Earnings Call: Q1 2019

May 2, 2019

Morning, everybody, and welcome to Catenamedia's Q1 Presentation for 2019. My name is Christian Hellman, and I'm an Equity Analyst with Nordea Markets. I'll be hosting the Q and A session after today's presentation. And with those words, I'll hand the word over to Pan Hellberg, CEO of KPN Ameria. Thank you so much. And once again, warm welcome here for those who are on-site here in Stockholm, but also for those calling in and also joining from the webcast. We are today going to present, it's me and it's also our Interim CFO, Erik Edein, who is joining to run the financials through a bit later. The agenda for today is the following. We start with the quarterly highlights, followed by a quick business updates, followed by financials, but then also taking a look for the future because exciting things are happening both nearby, but also over oceans far away, and we want to go through that. Follow-up by Q and A session, so you get you can get answer on the questions you might have. If you look at the quarterly highlights, we delivered a result, which was €26,100,000 in revenue, 9% growth from last year. We did €11,200,000 in EBITDA and this represents an organic growth of 8%. And for those of you who've been with us for a while, you know that the organic growth, we have adjusted the way how we look at that last year. This is the organic growth without any acquisitions included that are active within the period. So this is the pure organic growth from Nascence we had exactly 12 months ago. Some of you that have been on board know that we used to have higher growth rates than this. And obviously, we're going today address in this call what has brought down the revenues for this quarter compared with maybe a little expectation. But also we mentioned what we have done good in this part of the quarter, but also for the future. For those of you new calling in today about Katriana Meredia, what we do is a lead generation company. We have acquired ourselves into a very nice position and what we're doing now is to utilize those assets in order to grow organically in existing markets and new ones. And also we are here to grow today additional verticals, but also for the future while we see so being a good thing to do. We have headquarters we are headquartered in Malta. We have a lot of offices around the world, and we are listed on the Stockholm NASDAQ Stock Exchange build cap. Founded in 2012 and had a very good growth journey so far. Business model simplified, because you can make this model very, very advanced or you can make it simple. But what we do is to make business of people search on Google. You search because you want to have answer something. You are, to be honest, a bit too lazy to find everything by yourself. So you go in and search, I want a hotel in London. You get the site supplying all the information and you book. This is what we do for living as well, but we do it for the high gaming industry and for the professional finance. So you search that you want to find a good sport betting site or for a casino you can trust, you come into our domains. We today run about 1200 brands out there or products as we call. We guide you to make a decision. And once you make a decision and you go to one of our business partners and spend some money there, whatever it can be. It can be doing a sports betting on Barcelona winning after fantastic free kick yesterday or it can be that you want to learn how to trade CFTs whatever it can be. You start to get a commercial agreement with our business partners and we get paid. The way we get paid are different. Either we share a part of the lifetime revenue of the customer, what they the net revenue they generate to our operators or we take an upfront charge for delivering such traffic. We do a mix between those 2 or we do fixed fees, which is kind of regular advertising on the site or we'll say if you stay here for a certain time, it costs you this. We also do subscriptions either on very detailed football or sports tips or on very interesting finance professional finance related stock trading information. So that's the economic kind of business model that we operate within. We live by search and everyone of you know that the search volume worldwide goes up all the time because there's an information overflow and you need to get helped to get an answer being within that field is not only good today, but even better for the future. If you look at the business update fast when it comes to the revenue generation, etcetera, we have put together this slide. We have some things that we think are very positive. We have some things that are not very good and some are really not very good. If we start with the positive thing, United States, we've been on board here since a long time, especially New Jersey, which is a key state that generates revenue today. It continued to revenue continued to generate revenues. And we have a good team up there. We see more operators joining, which not only good for short term revenue, but also when it comes to the big sports seasons coming up this end summer. More operators means more activities on the market means more customer generation. But we continue to do good business there even today. U. K, you remember that in Q4, we mentioned that we had a short term decrease there due to several reasons. I'm happy to announce that all those has been arranged and we're actually growing nicely again in the U. K. Efficient, not only the fact that we can make our sites rank better and create better business. We have also managed to still get some nice or decent margin from the pay per click advertising, which was a key thing in Q4, but still we're not up to the same spending level because we want to keep that in control. But also we have launched our first retention deal, not only generating new customers, but also helping operators to maintain their customers for a long time. We help them to resend the traffic in for which we have a financial solution in place that we gain money from that as well, which is good. Japan growing nicely, small market, but still very growth nice growth trend by doing all time high basically every month now going forward, nice trend. That was in terms of organic growth what we're looking at. But another key thing we have been focusing on is the cost structure of the company, where we have increased cost dramatically the last couple of years quarter on quarter. I'm happy to announce that the costs are actually down in Q4 in Q1 compared to Q4. It has to do with IFRS adjustments for rent of the offices, etcetera, but you can see that even by netting that away, you can see that we have a much more efficient business going now than we have ever had in that sense compared with the revenue. And that is something that will continue and we'll come back to that a bit later. But that was a key part of our short term strategy and we're on to it now. If you look at