Catena Media plc (STO:CTM)

Investor Day 2018 Day 1

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Nov 20, 2018

Good afternoon, and welcome to the 2018 Capital Markets Day of Katina Media, live broadcasted here in Stockholm, Sweden. We have a lot of interesting stuff to tell you today. We have a packed agenda. And just to give you an idea about how that looks like, we will spend together a bit more than 4 hours, I hope, maybe more, where we're going to go through a lot of exciting things. I want to start with you with a general picture about the company and the general directions of what we do. Followed by Johannes, who is our CEO, who will speak a lot about how we do it and how we're getting better by every day on doing what we're really good at. Then coffee time and then follow-up by Michael Dally, who some of you already met from the Q3 report, who will do a deeper digging into the U. S. Opportunity we have to give you a lot of interesting ideas and opportunities there. That should somehow consolidate into some nice financial numbers and ideas how we do that and how we drive that. So therefore, Pielena will come up and talk a bit about how that looks like. Asa will conclude about our sustainability work, which is very important to us. And in the end, I will then come back and we will do a Q and A. Just to mention that in the end of each session, we will run a Q and A about 10 minutes. So it would be great if you can when you come up to your questions, just wait for them until there's Q and A in the end of each session, so we can have a productive presentation here. Before we really kick off, I would like to introduce to you, Magnus Andersson, who is an analyst that writes a lot about various companies here. And instead of me presenting you, I think you do a better job of doing that yourself. Thank you very much, Per. Perhaps some of you know who I am. I'm writing and analyzing stocks in the iGaming industry mostly. I also do a little bit in beverages and luxury goods. And I've covered Kateramega now 2 years very intensely. And I've asked management many, many questions. I'm happy today to be invited to ask some of them in this forum also. And full disclosure, I am also an investor in the iGaming industry in Katteh Demedia and various other companies. And I'm going to after each presentation today, I will start with some questions, and then we will go to the audience here. And after the questions from the audience, we will pick up the questions that have come in from the web portal. Yes. Okay. Thank you, Magnus. Thank you. Okay. There we go. So that is us and our history. But to conclude a little bit more about us, we put a full page of text here. And it can actually end here because we're quite super late about what we do, but we thought we should spend today instead of going through all this we're trying to say on this side, who we are, why we do it, why we're here to stay and what opportunities we have. So instead of looking into this, I, as a first interesting things with you. Maybe this is the first one. So why do we do this? When I'm traveling with meeting a lot of journalists, when I was traveling with meeting a lot of investors, I always get the questions, what do you really do? What is your part in the value chain? And why can everybody else do what you do? And how can you make such margins? When will that disappear instead of saying how can we increase it? But that's the question I get. And is this already here to stay or not? So I thought we should spend the day to make that very clear. And my part will be on the overall part, and then my fantastic colleagues will win and give a more detailed view on exactly what we do. The presenters today, as I mentioned, are the ones you see here on the screen, but we just have a small part in this build. There's a lot of exciting people here with us, not here today. Some of them are, but that works very hard in the management team. Underneath this, we have another 344 employees. That makes our life very easy because they are such good colleagues and doing a good job. And we build our team based on the fact of a lot of different things, not just higher talent. We need to hire the right talent, and we need to have the right structure of the business, and we need to have the right kind of gender equality, etcetera, to do this in the right way. And I think we're doing excellent the last couple of years, especially in this industry. Today, we're actually listed in the Allbright Green Report, which is a list here in Stockholm Stock Exchange, that list companies that have equal gender distribution within the management team and in the company. We went on to this list this year. We ended up in like half of 47 companies with ambition to become, of course, like in anything else, we're trying to do number 1. So this is very important to us, and Johannes will later go in and say how we build teams and have engaged all our wonderful employees to do this. It might sound like a fussy thing you say in management, but we're actually driving this extremely hard in everything we do in all our sites. And we're talking about sites. We have these sites today. These are all sites except the Swedish and the Maltese one that basically have been acquired during the years by us when doing acquisitions. We'll start from West. We have Michael's hometown, Las Vegas, where we run our U. S. Business. We have 2 different offices in London. We have offices in Italy and Rome, in Serbia and Belgrade, Japan, Tokyo and Sydney in Australia, where we do around the clock work to drive this business forward. So if you look at the business model, I think some of you are familiar to this model. This is what we've been showing many times in various form and things. And I will spend some time on trying to explain this, but then we'll dig deeper, but also go up a couple of levels. You really understand the beauty of this one. It starts to the left hand side of the picture where we have somebody out there on Google searching for something. They won't have answers to something. They put in a search word. And when we find that search that picks up something for our company, we send out and have prepared a website for that to pick up their interest. We're trying to onboard into any of these sites you have here by different methods, either by search word from Google or we pay for it. We do YouTube channels. We do a lot of things to try to track them up to our websites. On their websites, we write about interested content. We place an offer. And if they like it, they go on to our business partners, which you see on the right hand side. And they do whatever they can to make a good journey there. In the journey, they get some customers signing up, spend some money. And when that happens, we charge for our services. And sometimes people want to do more. They go back to our site, so they start from the beginning again by doing search words. That's basically what we do. But I don't think it's crystal clear there. So we made a little bit another approach to try to explain this in another movie. So here you go. We have been transformed from passive receivers into seekers, searching for information and guidance in reaching a buying decision. We will do anything to find the optimal alternative, whether we're looking for the best flight to Tokyo or a luxury hotel room at a bargain price. So for businesses to remain a credible option, they need to maintain a high rating in search engines and know more about their customers' online behavior than the customers themselves. That's where Katina Media comes into the picture. We at Katina Media are experts at aggregating information for the very best base for decision, to create websites with qualitative content through carefully selected data, all based on our invaluable knowledge on everything from the many search engines, complicated algorithms, to how humans behave online. This allows us to create content that cuts through the noise and connect product brands with their ideal consumer. We own thousands of sites that consistently rank highly in search engine listings. Once there, we introduce the consumer to our operator through high quality, relevant content in a credible environment. And whatever else it takes to satisfy their demands for personalization and interaction. As a result of this, we can send the consumer to the most suitable market. We are now in the market. We are now in the market. We are now in the market. We are now in the market. We are now in the consumer. We are adding real value. We started to apply our flexible business model in online iGaming and the financial services industry as these were established digital categories with large numbers of mature users. However, the fact is our business model choice of your next planned spaceflight. Since we have the experience, knowledge, technical expertise, digital platform and highly skilled staff organization, our ambition is set to become the very best provider of high value online leads. Online buying behavior is changing industries 1 by 1. You're invited to join our ambitious journey of growth, right in the front of online evolution. So that's what we do. And to dig a bit more into details about this, to explain you the kind of conversion journey we do, this is basically how it works. The first thing we do is that we want to identify needs. People search for different things in different verticals, from travel to finance to gaming to education to dating, whatever it is. So within that vertical then that we choose, what is the specific needs? In our case, it can be that I want to do Forex trading, I need a good tool for it. Where I want to place a bet on Manchester United, where can I do that best? Or which casino operators should I not spend time with rather than other ones. So we do that, and we want to answer the questions of what kind of question can be answered, what kind of problems can be solved. By that, we build websites for people to come into. And how we do that is that we create a lot of information. Today, there's so much information overload. So when you do a search word, you want to be served. You want somebody to create everything and just tell you what to choose. Go back to yourself, search in a hotel room, etcetera, It's not very simple to do to all hotel sites and figure out what is best. You want somebody to do it for you. That's where we come in. Once on the site and you're interested and engaged in the site, you want them to be served with offers. That is according to the search bar or something that attracts you, and that's what we do. When we have that and people are interested in that, they click on the offer, we have a lead. We have created a lead that we then decide to send to someone out there, our business partners. And when we send that, it's not just to send it over. We need to choose to who to send it to because we want to make sure that we and our business partners makes netbooks possible winnings and earnings from that. And then we have converted into paying customers. So we work in the below with search words. We work with SEO, search engine optimization, to make sure that our web pages are performing very well, the content, then offers, then we convert them, and in the end, we get commission for it. That's what we do. And it's not unique to us. As you see by some brands above me here, there's a lot of businesses doing that, but it's in remarkably few business verticals it happens. Travel has been very dominated, gaming obviously, but there's a lot of verticals where this hardly exists already. And if it does, it's still very early, not matured. And that's why our business model has a fantastic future into other industries as well. So every day, our fantastic team is spending time on this around the world. And in order to really drive the business forward, our overall strategy has evolved during the years. But one thing that we go out and communicated quite a lot is the core focus of our strategy, is to grow organically by combination of geographical expansion and acquisitions. And as a lot of you know, we have done a lot of acquisitions history that made us what we are today. We are going to continue to do acquisitions but in a different way that we'll explain a bit later. But if you look at it then organic growth and then geographic expansion and acquisitions, how do we work with them together? Well, first, when it comes to organic growth, there are 2 elements that you need to be very sure of, and that is how large the market is and how large you can make it. One is, 1st of all, does the market itself grow without us doing anything? We see some markets growing very fast. We see someone growing not so fast. But the idea is to understand how much is each market growing. And by understanding that, we also know the potential of that piece of cake that would be ours. But then there's a lot of internal factors that we can speed up our total market from, and that is either we can pay in different ways, pay for digital advertising or AdWords or pay per click, as it's called, or we can do traditional advertising like Hotels.com is doing to expand the knowledge about our brands for more people to go directly to us or to click on a banner. But we can also have land grabbing in this work by doing better job each day to make our market share higher, which is typically we see something happening when the market regulates. And in the end, we can also bring our brands to new markets to expand that way. So we have a lot of different multidirectional kind of ways to grow our business. When we look at the funnel, this is the funnel we see. We need to fill it up with a lot of things from the top. And in the end, in the bottom, it should come out something very interesting. That is paying customers or NDCs, that is called in our industries, new depositing customers. We have 3 different stages in this funnel that we work very hard to, and this is what we are good at. A, we do the first where we do search is going from search on the web to coming into our site. That's the first step of everything we do. To do that, we have experts sitting understanding how Google works. Johannes will tell you why or how later. But we do that to make sure that we improve and get our sites better ranked and more traffic to them all the time. We need a lot of data, data management and do that very well. Then we have done the onboarding part. We do the internal conversion. That is to make sure that you have the person on the site. Now you need to convert them to lead. I told you how we do that and the video showed you. That we do by presenting good creative content that answer the questions or problems the customer want to have solved. And then we place an offer related to that. Customer click, we have the lead. To do that, we need to have kick ass products, which Johannes will tell you a lot of later. We need attractive partner offerings and then again a lot of data that we analyze. And last but not least, we have the lead. Now we need to make it money for us and the operator. And that's the case where we then send them over to the operator. We make sure that they nurse it in the best possible way to become paying customers over their sites. It's all about us sending it to the right kind of customer at the right time with the right kind of offer for them to convert into paying. And of course, to do that, we need a lot of good business partnerships, And I think that's one of our strengths, to have very good relationships with our partners, both way discussions how to improve the business we do together. And of course, we need a lot of data. And as we already did with the company, data