Earnings Call: Q4 2020

Feb 24, 2021

Hi, everybody, and welcome to this Q4 presentation from Techninam Media and I'm Joran Lundberg. After a soft spot to the Q4 in October November, we ended The quarter very strong in December. In total, Q4 revenue were flat, But the EBITDA was up around 9% in the quarter. Adjusted EBITDA margin ended at 46 versus EUR 42,000,000 last year. We had a very strong operating cash flow all over the year, so also in Q4. So we ended the year with a net debt of SEK 67 compared to SEK 150 last year. And that means a leverage of 1.09 and going down from 3.46 last year. When we look at our business next slide please. So when you look at our business, there are a couple of things that we would like to highlight. We have a very strong business in the U. S. 2019 represented 18% of our business and now it's up to 30%. In Q4, the growth was 42% and year on year, We are on the 72% growth. We had a strong development in Japan over the year with an increase of 38% and so also for Ask Gamblers with 23% growth year on year. Sports was negatively affected by the COVID during 2020, but was back to normal in December and that continued in January. We faced headwind in Germany for both sports and casino. And Germany was down 50% in the Q4. All in all, we have around 15% of our business that is in decline. And therefore, we have put the transformation program in place to enable growth and increase efficiency. We have significantly strengthened our financial position during the year, First, through a right issue and then through the strong cash flow. So we are now operating within our target of 0 to 1.75 in leverage. And that means that we have possibilities for strategic M and A now during 2021 and going forward as well as share buybacks and dividend. And we will evaluate all those options going forward. We had a very strong start in January. As I said before, we had the momentum that continued into 2021. And together with opening of 2 new states in the U. S. At the end of January, we ended with a 58% growth and 61% in like for like organic since we divested one product within the financial segment last year. So 61% like for like growth and that's We are very happy with that. So we estimate the full year 2021 to be well above our target of double digit growth because of this strong start that we have seen. I'm now very happy that Mikael Vaeli will step in as the new CEO for Kettina Media. And Mikael has very successfully built up our U. S. Business to a strong growth and profitable business. And he also brings an excellent skill set to his new role as the CEO. So I'm Really looking forward to go into the next phase of increased growth and profitability together with Mike. So I leave over to Peter for the numbers. Thank you very much, Joran. Good morning and welcome to our Q4 results call, let's switch to Slide number 6, revenue and NDCs. So our total revenues recovered after a somewhat weaker third quarter, grew by 7% quarter over quarter and Ended up on a level that is comparable to last year's Q4. However, the organic search revenue increased by 2% year on year. As you see, paid revenue has been the only KPI trending a bit below last year and that has been the result also of a decision that was Previously, take note to focus more on organic growth. However, we have changed our performance marketing sets up during the Q4 and have seen already very positive results During that quarter, with an increase of 28% in paid revenues, if you compare to just the previous quarter. In its entirety, revenue is flattier on year, as I said, despite the strong Growth in the U. S. That Joran also mentioned was above 40% in the 4th quarter. And that, of course, is the result of a weaker performance in exactly this 15% of legacy business parts that we put a transformation program on, which relates to casino assets and the German markets. Sports still showed a slight decline due to weak start in the Q4 that we have seen, but recovered in the final months of that Q4. NDCs increased by 10% year on year, which is mainly due to the spoons segment, also with the U. S. Having contributed largely with all major spoons leaks being up and running as well as the performance marketing efforts that I just mentioned. Let's switch to the next slide please, and a closer look at our segments then. So with the recovery of sports, the share of sports is now back to 35%, And that is where it has been before the outbreak of COVID-nineteen pandemic in the Q1 of last year. Sports saw a slight decline of 2% year on year. And as just explained on the previous slides, that was the result of a softer start, but then with a Full recovery towards the end of Q4. Casino represented 60% and likewise has been in line again with pre COVID-nineteen levels. So that share In relation to each other, sports and casino has normalized in that respect after the COVID-nineteen situation. Financial Services segment has been stable at 5% of total revenue. But note that we divested The U. S. Facing Hammerstone business, which is a real time stock market news subscription service, towards the end of December. So going forward, the Financial Services segment will have a slightly lower run rate in revenues and hence share for total revenues. By source, the revenue split between revenue share and our cost per acquisition, CPA and fixed fees has been fairly stable its entirety as compared to the previous quarter. So there's nothing strange about that. Let's turn to the next slides And take an exclusive look at segments and total quarter results in terms of the adjusted EBITDA then. So as you can see in the graph, after a somewhat disappointing 2019, 2020 now turns The business back to a bottom line growth, resulting in a full year adjusted EBITDA of SEK 52,000,000. That's a 20% increase year on year. The Q4 in itself, adjusted EBITA grew by 9% year on year. Casino results Increased by 8%, while spoons decreased by 8%. And that spoons decrease was entirely the result of The new performance marketing approaches and hence