Welcome to this presentation of the Q1, with the continued strong growth and solid NDC numbers. If we start off with a snapshot with what everybody is mostly interested in, we had revenues of EUR 15.23 million. That's revenue growth of 104%, an operating profit of almost EUR 7 million, giving us an adjusted operating margin of 46%. To go into some other numbers as well, we are currently 228 employees. As I've said before, we're very proud of being such a multicultural company. We're still growing. We have quite a few open positions, and we are quite diverse and equal in terms of gender as well. The revenue growth and profit, I just said on the last slide. I also wanted to highlight what happened during the quarter.
AskGamblers, one of our acquisitions that we did last year, won the best casino website at the awards, which of course we're very proud of. It's one of the acquisitions that has developed really good for us. Again, we are not only numbers. To that point, what we're trying to say here is that we are in a very aggressive phase of building a company. We have been building it very quickly. When I started two years ago, we were 30 employees. We are 230 now. Obviously, that comes with its challenges, and the needs in investment in culture, in office spaces, et cetera. Just to give an example of that, we had both our offices in London and Serbia, got completely new offices during the quarter. Really nice.
We ourselves, the headquarters, is at the moment preparing a move into a completely new facility in the beginning of July. That's going to be very good. We're going to have a very competitive workspace, which is, in Malta, key, I would say. Malta is becoming highly competitive when it comes to staff and the expectations that they have. Moving on, repeating a little bit of what it is we actually do. We're a lead generation company driving traffic to casino and sportsbook, basically. I also have a little more film that explains this in the version of.
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In detail, this is our business model. As you can see, we basically drive traffic or leads to one of our sites, like the one you just saw now, RightCasino, for example. We can do that in several ways, either via search traffic or AdWords. Those are the two most common ones, but we also do it via email and social media. Once there, as usual, they will select the casino. They will move on to a gaming operator. They will pay or deposit money, and we will start getting paid, either on revenue share or CPA, or a mix of them both. One thing I want to highlight that has happened during Q1, and we continue to strive to do that during Q2, is predominantly when you work with AdWords, you also have a fixed CPA.
Fixed CPA is because we need to take the investment upfront, then we get a fixed sum of, let's say, a few hundred EUR or to EUR 500, completely depending on which word it is. Of course, that's good for cash flow. That's also good because you don't have a downside. You know exactly what you get. However, you lose the long tail of that player. You don't have that reoccurring income over time. What we have now decided to do is to, as much as we can do it, move AdWords also to a revenue share model, or at least part share revenue share model, which means that we might have a lower upfront, then we don't lose the tail.
Of course, that has an effect in this quarter and probably will have a bit of an effect in next quarter because it takes now a bit longer until we have recuperated the investment that we did. However, we then have the player with us for the long run. This should help stabilize also the paid media and also increase margins over time in paid media, because we will have recurring revenue in paid media as well. Moving on. Our vision is to become the world's number one provider of high-value iGaming leads. I would say that we have proven that we are on the way. There's still plenty out there that's very big. There's very many markets that are regulating, that's opening up, that's looking interesting. You have the whole South America, Asia, and then, of course, continued expansion in Europe. That is very interesting for us.
What we try to do is to transform iGaming through the power of choice, which means that we do want to help the consumer, offer them better choices when they are going to gamble. This is why we want to do this. Hopefully, that also leads to better gambling experience and gambling environment for the user. Looking on how we are doing this, what's our strategy? We focus on organic growth in combination with geographical expansion as well as acquisitions. I think we have done this well during the quarter. We started operations in U.S. through that acquisition. We have also added new geographical markets, as well as organic growth. Some of the recent developments, as I just said, we closed the deal with our U.S. acquisition in January, part shares as well, we issued new shares.
