The CEECA region represented 39% of the group's total revenue, making it the largest region by revenue. Reported revenue in Latin America region amounts to EUR 38.8 million, representing an increase of 59% compared to the same period last year, where all countries in the region reported revenue growth, driven by growth in deposits, active customer, and growth in turnover in both Sportsbook and casino. Quarter-over-quarter, revenue in Latin declined due to lower Sportsbook margin, although turnover is on the same levels as in the second quarter. In the third quarter, the Betsson brand was launched in Mexico, where the offer includes casino, live casino, and Sportsbook.
The Latin America region represented 19% of Group's total revenue in the third quarter. Revenue from rest of the world increased by EUR 0.5 million compared to the same period last year, and is mainly driven by the Nigerian operations, where Betsson increased its ownership from 25% to 60% in the quarter. Revenue from markets where Betsson pay local betting duties increased by 22% compared to last year and constituted 35% of the Group's revenue in the third quarter. Next slide, please. Focusing on the EBIT development year-on-year, we see that revenue has increased by some EUR 30 million following that also cost of services provided. The increased cost of services provided of EUR 6.4 million is mainly explained by higher cost of betting duties following increased share of revenue from locally regulated markets and increased payment provider costs.
Gross profit increased by EUR 23.9 million compared to the same period last year, corresponding to a gross profit margin of 66.8% compared to 64.6% last year, which is a result of increased revenue and a favorable revenue mix, where also the share of sportsbook revenue has increased in relation to the total revenue. Marketing spend was higher in absolute numbers compared to the same quarter last year. This to increase brand awareness ahead of the World Cup in football that takes place in the fourth quarter. Focus in the third quarter has been towards the LATAM region and other new markets. Marketing cost in percentage of B2C revenue amounts to some 22% and 27% when including affiliate marketing as well, which is in line with the previous year.
Personnel expenses has increased by EUR 7.2 million in the third quarter compared to the same period last year due to yearly salary revisions, performance-related compensations, geographic expansion, and increased investment in product and technology development. Other costs increased by EUR 2.9 million and is mainly driven by sustained increased investments in product development and technology, specifically from increased investments in cloud-based environments and from extension of the sportsbook offering. When breaking out costs related to development of new markets, this sums up to EUR 11.8 million in the quarter, of which EUR 1.5 million are attributable to the U.S. expansion. The remaining EUR 10.3 million consists of EUR 7.9 million in marketing costs and EUR 2.4 million in other costs, where the bulk of the cost relates to external consultants within the tech development.
EBIT amounts to EUR 38 million and the EBIT margin is 19.2%. High customer activity in general, combined with a favorable revenue mix and Betsson's scalable business model have contributed to the higher EBIT. Next slide, please. Moving on to the cash flow and the financial position of Betsson, we see cash flow from operating activities amounting to EUR 38.5 million, driven by operating income. The deviation compared to the same period last year is mainly explained by impact from working capital. Negative impact from working capital of EUR 6.8 million should be compared to a positive impact of EUR 2.0 million last year. The negative impact comes from increased payment provider balances as a result of deposits and turnover, both reaching all-time high in the third quarter.
Settling of balances depends on when deposits are made, in what market the deposits is made, and when settlement of accounts is scheduled for within with the individual PSP. Cash flow from investing activities amounts to EUR 9.1 million, of which the largest part relates to investment in capitalized development cost. During the quarter, the group increased its ownership in the Colombian operator Colbet from 70%-88%. Cash flow from financing activities impacted the cash flow by EUR 17.7 million, mainly explained by the transactions related to the bond financing.
We have redeemed the remaining SEK 300 million out of the total of SEK 1 billion in the 2019-2022 SEK bond series, corresponding to EUR 28.4 million, and we have also issued subsequent senior unsecured bond of EUR 10 million under the company's outstanding framework of EUR 250 million in the 2022-2025 series. The subsequent bonds were priced at par and run with a floating interest rate of euro 3-month plus 650 basis points, with final maturity in June 2025. Betsson has, as of end of September, a net cash position of EUR 54.7 million and an equity ratio of 66%. By that, I hand over to Pontus again to take us through the trading update, followed by a regulatory update. Next slide, please.
Thanks, Martin. Now let's have a quick look at how the fourth quarter of 2022 has started. The average daily revenue up to and including the 24th of October was 38% higher than the average daily revenue of the full fourth quarter of 2021. Adjusted for currency effects and acquisitions, the average daily revenue until the 24th of October was 44% higher than the average daily revenues of the full quarter of 2021. During the start of the fourth quarter, the Sportsbook margin has been higher than the average margin over time. The Sportsbook margin in the full fourth quarter last year was 6%, which is significantly lower than the historical average. The fourth quarter last year was also the first quarter without any revenue from the Netherlands, which obviously affects the base that we are comparing against from Q4 and onwards.