is important. So when you have done that, we trade. And you can imagine that this opening of this funnel is a lot of customers. And then it goes down, and in the end, it comes down a couple of NDCs. But every single improvement we do in that funnel has a major outcome how many NDCs we get, not the quantity, but the quality. If we do wrong, we will have a lot of NDCs, but they don't generate money. That we don't like. We want to have NDCs that comes down, large volume that generates money for us and operator. So the amount of NDCs is not key. The key is the quality of them, what they can generate for all business parties, important to remember. And this we do for a lot of our brands. We have a lot of things we're doing. But can you imagine doing all those things every day that we talked so far for thousands and thousands of brands? It's not possible. You need to shoot some. You need to shoot some brands that give you a good portfolio globally that answers most of these queries that customers do to make sure that every search word we want to pick up, we send them to the right site that gives the best answer to the customer query. So we're using a lot. And I think we, in the Q3 report, mentioned that we're doing about 1200 sites operating today, but it's about 30% doing the bulk of the business, about 80% of the revenues. And that's how we're going to continue. We're going to use those brands, 30 brands across the world to really fulfill all the search words requirements that are out there. The other ones, we will keep and operate as long as they give us money, but we will not invest a lot in them. So the strategy then, of course, in geographic expansion is as well. We have all these brands. Where should we have them? We have today a lot of markets. Our idea has been to come to a situation where we will not have any market be larger than 10% of our revenue. Unfortunately, I cannot stick to that much more because we have some markets today that are a bit above. We mentioned that many times. We have U. K, Germany and Sweden being a bit more than 10%. But next year, that picture will change that we'll talk a bit about later, and that's due to U. S. So I'm sorry I cannot stick to 10% thing, but I think it's a thing you can live with, and we explained what we're planning to do over there. But the idea is here also that we're doing some of the business. Currently, about 25% of our business is not coming from regulated market. Is that a problem? No, it's not as long we are in markets that don't is a potential risk for us shutting down. So our idea is that we will not go for 100%. We will go for other but so called low risk gray markets where we see that, in this case, there's no regulatory risk coming up. There's very little things that can happen with this. And therefore, we definitely believe that we can operate in those, especially as most of our operators do. So the target is to make sure that the vast majority of our business is regulated or taxed because then we are very safe, but a small part will always be also for non regulated but so called safe markets like today. Okay. The last thing, acquisitions, we talked about. Less is more. What we learned, we've done 34 acquisitions year to date no, live to date. A lot of them have come in either as single brands or with a lot of brands underneath them, creating all these 1200 brands and some 14,000 domain names under our ownership today. The key thing is that we have done a lot of cherry picking out there. And if you look what is available today, there's a lot of good things out there, but they're either too small or too complex built. Meaning that if we take them over, we don't really benefit. We increase our cost running them, and we don't get the kind of revenue we need to do so. So we've done a lot of acquisitions. We're building them up to what we are today. But at the same time, it has cost a lot of money, a lot of dilution, and EPS has not been growing that much. And that we're here to change. So of all the 34 acquisitions and 1200 brands, we don't need more brands. That's clear. We have can we say, we have scanned the market, and we don't find that much good things anymore to buy in the markets we're in. So therefore, we focus all our efforts and grow what we have. We know that if we focus on a couple of things, we will run the business more efficiently. It becomes quite clear, doing all this work that we need to do to rank good, doing that on 1200 or 30 brands, you figure out that by yourself. So it will continue to be a consolidation of our efforts into driving these key brands around the globe, and that's will make us also more cost efficient. To talk about this a bit more, and if you look to your right hand side of this page, try to explain a bit how we can look out there. There are 100 and 1,000 of brands out there and a lot of affiliate companies trying to drive traffic there. There are 2 different things. Either it's a kind of cluster of brands that you buy, meaning that it can be a company that has quite good revenue, but there's a lot of brands within that cluster that generate all that revenue, meaning that you need to have a lot of focus on a lot of different brands. Or there's a single brand, one brand, one team focusing on the brand. So when it comes to domain management, it's, of course, easier to work with 1 than many. But also the revenue will be more if you don't do 1 per brand than if you do a lot. That also means that the way you have to operate this brand efficient is completely different between these two. That we learned during the years, and that's why we're focusing on our on a few strong brands going forward. That also means that you get cost synergy effect because you can use that brand in much more markets. So you have a geographical expansion efficiency. And because you can also scale them in any way or form, that would be better. So the logical acquisition would obviously be go for the single band position. The question is that very few out there that fulfill all the quality we want to see, that are operating in a good way, that has the revenue we want to see. And that's why we have gone down in our acquisition frequency. Because why add something if it doesn't give a clear impact to what we do? It doesn't make sense. So going forward, if you look at what we do, we are going to build our products focused on what we have. And to do so, we believe we can get very focused, and we can also bring this business model to new verticals ahead. Because as we said in the movie, what we're good at is not specific to vertical. We know very good how the search world works. We are an expert on that. We also know how to build product that really stands out and to get the customers' attention. We help customers to make a choice to make sure that they come to something that benefit the time why they started the search from the 1st place. And when they have that, we are very good on creating them to a high quality lead. We create revenues from our business partners, and we maximize profitable for us and for them because we send in customers that we otherwise never ever would have. And as I mentioned, this is not the iGaming specific. This can be implied to any kind of business vertical out there. So our message with this one is that we are not a gaming company. We hear that very often. We're not a dedicated iGaming thing. We're a lead generator. And what we do on this page this year has nothing to do with gaming. That's why also our promise for the future is that we will be more than gaming. We started with the finance vertical about 10 months ago. Our mission has become very large on that one, but we're still very early in the life. And at some time, at some point, we will scale into more verticals, but not before we feel that we are ready what we do where we are today because there's a lot of digging to going on in iGaming U. S. And in Financials still. Another important thing then is profitability management. Historically, as I mentioned, a lot of acquisition drives a lot of people. We actually have been growing cost the last couple of years faster percent wise than revenue, meaning that we've seen the margin deterioration. We want to change that, and I think the Q3 report showed you the first step in this where we want to see efficiency in our operations to brands that we can focus. We will see that also mean the headcounts will be less growth. We will grow headcounts, but not as fast as before. We will also have no need of growing other operating expenses as fast because with fewer brands, we can really focus the cost and investments we do to those instead of a lot of others. And acquisitions, as we mentioned, we will do them more focused, meaning that either strategic large and important where we can have efficiency or scale and cost synergies or something that strengthen the core in the business where we believe an entire company will benefit from this. So it's clear that profit amount and EPS is more important than margin. Does that mean that we intend to increase reduce the margin dramatically? No, it's not. But we will always sacrifice percentage margin before profit amount and EPS. That's clear for the future. So talking then about profit and this one. I get a lot of questions out of this. How is this possible? You're going to reach you will be halfway in the end of this year approximately. And after that, you have 2 years to double your business profitability wise. And ideally, of course, if you double the profit, we should not do a massive dilution so that EPS won't move. Well, we showed this business in the Q3. I want to give some more details to this to give you our idea how we think. Every day, we get more news about what's happening in Europe about regulation, etcetera. But if you go back, there's been a lot of talks about regulations for many, many years. We have U. K. Regulated. We have France regulated. We had Denmark regulated and so far, and still we conduct very good businesses there. The thing is that you need to live in the regulation. You need to eat, sleep and breathe with regulations because otherwise, you will lose your business potential. And what we are good at is to make sure that we can generate good business in regulated markets. You will have short term bumps for sure, but those not taking regulation seriously will have even more bumps and will be wiped out of the market. And then we land grab and we increase our market share. So yes, when something happens, we will see impact. Luckily, we have things to mitigate that with by being more cost efficient, but also with the U. S. Opportunities we'll talk about later. But therefore, we still believe and are secure about what we do to grow organically and invest differently that we will be able to do a double digit growth going forward, even though we see movements in U. K. To more taxation, even though we see Sweden and all these other markets. That would put us a big way because the idea is that we won't do it without a lot of cost. So for every single euro we increase, we put a lot of that directly to the bottom line because in these markets, we already operate. Then the market expansion. We will go into more markets by more brands that we already operate, meaning that we have a quite low additional cost increase for reaching a new market. We run the brands already. Translations. It's localization, but that's much, much cheaper and more efficient than acquiring and entering that market. Of course, then add U. S, the opportunity, Michael will talk about that more. But if you look today what we have and how we see that market is just growing in terms of reach by more states coming on and still the states that are there not mature yet, of course, we will see a massive growth potential there. And then cost efficiency improvement that I talked about. If we take that, we will not hit €100,000,000 maybe. U. S. Is a big bracket. But if you exclude U. S. And the things, we're not in €100,000,000 We'll have a certain delta. And the question is what can make up that delta without diluting? Because you could do massive amount of acquisitions, which I think was the original idea, but we don't want to do that. We want to do a couple of few acquisitions to strengthen that build a lot of money because we find synergies in doing so. That won't have the same impact of EPS. But also, what I said so far is based on what we know in U. S. So far, mainly in New Jersey, mainly in West Virginia and mainly in Pennsylvania. That will be up and running as it looks now in the end of Q1 or early Q2 next year. Then we have another 7 quarters, and I don't think you disagree with me that we can consider some more states going to open up in that time. Everything on that will help us to close the gap to $100,000,000 So we'll be very close even without doing any additional states in the U. S. And any acquisitions, but the delta there can be fill up with either acquisitions or additional growth in U. S. So that's why we feel very confident we can hit that number. It looks very, very promising. So by summarizing, I think the Q3 showed also that we go in that direction. We have taken the steps now to walk away from massive acquisitions frequency. We're putting more control on our costs. We are putting more efforts to grow organically and have a strong rate there. We have the U. S. Opportunity. And as I mentioned, we have not stopped acquisitions, but we're going to do them differently. So that concludes my part. And I think it's time now for Magnus to start doing some questions, and then we open for the floor and potential from the outside world to answer questions as well. Okay. Thank you very much. About a year ago, you presented the 2020 targets. Back then, it felt like very far into the future. Now it's getting closer and closer. If I were to play the devil's advocate here a little bit and say what can derail this plan? What are the things that you worry about when it comes to reaching these targets for 2020? Normally, as Catena, we're not kind of the worrying kind of people. But if we're trying to find something to worry about is, course, something happens in U. S. A, change the directions of launching states. I don't think that will happen. We're seeing what we are. I will get the questions whether you think Google will change. I don't think well, for sure, Google will change. But if you build sites that play with Google, Google likes you. If you try to fool Google, they don't like you. And we do the first ones. There are, say, very little plans for either. Additional very strong regulations, but also then we need to see the upside. So we're not seeing a lot of things actually stopping that plan at this stage. We're looking at that all the time and trying to mitigate, but we haven't come up to something really, really the thing that we're thinking of more than others. Okay. You talked now about bigger purchases, fewer and bigger purchases. Traditionally, you have paid those purchases with stocks, of course. Is there a risk for further dilution of the stock if you make big purchases now in the future? Yes. I think, 1st of all, dilution is not the evil. Dilution, if you do it in the right way, will actually grow your business because you buy something that will generate more profits than you would have done before. So I think what we look at is that just adding something that just only adds revenue and comes with a lot of cost that you cannot do anything about. That is over. What we want to do is something where you can put these two things together and scale off cost and increase quite dramatically in revenue and secure your brighter future. If you do that, you can also prove