From, I think it was 15th or 16th of January, they were consolidated into the group. 16th, it says here. In February, we also acquired Slotsia, which is more of a bread and butter. It is a good site that is focused on casino in Nordics. Some significant events during and after the quarter. The board has decided to postpone the IPO to second half this year simply due to strategic initiatives. We also, as you saw yesterday, announced that we are exploring to tap the bond. We also secured a long-term cooperation with Gary Gillis, the founder of SBAT. That is a fantastic solution. He has turned out to be very talented and passionate in what he does, and we saw that there was an option for him to help the whole group with his talents in sports.
We also just announced the acquisition of OLM. OLM is a bit different, but also complements us really well. If you look in paid media, we have been doing PPC with Google. This is not dependent on Google. This is display advertisement, more traditional advertisement, where we also drive traffic straight to the operator, not via one of our properties. Of course, we can also explore their technology to drive normal display advertisement to our properties. Their model so far and very successfully so been to drive traffic straight from the advertisement to the operator. Their payment model is the same, it is revenue share, and it is sport focused, and U.K. focused. It fits our portfolio really well. As you can see, we continue our good development with NDC, one of our most important KPIs.
We did over EUR 80,000 in the quarter, which is 149% up since the same time last year. We keep seeing a strong development in NDC. Claes, I give you the floor.
Thank you. Good morning. I then go into the financial numbers, as you can see here, as Robert said, we had good growth, 104% now the first quarter up to EUR 15.2 million. Paid revenue stood for an amount of 24%, which is not so far away from what we had before, but it has had an effect on our margin, which I will come to on the next slide. We also have operating other revenue in this quarter, which was a compensation from a partner regarding lost revenues. If you look at the expenses, you can see part of the increase in the operations is related to the move from CPA to shared revenues on the paid media, on the paid revenues. Also, as you can see, our personal cost has increased as we now are 228 employees.
We also have increased a lot of other cost in the organization to be able to handle the growth of the company. If you look at the financial cost, as you can see, it's almost EUR 2 million, but only EUR 850 of them are related to really cash out for our loans. The rest, EUR 827,000, are related to the value of the bond we have. The other financial costs are mainly related to calculated interest on the future acquisition cost. This is IFRS-related costs. It has no cash flow effect at all. If you look at the revenues, the adjusted operating profit is now EUR 7 million. The decrease in adjusted operating margin is mainly related to the shift from CPA over to shared revenues for the paid revenues.
If you look at our financial position, as Robert said, we are now exploring the opportunity to tap the bond. We have, at the moment, at the end of the quarter, EUR 23 million in cash. If you look at the financial targets, it's as we said before, a growth over this medium term of 75%, including acquisitions. The operating margin should exceed 50%, and dividend is something that we will look into after this short to medium term. Thank you.
All right. If there are any questions, I'm guessing that you have a few.
I have quite a lot of questions. Thanks. Maybe we can start with the quarter, the details there, and explanations, possibly. The shifts that you mention in the report, where you are pushing search traffic over paid. Can you explain how you do that.
We're not pushing search traffic over paid. We're still paying for it in the same way, but our recoupment model in the back is different. Instead of an operator paying us a fixed upfront fee, we are changing the deal with the operator saying that, "Okay, we will take EUR 100 upfront, and then 30% revenue share for life instead.
You're driving the mix towards more revenue share deals in the organic side or is that?
In paid.
Within paid?
Yes.
Okay.
That's why you will say that the margins goes down is because if you do 100% upfront payment in paid, you get all the money all the time. However, what happens is when you take the decision to make this shift where you put the long tail on, but the issue with paid, even though it's very good to be able to drive revenue short term, is that if there were to be a dip in paid for some reason, you have zero income because they are a one-off payment, so you don't have the recurring revenue. What we want to make sure is that we start building up the database of recurring revenue also in the paid media.
Okay. I thought that you're referring to the whole company and specifically to.
No, this is specifically we have, in search, we are mostly on revenue share already. Most of the CPAs have come from paid media before. We're still doing CPAs, but you should be able to see during this year, very strategic shifts to more and more revenue share deals or hybrid deals so that there is more recurring revenue.