Next slide, please. Now let's look at some regulatory developments in the third quarter. In Norway, in the pending complaint regarding the cease-and-desist order of the Norwegian regulator against Betsson's subsidiary, BML Group, the subsidiary has been granted deferred implementation of the cease-and-desist order until the ministry and the committee decide on the complaint and whether to uphold the order. The Ministry of Culture is expected to issue its decision before the end of October 2022. Peru, the Peruvian Congress passed a new gambling bill in July, which was approved and signed by the country's president in August. According to the new law, gaming licenses will be issued for six years. Licensed sites must be on a local domain, and the gaming tax rate will be 12% of GGR.
In Argentina, Betsson, together with its joint venture partner, Casino de Victoria, submitted its application for the licensing tender in the province of Córdoba in August. In the Netherlands, the gaming regulator, KSA, is still in the process of reviewing the license applications filed by Betsson's operational subsidiaries. In August, the subsidiaries were asked to provide further information relating to module B of the license application, whereby additional involvement and ancillary entities were requested as part of the regulator's reliability investigations. The request has been fulfilled, and the KSA has been provided with all relevant information. In Ontario, in Canada, the local regulator, AGCO, issued a consultation document in August stating that October 31st will be the deadline for gaming operators without the license to stop serving Ontario customers. The AGCO have recently issued registrations for two of Betsson's operational subsidiaries for B2C and B2B licenses.
The remaining step in the licensing process is to obtain signed agreements with iGO, which is the provincial agency and lottery subsidiary corporation of AGCO. This is expected to happen in the near future. Next slide, please. Finally, here's a brief summary of the quarter to conclude the presentation. Betsson reported all-time high group revenue and EBIT. The organic revenue growth was 35% year-over-year. We saw strong underlying performance across the business with all-time high levels for turnover and revenue in both Sportsbook and Casino. Customer deposits were up 24% year-over-year. Regionally, the key growth drivers in the quarter were Latin America and the CEECA region. Furthermore, profitability was still at healthy levels despite continued investments and no revenue from the Netherlands. We ended the quarter with a strong balance sheet with a significant net cash position.
Today we announced the acquisition of 80% of the B2B sportsbook business from TG Holdings at EUR 14 million. The acquisition supports future growth for Betsson in sports betting, both in business to consumer and business to business. Looking ahead, we continue to see growth potential in existing and new markets. We have a very active calendar in the final quarter of the year with planned new market entries and the FIFA World Cup, which could become the biggest sporting event ever for Betsson. Next slide, please. Thanks everyone for listening to the presentation. Now it's time for Q&A, and we welcome your questions.
Thank you very much. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing these keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Oskar Rönnqvist from ABG. Please go ahead.
Thank you. Good morning, Martin and Pontus. First, I just wanna take a look at the strong results and sort of get where it comes from. Revenues from Q2 levels are up SEK 14 million, and you also have, I think all of that SEK 14 million sort of is B2B sales, and gross profit is also up SEK 14 million. Can you talk a little bit about the incremental margins on the B2B side? Because it seems to me that, I mean, it sort of has 100% incremental drop through. Could you tell me if I'm wrong here?
Okay, I can start, and then Pontus can fill in here. I mean, to start with, we are really pleased with seeing that both B2B and B2C revenue is growing. In the B2B segment, it is good growth on quite a few of the customers. We see some of the customers are increasing their revenue significantly. So we are really pleased to see that our product development is paying off here.
All right. Can you just elaborate? You just said quite a lot of customers. So, how many customers on your B2B platform do you have at the moment?
Now that we have from the additional acquisition, I don't think we mentioned the number of customers, but there are quite a few in the business that we acquired. In the past business that we have, there are a few of them. I think we have mentioned a few of them in the past. One of them is iBet, one of them is Reel. Yes. There's a few more.
Yeah. Okay. And iBet, so that's in Germany, right? Western Europe?
No, it's not only in Western Europe. It is a European business.
Okay, got it. Also just to elaborate on LATAM, because it's down quite a lot from Q2 levels. It's down 25% in the Sportsbook. Is that solely driven by turnover? You mentioned that it was solely driven by turnover. Was turnover flat and the Sportsbook margin exceptionally strong in Q2, or how should we read that?
I think it's important to say that the casino part in the LATAM region is up quarter-over-quarter.
Yep.
As you say, it's the sportsbook part of it. It is margin driven. The turnover is more or less the same in the quarter. Purely margin driven in that region.
Okay. Then I just want a question on the Sportsbook acquisition. You obviously already have an in-house Sportsbook, which you are currently marketing in the U.S. also. What's the rationale behind buying a Sportsbook? What's the sort of incremental positives from buying this one that you don't have at the moment?