that you have an increased shareholder value quite quick. And that's how we look at it, more long term benefits for the company and short term quarterly increased revenues. Okay. When you look at the map of the world that you had here on here before, you could see perhaps I thought I could see a little bit of a gap there for the big Spanish speaking world. Is that something you are looking at or thinking about now? Or what's your what's the plan for this? Of course. I mean, it is a big language coverage even in U. S. There's a lot of Spanish going on, so we need to consider that one as well. But obviously, we start with Spain. Nice movements, taxation difference to the better, more license and handed out, and we already have products that we launched there. So that is a market that I think a lot of people are looking into to do more business from. By doing so, we'll also have scaling opportunities into other markets due to the language things. So yes, Spanish is on our list of attention. Okay. And finally, the finance vertical, it's still it's growing, of course, at 6% now. Is this a focus? Is it more of a focus for your acquisition strategy going forward, you think? Well, we went in there because we have a focus study of what to become and the people working within the finance are super focused. And I think that's exactly how we did it. When we started the finance vertical, as we started the U. S. Vertical within iGaming, we set there a team to run that so that we don't take central resources to do it, to take money from elsewhere. And the good thing with this is that they will focus on what their mission is to become very big in this one. Like Michael is doing for U. S, Nigel is doing that for the finance team operated from U. K. But we have to remember that finance in Katina is where gaming in Katina was 6 years ago, only in the beginning. So we're building something there already now. And therefore, we take more cost and income at this stage. Okay. Thank you very much. Then we open up for questions from the audience here. Hi. Mikael Aschen, Carnegie. Just want to understand your comments about the financial target, SEK100 1,000,000 that it's possible, including the U. S. So what part of the U. S. Do you really need to reach SEK100 1,000,000? Was it the extra states without your current presence? Yes. I think if we do nothing in terms of acquisitions and continue business as we do, growing the normal business organically minimum 10% a year, adding the states we know that will go live on top of what we have today, which is first, Virginia and Pennsylvania, we will come very close to SEK 100,000,000. We need something more to hit the SEK 100,000,000 to do that either to do 1 or more acquisitions or that more states will go up live until the end of 2020. But the delta is very small now with the big growth we see in U. S. Okay. Can you maybe explain what the difference is between last year's expectations and so the addition of the U. S? What is the difference in Europe mainly? What has happened there? Well, I think the idea with going there was to continue massive increase of acquisitions. But we can see there and also got a lot of comments from the market is that, that is nice. But on the other hand, the EPS is not growing at all. And with profitability increasing, but we don't send value that way to the shareholders, it's also been a big demand that we need to start looking at that. So instead of diluting too much, we will start to collect more cash, use that to pay off our debt, debt not only to reduce the debt levels, but also at the same time increase EPS. So that's the change of strategy we do. Yes. Martin O'Neill with DNB Markets. I have a question on what do you really mean with low risk gray markets? Can you define that a little bit more and have some examples? Typically, they are take an example. We operate in Japan. That is not a regulated market. But we run the business there, and you can ask us why do we do that if it's not licensed or taxed in that sense. Now because when we acquire that asset, we checked with the local authorities if the way how we run the business is that okay. Because what we don't want to do is to run a business and we can make great money from it and the day after regulatory bodies come in and say this is completely forbidden or something happens, meaning that we overnight can lose a lot of revenue. By that also profitability that will be hit to our numbers and the risk for our investors. So the 25% of the business we have that is not regulated with tax today are coming from businesses that are either soon to become regulated, like Sweden, or markets where we deem it to be no or very little it will ever become regulated or at least impact us that overnight impact that we will lose in revenue because of it. So there are super gray markets like China we don't want to touch in our ways. People other people might decide to do that. We don't want to do it because it's too much of a risk. Then there are other markets that are more, so called, safe to operate like we do today. We have 25% of our business from such market. And when Sweden is regulated, U. S. Taking more part, that will close the gap to 100,000,000. But on the other hand, we want to grow these markets that are not regulated in that way yet to make sure that we don't lose opportunities out there. Okay. And also, what could be a new vertical for you? It can be a vertical representing very much what we stand for today, meaning that there is a lot of marketeers out there that find it very, very difficult to get efficiency from the current marketing, that everyday experience that digital market in general increased by cost and acquisitions every year, and they still have customers they need to connect to. So I would say it's pretty much verticals that go in there without being specific. Thank you. Yes, I have a question regarding the financial variable. So when you say that the financial variable is where Cattellamende was 2012. What are the underlying trends that you see that make you say that? Well, I think the underlying trends is that finally becomes quite clear in that where you should focus your efforts long time. When you wash away the kind of, let's say, the binary options, these kind of things, which is very volatile. When you wash away the trends you have in crypto, something stands out that is always in the movement and people are interested to pay for information for winning stocks, CFTs, whatever it can be, ForEx. Those are the trends that we switch into and the need of information related that we can translate into affiliate lead. So I think it's very easy that we go in and say we want to do a lot of advice and decrypt and stuff. But obviously, we see this is not the right way to do. You need to bet on the horses that will live a long time, and that's what we're doing now. And how will you be affected if there is tighter regulation or I mean if there is a financial bust maybe? Well, that's always the case. I mean like anything, when the business do good, people want to have information about that. When the business is bad, people won't have information on that. And if you create information about something that people are interested, you can always convert a different kind of traffic. I think that's the expertise and trends we are learning now to build this. And that's why we're saying that this will not be a €100,000,000 business by itself next year. It's a huge business like we saw last Capital Markets Day that we want to address. But to do that, we need to do our homework well and understand how this works and build that slowly. So you will always have up and downs definitely, but it's about using them in the right way that's important. Okay, thanks. Yes. Okay. My name is Asa Hilsden. I work as IR Manager in Communication. And we have first of all, we have 200 people following us today, which is great on the webcast. There's a question, a large acquisition, could that be a merge us with XL Media, for example? Well, it could be a merge. Of course, we're looking at everything that is in our feed. We're looking at our competitors every day to see if it's a good diet. We're looking at different verticals, things that we believe could come into our vertical and destroy our life. We're looking at everything just for information, we're looking at about 50 to 70 cases a month today. So we're having our radar out there and doing a lot of that, not only because we want to acquire them, but we also learn a lot from it that we take opportunities to grow our business. So that can be definitely consolidation within the vertical. Great. Thank you. Developing Italy, that's a new question. Tell us about it. Well, I think it's quite clear what's going in Italy. There will be an advertising ban coming in as we know now. And of course, when that happens, we need to act accordingly. How it happened and how it will affect, we will see then. From a long term perspective, Italy will not stop the sports betting. That's for sure. The question is just that the government need to make up the mind how they want to run that efficiently. And as any government had tried to regulate, it would be pumps enrolled, but in some part, attempt to come out quite good for the benefit of the consumer to be operating in a more safe environment in terms of gambling addictions, etcetera, but also in a way that the states get a fair share of the taxation so they can drive this good. The road there in nickel now seems a bit more bumpier than other ones, but I think we will program the GPS in a good way in the end to come to our end destination. But for now, we act according to what we know. Thank you. No more questions from the webcast so far. Okay. Thank you. So that was the general stuff. Now you need to know more stuff about how we really do this. I would like to welcome Johannes Berg, our CEO. Thank you very much. Thank you. So this is me when I'm not wearing a stupid mustache. This is Movember. We do a lot of things in the company to engage in different matters. And this year, as last year, we engaged in the Movember Foundation. And I think this is a great opportunity for us because in this room and the 200 followers are investors. So in this presentation, there is a link where you can click and you can donate money to Man's Health. Next year, we will have a Capital Market Day maybe in December, so I don't need to stand here and look like a Mexican without the hat. Anyhow, I'm here to talk about what we do and how we do things. Operations is running the business. That means to figure out how to get things done in a really efficient manner, but then not be satisfied with that and start figuring out how can you do that better. There's a lot of talk about innovation and there's a lot of talk about lack of innovation in companies. And my experience that if you don't have a sufficient efficient way of running things, you can never innovate. And innovation is about creating new customer value. I just want to give you a question. So you can think of this when I'm going through the other slides. We're in a business where users are expecting everything on Internet to be free. Every piece of information is supposed to be free. We know that newspapers are trying with payment walls and so on and they're not so successful. But if everything is for free, how does that affect what we do and how we do things? I'm hopefully trying to explain it. I'm just going to bring this up again. Because as Per said, on our Albright report, we're on 24, 27 place. We don't only engage in themselves. Last month, it was the pink ribbon, and this is picture from every single location we have. So Catina Media people are super engaged. We did pink cupcakes, and we sold them for quite a premium to get money, and we gave away that to women's health. So again, click the link. Why am I talking about engagements? Well, we come to the point in our company to understand that, yes, we're a tech company. Yes, we're a lead generation company, but it doesn't matter. It's still people that builds technology. And to my knowledge, luckily, there is not an AI who can do it for us. So that's why we need to build people. And that's what I'm going to spend a lot of time talking about how we do. The other part is innovation. For those of you who were here last year, we talked about the Dragon's Den that we do like a big yearly event when we have 10,000 for proof of concept and stuff like that. I'm not going to spend so much time on this today because that I can talk about that for forever. We did a big Dragon's Den this year, and we had an awesome winner. So that's something we have to say we guess we do it everywhere in the company. But everybody talks about culture and that culture is the most challenging thing for a strategy. So if it's people, if it's team, what do we know about teams? We know that diversified teams are much better than homogen teams. We have very diversified teams. Diversified teams is way harder to lead than a homogen team, and everybody is exactly like I am. So that's why we invest a lot in the leaders, because if we want to have diversified team to be better, then we need to make sure that we can lead them. Then on the flip side of all that is that every company has viruses and there is politics. We don't want that. We try to kill it at first sight. It's not supposed to happen because that's something that's contagious and should be eliminated. Then Per talked about scaling. Yes, we're going to scale by going into new markets with the same products, meaning we don't need to add as much resources. But in order to be in that position, we have to have a platform to stand on. If we have different platforms in different markets, well, you get it. So that's what I'm going to talk about. And I know that repetition is a pretty good way of learning stuff. So it might be that I'm going over a few things that Per already covered, then you just shout out loud and I skip forward. We have 4 strategic pillars. 