Okay. I see. Yeah. Thanks. The other income that you had in the quarter, can you explain what that was about?
I can explain it as much as I'm allowed to. We have had an issue with a partner. I think it proves a couple of things. We have good systems in place that caught this quickly, and we have good agreements in place where we could also show the loss in revenue, and we have been compensated by the partner. This is how we had to write it. We couldn't take it as normal operating revenue, so we needed to highlight it.
Okay. It's an operator that has not-
I'm not-
paid you before, and you are now taking that as an income.
As we have settled on this, I'm not at liberty to talk about it.
Okay. It will not continue going forward. This was a one-off effect.
There might be an effect in Q2 as well. After that, no.
Okay, good. You changed and updated your own slots in the quarter.
Yes.
How has that change developed and impacted your-
It's like always when we saw that with AskGamblers as well. When you change something, Google, you get a honeymoon week where everything goes really a lot better in terms of how it ranks, and then you have a dip that's a little bit longer. It's just how things work before it re-indexes and populates properly again, and then it starts climbing. We saw the exact same thing there. What I can say is that, for example, outbound conversions are significantly much better, and we're still going to make that site a lot more feature-rich. There's more update that's coming.
Okay, good. Can you maybe also talk about the U.S. acquisition? That was a very significant transaction last year, and it came in this year, how has that company performed, or the assets?
As planned, I would say. As planned. They've had some really good months, but that's basically according to the expectations we had. There is nothing. It hasn't been way above expectations, but it's been on what we actually believe they would do.
Okay. Can you say something about how that market works in New Jersey, and also maybe in relations to that, comment on Pennsylvania and other states, what do you see there?
Yeah. At the moment, first of all, New Jersey is basically the only market we can be active in at the moment, at least where there's significant revenue. Of course, we are all cheering for that they are going to regulate Pennsylvania. At the moment, it seems to be people seem to agree that they should regulate it, but they don't seem to agree on how they should regulate it. That's where it is at the moment. Hopefully, they can agree soon, because Pennsylvania has a quite big hole in their budget as a state. It's commonly discussed that this would be the way of patching this hole, but they just don't seem to be able to agree on the license system and the tax rates, et cetera.
I believe it's coming.
How is the New Jersey market working in terms of affiliation and lead generation?
We are one of the absolute biggest affiliates there. It works the same way. You Google a casino, you go to a website, you read about it. However, land-based and online, land-based is very big. Online is growing. It's not such a mature market as you would find here in Europe that people play online. I think once the U.S. comes to and matures, and more and more states do this, it's going to be an absolutely massive market.
Are you working in the same way with all the operators there on the online side? Is it very focused on only a couple of them?
We have, of course, stronger relationships with a couple of them, and some of them are really aggressive in their payments, in the deals that they are willing to make.
Okay. Great. It would be interesting to hear how much of your 200,000 approximately NDCs last year that is actually coming back and continues to be active. I don't know if you have statistics on that, but if you can say something about what you think and what you feel when you are monitoring your business.
Yes, absolutely
payment.
There is a reason why we shifted paid media around as we did. We have been investigating that quite heavily. Let's just say that we have more of our revenue recurring than we expected it to be when we did this. This is something that we want to be certain of, and it's quite complex. As soon as we have this, that we know it's reliable, because the issue is that the operators aren't sharing enough information with us in terms of lifetime and who spends what, so that we don't feel comfortable enough with reporting it. Our aim is to have as good and reliable KPIs so that we can also start reporting how much revenue share, how much CPAs, lifetime, et cetera. I can just say that it's more than we thought it was. That's at least.
I can't get into specifics because it's management estimations.
Okay. Good. How many sites are you managing today, and how many are real money sites that actually are generating revenues?