the things that are impacting the quarter in not supposed to weigh down, typically Q1 is in this industry lower than Q4. It has been that for a long time and we have not seen that before because every quarter since start, we have more or less injected revenue by acquisitions. But if you don't acquire anymore, obviously, your business will turn more to the normal market logics. And therefore, we will see and then also forecasted some seasonality adjustments in this quarter. But on top of that, we had extra movements bringing the result down a bit. And hence, Sweden, I think for those who are active in this part of the world and you've seen what the regulation in Sweden have caused for most of the operators up here, I don't think it come as a surprise that also we being affected by this. In general, regulations are good. We see historically that when you regulate after time, we bring we increase our market share, because it's more difficult for an affiliate to run business in a regulated market. There are more laws, regulation, compliance required. Hence, operators tend to turn to us, because they know that we can handle the traffic in a way that plays along with the regulation. But when we stood here some months ago, I think nobody in this industry could really realize what will happen in Sweden. And we see now a very shaky market to try and define itself in a new regulatory environment and that impacted us. And as you know, we communicated before that Sweden is more than 10% of our revenue. We obviously will have a hit of this as well. But we still remain positive about Sweden in the future, but we don't know really from when we will see stabilization in the market here. Casino, in general, we have a very good casino business, but there are some casino assets that we're not happy with. And those are the ones that actually have not been maintained resource by properly, because we have spent so many resources on onboarding a lot of acquisitions we have made. This means that we have maintained them, but not maybe as much as we would have liked, meaning that they have lost a bit in ranking, meaning that there are less traffic. Those has been the key thing now in this quarter to address and also continue to do in the second quarter to do that and we'll see a positive outcome of that. I'll come back a bit later what we do there, but it had the impact here. I think the last point is that for those following you, the professional finance, which I know a lot of you do, you know that in the business we're in, you see some very low volatility in the kind of trading instruments we work with. We see a giant out there went down with 80% reduction of the revenues in Q1 due to this happening. And feeding them with new players, then if there's not a big volatility in trading, it is, of course, has an impact about how many customers we can do. But based on that, we have restructured and I'll come back to what we do about that going forward and how we see a positive outcome from that. But we also have to remember that even in this with the quarter that goes down from Q4, we're also doing a lot of good things. And I think that's the key thing of this presentation that we know what is impacting the result, but we also know what we need to do to really make it grow. And we see a lot of growth already in parts of the company. And I think rewards like this that we still have some of the best affiliate sites out there on the planet, good rewards. I will also show you later that we're also being rewarded once again the Affiliates of the Year in North America, shows that we're doing the right things where it should be done. So I'm coming back about that a bit later. But before that, I think it's time for some details in terms of the numbers. Good morning. See if we can great. I will guide you through some of our financials for the Q1, starting off with our revenue. Looking into our revenue, breaking it down a little bit further, we had our search revenue rose to €21,700,000 in the Q1, our paid revenue at €3,500,000 and our subscription revenue at €900,000 for the Q1 adding up to a total of €26,100,000 The growth year over year is 9%. Breaking that further down, we had our revenue share at 44%, our cost per acquisition at 39%, fixed fees at 13% of our total revenue and our subscription revenue up to 4% of total revenue. The increase in subscription revenue is mainly driven by the investments we've done in the sports vertical as well as our financial services segment. The decrease we see in revenue share is mainly impacted by the regulations and legislations on the Swedish market in the Q1. Looking at the graph, you can see our LTM is increasing next to our revenue here and we are up to €107,200,000 rolling 12. If we look into our regulated and taxed markets, Para mentioned that we prioritize, we are good at acting in those markets as we are very good at following and tracking the regulations. That percentage of our total business rose to 78% for the Q1 and organically, we grew by 8%. I'll guide you through some of our costs in the Q1 as well as the margin development. You can see here in the graph that we have a trend shift looking at our cost development. This graph includes personnel expenses, it includes other operating expenses and it includes our direct costs as well. And you can see here that we have a trend shift. We have focused quite some on cost control and cost efficiency in the past quarter. That is, however, impacted by IFRS 16 adjustments. But taking that out, we can still see that we are on track when it comes to following our cost development and a slowdown when it comes to the cost development trend. When we look into our margin, we ended at the margin with 43% in the first quarter compared to 44% in the 4th quarter. That was impacted by our direct costs in absolute numbers increased. Looking at our personnel expenses, those were we had a little bit of a decrease in absolute terms in comparison to revenue as in this bridge, we are quite flat. Looking into our operating expenses, as you can see here, 1.9% impact positively on the margin. However, that is impacted by the IFRS 16 adjustment in the quarter. If we continue to look into our segment performance in the Q1, our iGaming segment consisting of sports and casino stood for 94% of our total revenue in the Q1 and our Financial Services segment up to 6%, quite similar to the Q4 last year. If we look into those different segments and the underlying performance, our revenue in the casino and sports betting business was €24,600,000 and at the margin at 46% ending with an EBITDA at 11 point €3,000,000 Our Financial Services segment had a revenue of €1,500,000 and an EBITDA slightly below 0 ending at minus €0.1 and an EBITDA margin of minus 5%. In this quarter, we have put quite some focus at fine tuning our cost allocation key and that impacts the Financial Service segment a little bit more here in the Q1 than before as we have