1 is about products. My colleagues in U. K, they get think I'm a bit vulgar when I say create kickass products, but that's because insanely great was already taken by Steve Jobs and his team. But why is kickass important? It's because it's a moving target. Status quo kills companies. We need to set moving targets and that's why kickass is a pretty good thing to have in mind, because what's kickass today will not be kickass tomorrow. And if our job is to figure out how to do kick ass products, we need to do that. The other part is about relationships. And this started off like us being trying to set a different standard within the affiliation industry in gaming, which we sort of growing away from. But typical affiliates never met a customer. They never met the operator or pay the bill. They just clicked on, joined the affiliate program, send traffic, money on the bank account. We understand that if we can have strong relationships with our paying customers, we can help them grow further. And if we can help them grow further, we become a much more important partner to them. So that's a long term competitive advantage. Then we have culture and then we have innovation. However, we're a data driven company as well. Everything we can do, we can measure. And I'm basically saying, if we can't measure it, it simply doesn't work because if you can't figure out how to get metrics on something, forget about it. It's not the discussion. It simply doesn't work. So if I'm talking about relationship and culture, how on earth do you measure that? Does anyone in this room know how you measure culture? And I'm not talking about painting free sexy words in the cafeteria like curiosity and something like that. How do you actually measure it? Well, I'm going to talk about that now because if we want to build technology, we need to build people, then we need to have the right metrics so we know what we're doing. And if it's not working, we know where to fix. And if we figure out what works, that's where we want to grow. This is a slide from last year, which I think is amazingly interesting. What it does, it shows global engagement at work. And they measure on 2 scales, it's how happy I am at work or how unhappy I am at work, how engaged I am or how disengaged I am. And if you take these numbers, the 21 plus 13 that are highly satisfied and highly engaged, that's 34. And then on the other side, you have 37%. So it's a delta of 3%. That means over the globe, there is a negative productivity, if you believe in those numbers. And this is a pretty big study. And you can go and dig into country specific as well. And yes, guess what, all the countries you think have low productivity have much more of the workforce in the lower corner. And the countries where you would expect to have high productivity, yes, they're in that direction. So engagement matters. So we measure engagement And we've been doing this for almost 3 years now. And what's super interesting is that we see a 100% correlation with the offices, meaning Belgrade, UK, Japan, Malta and U. S. That has high engagement and the profitability. There's 100% correlation. So when we see engagement go down, I know profitability go down. And then we measure 10 different other subcategories, so we can see where is default, where is the error, how do we fix engagement. And this is working really, really good when you have the profitability number, which is a revenue number and a cost number and what you have left. But how do you measure that on other parts of the company like HR or finance or tech department because they don't generate revenues. So we need to put in metrics for productivity and we're working on that, and I'm going to bet my mustache on that. We will see the same correlation, high engagement, high productivity. So now everybody is thinking, what is the next thing? Yes, how would you get engagement? This is a book I stole this from Nicholas Taleb. He wrote Black Swan and Beat the Dealer, and his latest book is actually called Skin in the Game, which is I enjoyed reading it. This is the biggest thing that confirmed that we're doing the right in this sense. So if you have no skin in the game, that means that you take all the upside and you transfer all the downside to someone else. If you have skin in the game, that means you take care of the downside, I get shit done, I'm responsible for errors, but I also take risks to get rewards. If I have soul in the game, I take the downside of everybody. You agree on this? And if you think of companies or people or other areas, bureaucrats, they have no skin in the game. They take all the upside and transfer all the risk to citizens. Consultants rarely have risk. I give you an advice. You pay me for that advice. Did it work out? Did I suffer? No. Did you suffer? Yes. Entrepreneurs, however, they take risk. They suffer when things go down and they're successful when things go up. Crazy innovators and over here that have this passion for something, they take all the risk. So if you can figure out a way to get people in an organization to get the piece of skin on the game, they will be engaged. And that's not related to share option programs, bonus schemes or anything else like that. It's related to only one thing, it's called ownership. If I can go to work and affect what I can do, I will grow. I will have my skin in the game. And if we can award them because they're doing a great job on top of that, that's even better. So that was the whole idea when we designed the organization. We want people to have a skin in the game. Last year, we talked about us being a product center company. Now this has evolved and we call it we talk about pods and roots. And basically the concept of this is all big companies are super efficient most of the times, but they are very silo structured and things happen, input, output, top down and so on. Good. Really boring place to work at for most people. That thing over there with all the little circles is a start up, super high energy, super creativity. If you've been there, it's like just a bus, people drinking your old cola whatnot working 24 hours. They're really crap at getting things done. They're very rarely you find a startup with high productivity numbers. What we want to do is we want to take what's good in the big corporation, what's good in the start up and combine that. And we call it pods and roots. And when we start looking to this, the sexiest world in the world right now is like being agile, being modular. And this is actually a very agile and modular design because the definition of a pod is the amount of resources you need to create revenue or value. The definition of a route is something that you need to support that effort, meaning all our pods is our products. If we see one product is growing, we could easily allocate resources to that pod. Or if we see it shrinking, we might, as you do in your garden, cut that pot off. It doesn't affect anything else. But if you have everything in departments like this and you need to figure out how to carve stuff out, very difficult. Here you get the skin in the game in the pods. The thing with the roots though is they're not departments. We don't have an HR department. We have an HR company. And that's when you get the whole entrepreneurship. So the HR team is supposed to be the best HR team in the world from a company perspective, not the department, because there's a big difference in this. Might be just a wording, but it tells everything about engagement. And then on the good side of that, it's really easy for us to track financially and it's easy for us to just put on the engagement numbers, let's see, on the right hand side of that. It wouldn't be so engagement to work in a cost center because that's what HR actually is. It's not super engaging to go to work and work for a cost center. But being a really, really strong and the best HR company in the world is pretty engaging. And if they fail, the pods will fail. And if the pods fail, the HR department will fail. So this is the whole idea and the concept between pods and routes, and that's how we build people. So from people to leaders. Yes, question, Orena? Okay. No, we're not you're not allowed to ask questions at all. Moving on to leaders. This is a question I get quite often. We invest a lot of money in our people. And yes, that investment just went out the door. Smart. But the other side of this, if we don't invest in the people and they stay, we will end up with the dumbest workforce in the whole world and that is not a good investment. So that's why investing leaders. And we have 2 different programs. We have one where we talk about on the job training is doing it now. You need to be better as a leader. And we call it BLACK. It's acronym of Bidsize Leadership Assessment and Coaching, and that's ongoing, ongoing, ongoing. Then when I started looking into the amount of time it takes for us to find a leader, for that person to be able to join because most good people are already at a job and then onboard that person and still having the risk of that person leaving. So what if we just invest a little bit in identifying the future leaders in the company? And that's what we're doing right now. So we have one program that's that focusing solely on the future leaders, identifying them, help them to grow and that could be people who are not in a leadership position at all. So invest in people. Now we should talk about products. To me, our product strategy or basically strategy is about defining where do we play and how do we win. Because if we can do that, it makes us very easy for us to decide where to allocate resources and where to focus. So first, where do we play? I think we have a great opportunity. Perot has been tapping into that all the time. We're a lead generation company. That means our opportunities everywhere there is a need for new customers and that's something that's going to be lasting for forever. There's 2 different things as well in this aspect. In a mature market, you need to be best. In a growth market, you need to be fastest. So in U. S, we have a growth market. It's very important to be fast. On other markets, we're very mature, then we need to be better. So that's where projects come into play. So number 1 in lead generation in the world, that's Google, end of story. We will not beat them what I can see. So where is our space? We talk about Expedia and Booking and so on. That's transactional things. I want to go from Stockholm to Copenhagen tomorrow after lunch. That's all the information I want to have. But when you need to spend time collecting information about 800 casinos, you can't do that. We can do that. We can aggregate that all information to help you to make a decision. And on top of that, we can help you sort problems when something happens. So I'm just going to since time is going away from here, I'm going to skip a few slides, but you have this in the presentation material as well. So if we want to help people make decisions, we need to understand what they search for. I search for an online casino I can trust. I end up at Ask Gamblers. I choose to go to Glio Vegas and I play. Boom, super easy. Data points we get. We get the total amount of traffic going into Ask Ambler. This is just fake numbers, but so you can understand the funnel. I always get questions about, oh, this John Slots is going down, why is it going down? It could be because we decide not to rank for certain search words or it could be that Google changed the algorithm. Anyhow, that's total sessions. Of those, 75,000 decides to move on to an operator. Of those 75,000, 39,000 decides actually to register, we still haven't made any money because we haven't deposit anything. And of those 39,000, 5,600 decides to play. So we have 3 areas where we can optimize, but we cannot optimize the NDC, because that's the player's job, the operator's job with the player. But every step in between, we can figure out how to do things better. And it gives us data points all the time so we can start, okay, we get a lot of traffic, but they don't convert. What's the problem? We got a lot of conversion, but they don't sign up. What's the problem? Then we can sit down with an operator and say, hey, might be this, might be this, because we get data what actually works. Back to the relation thing. So PPC versus SEO, that's a very common question as And all of you that searches for something, most of the time you see ads on top. There are 4 slots for ads. That's the pay per click. Underneath is the SEO. It's what Google thinks should be ranked 1, 2, 3, 4, 5, 6 apart from the ads. So the ads basically works like you decide to have a campaign for something and when your money is out because you bid on these keywords, you're invisible. So every now and then you search for something, there are no ads. You notice that? That's because no one is paying for those keywords. Anyone who's into investment will say, so why don't you do only PPC then, because then you would always be 1, 2, 3, 4. End of story, boom, you won. You could. The thing is though, what if you search for something, an online casino I can trust, and the first thing you see is an ad, would you click on that? Probably not. The data we have is that the click through for PPC is way lower than SEO. So that's why SEO is so much more important and it's free because we don't pay for the click, but we need to do a lot of stuff. So the data we have is that the click through is €29,000,000 to €71,000,000 So the first four slots that's PPC spend, get 29% of the click throughs and everything else gets 71%. So what remove those? What happens then? This is why we think position 1, 2, 3 is the most important one. The data we have is about 60% of all traffic goes through position 1 to 3. Position 4 to 10 gets around 20 and everything else, position 10,000,000,000 to 2,000,000,000 and whatnot, get rest. So those are the only position that matters. How do you get them? And this is where it's going to be really interesting, because as Per said, we said that we had a few 1,000 websites. I know a few of our competitors says they have a few 1,000 websites. To rank on Google, You need to, 1st of all, make sure you have really, really good content that is on topic. Then Google looks into how the user behaves on that site. Does he stay or she stay on the site? Does he click through to another site or does he just drop off because it was crap? I searched for an online casino, I could trust, they ended up somewhere else, I drop That improves your ranking. Then they look into technical aspects like mobile and if it's a secure website and other things. They look into your user experience, meaning how easy is it to navigate on the site. They look into user signals, meaning do I tweet, do I share, do I do anything on Facebook with this site? And then they're looking to all the links going into that site. All that combined, is that possible to do for a few 1,000 sites? No, it's not. So when someone is talking about that, something is wrong. In order to rank, no one knows how Google works. They don't disclose this, but they say they look at these things. So that's why SEO takes a lot of time and effort to get done. So I'm going to use Ask Candlers as an example. I was looking for an online casino I could trust. I found top 4 or 5 things. I choose to click on Askandlers. This is a scammers website. It has a lot of information. It has a top list of casinos, has information how to play and a lot of stuff going on. So it can help me to make a decision. As gamblers, it's 5,000 sites under this one, 5,000. So then you think of what I just showed you, the 6 areas you need to be good at and then you think of that times 5,000 and then you think of that times several 1,000 websites, and you see where I'm trying to get. So this is what helps people to make a decision, but we also help them to make sort out problems. So far, we generated 19,300,000 something and change back to players because we help them sort issues they have with the casinos. And it's not only getting money back, it could be basic things. And the casinos actually like this because we become their source of information how they can improve. So that's why make decisions and sort problems. So back to the kickass product and focus. Most of you are probably familiar with the network effect. And this is what we think. At one point, our product, because there are more users on it, it increases the value. Facebook would be a pretty boring place to hang around on if it was only me and Peridar. So the amount of users create the value for the paying customer. It also protects the could potentially have a little tipping point where there's a winner takes it all effect like this typical critical mass. We see that here in Sweden with Blocket. We see that with Lendly and Finance. We see that in some lot of areas. So that's why focusing on the product and make them really, really good matters. I was asked prior this to have a little quick idea of acquisitions and what that means. To me, this is acquisitions. The 34 different companies we bought, all are built on different platforms. Back to the scalability, no, we're not there. To get everything to one platform is key for us. That's bypass Stockholm exercise. It's an infrastructural program. Everything will be crap while we do that. Everything