That's a very good question. I would say we definitely have about 100 sites that generate revenue, I would say. You have the good old 80/20 rule on that. I would also say that you have 20 of them. They are basically 80% of the revenue, but then there is quite a few niche sites as well. There is also a consolidation within this, and as a strategy, we do believe that fewer, bigger, more global sites and global brands is going to be the way to go forward.
Okay. Yeah. Do we have any questions in the room? Yes. Here.
Thank you. Martin Arnell with DNB. My first question is on this strategic shift in paid media.
Is it possible for you to quantify the effect from this shift in the first quarter?
We haven't really done that because if you yourself look at the graphs, you can say that it looks like paid media hasn't grown as much during the quarter. That's because we basically pushed revenue ahead of us. It's hard to quantify exactly. I wouldn't want to give you a proper figure. It's something that we probably could come back with.
Okay, thanks. Could you tell me a little bit more about your acquisition strategy? When you acquire these sites, how do you keep the drive, so to say, of the asset you acquired, of the people behind it, how do you keep them motivated to keep going?
It differs a little bit on case by case, depending on how you feel that the owners are structured, how is the acquisition built, would you want to keep cooperating with these persons or not? If we say that it is often when you find something that's just about to take off, which is something we aim for, the owners aren't usually that stupid, so that they do want to be on that journey a bit. Then we do things on a year earn-out or two. That obviously motivates them a lot because they have a multiple on the revenue anyway. Then, as you've seen in a couple of cases during this journey, we realized that we like each other a lot and we want to go further in the relationships like we did with SBAT.
We have made a deal and changed the deal around. Gary now, for example, bought also shares, which is great, because now he's a part of thinking bigger than just SBAT. That's one way of doing it. Other times, we simply don't want the owners there. The best case would actually be AskGamblers, where we acquired it right away, and we felt that we needed to do it from the day one, basically. Hasn't been easy all the time, but it's turned out really good. It's a very adaptive model. We don't have one mold where we put things through.
Okay, thanks a lot.
More questions here in the room? Can we maybe check the telephone conference, operator?
Ladies and gentlemen, please press 01 on your telephone keypad if you wish to ask a question. 01 on your telephone keypad. Please stand by. We get a question from the line of Vanessa Adams, CMB Financials. Please go ahead. Your line is open.
Thank you. Hi. I have three short questions regarding regulation of the markets you work in and gaming operators you promote. As it seems to me that you might be working in quite a few prohibited markets with operators licensed in the Caribbean and similar places. The first question would be, while looking at your portfolio, it is clear to me that you target both U.S. dot-com market as well as the French one with sites like AskGamblers, RightCasino, BitStarz, Atlantic Club, and many others. How do you address the legal concern that you are promoting illegal operators that do not own a local license?
if you look-
The second question.
Shall I ask the second question or shall I wait for the answer first?
Answer first, the first.
Okay. Yeah.
That's good.
That makes it easier. If you look at, for example, U.K., which is a regulated market, we only promote casinos that have a U.K. license. It's that simple. There are more gray markets, obviously, like the Nordics, which remains unclear where we promote licensed operators, but they might be licensed, such as Casumo, for example, in Malta. Okay. There was a second question maybe.
Yes. Regarding old revenue sharing, I looked at AskGamblers when you acquired it, and it was working with many dot-com operators targeting the U.S. Are you still collecting old revenue sharing for them?
We have completely blocked U.S. from them.
Cool. That's awesome. Third question, you never mentioned the underlying organic growth of your acquired assets. Will we be getting more clarity on that?
That's something that our aim is to be as transparent as we can when we have reliable data, basically. As our business intelligence tools gets better and better and grow, we invest a lot in building our own system. Our goal is definitely to start building out more details in our reporting to the public as well. Going forward, hopefully, yes. We need to make sure it's reliable when we do it.
Okay. Thanks. Thank you very much.
Thank you very much. No further questions in queue. As a reminder, please press 01 on your telephone keypad to ask a question. Please stand by. There are no further questions from the callers.