focused at being even better at allocating our overhead costs to the right segments. Looking into our financial cost structure, if we go below EBITDA, as you can see here, we've increased our depreciation and amortization in the Q1, mainly due as well to the IFRS 16 adjustments due to leases. Continuing further down, we had a fair value loss on our bond valuation when we did that. So in the Q4, we had quite a big increase. Now we see a decrease based on the fair value affecting the EPS in this quarter negatively. We did not have any non recurring items in the Q1 this year. If we continue to look at our NDC development and as you can see here in the graph, our indicator, we are pretty much at the same level as we were in Q4 and maintained that, so quite flat. Looking at the NDCs in total numbers, we saw a slight decrease in the Q1, mainly driven by the legislation in Sweden, we mentioned before, but as well as some non performing casino products decreasing the NDC level a little bit. However, we are happy with continuing and maintaining high levels when we look at revenue per NDC. If we look into our balance sheet and statement of financial position that mainly consists of intangible assets on the asset side, CHF340.1 million ending March. Looking at our cash and cash equivalents, we were up to EUR9.3 million and on the liability side, the financing and borrowings rose to €148,500,000 and our amounts that is committed to in acquisition EUR 68,500,000 and of those €3,500,000 sorry, €3,000,000 is related to non current commitments. I will also give you a slight view on our statement of cash flows. We are continuing to have a strong underlying operating cash flow in the company. We had a cash flow of EUR 9,100,000 in operational cash flow in the Q1, ending at a cash conversion rate of 81%. So we continue to have a strong underlying cash flow in the company and the Q1 has continued to show that as well. On the financing side, as we've said before, but for those of you who are new here, we have the revolving credit line facility and we also have a senior unsecured bond with a total framework of SEK 250,000,000 currently utilizing SEK 150,000,000 of that framework. Back to you, Per, strategy and outlook. Thank you. So, obviously, a quarter that is my half face is happy, my half face is sad. And I think that's how we look at it, because, of course, we never like to report decreased revenues. But as you can see, we're following the strategy what we want to do by focusing on the assets we want to grow and make sure that they start to grow. We're keeping cost in control. And by then adding revenue, we should see a trend shift in margin trend by accelerating the margin later on. So I thought I should spend some time with you now talking about the future. The strategy has been that we should focus on organic growth and we want to do double digit. We didn't hit all the way to that this quarter. It should be then obviously 10% or more. Pretty close, but obviously brought down by Sweden. We mentioned we have some websites we're not really happy with, especially in the casino segment. We have worked a lot and we're starting to see a trend shift there as well. And of course, the geographical expansion. We have a lot of interesting sites or products that we want to perform in more markets than we are in today. To do so, we want to use less brands. We don't want to bring all 1200 all over the planet because that would be impossible to do in an efficient manner. Also, I think it would be quite confusing for the consumer. I'd rather build a few very strong brands well known because that's increased efficiency. If we do that right, we can actually operate more revenue with less cost percentage, and that's exactly what we're trying to do. So the cost control today has been focusing on continue to be very active on other OpEx to make that not rise much, if any. Also personal expenses to keep that in control. We, however, have figures like direct cost that actually moves with the revenue. So if you go up a lot in revenue, that will increase, but I think that is a positive momentum in the cost structure in that case. So this is how we look at things. And I thought I wanted to be a bit detailed here because I think this tells you a bit what we're working on. Well, Sweden, how do we see that? That's the question I get. Will it remain this? Will it increase? From when? We don't know. I think we need to follow the market trend. The market needs to stabilize, but what we think is that it will repair itself and come back. Do we forecast with a lot of revenue for that going forward? No, we don't, because we thought it's better to focus elsewhere and build revenue there. And if Sweden comes back early, it's a bonus for everyone rather than being dependent on it. So we are doing what we can. Of course, the market is also changing because we have a changed market condition, operator changed in their way of work and then so do we. So when that is done, we see potentially regain from that market. Italy, news late last week that the marketing ban that's been there for a long time, News came out about that and it seems today that it will not have a dramatic impact on the industry part we are in, meaning affiliation. There will be impacts and there will be regulations, but nothing new to us, but it will not close down our business opportunity. So that was good news. The weekend was spent talking future plans with operators. So it's already ongoing. So I think we can see a good potential in Italy moving forward, but needs to be 100% clarified, but it feels very positive about that one. Those are the 2 kind of regulatory things that we wanted to mention here. When it then comes to other organic growth opportunities, I think those sites that we're not happy with, what happens is that if you don't resource them, you cannot maintain the content quality as good as you want to have. And when you do that after a while, you will start losing ranking. And then you need to do a lot of work. So what we've been doing lately is that we have been adding a lot of resources to work with the optimization of the site to improve ranking, to build more content and to also work a lot with our different operators to revisit the offer structure here to make sure that we maximize, but also improve tech. And something that our CEO, Johannes, who is sitting here in the room is also very much involved in and doing a good job with. Therefore, we should see during Q2 a trend change in this and walking into second half very strong in that case. A lot of work going on there. But then also not only that, with looking at what brands we can bring globally and just recently we launched a site we have that is very successful, newcasinos.com into Germany and more things have been rolled out just to make sure that we make use of the assets we have to grow them. The most successful brand we have Ask Ambler's, one of the strongest affiliation