will go slower. We need to add more resources to fix the problems. But once they're done, we have bypass Stockholm and then we just need to maintain it. In the presentation material, you have this. It's what we're aiming for. It's typical Lego, bits and pieces. And I could only describe it like this. If everything is on the same platform and we want to deploy a chatbot, we need to build 1 chatbot and then we can deploy it on 34 different products at one click and we only need to maintain that chatbot. If we have 34 different platforms, we need to build 34 different chatbots and we need to maintain and develop them 34 different environments. So that's why this is key, and that's also why costs are not slowing down as fast as I know Per wants them to do because we're building bypass Stockholm. And until we're done, there will be some gray hairs coming out here and here. Finally, I just want to say, we talk about focus on brands. Now you understand why. Metrics, scalability and hopefully a network effect sometime down the road. Questions? Yes. You touched on this in the presentation here that seemingly your site fluctuates sometimes a lot in traffic or at least according to people who know how to measure these things. I don't, but they tell me. The question then is, do you experiment a lot with the sites? Now that you have so many sites, can you afford to make experiments? And that is also the reason why sometimes you can see someone say, oh, no, this is going down and so on. Or how does it work? We don't really experiment with the keywords per se because that's a bit scary. But we track them very carefully and see if we rank on this, what happened over here. And if we see something is going down, like best example I can give in U. K, everything that's related to free spins is not compliant. We were super strong on free spins. So if anyone follow the traffic on our site, freespins.com, they can see that that's going down because it's completely useless for us to rank on that keyword because we can't make money on it. So and sometimes from Google, we had a little bump upwards in August on a few sites because Google decided to look at it a little bit different, and we started to rank on a keyword was not important for us because it didn't add any value over here. And then now when Google did the new algorithm update in October, things got back to normal. So yes, but if you only look at that, you're like, yes, dramatic. But if we go below where we were big time, then it would be dramatic. Okay. You talked also about the NDC. Katina historically has spoken a lot about NDC. It's been really a focus point on the quarterly presentations, IBN and so on. Now lately, you have tried to downplay NDC a lot and talked about the problems with this. But how do you see NDC going forward? Could it I mean, has it now plateaued a bit? Or do you think it will still see growth even though you try to focus on driving value with them? NDCs should grow over time naturally. But if you look at the revenue mix, we have 10% from fixed fees now. And that's meaning that operators do not care exactly for the numbers they get from what we give to them. They just want to be exposed in this environment and just the exposure is important for them. So and that means that we actually every time we get fixed fees, we're sacrificing indices, of course. Okay. Any questions? I have a 3 part question. Can you tell me more about your core product and how far you've come with that and develop a little bit in your Yes. So the core is our core of the technology. You have that in the presentation, and that's something that's been building for a long time. It's fully working. So now it's integrated with a few back end systems. So we're improving a lot on that. The next step is between core and our websites. So now we're building Katina Press is what we call it, and that's Bypass Stockholm. And if you look at the global market, right now, it's probably 80% off line and 20% online. Talk about that. In terms of any industry? IGaming, though. IGaming, yes. I think most things are moving in the digital space. So I just expect that to continue in that way. Thank you. Yes. So last year, you talked about you have a new way to evaluate your leaders or managers. So have you seen any results from that? And also, what is your employee turnover on a yearly basis? So we see really, really good results in leadership, and we built that into the bonuses for them as well. So we measure in the 360 perspective and then we see where the gap is and if they can close the gap that actually impacts the bonus. Turnover of employees is really difficult to measure, then we need to go into each different sites because we have some sites where people never leave and some sites where just Malte is a typical place. People come in for 2 years, live in a warmer climate and then they go and pass on. So we try to benchmark where we are operating and see if we have any deltas there. But I don't see we have any higher or lower than what we compare it to. Okay. So the number I've heard as an average on Malta is 50% on a yearly basis? Oh, yes. If you like Evolution Gaming, for instance, that has a lot of people going in and doing the live casino, they, I guess, suspect they have very, very high turnover. We're not close there. We're not that 50%. Okay. So you're at the same level as your peers perhaps? No, I think we're better. Okay. Thanks. All right. Any more questions? It seems like you have been crystal clear, Johannes, because you have no questions from the web. So everybody wants to have coffee. Yes. Okay. That might be the case. Yes. Actually ahead of schedule. So if we don't have any questions up to the moment, I suggest that we have a question. Regulations. Yes. So no more questions in this area. That moves us into the topic I'm also covering, which is I just assume there will be more questions around this. But in your presentation material, there are a few details. But I think we can just shoot with questions because I'm not going to read this from top to bottom. Okay. Well, you see now that you don't think you will have any impact on Sweden. I think the market is more worried than that. We have a new situation from the 1st January with taxes, which we haven't had before, and we had lots of new rules regarding how your customers are supposed to operate and so on. Could you please give us the puts or take why you think that there will be more or less no effect on your business? Yes. So I always hear who are our competitors. And the most common competitor is the mom and pop or the 2 guys in the garage. And when the market regulates, you have to be compliant. And if you're 2 guys in the garage, it's very difficult to be compliant. So what we saw in U. K. This spring where the operators were like, if you're not compliant, you're out. A lot of small companies, 2 guys in the garage, they just went out of business basically. So even though the market got tighter and you can say we wouldn't have dropped, I think we stayed on the same because we got that back. And I simply assume that would be the case here in Sweden as well because if you pay for a license and you know that if you're not compliant, you won't be fine. You don't want to do business with someone cutting corners. Okay. Italy has been a topic also this year regarding compliance and regarding regulatory frameworks. And how do you look at this now? Knowing that what you know today? Would you still have bought this company? And also what do you think you have learned from this experience, which I guess was a little bit of a surprise to you that it could Yes. Looking back and having additional data points is always easier to understand or say we wouldn't have done it that way. But if you look at the data points we have, acquisition wise, this is exactly what we wanted. It's in sport. It's a single brand. It's been very, very established in the market, super good product, tick, tick, tick every box. Italy decided to approve 60 new more licenses. So yes, very good market. We get it. And then all of a sudden, Italy decides, no more advertising, which is completely in the other direction why they did open up the market because they want to get rid of all the black money and all the mafia and all those things. So we would definitely have done exactly the same decision again because the data points we had was perfect acquisition, market is opening up. Yes. Okay. Thank you. Any questions in the room? Yes. So regarding legislation in the financial vertical, do you see a big difference in profitability between perhaps Europe or U. S. Depending on what is allowed regarding CFTs or binary options? Or is there a big difference in profitability between different regions? Too early to say, I would say. And if you look into the finance products we have like Hammerstone, it's a subscription model. So and that's a very, very good product because selling another extra subscription doesn't add any extra costs. So hopefully, we can continue to grow that and then we see how the whole finance market evolves. Okay. Thanks. Per mentioned in the Q3 about your products that you're probably going to release in the U. S. Market. So what's the hold up? And because if you look at RFs, you see that Ask Ambler has a lot of traction in U. S. So why don't we go there and pick up the money? Yes. So thanks for asking that question because we see exactly what countries we have traffic from. And in NASSCAM, we have quite a good traffic. However, none of that is from New Jersey. So we're not monetizing. We have a lot of U. S. Traffic, absolutely, and I'm just hoping for states to open up so we can monetize that. But unfortunately, not that much from New Jersey. But that might change. So regulation is done. Operations is done. Coffee break? Okay. Thanks. Thank you. Welcome back. Again, it's now time to start the second session of the day. And I'm once again happy to welcome our GM in U. S. IGaming, Michael Dally to the stage to explain you a bit more about what's going on in the U. S. And how we see for that for a long time ahead to be a very important business to us. Mikael, welcome. Thank you, Per. Good afternoon, everyone. I'm Michael Daly. I have been with Kutena since the spring. I've been in the U. S. Gambling space for the last 15 years and the iGaming space since about 2010 and have watched that grow in some work in Europe and then some work in the U. S. Since we took off in 2012 or so when we started passing iGaming legislation first in New Jersey. Kata came to the U. S. In December of 2016, we made our first acquisition of a group called I15 Media, which had been one of the acquisitions working in New Jersey since the opening of that market. That consisted of a company that was doing, obviously, we announced at the time about €1,000,000 per quarter and New Jersey at that point was doing about €214,000,000 a year. This asset also included some this company also included some additional assets that we had the option to, which were for future markets and things such as sports. We recently saw that we announced that we had finalized in some of those acquisitions of the secondary assets, which we announced a few months ago. So our second asset acquired in the U. S. Was a company called PokerScout, which we picked up in November of 2017, the same month that Pennsylvania passed a bill legalizing online gambling casino. That's currently expected to go live in Q1 of 2019. We also in this spring of this year picked up our 3rd acquisition, which at the time was our 2nd largest competitor in New Jersey for lead generation Bonus Seeker, which made a great add to our portfolio for not just New Jersey, but for future states for the gambling and sports betting space. From all these acquisitions, we will then build out the team that will become the organic growth for the U. S. Because while we may look at some acquisitions, it is mostly going to be an organic play from here because we are essentially the largest lead generator in the U. S. For iGaming at this point. We are the leader in New Jersey, which is today the only place where we see real competition in the iGaming Casino Poker space. There's 1 or 2 other states doing a little bit of poker, Nevada. We work there, but there's only one operator doing online poker in Nevada today. And then you have states like Delaware, which is run by the lottery and so it's a less competitive environment. New Jersey though has been very healthy. Since the opening of the market, it's been growing at 20% year over year in the online space. Catena has been even healthier there. We've grown at faster than market rate in terms of our own revenues in market as we gain more and more market share. Today, we make up by our estimations and talking to our customers probably about 70% of the lead generation acquisition marketing in New Jersey. Catena has also become the leading acquisition channel now leader for sports betting, which started in August of 2018 in New Jersey. We work with most of the operators and the market as has been announced by various parts of the press, including our sites like Legal Sports Report is often running very healthily. New Jersey sports could probably double the size of the market over the next year between that and the 20% growth rate that they've been seeing annually on the casino side. Where are we in this? So this is if you were to look up in Google, New Jersey Online Casino, everything in a red box here is a container owned site. This is Page 1 of Google search for New Jersey in New Jersey. So we have multiple sites, multiple brands, somewhat of a different strategy than what we're doing in Europe, where we're consolidating brands. In the U. S. In its early stages, we're lots of brands out there to make sure that consumers have choice of the type of site they go to, where they can look at then the types of sites they're going to go and be led to in their follow through clicks and become NDCs. The same is true now for sports betting. Everything in red here on the front page of Google under the search for New Jersey sports betting is Catena. So we are doing very well in New Jersey. It's been a very good business for us and will continue to be a very good business regardless of everything else that's going on in the U. S. But there is other things going on in the U. S. 2019, payers referenced that West Virginia and Pennsylvania will regulate or go live. They have allowed it legally and they're building their regulations. Both have now gone live with land based sports betting, but both will go online probably in Q1 of the coming year. West Virginia maybe it makes it by the end of this year, but most likely Q1 is our pessimistic view at this point. So what are we doing to be ready for these states? Catena for years has been building up traffic and site credibility for both these states, for both casino and for sports betting, because we knew it was not a matter of if it was a matter of when that these states would come. And that's continued strategy, especially in the U. S. Where pay per click is essentially not allowed by Google for the gambling space. So organic is not only the most important and the most effective, it is pretty much the only thing allowed. So those that are there early and those that are able to maintain position on the front pages of Google will be the winners of the game, we believe. So in West Virginia, for example, we have playwv.com, we have wvonlinesportsbetting.com, we have wvsportsbooks.com. We rank very well for all various search terms. New to Pennsylvania, here is just a few of the sites we have. We have 7 sites today with a PA in it somewhere, Pennsylvania, under