Okay. Thank you. Thank you for that. I have a few more questions. First of all, we have noted and seen that your competitors also are becoming more, they're taking in funds through debt issues, bond issues, they want to also acquire a lot of companies.
Have you seen an increased competition in the Nordics and in Western Europe for the most interesting [crosstalk]?
I would say yes. More than we have done before. I guess it's natural that we prove the business model and people realize that they can do the same. We have certainly noticed GiG and Raketech, for example. They have been active.
We have met them a few times on what I would consider the smaller side so far of what we are looking at. Yes, it would be naive not to say anything else.
Okay. What can you offer the companies that you are discussing with that your competitors maybe have not possibility to offer?
I would say when it comes to, if you want to compare with a company that only has this as a side business, there are a few of them that basically has this as a part of their business while their core might be something else. Of course, especially if you're on an earn-out, it's probably a lot easier to reach the earn-out together with us. We have done this so many times that's definitely an upsell and they can look at cases from the past and we can prove to them that we're a good partner. I would say that's one of the things that we can offer above, for example, Cherry or GiG.
Okay. Can you also talk about the affiliate market in terms of how it's structured in each market? I guess there's a huge difference in terms of maturity and number of affiliate companies in Italy, for example, compared with U.K. and Sweden, Norway and Germany.
Yeah, of course.
How fragmented the market really is.
Yeah, of course. If you look at Sweden and you Google online casino, you will see an abundance of sites. I would say all markets are still very fragmented. Clearly the consolidation is happening. The smaller ones are starting to feel the fact that it's harder to compete. It was easier when they only had to compete against other people in the basement. Now if you go head-to-head with us, they can put a lot of technology and 200 people behind something. It's going to be tough. We do also get quite a lot of people reaching out to us that wants to sell. While in Italy, even though it's not great, revenue from Italy isn't huge by any means. However, we are the largest affiliate there already.
There are still a lot of companies.
There's still a lot of companies. I would say that at the moment we have the biggest pipeline we've ever had.
Okay. What will happen to this market? Eventually it will be more consolidated and there will be other drivers, more organic drivers in place. What do you think will happen with the market in two, three years' time?
I think we have a year or two of consolidation, this type of really active consolidation left. I said it a year ago, I said, I think we have one, two years left. I still say that we have one, two years left. Once the market is consolidated or to a much larger degree consolidated, there will still be new companies coming and there will be still acquisitions. The pace will reduce. What I think there is that it will be the people that have invested the most in technology during these couple of years, scalable platforms, then building out more global brands. Because also the best example is still, for example, Expedia with their Hotels.com, Booking.com, everything. They are global brands. They're top of mind, basically unthreatened in that space.
I think this business will go towards that as well because you can say that in any other type of online business as well, that the bigger the better.
I guess that we will see more marketing activities to create these larger, stronger brands.
Yes, that's going to obviously be needed, is to create not only search visibility, but also do brand-building activities.
Okay. How much do you do that today? What are you doing there?
At the moment, we are not doing that much. At the moment, things are growing very well organically. We have other competitors that are running TV ads, for example. Far, we're an online marketing company, and to do print ad and to do a TV ad is kind of saying you don't believe in your own model, really. Now when we also bought Online Media that does display advertisement, et cetera, that's going to be a natural way of also being able to use them to build our own brands.
Okay. Great. Just one final question. You mentioned that Q1 is seasonally strong.
Yes.
Historically, we haven't really seen any seasonality at all.
No.
Is that implying that Q2 will be sort of flat compared with Q1, or how should we read that?
I don't want to comment that too much, but Q1 has been seasonally strong. Q1 also, actually where we saw, maybe it wasn't noticeable for people that much, but when we saw, you can say that the underlying search volumes for searches on Google goes down in summer, and we are dependent on searches on Google. That's why it's also really good if you have recurring revenue on paid, for example, because if searches goes down, volumes goes down. If you have recurring revenue, that's not such a problem.
Okay. I think we have to stop there. Good luck in Q2.