sites we can see on the planet, has gone through a major technical makeover, we can say. Something that is not visible to customer, but it helps us to run that product in a good mode, core mode, bring all the functional core functionalities to any market on the planet. It wasn't restricted. It could not scale it in that way before. We did an update now in Q1. And going forward, what we're then doing is to bring this new updated model into the core revenue generating areas we have, which is Germany and Sweden. So that is work we're doing and will be rolled out. But also we want to launch it in the new areas we haven't been in. And with a good growth rate in Japan for our existing business, we're going to launch it there during Q3. Extremely high play values in Japan, very good market trend, And we have a team there that can help us run it as well, so good market. And then we're also now in the planning mode of launching it now to additional markets before year end, Some very big markets is the plan. But let me come back to you when that is coming closer. This is to be added on top of a very good growth trend we already see from Ask Ambler's. You mentioned last quarter I think last quarter that we had close to 70% growth of Ask Ambler's last year. So it it's going well and it will add some incremental value to that trend. Jaapen already talked about. And then Financial Services, we're now going to focus on 3 brands. We have adjusted organization likewise, and we are now also working that to scale. We're scaling into, as I mentioned before, to Italy. We're doing a lot of market scaling and we're making sure to use that not by adding more cost to the model. And we're starting to see some positive changes there already. So that's what we're focusing on. But then people say, hey, what about U. S? Yes, what about U. S? Because here's a very interesting thing. For your information, I got a lot of questions, how big is U. S? Well, U. S. Today is more than 10% of our revenue. And U. S. Today is Nevada, Delaware and New Jersey. Nevada, Delaware hardly no revenues. So it's coming from New Jersey. It's Sports and Casino New Jersey. Good thing there, as I mentioned, operators are increasing, meaning that more marketing is hitting the market. The awareness of that you can do this is increasing. Hence, we also project a nice growth from existing markets in U. S. Going forward, especially when the core season starts here during end summer. We today have 27 full time employees in the U. S. Market, focusing on existing products, but also on the products that order stays that's going to roll out. And as I also mentioned before, we have a higher margin than average in U. S. Compared with any other market. So every euro we get there helps us to improve our total margin going forward. And then also last week, last week was a good week when it comes to news, I guess, because last week it was also announced that Pennsylvania or the week before we roll out finally. It was said to happen all the beginning of this year. It was delayed. But now they're saying that casino should start in July 15 and sports before that. Rumors already that some will launch order this week or next week, but within May is what we look at for sports, which is very good, because A, we have a lot of good websites there. We have a very good ranking position over there since long time. B, we have the team in place. We have already the deal structure in place with the operators that are there. And luckily, there are more than 1 operators. There's already a bunch of operators there who wants to start from when it kicks off. And putting that in together and with the low incremental cost we have, we believe that based on the population and based on what they do there that this has a potential to double our revenue compared with today. So if 10% is coming from there, well, quite simple what this will represent when it's up and running. And let's remember, with very, very minor incremental cost, this is transferred my order to bottom line immediately. So obviously, we're very, very thrilled about Pennsylvania coming up. But is that the only moment we see? Well, before that, just to mention about the ranking we have, we are somewhat dominating a lot of ranking sites now and words in Pennsylvania. So we are prepared. So when people start searching for this, a lot of traffic will hit our sites. But I thought I should put this together as well, and that is telling you a bit what's going on in the states that I'm being discussed. And actually, this page is wrong because last night we also heard that Montana should be added by 2 new bills that are launched for the governors to sign. So it's happening fast, but the difficult thing is that from its past the timeline until they launch. New York, it was a couple of weeks. Pennsylvania signed their casino bill in November 2017, which is 18 months ago. So it's a different time now. But what we see now with the business built up in U. S. Is that more states want to push through because they want to utilize this opportunity to stop the illegal offshore betting, control it under local legislations to protect the player and make tax income from this from the state. But in total, there are now 16 states that are pushing to take a movement into this. I think the most that are more likely a bit advanced to the other ones as you see here that are listed here and what to do. They tend to start with sports and then after that add casinos, some go for both at the same time. And I should say you should add Montana to this. How many will pass? Nobody knows, because all has happened. We say typically with the historically 2, 3, maybe 4 can pass within 12 to 18 months, but it can be all of them. And that's the tricky part. It can also only be 1 depending what's happening. So in terms of our planning when this will happen, it's extremely tough, but we know what happens when they launch. And with our positioning in these states, we also know that it will be an incremental business trust that is very high. But if you put this just population wise, it's some 6 times more than New Jersey. So it's a huge opportunity for us out here. And then we need to see about the timing. And as I mentioned, we are well positioned. We are already the preferred affiliate according to the market in U. S, and we're planning to maintain that position. Rollout, this is what I said is hard. So I need to do it like this. Compared with last quarter, you can see movements in Pennsylvania, especially for casino and sports betting. You can say Indiana is moving forward. It's hard to say when, but it's coming closer there because it's good movement. It could happen already mid this year, end this year, but can also happen in 2020. The other states, we don't know. And I thought Adam, but I put them there because they're pushing very, very hard to make this happen. But then we need to see about the timing. And then you have a bunch of