I think by buying this one, we broaden the spectrum of customers that we can serve with Sportsbook products. We can cover a bigger part of the market now, globally with these two products. That will be good. Then on top of that, we will get synergies, you know, both on the sales side and on the development side as well.
Okay. Got it. Let's see. Just on the beginning of Q4 then, you said that higher Sportsbook margin than the average. Can you specify any regions maybe? Is this the LATAM Sportsbook margin coming back or is it sort of the same trends as we see in Q3? Or can you elaborate a bit?
Yeah. In this forum, we don't look at the margin on the regional level. It's just we can conclude that in total it's a little bit higher than the rolling average.
Okay. Just a final one. You have, I don't know if you would say postpone maybe, but. Can you say sort of any expectations for Netherlands contribution in Q4? Or should we wait for Q1 to pencil in some estimates there? Or can you say anything about that?
We can't say anything about where you should pencil in estimates. We have the application at the relevant authority, and we're waiting for that one to go through. As soon as it does, we will start working on from there.
Okay. No timeline on when you would get that license.
No.
Everything okay. All right. I think that was all for me. Thank you very much.
Thank you.
Thank you.
Thank you. The next question comes from Georg Attling from Pareto Securities. Please go ahead.
Good morning, guys. Congrats on the strong quarter. A couple of questions from me, starting on the active customer level this quarter, which was quite a lot lower than I think Q2, whereas deposits were very strong. So it seems to me like there are fewer customers active, but the ones who are active are more active than they have been in deposits. Is that a fair assumption? Or how would you explain the trend in active customers and the deposits? Thanks.
Yeah. That's rather the outcome that you mentioned there. It's not a trend that it's trending down on active customers. We have a lower amount of active customers this quarter compared to the previous quarter. That is depending on how we decide to market, where we put our efforts, what kind of bonuses offerings we do. That one will fluctuate, you know, between quarters. That's pretty normal. The important part is that the average is trending upwards over time, and that it does for sure.
Okay. On the activity side, is it? I mean, it seems like the customer isn't lowering activity despite, you know, everything that's going on in terms of cost pressures on customers in general. Is that fair?
That's a fair judgment that you do and the same as we do. We can't see any kind of down drop in activity among the customers due to the problematic situation around the globe. It seems that the business is holding up really well this far.
Okay. Is there any difference between customers and their behavior in different regions? Or would you say that's quite the broad trend across all the whole group?
We can't see any regional difference at this point of time in that regard.
Okay. Just the next question from me on KickerTech, if you could say anything about the growth profile, maybe on the LTM figures.
Yes. The only thing I can say is that it's a smaller business than our sports book business, but it's in a strong growth path, and they have a very attractive offering. They are on a strong growth.
Okay. Will you implement any of their solutions in your B2C business?
We already have some. We'll see how we move on forward. It's a very interesting acquisition in my view because it broadens our sportsbook offering a lot, and it broadens our possibilities to offer sportsbook to B2B clients a lot as well.
Okay. Just a final question on the trading update. Is the CSO region here again the main contributor to that strong growth you've seen at start of Q4?
We haven't given any guidance on that. So, we will not go into details of the regions. This is a general, just update of the group as such.
All right. Thanks. That's all for me.
Thank you.
Thank you. The next question comes from Simon Davies from Deutsche Bank. Please go ahead.
Yeah, a couple from me, please. Just on the B2B acquisition, are there any particular strengths in the acquired business in terms of product or geography? Are you planning to integrate it in any way with the existing B2B operations, or are you gonna effectively run a dual track there? Secondly, any thoughts in terms of when you might get the iGaming licenses coming through in Germany? Thirdly, can you talk a bit about inflationary pressures, if you're seeing any, in terms of staffing costs and sort of, specifically on the sort of the tech side, are you seeing sort of build up in costs there?
I think I start with the last one. We haven't gone into salary revisions yet. We will see what that looks like when it happens. That's quite a well-structured process for us. In terms of new hires, we haven't seen any inflation pressures, and neither have we in contractors work and things like that. No inflation signs there yet. For the sports book question, this one is a little bit. It's a different technology. By acquiring this, I can't say that there are some technical specific details that we don't already have. These are two different sports books and two different natures.
The acquisition will give us the possibility to integrate to several customers at the same time, and we can be faster and more agile with this new acquisition. We can adopt the offering to what is suitable for each potential market that we want to sell to.
Does that have any particular geographic focus?
I wouldn't say so.
In terms of the-
They are quite spread, as well as is Betsson Sportsbook. They are present in European countries, in African countries, in different, even in LATAM, I believe. They're quite overlapping in geography. It's rather that they are, you know, of different natures and they cater for different customer types.