sports, poker, casino, because all are expected to come live in Q1. That's in addition to that, we have numerous nationwide brands that we have in the U. S. Such as Play Picks, The Lines, sports betting sites, Legal Sports Report, Play USA, Bonus Seeker, all sites that are well ranked within the coming states. For example, it's hard to see, I apologize, but in Pennsylvania, everything in a red box under the search PA online casino were 3 of the top 5 sites. Now the others are casinos that are in Pennsylvania, who've been running social casinos and will run real money and will be partners of ours. And then the same is true for PA Online Sports. We're 3 of the top 5 spots today. The market is not even open yet. So just like we did in New Jersey, where unlike the operators, we can be driving and building traffic and email lists of players long before the markets open. So the day 1, the first customers to open, we have a plethora of customers to deliver to the casinos and get paid for our CPA rates for doing so. That's what is known about for 2019. That's already been passed. It's going to happen. Yes, it may shift a month or 2 this way or that, but it is going to happen and Catena is confident that it will happen in 2019. And just those things alone will probably make it 2 times the market size of the current market in the U. S. Between sports in New Jersey going live, Pennsylvania Casino and Sports, easily 2x even with tax impact or per capita spend per state. We are looking at doubling the size of the U. S. Business in the next 12 months. But that's just a start because in the spring of this year, the Supreme Court struck down the PASBA, our Supreme Court struck down the Professional and Amateur Sports Protection Act, which made sports betting illegal in the U. S. Doesn't make it legal, just turns it over to the states to allow them to decide for themselves, such as we saw in New Jersey, who already had a bill passed that said when the Supreme Court did this, they could go live and they did. Pennsylvania, same thing. And now we've seen other states. So 14 states in 2018 by my count put up bills in their state legislatures to pass online sports betting. Only a few of those Pennsylvania or West Virginia, Rhode Island passed them. None of them have gone live yet. But what happens next year is probably something similar. More bills go up, more states are already talking about it. We're at 18 and climbing in terms of the number of states that are presenting something, some portion of those will pass. And that's not just for sports betting. This has also been a resurgence of casino and poker bills being put up because some recognize more than others that tax revenues from sports is not nearly going to be as lucrative as it might be if you also had casino and poker. But casino and poker will roll out at a slower rate than sports betting. In the U. S, it's probable that sports is considered more acceptable than casino gaming in the online. So some will roll faster than others. But let's start with the slower of those 2 and talk about casino and poker. So this is where we are today in the U. S. New Jersey and Delaware have online casino and poker. Nevada has online poker. That's 3% of the U. S. Population, about 13,000,000 people that's made a very healthy business for Catena. That's justified our acquisitions there and our spend and the returns on those investments have been, I will say, fantastic. I will let our CFO describe it otherwise. This is what happens in 2019. One state, the 5th largest state in the U. S, Pennsylvania goes live, more than doubles the population that will have casino and poker. So even though 40% larger population, higher tax rate, about double the tax rate, but the net effect of that is you are probably talking a 2x this current market in terms of those that Catena can touch for lead generation. And Nevada will continue on with Poker. 2020 to 2022, things get interesting and things may accelerate, especially as sports moves along. So these are all the states that so far in the last few years have put up casino and poker bills, shut down internal infighting, who's going to get the money, what have you. But they're all talking about it again. Catena has had representatives meet with people in the state legislatures of New York, Michigan. We have people out who do interviews and have talked to various state legislatures and they are putting up bills. They have publicly announced these things. Some of these will pass, some each year. It doesn't take a lot to again grow that population. New York, it's almost the size of Pennsylvania and New Jersey put together. Illinois, under high likelihood, Michigan been talked about a lot, little bigger than New Jersey, tons of states or a dozen states talking about casino and poker. Some go each year, makes a very healthy growth rate for Catena. So that's casino and poker. So 2018 growing at a very healthy 15% I say here, it's more like 20% at the moment. Growth from the states of PA in Q1 in 2019, we talked a little bit about net value is probably be the same, maybe some potential launch issues. But that means by 2020, we can expect the historic growth of New Jersey plus Pennsylvania will at least grow another 25% if they don't launch until Q1 of this year means they pick up Q1 as part of the growth the following year, plus they will have their own growth. There will be more brands entering. There will be more competition. Competition is good for marketing spend, marketing spend is good for lead generation. And being the top of the lead generation pile, that's good for Catina. 2020 or 2021, excuse me, if half of the possible states go live that were just on that slide, then we could be at 2x what we are at 2019, which is 4x where we are today. So I'd say that's pretty healthy growth. And that's not the most interesting part of the U. S. Sports betting is the most interesting thing in the U. S. Right now and perhaps the world, but I've got an American view perhaps. We always have been known to be a little self focused. So today, sports betting for Catena Online, New Jersey went live in August. They've been growing, their handle grew 40% last month, month over month, many more operators launching, still a number to come. Again, more competition, good for Catena. So Pennsylvania and West Virginia have passed bills for online sports betting. They expected to go live in Q1. Pennsylvania is right now saying they'll go live with casino and sports at the same time. And West Virginia is saying sometime in the next few months. Optimist might say November, December, we'll say safely Q1 of next year, they'll be live by. And they both have recently in the last few weeks gone live with their land base. So I should have changed them to orange like these other states, which have launched land based sportsbook. Some people got confused when Pennsylvania announced the other day that it had gone live to land based only so far. But land based is a good thing for our business too in that it starts to drive the momentum. The more states that have sports betting going online and then land based, the land based ones will go, wait a minute, we're not nearly the same revenues and tax dollars as those guys that have online available as well, which then further accelerates their decisions to change their laws and regulations to allow online as well. Or conversely, there may be opportunities for Catena to look at how do we do lead generation in the digital space for some of the land based casinos. It's historically not been there, but it's another channel, especially as those businesses get more sophisticated in how they track players, because that's usually been the challenge. How do you track who comes through the door in order to get a CPA or just terminate an NDC. Those days are changing and container will be there for the times. But so today we are look sorry, today we're 2.75% of the population with sports betting online. Next year, December 2019, West Virginia, Pennsylvania and Nevada, which goes from a quasi land based sports betting, you have to go into the casino to register and then you can use a mobile device. They're looking like their governing body, Nevada Gaming Control Board is reviewing whether they can just do full online. So that adds another market for us. And not a big market, but it's a third the size of New Jersey. So if New Jersey has been a healthy business, we'll take an additional ad from Nevada. And then 2020 to 2022, it could just explode. You've got more than 14 states, this Washington D. C, which is not a state, but a very rich province, if you want to call it, in the United States. All talking and all have these are all the states that have put up in 2018 some sort of sports betting bill or discussion in their legislation. There are some very big states in there, New York, Arizona, Illinois, Ohio, Michigan and some small ones. Just a couple of them each of those years, very healthy business, very good business, very high likelihood in my view that some of these are going to make it each year, especially as we see West Virginia and Pennsylvania go live, which will prove to the rest of our states that states outside of New Jersey, which is more known as a gambling market like Nevada, that this can be done in these other states and replicated. So these guys get live, these other bills will start to pass and the market will grow. And on the front side of that will be Catena. So 2018, we launched New Jersey in the middle of Q3, the middle of the start of the American football season. It's probably the top of the sports betting season in the U. S. So lots of good acquisition, which helped with handle in September, which grew in October, thanks to leads brought in, in September. CPAs are lower than casino just as they are I think everywhere in the world that was expected. But it's a volume play. There are more sports betters than there are online casino players in New Jersey and every other state. We'll see the seasonality though in sports that we don't really see as much in casino in the U. S. U. S. Casino doesn't really have the same summer fall off online, quite the same as we see in Europe, but sports betting will have a very unique and strong fluctuation in acquisition based around various sports such as football, playoffs, Super Bowl and then hockey and football or hockey and baseball and basketball will be to some lesser extent. 2019 will be about market expansion with New Jersey growing more customers, more of them live for the full year because nobody has been live except since August, Pennsylvania and West Virginia. We've talked about some of the challenges in Pennsylvania with casino and their tax rate, but in sports betting, the tax rate is effectively the same as New Jersey. So it makes it a pretty healthy market in Pennsylvania with 40% more population. They do have a slightly lower per capita income, but that may or may not have an impact in particularly the 1st year or 2. 2020 from just some of those states we showed that might pass a bill in 2019 could double the market effectively. 2021, same thing. Some say some who project probably more optimistically than I do come up with numbers of 4x or higher. I'm happy to see if we can do 2x and we probably can based on the number of states talking about it. And that is just the beginning. This is Eilers and Kriedjeck, who is an analyst for the U. S. This is talking about sports betting overall, not just online. But if you look at them, they're talking about by 2022, we could be up to 60 ish percent of the United States, 50 ish percent of the United States with online or with the sports betting and some portion of that. But then you still got another 38% that will go in sometime the years after that. So is it possible that we could see double ourselves in the U. S. Again after 2022? Quite probable. Now there'll be things like competition coming in and other challenges that Catena will have to position for and we are. And we are in what we describe as pole position for that. So this is Catena today in the U. S. We have 2 states in red where we're fully monetizing. As we talked about New Jersey, casino, poker, sports betting and then some poker in Nevada. The states in blue are the states that we believe are closest to passing or have already passed something. And so container for the last few years in many cases has been building up sites there, building up traffic, building up site credibility with Google, being ready to build customer bases or pass off customer bases when those states go live. In certain states, Pennsylvania and Michigan, what we call them pre monetized, they actually are making money from the I Lottery groups, Michigan Lottery, Pennsylvania Lottery, which is a whole another area that could expand in the U. S. As sports and casino goes across the U. S. So many lottery. And we haven't even delved into what that could mean for us. And then we have build out sites. These are the states that are not quite close to the bone, not a 2020 launch most likely, but Catena spends our time when we have down cycles, when New Jersey is launched now, but West Virginia is behind. West Virginia sites are good and healthy and we're growing those. But we use some of those build out teams to work on some of these other states that are a little further out. So that with the same number of resources, we can build out a lot more states to be ready when they come and start to grow traffic, but not have to when every state goes double the size of our operation, because the idea is to bring some of this to the bottom line. And then we have the national sites. So outside of the last slide I showed, which are where we were building state specific sites like Pennsylvania or PA onlinecasinos.com or PlayPA or Play WV, Here we have if you were to look up legal online sports betting in the U. S. Or online gambling or sports gambling, Play USA would come up number 1 in the Google search. And I guarantee you on that front page, there will also be some others of our sites anywhere in the U. S. Same thing for PA Sports Betting or Illinois Sports Betting. Top of those searches right now, legal sports report and that holds true for Wisconsin sports betting most likely, many other states that are much further out. So we have a national presence on top of the state specific. So lots of very strong national brands that will roll out along with state specific ones. And then as Per and Johannes talked about, I believe, bringing other brands of the company to the U. S. So someone asked about Ask Gamblers traffic. Well, it's low in New Jersey today. It is in the U. S. And we recognize that. Ask Gamblers has launched in New Jersey now. We did that a little while ago. It's going to be a slow build, but building up its credibility to be the same as it is so well respected in the rest of the world, but it is coming to the U. S. Some of these other brands will bring across as well. And you might say, wait a minute, I thought you were just talking about decreasing brands worldwide. We are over time. The U. S. Is a nascent market, so it's not at that position quite yet. Right now, we need to flood the field a bit if we can do it efficiently with our same size teams so that we can be whatever anybody in the U. S. Wants sports, casino, poker, find the right niches for them. And then as we figure out what's working best, we consolidate, move traffic over, shut down those sites that don't make sense. But you're going to see us try more things in the U. S. Than we might be doing in Europe. Because remember, each state in the U. S. Is somewhat like a separate country. So each state is going to have its own sports flavor, its own