other states down there that are also pushing a lot. But you can see this list is coming longer and longer every month, meaning that things are going to happen. Or Italy, one thought that 2022, 2024 was when the big bang should happen. Now people are talking more about 'twenty one end 'twenty, mid 'twenty to 'twenty one that it should really happen things. So that's positive, extremely positive and we are happy to have our very strong position over here. So if you put all this together, what we can see about going forward, when we did 26.1%, if you take that start, what can happen? Well, we don't see a big return on Sweden. I hope we're wrong, but we don't plan with it. But in other ways to bring it up, we continue to grow nicely. Pam mentioned that Italy we mentioned, Pennsylvania Sport, good momentum to increase. So let's hope it starts now this or next week or whenever here in May. And of course, we're launching more markets and seeing benefits of the markets we have launched into the new markets to start to do. In the meantime, we keep cost in control. I mentioned about casino, the speed up of the products we have that should give nice income from that coming later in the year. As Gamblers, Casino we talked about and existing markets as well. But also remember that second half especially is always much larger in the traditional industry than the first. So we also have a seasonality impact. So with this, we want to say that we're not planning to stay in these revenue levels. We see that the market itself historically has a potential to increase, but then also that we're doing a lot of things with existing assets to improve it and some new things, welcome things like from U. S. Is added on top. How about costs then? Well, this is a picture of the development. You see a trend down for cost in Q1, but then you see coming up that we're trying to maintain a rather flat level, but you still see that is increasing. I need to explain that. Other operating expenses, we're planning to be rather flat on. Personal expenses, typically, we always have a small salary increase, but then also the better result, the more we accrue for incentive bonuses. So if we plan to increase the result, we need to put more money away. But the big change here is that if we expect revenues to increase, we also need to book more costs away for direct costs, meaning revenue generating activities. So if we will net that out, we have more or less a flat curve here is what we believe. So we're not planning to increase costs at all in the same level that we historically have had. So if you put revenue ideas on top of cost control, then we can start building a picture like that. And this is not don't trust the scale on this one, please. It's up to the analysts to decide what will happen here. But if you can see the cost development here, what we're trying to say, and then you take all these activities we're planning to do, only if Pennsylvania start to launch, how much that could generate plus other states, plus everything else we do, we look forward to a very bright future in this coming quarters, especially second half. So we believe that you will see the nice trend in margin development and we'll continue to do that and send this company also into a very nice trend into the next year. But also as we mentioned, this will therefore remain at €100,000,000 EBITDA target. But to be honest, that target was based on the fact on U. S. State's rollout timing and potential acquisitions. And I think I definitely believe we can hit it, but I'm not sure if we can hit it in mid-twenty 20, and 2020, beginning 2021, mid-twenty 21. It all depends on when the states roll out. What I'm sure of is that excluding U. S, we will see a very still good growth curve with controlled cost and adding this on top, we will definitely hit it, but I cannot commit that it will be done by 31st of December 2020. If we're lucky, I committed before and confirmed before. If market delays a bit due to some reason, we will celebrate a bit later. That's what I want to say. So we're not walking away from the target, just we're unsure about the timing. So to summarize, important key takeaways. The problems we occurred in U. K. In Q4 are sorted and we grow in U. K. Nice again. Nice trends from U. S. And very good things in sight. We are focusing on organic growth and especially repairing the things we're not happy with, but also launching new sites across the world to benefit going forward. Sweden had an impact. We're not sure when it comes back, but as you see, we still have a belief that we can do a fantastic journey going forward, even if Sweden wouldn't come back on former levels soon, all by not growing costs. So it's programmed for a bright future. And except the weather here today, we feel that we live in a sunny environment going forward. So thank you very much. And now we go into the Q and A session. Great. Thank you for that, Per and Erik. Let's begin with the U. S. Could you elaborate a bit on you have 27 full time employees in the U. S. Right now. Can you elaborate a bit on the scalability there with Pennsylvania now going live hopefully in a couple of weeks and a few more states. After that, perhaps next year, how many people will you need to be in the U. S, yes, let's say in a year's time? I think that amount depends about how quick it rolls out. But just to give you an idea of what we do, there's a core amount of people there needed to do whatever we do with any product in place, which is maintain the site performance. And as more states open up, typically in sports, we need to add more local information. That is content creation. That's normally not the most expensive part. You can find a lot of people writing about sports. But then also we want to make sure that the sides are continue their kind of competitiveness. So therefore, we add functionality. We're now building up where we want to do more video content on the sites and building up teams about that for Statesboro. So we're adding these kind of things into it to make sure that we can maintain a very high market share. And also we have some central functions with 27 people. You need somebody looking after these from an HR perspective, etcetera. But for example, if Montana will go up, what do we need? Predominantly, you will need content creators, as mentioned before. You might need one if it's far away in a country for local in the beginning key account management. But what we see from all states is that a couple of local players, while the ones is the natural ones coming in. So from key account activities don't need much. So I would say that without being able to answer the amount, because that depends on the rollout, we don't foresee a big cost increase once it rolls out. So we see a basic margin improvement for the total business if rollout starts or when for when it starts. Great. And you mentioned that your assets rank very well in the U. S. On different keywords. Could