Yeah.
Simon, in regards to your question regarding Germany, we are currently operating in the German market through our horse racing license and through RaceBets. As we have mentioned, we have applied for one license in the iGaming part of Germany. Although, as I mentioned earlier, we think that the current regulation is not super attractive for the time being. We have submitted all the things that is required. It's now up to the regulator to decide when the license can be granted.
Can I just add one more? The World Cup, how significant do you think that will be? I mean, is that the equivalent of an extra month of trading for sportsbook, or is it gonna be less?
It's always very hard to tell with these tournaments. What we know from experience is that activity goes up. Customer intake usually goes up as well. In terms of revenues, it depends a lot on the outcome during the tournament. It remains to be seen.
Okay, many thanks.
Thank you. The next question comes from Stefan Gauffin from DNB Markets. Please go ahead.
Yes, hello. Just a question on the U.S. market where you have been targeting new B2B partners for your Sportsbook platform. What is happening here? Are discussions progressing well? Is there anything missing in your offering? Is the new acquisition helping you in any way in these discussions? Just anything would be helpful. Thank you.
Okay. Discussions are ongoing. We have quite a nice pipeline of potential clients. Of course, with such a big decision as choosing your supplier for operations in the U.S. market, there are long lead times to come to decisions. It looks exciting from our point of view. The acquisition of the KickerTech sportsbook is not really aiming at the North American market at this point of time, but potentially that can change over time. We have a good product in the market. I read some rating recently where we had done a big jump up in the rating of the sportsbook, which are active in the U.S.
I think we have a competitive product, and we look forward to see what's gonna happen on the B2B deal side in the future.
Thanks.
Thank you. Next question comes from Ed Young from Morgan Stanley. Please go ahead.
Good morning. I've got one question, please. I wonder if you could just give us a bit of color on the competitive environment and competitive context, particularly in Latin America, and Brazil ahead of potential licensing there and obviously ahead of the World Cup. I just wonder if you could broadly talk about your competitive position and what you're seeing more generally in the market. Thanks.
Okay. Yes, the competitive landscape in LATAM as a whole is, of course, quite tough. LATAM being comprised of several different markets, each one have their special competitive landscape. From Betsson side, we have a more of a regional view of the LATAM market, which means we can sponsor big events that cover the whole LATAM. We have quite a broad ambition in that region. Given the fact that we have quite a strong position already, I think we are in a really good position to keep on growing on that market and have a very good position also in the future.
Could I just follow up maybe in Brazil in particular, have you seen any large change in competitive intensity over the last six or 12 months? I appreciate your market, your position in LATAM has been progressing very well, but maybe in that market in particular, are there any large changes ahead of licensing in your view, or is it more of the same, that it remains a competitive market? Thanks.
Okay. In the Brazilian market, nothing that I can mention that stands out. We are still in quite early stage in that market, but we have big expectations, of course. We look forward to take on those challenges. I'm sure it's gonna be competitive. These are big markets. They are quite early in the development curve. Lots of interesting possibilities, and we are not the only company realizing that. It will be competitive, but we have proven so far that we can deliver, and I hope we can do that also in Brazil.
Thank you.
Thank you.
Thank you. Again, if you have a question, please press star then one at this time. While we wait for the queue to assemble, may I hand it back to you, sir, for any web questions?
We have received two questions from the web, actually. First off, what is your thinking about leverage, and the balance sheet? Do you intend to continue having a net cash position?
I mean, we have quite a strong balance sheet, and we want to have a strong balance sheet, especially when you are entering, maybe, a bit kind of rougher times out in the financial markets. Then it's very good to have a strong balance sheet for us to be able to deliver on our strategy, growing both organic and through M&A. I mean, having a strong cash position means that we can have big flexibility in growing. We just recently now showed that we use some of the cash to acquire a B2B business. I think that would be our position going forward as well.
Yes. The other question was about the gross margin in Latin America. Can you comment on how that looks compared to the average for the group?
We do not comment on specific regions in terms of gross margin, but in general, we can say that it differs between countries, of course. Countries with high tax pressure have, of course, lower gross margins. That is to a certain extent counteracted by lower payment costs. In general, you can say that markets with high tax pressure have lower gross margin.
Thank you. Again, if you have a question, please press star and one at this time. As there are no further questions, this concludes our question and answer session. I would like to turn the conference back over to Mr. Pontus Lindwall for any closing remarks. Over to you.
Okay. Thanks a lot. Thanks everybody for listening in to this third quarter. We look forward to come back with the fourth quarter after this championship and what's been going on in the fourth quarter. Thanks all. See you in three months time. Bye.
Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.