keyword searches, people talk differently, different dialects in the U. S. I mean, while Per said, the U. S. Might make it so that it's more than 10% of the overall company, you have to think of the U. S. Sort of each state. And I'll say we'll try to keep each state under 10% of the overall company. So what are we doing in the U. S? We are focusing on the sports betting preferences. We're trying to make sure we understand what makes people tick, what makes for a good lead generation site for sports. It's different from a casino audience. We have lots of things to draw on from Europe from their experiences, but there are different and unique flavors that we need to focus in on the U. S. And various states. We're analyzing our products. We're figuring out what do we need for content writers for the various sports. The good thing is we don't need a lot of newer resources for 2019. We have done most of that. So most of what we make in 2019 should not be eaten up in more personnel costs. We are infusing sites with more video and audio content because that seems to be what Google has preference and that seems to be more what sports betters prefer and that's way they consume. We want to stay on top of the tongue, so the top of the search, so that's what we do. And then continue SEO work, because it is an SEO play. And then niche markets, education, training, advice, those things are all very important, especially in launching markets, proved very well for us in New Jersey and will be very important here. And then strategic acquisitions, there will be some, there will be some competitors, there will be some technologies that may make sense for us. But most of our growth in the U. S. Is going to be organic. So that's a quick turn discussion of the U. S. And I'll turn it over to questions. Okay. Thank you very much. For us in Europe, this land based sports betting is rather peculiar. I don't think we have had anything of that in here. But how does it work? Is it a strong culture where it exists now in Nevada and so on in America? Could there be a chance that this goes against the current of everything going online? Or do you think this is something just that they will try for various reasons and then it will just blow away? So sports betting, land based is our history in the U. S. For casinos. Obviously, the technology for online didn't exist for the longest time. But most of our regulations and laws make it easier to pass land based bills first to manage and that's often controlled by the casinos who want to make sure they stay on top of the pile in terms of their businesses. So they managed to keep out businesses that they don't quite understand. Start with sports betting land based is a good thing for Catena. Again, I said there may be opportunities for us to do some lead generation there, but those states that do that will inevitably, I would argue, move to online over a period of years. And that will drive other states around them when they look at, oh, Nevada is making this much from land based, but New Jersey is making this much from online and land based where New Jersey is over 60% last month of the handle came from online for sports betting. I think it will show the new states more and more that online is part needs to be part of the equation. Okay. These different states where you are in a pre monetized state, are you already in discussions with operators thinking about contracts and so on, if you know that they will soon or sometime in the future go live as a regulated market? How much can you do there before it kicks off for real? So yes, to the degree that we can. The operators and ourselves being a regulated entity can't obviously strike deals in states where it's not legal to do so. But we do have discussions with various operators in Pennsylvania where it's legal and they're waiting for their licenses to kick in with ourselves who are waiting for our licenses to go into effect in such states. We have some discussions, precursor. We also do things in these pre monetized states like I said with lottery, where it is legal in certain states and with social casino and other things that help offset the costs of some of these works in pre monetized sites where we can monetize into things that are not regulated in the U. S. And are safe to touch. Okay. Yes. I don't know if you agree, but it seems that if there are any obstacles here, they are about competition and taxes and something that you have in common with lots of industries, of course. But what is your feeling regarding taxes? As you said, Pennsylvania has rather high taxes. Do you think more states will aim to have as high taxes as possible? Or do you think there will be a competition generally between the states because yes, where they want casinos to start operating and so. So taxes are higher in Pennsylvania than New Jersey. They're a little higher if you look at it than we see in some other countries in the world potentially. I think that higher tax rate if it works in New Pennsylvania, which I would argue it will still make for a healthy business otherwise casino groups there wouldn't be spending $10,000,000 or $20,000,000 for the licenses That if it works, that will show other states that it can work outside of New Jersey and at a higher tax rate that will drive more states to adopt these businesses. So I think the tax rate, while it's a negative in terms of how it might impact margins for the operators in particular, it will help drive business. For us as Catena, because those customers in Pennsylvania are spending $10,000,000 or $20,000,000 for licenses, those groups have obligations now to show that they can do something with these businesses. That means driving customers. Those 1st years they're already not expecting to be profitable. So it's going to be heavy marketing and lead generation in order to drive customers to their businesses. Catena will be there and Catena will be in a good position for that for the 1st few years. So CPAs maybe higher than they should be and the business maybe stronger than the tax rate might effectively mean it should be over time. And it will come down potentially over time. We said the same thing about New Jersey though and CPA rates have gone up, I think, all 5 years since that market opened. So the next couple of years could be not so impactful for our business from the tax rates. Okay. I remember from the Q3 presentation that you made that you talked about there not being even a clear number 2 in America. It sounds a bit too good to be true. I mean isn't there any real competition? Or is it or can you see that it's coming now or people are starting to get their act together and compete with you? It would be very egotistical to say there is no number 2. It's just that there is no large affiliate organization like Catena in the U. S. Space today. So our number 2 against us in New Jersey, well, it was Bonus Seeker, but we own them now. But the number 2 there is different from the number 2 in Pennsylvania or West Virginia. There are smaller mom and pops or 2 guys in a garage as Johannes might say. So that's what we're seeing right now. But we are very cognizant of the fact that as the U. S. Becomes more interesting to everybody that other large competitors will enter the space. And so we are always working on how to improve ourselves, how to grow our team and protect our team from pilfering as these guys enter and how to stay number 1 because we will be the largest target. Okay. Thank you. Are there any questions here? Thank you. When we say we're investing in organic growth in the U. S, could you just give us a feel for the flavor of the costs? Are they more like legal and lobbying and regulatory or are they more like SEO professionals in the unmonetized states sort of building out our online footprint there, like what help us visualize the cost? Sure. More the latter than the former. So it's more SEO work and development of the resources in our own team for more social media focus, more SEO focus, more sites that we have to run means site runners to run those and finding the right writers. So that's organic growth. It's not so much the legal. There is always a legal portion of things and there's some work with lobbying groups that we participate in for various states to help move them along and ensure that people don't forget or people even in the U. S. Even understand what affiliate marketing is because we want to make sure that's legal and part of the infrastructure of the states. Mikaela Seine, Carnegie. I have a few questions. The first one is about lead generation as a percent of total gambling marketing in New Jersey. Do you have statistics or figures on that? So nothing solid to share in that way, but it's in the realm of the 20% to 30% of total marketing similar to rest of world is what we get from what we're told by various operators of what their spend is, but I don't know that I have it in a true release statistic. Okay. And can you talk about the operators in New Jersey, how they use affiliate marketing so far? Some of them are performing quite well in sports, Van Dool and DraftKings, while others seems to be lagging a bit. Can you discuss how they sort of performed so far and how they use affiliate marketing in general? So various partners had different approaches to starting with affiliates or not starting with affiliates. Some of the some of those that had worked in the European front decided to see if they could start without affiliates, I'd say, or weren't set up with their new U. S. Systems yet to do so effectively. So they decided to start or hold off to tracking was effectively working. The more U. S. Focused ones, U. S. Startups, let's say, they're not really startups, but DraftKings, FanDuel, they went from day 1 SugarHouse, went from day 1 with affiliate marketing with us. And I think they have performed exceptionally and proven out to everyone that the affiliate model works in sports betting, works in the U. S. And is a critical piece to making sure that your site is top ranked. Okay. Do you have some comments on the October statistics in New York City, the sports betting activity revenues from that and casino, how the sports market has affected casinos? Absolutely. Casino market continues to grow healthily in October, was not impacted negatively, though I don't know that it was impacted super positively by the sports rollout, but I think that is because the sports rollout is so new. And the casinos operating groups will eventually roll over from having sports entries roll over to their casino side and do the same things that is done in Europe in terms of cross selling players. I think they're just getting off the ground on that. Sports handle in this New Jersey in October was 40% up from September. Revenues were down for the operators, but that's I think probably because everybody is investing in their infrastructure, getting things ironed out, doing more marketing, improving things that will help their businesses longer term. So they're not taking the short term approach. Catena is doing very well. September was the start of the NFL season. So it's by far the best month and with 6 operators I think in off launching that month, great month for us. October also a very good month for us. And now we'll still see some of the sports cycle, but that will be offset a little bit by the launches of different operators. For example, Golden Nugget Casino has yet to launch their sports book and they're a prime player in the online casino space. We have new market entrants talking about coming to the U. S, Bet365, Playtech at the Las Vegas Gaming Show this year was making a big presence and saying they're coming. So those coming will also help even change the 1st year at least the sports acquisition curve we might expect in the U. S. Thanks. And just a final one, how many employees do you need to do this during 2019? So we're pretty much built out for our 2019 team. We're at 19 in the U. S. Today, employees. There may be a few more sports writers to come along depending on markets and things that we can rely on in Europe and how things go here. There may be another employee here or there in BI or the like. Other things would be depending on what states pass in 2019 and how many and when might mean we might need to scale up near the end part of the year to have more team people ready for additional states. But if the state's time right, our core launch teams can move from state to state, while the runners and the writers for those states that are already live can remain at smaller numbers. Yes. I have a question over here. Exceptional presentation, a lot of energy from you. I like that. Now over to New York. Can you elaborate a little bit more about New York because we Swedes don't understand about the election system. And as I've heard, the Democrats have taken over the trifecta system, and it's common sense that New York should open up sooner than later because it's just a bridge to New Jersey. And accordingly to Eilers and Krejik, they say like New York is going to be a bigger market than U. K. 2023. So can we talk a little bit more about New York? I won't argue with Eilers and Krizhek on their predictions on how big New York could be. They are very good at what they do. So New York, it's inevitable with Pennsylvania coming online to me that at some point they have to move. Pennsylvania, New Jersey, we see players, we have the data, so do our operators, so does the state, I am sure on how many are going across the bridge or the tunnel to open up their mobile and then place bets and then drive back into the city or back into the New York State. It will come. We are U. S. And we are a political animal. Often the issue in the States is not should we do this, but if I do this, what happens to this other group? And we have tribal entities in New York and the states are sometimes concerned. Well, if we open it up, the tribes get it too, but the tribes don't get taxed on this. So should we not do this? So let's give up 90% of the revenue because we might give up 10% of the revenue if we actually did it. Michigan is in the same state or in the same situation. I think New York will move, having had some discussions with the various state legislatures, New York is very close, I think, on sports and online casino not that far out. So may not happen together because I'm pessimist and I can't see them getting it all together at once, but I think we'll see something happen. I think Eilers has said they believe next year for New York will pass an online bill. I think they have said that. Yes. Thank you. Hi, Vikram Berg from Pareto. Could you talk about the renegotiated terms with the acquisition bid 2 years ago in the U. S? Certainly. So as I had said in the first slide, we had some secondary assets that were part of the deal, which were the initial deal was focused on New Jersey, because at that point that was what was live and that was what could be calculated essentially into what was the value of those assets. With the changes in sports betting and some other regulation since the time of that deal in 2016, December 2016, it allowed us to work with the parties that we bought it from to finalize the secondary assets, so that over the course of the next year, they have an earn out with a maximum cap on that, allowing them to go their separate ways, us to have full control of them, still use their guidance for an input, but instead of being a protracted 5 or 10 year situation where multiples could have got significantly larger based on the number of states that could regulate. And are there any implication restrictions up until that time when you can go separate ways? In terms of the