you elaborate a bit on that, how that differs between different states, if it does, New Jersey, Pennsylvania and the other states that you listed in the presentation? Well, I think our team over there has spent a lot of time to try and predict which states that will open when. And if you have a state like Utah, that's likely to maybe never open. We don't spend a lot of resources there. So we're trying to predict all the time what to do and start to build sites and ranking there. Typically, we have had a strategy that if the new states open up, we use brand names that can include that state names, play Pennsylvania, play New Jersey, which is a good thing because when people search, they understand that outside is related to that. Over time, when more states open up, we don't need this local adaptation. So then we can do only the Play brand. So we have focused not only bringing up local sites, but also having national brands there, plus that we bring in sites. We already have a very good traffic on mass gamblers coming in from U. S. Most of the traffic we cannot use because it comes from states that are not regulated yet. But when it opens up, we do that. So it's a big mixture of what we do. And I think that for the states we have on the list here, that's exactly what we're working on to make sure that they are ready from when they launch and typically are ready much before they launch because of the uncertainty. So I think that for any of those states, we are well positioned today. But some of them are very early and therefore we haven't spoke focused a lot to get the traffic going there yet. Okay. But there are not any particular states that you want to highlight that in these states we are very well positioned versus other brands? I think people are focused in the state where we're not very well positioned. And at this stage, they're not in a place where we are dissatisfied where we are today according to the plan to execute. All right. And moving back to Europe. Sweden, could you elaborate a bit perhaps on the developments in Q1 to give us some sort of impression on how it started, how it ended, just paint a picture of Yes. I think it will be quite a blurry picture, because for those following in the market, you can see operators that from the eye of the spectator looks extremely the same had dramatic change in the quarter, even in month between each other. And of course, with us doing business with both of them, it also blurs our picture to make a good decision from it. We obviously saw a lot of decline in January immediately. Reason for that, a, the regulations come in, there is self exclusion limitation, but also the fact that a lot of operators have pushed a lot in Q4 to let a lot of customers in before the regulation starts. Then also we saw some other operators having a big problem in February, while some of them regained some things in March. And because of that picture, it's quite hard to predict the future. What we're doing now is that based on that knowledge, trying to refine our partnership with our operators, so we both can find a way through to find the right kind of customer at the right time going forward. But it's unfortunate too early to give any clear answer. This is exactly how it worked and what's happened. Okay. And regarding this, there's been some news in the media about the potential ad ban in Sweden or some sort of restriction perhaps coming into force. How would that perhaps impact you? Of course, we don't know exactly how it will pan out, but looking at what's happened in Italy perhaps Yes. It's exciting. It's like a year ago that one happened. So I think it is time for advertising ban discussion again this time for the North part of Europe. What we see generally is that no country has been very successful in completely managed to ban advertising. I think in this country specifically it will be tough because the government is actually making a lot of business from this kind of industry as well. What is more about is the restrictive volume of it and what kind of market message you can have that we see from a lot of parts of the world. Typically, when that settles, we have not lost that on that because the opportunity for operators to use the media channels in full mode is restricted, but they still need the business volume and therefore they tend to go more to digital where we are active. So that's why we believe that these restrictions historically we see it actually improves our business over time. But we need to look what it means and what they will do. But I think what started this was the extreme exposure on television to reach people that are basically not looking for this ad. We're doing is that we only serve this information to customer who wants to see it, because they search for it. I think that's the big difference. So potentially it could be a net positive for you? Yes. I wouldn't say it will be a net negative. Exactly. And that's also what you're hoping for in Italy as well? Definitely. We took the decision to maintain our business in Italy. But because of the upcoming ban and the chance of that being negative to our we took actions also to start to launch incremental business in the life finance assets, etcetera, to maintain the value of the assets and still maintaining business there. Now obviously, and both things are happening. It looks promising. And speaking of finance there, posting a loss in the quarter, perhaps due to some costs being allocated in a different manner than they have been historically. But could you elaborate a bit on the finance segment and when you expect that to turn back into positive territory again, exactly in Q2 or what do you see? Our plan now is to deliver a better result in Q2 than in Q1. And that's the feeling we get now when looking at first sight of the numbers, because we're going to take starting to execute now on the numbers. It's been a constant struggle from the time when we bought it. We mentioned that many times before with high value of the company based on crypto and binary options. We know what happened with them. And now also relating with the CFTs being a bit tough one out there for time being and that's where we've been very strong. However, now with the changed structure there and the changed operations accordingly, we feel that we are able to start to turn that around now. So that's the plan. So we're not planning to book the same results going forward. That's for sure. All right. And just a question, in your report, you mentioned that obviously revenues for Q1 was below expectations, but you expect to see positive development from the Q2 onwards. Could you just elaborate a bit on what positive developments mean? What do you mean by that? Yes. I think that what we mentioned here that, A, we're not sending out as much money from the company as we used to do. I mean percent wise, we can cost and control. I mean, all these things mentioned here, that's the positive element. I mean, we see that we're taking we're repairing what we feel is broken. We take the things that are working good to other new markets. And we have U. S. Coming up. I think those are the quite nice bunch of positive momentum for us to chase Martin. Yes, I understand. But is it possible to quantify it a bit? Or are you saying that revenues will increase sequentially versus Q1 given that they In Q2, you mean? Yes, in Q2, given that they decreased versus Q4 in in Q1. And now you're saying that you expect a positive growth? Well, obviously, I'm not saying that we're going to go down in Q2, that's for sure. We have a plan. What we program the business for us to grow in Q2, of course. And as you can see here, we also foresee even larger growth trend coming out in the second half and first half. So we're looking at a bit of hockey stick going forward. All right. Any questions from the room here? Or perhaps from the telephone conference. Operator, are there any questions? Thank you. And we have a question from Michael Olesen from Carnegie. Please go ahead. Your line is now open. Yes. Thank you. Good morning. Yes. Again, on Sweden, I missed a couple of minutes there in the beginning, but can you maybe say something more about revenue development quarter on quarter for you in Sweden? And what you saw in terms of revenue mix during the quarter, how the regulatory and activity levels affected that side? So that's the first one. Okay. Good morning, Michael. I think that what we said here is that I need to look at what we have said officially and what we normally guide on. We have said that Sweden has been more than 10% of our revenue. If we look at the average impact on gaming operators in Q1, we see quite dramatic downturn for all of them. If you apply that average hourly business, it will apply the same thing. So looking at quite substantial decline in business in Sweden in the Q1. The exact amount we don't guide on. And what we also need to say that historically our business was created in Sweden. So at some point it was 100%. Today it's much less because we've been going elsewhere and acquiring elsewhere. But it also has historically having a bit more weight of rev share in Sweden than other markets, meaning that when player value goes down due to restriction of and limitation of spending, it hits revenue share more than it hits acquisition numbers. So that's why we had a kind of double impact on that, but we don't guide on exact numbers by individual market like Sweden. Okay. Did you see any traffic changes in the market or on your key money generating sites during the quarter in Sweden? Yes, we did. And I think it's a combination of what's going on there. We saw that people started to search for different kind of things after regulation, which is quite logic because you cannot search for some things anymore because you cannot market them in that way. But also as I mentioned here in the beginning that we have some casino sites that we're not super happy with and some of them have business in Sweden. So also not only the fact of the regulation, but because we have not maintained them probably due to resource allocations, we also had an impact on that. And that's what we're repairing now to get away from that problem. Okay. And any thoughts on the what Google is telling now for Swedish markets and how that could affect you? Well, I think actually a positive matter. For those who doesn't know, Google has announced that Dynal started with pay per click advertising in Sweden, but only licensed players can do it. And as affiliates operate under license, we cannot use Google's pay per click advertising. So the first four ads when you search and then the normal results come below, we cannot do that as an affiliate. On the other hand, most market doesn't have that, but in Sweden, I see it like this. If it's restricted only to a lot of regulated operators to fight for 4 spots, the price bidding because the open bidding price on that will be extremely high. And on that traffic, they need to convert that into a decent acquisition number. And I'm sure that, that fight, considering the potential then bans in TV advertising, will increase a lot. That will be really expensive to bid for those search words, meaning that the customers they acquire from those will be quite expensive compared with the traffic we send. So if it tighten up to 1 media channel and everybody fights for that, especially digital price goes up, it's been the same in every kind of PPC market that's been and it will happen in Sweden as well. So over time, we will not have a negative impact of that. I think we will gain business over time from that. Okay. Thank you. I got it. I have also a couple of questions. One is regarding the organic growth. In the quarter, it was 8%, I think. Correct. But it totally was 9%. So that means that the acquisitions added not very much. Can you explain what happened? Yes. I think Because you did a lot of acquisitions last year from April, May, right? Correct. I think we need to look into this and break it down a bit for you to understand because a very valid question. We as you remember, we changed the way how we do acquisition measurement or organic growth measurements. A year ago, it was including acquisitions. We took that out. So it's now the pure organic growth of assets we had 12 months ago. But also, we don't include search revenue sorry, we don't include pay per click advertising in growth in organic growth, because that thing goes up a lot of time. And if I just want to create a nice revenue, I start to buy pay per click for €5,000,000 a quarter and you think I have a fantastic revenue while profit will be low. So we just look for the search traffic. And if you look at the percent wise of the search volume or sorry, the pay per click volume quarter ago versus now, you will see it was more. So therefore, we have actually a positive outcome of the organic growth. So the search revenue only increased 8%. But then also, as we mentioned, what we did primarily what we did in acquisitions in Q2 onwards were financial assets. And those assets, as you remember, has decreased due to the crypto decline and the privation of binder options. So those assets has been reducing. And that's the reason why you see this kind of a bit interesting development versus organic growth and revenue. Okay. But one thing that is a bit well, I'm thinking about is that paid revenues were flat or increased a bit actually. So that should be I mean, then you have other things that is going on behind the scenes sort of. Yes, I think but You're referring to search traffic. Yes, but I think yes, the search traffic is there. But then as you say, if you look at the assets we have, but then it's clear that some assets has reduced. And I think we've been very clear about that, especially those financial assets has been going down compared with when we acquired them or had them there. Okay, okay. Got it. And my