business we do together, they're encouraged and incentivized just as we are to grow that business as rapidly and in a way that's sustainable for the future. So I think we're pretty well aligned. It was a very well constructed term or deal. Okay. Thanks. Okay. We have one question from the webcast, and it's what about the current casinos such as Hard Rock's? What's their view on lead generators and affiliates? So I think Hardrock is definitely talking to us that they're interested in lead generation. They went with a platform for both sports betting and for casino that was new to the U. S. Market. And just like some of the companies in 2013 probably discovered, there were some number of regulations and other things that had to be incorporated in the platform. So they told us they were not quite ready for a lead in affiliate tracking and they launched without it. The casino next door to them essentially launched at the same time, Oceans became a very good partner of ours using a platform that was already in the U. S. And Hardrock will come as well. All right. Thank you. No more questions from the webcast. Thank you, everyone. Okay. Thanks, Michael. So as you can see, warm winds blowing from the west. And normally, Michael Collins sends the pessimistic ones. So I think you need to rephrase that a bit after this presentation. All this we do should generate money, of course. That's why we're here. And I guess that there's nobody better knowing what's happening with our money once we bring it in the PLENA. So warm welcome here for presentation. Thank you, Per. Our total revenues has grown with 113% from 2015 to 2017. And we're still growing fast. We're not living on old merits. We don't give forecasts, but I just want to share with you our run rate in the Q3. So if you take that times 4, you reach total revenues of EUR 110,800,000. So that's our run rate. And we've been able to do this with high profits. Our component annual growth rate in adjusted EBITDA was 87% per year during 2015 to 2017. And then again, if we look at our run rate for the Q3, we would be at €54,400,000 Catenasimeria total growth in revenues in Q3 was 60% to €27,700,000 The only quarter where we didn't have growth was in the Q2 2017, and that was due to there were no major sports event during that summer. So we used less to pay for pay per click to Google, and we thus got lower paid revenues. But as you can see, in Search, we have been growing every year even in Q2 last year. And we've been growing with a combination of high organic growth in conjunction with acquired growth. So our total growth in search revenues in the 3rd quarter was 63% to €23,700,000 And we are focusing on organic growth. The organic growth that solely was generated in Catiana Media was 17%, both for the quarter and for the first 9 months. And when we say solely generated in Catiana, that's the assets that we have for at least 1 year, how much they have been growing within Catiana for the last 12 months. And we will focus more, as Parel said, on organic growth going forward. But of course, we will make some strategic acquisitions also going forward, but more focus on organic growth. Our platform continues to generate a large number, a vast number of new depositing customers to the operators. In the Q3, we generated more than 138,000 new depositing customers to the operators. This was slightly lower than the Q2, which was spiked by the FIFA World Cup. So but still, it's a large number. But then it's not only the number of NDCs that's important, but also the quality of the leads. That is the one that's predicting what value really get from the NDC. And you can look at the other graph that we have here and see the amount of euros that we have received per NDCs, and you see that, that is increasing. So in the 3rd quarter, we received more than €200 per NDC. And this is, of course, by that we get a lot of payments from the U. S. We get about double the amount per NDC in the U. S. Market compared to the European market. In the Q3 came from revenue share. That is when we receive 50% of net winnings from the end customers over their lifetime as operator. So we could close down Catenamedra today, and we would still receive revenues for months or even years on these contracts. 39% came from cost per acquisitions. That is when we get one payment upfront. 10% came from flat base. That is pure marketing on our website since we have so much traffic on our website, and 1% came from subscriptions, which is our fairly new revenue stream that first came from the financial segment from Handelstone, but we now also have in the sports segment in Paris Sportif. But we also have a healthy diversification when it comes to our segments. In our iGaming segment, for example, sports betting has been growing and now stands for 37% of the total revenues. Casinos were 56% and our new segment financials, 6% in the 3rd quarter. We prefer to be on regulated markets. We're not here for the short term to just make short term profits on black markets. We want to be sure that we can sustain and have our long term revenues, and that's why we prefer to be on regulated markets where we know the rules and we know how to comply by them. In the Q3, 75% came from regulated or taxed markets. And then we know that Sweden will also regulate next year, so this portion will increase even further. Yes. And Catalina Media has one is one of the companies that have the highest EBITDA margin on the Stockholm Stock Exchange. So we're dealing with high margins. In the Q3, we had an adjusted EBITDA margin of 49 0.1%. It was a little bit lower than we have had before. This was due to mainly the investments that we make from the U. S. Market, but also for the financial segment. But even if we take that into account, we have slightly lower margins than we had during 2016 2017. But if you look at the earnings per share during that time, we have not been able to grow that, that fast during these years, but we have grown our earnings per share substantially in the Q3. We grew it with 50% from the Q3 2017 to the Q3 2018. And that is what we're going to do. We're always aiming for high margins, but we will focus even more on having a good growth in earnings per share forward. And we have a very strong cash conversion in the underlying business. That, of course, is our main funding. It's our own cash that we generate. And we generated more than EUR 29,000,000 during the 1st month 2018. Of course, we also have other sources of funding. In the 3rd quarter, we also secured a multicurrency revolving bank facility with Sverdabank, which is attractively priced. It's over EUROBOAR 3 months plus 2.5 percent. And it is on EUR 30,000,000 and it matures 15th January 2021. And then we have the bond that we've already issued, the senior unsecured bond that we have issued EUR 150,000,000 at EUR0 bar plus 5.5%. That we have a total framework of €250,000,000 So we still could issue more on that. Looking at our balance sheet. We had total assets at the end of Q3 of €354,000,000 And most of our assets was our intangible assets that came from our acquisitions. On the liability side, we have equity of €126,800,000 And then we have the amount committed to acquisitions. That was €65,800,000 And of them, up to 50% can be paid in shares if we choose to do so. But that's our decision. And we will be more willing to pay them in cash going forward, not to dilute our earnings per share. And then the borrowings is the EUR 150,000,000 senior bond that we have on the market at fair value. And we have not used anything of the Sverdrupank facility during Q3. Okay. You talk about 75% regulated markets right now, but pretty soon you will have Sweden as well. Could you give us some kind of indication how much this will influence this number? We don't give guidance on our markets, but we have said that Germany, U. K. And Sweden is one of our largest markets and that they are close to 10%. We say that we aim not to have any market more than 10%, and they're just above that. So that gives you an indication about what Sweden would give. Don't blame me for crying. Organic growth. You have now a new very strict definition on organic growth. Do you have any kind of ideas about this number? Or are you optimistic or pessimistic? We're always optimistic. No, but we haven't guided on that either. We have, however, in our financial target, the 2020 goal, that we should grow organically with a double digit figure. So that is what we're aiming for absolutely, to have a double digit organic growth. Okay. And lastly then, could you comment a little bit more on this new diagram that you had regarding your revenue divided by the NVC NDC number, it shows a very healthy trajectory there. Could you just elaborate a little bit more on this or? This one. Yes. Of course, we have an effect of that now here of the U. S. Market since we're getting so well paid for NDCs. We also have a larger portion of CPAs. But also, we see that we have a higher lifetime value in the NDCs on our revenue share. So especially in sports betting and in the financial service segment, we have longer lifetime values per NDC also. Okay. Any questions here from the audience? I have a question regarding the bond. About the unsecured bond, what is the expiry date? Or is there an expiry date on that? Yes, we have an expiry date. It expires in March 2021. So how worried are you about having to refinance it at a much higher interest rate if interest go up? So will it have a big impact on you, do you think? We'll, of course, try to refinance it long before it's due in that case, but also we look at alternative ways of funding. We have now a credit facility with Swedbank, and we will look at different possibilities, of course, to optimize how we fund our business also. So it's not only the only alternative that we have, another bond. So you're looking at refinancing quite soon? I haven't said what timing, but we would do that before it matures, of course. Okay. Thanks. Thanks. Yes, regarding the investments into the Catena core platform that Janus talked about, it sounds like you're it's a drag on margins at the moment, that margins should bounce sometime. Could you elaborate on that? And also tie that into the 2020 target? Will it be margin expansion or revenue expansion that will take you to the 2020 target? I would say it would be a combination of both. Of course, we aim for higher revenues, but we also see economies of scale going forward. You could see in our Q3 before that we had economies of scale, both with direct costs and personnel costs. There was the investments that we made are hitting other OpEx, and that's why our margin was lower. But we believe that we will get even more economies of scale going forward. When it comes to development, new development, capitalized some of that over 3 years. So we'll not have that effect all at once, but it will spread over 3 years. Okay. Thanks. I have a question here from the webcast, and it's about debt. Do you expect to the debt to go lower? Or could you say something about the debt level? And the Yes. I mean, we have a very good cash conversion in the underlying business. So of course, we will use this before, we have used that cash to acquire new companies. If we don't acquire in the same pace as we've done before, we will use that cash and primarily pay out the earnouts in cash instead of diluting the share. Okay. Thank you. Do we have any more questions from the audience? Okay. Well, then I move on. Just briefly, I'd just like to inform you that we have started projects with an analysis to be the backbone of the report that we will provide in terms of sustainability for Catena Media, and we plan to have the report ready in the beginning of Q2. Obviously, one person can't do anything, but we can do something altogether, and the corporate social responsibility is about doing something together. And there are a lot of things done by Catena Media already. That's very good. We have actually or Catina's employees have collected tons of plastics. I think I went too quick here in terms of joining the Ketina Day or the Malta Cleanup Day to actually collect plastics. That is just one of the activities done by the company already, and that will also be presented in the report, of course. And as you can see today, you will not get a lot of merchandise and something to bring home that you won't use anyway. So we have actually decided to donate EUR 100 a person that will be for you and the guests attending today. And using the plastics that we're collecting on the West Coast and a project that actually makes new boats out of litter and plastics. So that's the contribution as of now. I think the Per will do a wrap up for today and the key takeaways. And yes. Excellent. So thank you very much. As you can see, plastic is not fantastic. I think what we now need to do is to start to summarize today and what we have learned so far. You can see that, yes, we have a company that has come up to a very nice position, generate a lot of money, builds a nice margin from iGaming. But I think you also can start to see that what we do is a small part iGaming. We do a lot of things really to understand how we bring interesting sites in front of people eyes that makes them answer the questions, the inquiries they have, propose offers, send them on, monetize and there we go. And that is applicable for basically any industry we do. So we are a lead generator. That's what we are. We're not a gambling company. We're not an operator. We're nothing. We generate leads and we're very, very good at it. We have obviously built the company now, invested a lot into a very scalable business model and platform. Johannes mentioned before that today we're coming up to a situation where we don't really need to program things we do for all the sites, that we can apply and launch things from one place into the entire business and get efficiency from that, meaning that we can also, with the same kind of investments, launch more things and bring our business further. To do that, we need a great employees. As I said, they need to be motivated and they need to be very engaged and they need to run more miles per gallon than anybody else on this planet. We need to work hard and obviously with the track record we see now and what we have ahead of us, it looks very, very promising. Fantastic optimistic things for U. S. As we mentioned. I mentioned before and I got the questions that what will U. S. Bring. Maybe I was the pessimistic one there, Mike, because I said what we're planning now, we only plan in our books what we can see. And that is Pennsylvania and West Virginia. But then questions comes up, what happened about New York? What happened about these other states? What will happen with them? Yes, something will happen. But if I get the question, what can I predict from what I know? I put that, I put the normal business, I do the cost efficiency and we're getting very close to €100,000,000 without even doing one single acquisitions. Will we do acquisitions? Yes, we will. Will more states open up? Yes, we will. Will we hit the €100,000,000 target? Yes, we will. So that's how we look at it. So I think these steps is just the beginning of a long journey. I suggest you buckle up and join the ride because we'll be back here. But if you didn't have enough on us, you can meet us tomorrow again in Mayfair Hotel in London, where we do the same show again. You're more than welcome. Before that, a couple of more dates that you need to remember, 7th February, 2nd May, and 6th August, we're going to present very good results. Thank you so much for showing up. Welcome

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