final one, if I may, is regarding the contingent earnout commitments that we have on it also. What is the plan for that in the coming year? Can you say something about what we should expect? Yes. Just briefly and what we also say and state in the report, we don't guide on the exact date when that will happen. But we have current commitments and those are up to €65,500,000 and additional €3,000,000 in non current commitments. And as a current commitment, that has to be settled within 12 months. So that's what I would say accounting wise and that's also what we inform about. When it comes to the payment of those earn outs, we do always look into the possibility of using our cash and cash equivalents versus potentially other ways of financing those acquisitions. Okay. But can you say something about what is what really have to I mean, what they have to deliver to get those type of payments? Yes. So They have to deliver quite good growth. But from here, if you can say something, what is really needed for that to be paid out? Yes. Not more than that. We are every month, we are tracking the underlying performance of those assets and it's performance based. They are not so basically performance based. So we look at the underlying performance in the assets. It's different parameters that we assess and then we evaluate it against the contract and the commitment we have. And every month and every quarter, we reassess that based on the latest performance. So that's how the process works. We cannot elaborate further on any potential changes and how those underlying assets will perform, but it is an underlying evaluation every quarter and every month due to those commitments. Okay. Thank you. Thank you. Thank you. And we have another question from the line of Jonas Lejnitz, a private investor. Please go ahead. Your line is now open. Okay. Thank you. You say you focus on high value NC customers from now on, but every customer is very accretive in this scale business. So why focus so much on high value customers, especially since regulations tend to try to gamble large depositions and high gamblers high state gamblers? Well, I think it's first of all, it's in one way quite simple question to answer because that's what our operators demands and want to have. And the more of those you can send over, the more traffic you will have from operators. I think our view is that how we see that Google change and what happens and the kind of search volumes out there. We're always trying to build the business on trying to create the max the best mix of customers versus the margin we can create and the cost we apply to do it. And what we see now what we're going to go forward in the markets we do, especially focusing on U. S. Where the player value is higher, focusing on Japan when the player value is higher, you will have that trend. Does that not mean that we say no to traffic? When we build our sites, we want to go for that to try to get everyone that has come with a higher value with them is always prioritized for a large volume of those who doesn't generate a lot of revenue, because our operator is predominantly wants to pay for the big spenders, so to speak. Okay. And one more question perhaps. Since you now are a pretty mature company in many ways, What new verticals do you look into like loans or credit cards or even lease your platforms as white label? Yes. I think it's a good question. I get it often. That's definitely part of our future to grow and become even more global. But as I also said here, there's a lot of things we want to repair. What we're trying to do is an extremely efficient engine that works regardless. And as soon as something comes up, we nurse it and when it can walk by itself, we throw it into the engine, it starts to grow. This turnaround now is to make sure with all the assets we have bought, we have a very efficient engine to run and that it runs very efficiently. And from that part onwards, we start to look at potential new verticals. But as you can see, even within gaming, we're not far from done yet. There's a lot of things going on. So we focus on making sure that we focus on the local hiring and food to do that. And after that, we start to grow. But you're right, we're going to do that, but sometimes in the future. 1st, we maximize where we are today. Okay. Thank you. No more questions. Okay. Thank you. All right. We have a question in the room here. So despite no World Cup this year coming up, you're saying that you're probably going to grow Q over Q. And Sweden, we don't have any answers for when it's going to change for the positive. So what's the plan? What's the plan for you guys to make the Q over Q growth despite the World Cup? Well, I think I mentioned that 20 minutes ago. We're growing U. S. We have launched new products to be sorting the problems we have with the casino products. We're hoping Pennsylvania will go live for sports. So I think there are a couple of things there that we believe we can bring the revenues up from Q1. And as Gamblers, now you're saying that we're going to Japan in Q3 and probably another marketing by the end of the year. So how's the rollout plan going? Or is it going to take 3 to 6 months for each country? Or is it different from every No, I think it all depends because the reason why you ask Andrew successfully is to do a site with massive amount of information. I mean, there are thousands of pages on that site that we operate. And to do that into a new language level takes some time. And when you have it, you then need to make sure that you launch in the market even where we have account management and operator knowledge or if you bring it to another side of the world, you need to build that up as well. And now we have prepared technical we're doing a lot of translation work now and then we need to see how soon we can roll it out. But also after once we launch it, there's some time before it starts to get any traffic. The good thing though with a site like Ask Gamblers is that Google also prioritize ranking on sites that are large in other markets. So that's what we're doing. But I cannot be clear about the exact dates, etcetera. But the team in Belgard, they are working long hours now. So we can expect faster rollouts going forward? I think you can expect what we mentioned today, and then I need to come back about exact dates about going forward. But we're working very hard to maximize the potential of that product for sure. Thanks. All right. If there are no further questions, I think that will sum up the Q and A session. And with those words, hand over to you Per for some closing remarks. Well, thanks everyone for logging in. I hope to see you now. And of course, remember these dates, 19 August, we thought we shouldn't bring in, in the middle of some of your holidays. So we're doing it here. And then November and then you have the February number as well. So please book it and hope to see you soon again. Thank you.