the direct costs in relation to that in the Q4. If you take a closer look at our segment reporting in the report, Personnel and other operating expenses in the Sports segment have been flat on a year on year comparison. The Financial Services segment increased with, I would say an insane above 3,000 percent year on year and also above 200% versus the previous quarter. So why is that? So what we announced during last quarter's call, we decided to not further invest into these segments. That doesn't mean that we're not further developing the portfolio, but it meant the shift towards more maintenance and optimization and in particularly profitability contribution at the end. And that result we have seen accordingly in the Q4 already. So all in all, taking that together, the Q1 margin increased from 42% last year to 46% this year's Q4. Let's go to the next page then and look at the cost development that is responsible for that Margin increase. So the total cost of the 4th quarter, excluding items that affect the comparability, has been EUR 14.23 €1,000,000, that's 54% of total revenues. And that is €1,000,000 below The Q4 2019, but some like SEK 1,400,000 above the Q3. So let's break this down and explain. So direct cost increased, again during the quarter versus the previous quarter, Q3, as just previously explained, But it's still 9% below the Q4 of the previous year. The personnel expenses have been flat if you compare that to the first half of twenty twenty. So during the Q3 call, in November, I explained that we had certain effects during the Q3 as result of changes in management and accounting effects between the second and the third quarter in relation to certain payroll cycles in the U. S. And generally vacation period. So that affected and therefore explained the lower Q3 numbers. At the same time, we continuously invested into the U. S. And that meant, of course, strengthening and particularly in increasing our workforce and as a result, an increase in personnel expenses. Other operating expenses were around SEK 1,000,000 below the level of last year and increased by roughly SEK 500,000 versus Q3, But are almost on the pre COVID-nineteen level of the Q1. And that was a result of increased, in particular, product spending and professional fees in relation to certain SEO efforts and Fees in relation to certain SEO efforts and content building and other product related expenses, in particular in sports segment with naturally As a consequence of most boards having returned after the summer. And then again, as a result of that, the margin increased from 42% to 46%. Let's then turn to the next slide and let's take a closer look at the profit for the quarter. So EBITDA increased quite significantly by 46% year on year. And items that affect The comparability, they account for the difference between adjusted EBITDA and EBITDA. And now in the Q4, such items amounted to a net income of €100,000 And those were related into a gain on divestment in subsidiary of $500,000 That was the Hemmestone divestments, an increase in loss allowances And then also reversal of reassessed share based incentive plans in the end time. Relating to previous periods, however, so this relates to all the incentive plans of 2018 2019 years. Depreciation and amortization charges have been further decreasing. We have Seeing that trend and I commented on that during the last call since Q4, 2019 have been steadily decreasing and that is a result of previously acquired assets that have been fully amortized by now. As a result, the operating profit increased to CHF 10,000,000 Note that last year's Q4 operating profit was highly negatively impacted by the impairment on the intangible assets. And if you would adjust for that, then nevertheless, the operating profits increased by more than 100%. Interest payable on the borrowings that relates to our existing bonds out there in the market and in the Q4 also still to the revolving bank Credit facility, I will comment on that on the further slides later. Note that interest payments on our newly issued hybrid capital securities, There was an interest payment of EUR 1,300,000 during the Q4. They do not show up here in the profit and loss for the period as those are directly taken against equity. So you see that in our statement of changes in equity accordingly. Our losses on financial liability, they again relates to changes in the fair market value of the existing bonds. And they do not have any cash flow Effect of course. So as a result of all of that, the profit for the period has been €7,700,000 and the earnings per share €0.11 before and €0.07 after dilution. Let's turn to the next slide and our cash position and cash development. So the net cash generated from operating activities increased by 32% and amounted to Almost €12,000,000 €11,900,000 with a cash conversion of 96% and as you see in the charts following the quarterly trends as previously. During the Q3, just as a recap, we made a mandatory prepayment of almost €50,000,000 in relation to our existing bonds And also repaid EUR 5,000,000 of the revolving bank credit facility. And now in the Q4, we made a voluntary prepayment of euros 6,000,000 in nominal value in relation to our existing bonds and repaid the remaining €7,500,000 of the revolving bank Correct facility. So that has been now repaid in full. In addition, we repurchased total nominal value of €9,800,000,000 of our own bonds that we now own. And as a result, out of that, cash and cash equivalents amounted to almost EUR 30,000,000 at the end of the Q4. Let's then turn to the final slides of the financial section and And look at the company's debt. So as just mentioned on the previous slide, debt has been heavily reduced through the prepayment of existing bonds as well as the repayment of the remaining part of the revolving bank credit facility and also our repurchases. And as Joran mentioned in the very beginning, Our net debt net interest bearing liabilities, they amounted to EUR 57,000,000 at the end of the quarter, which is a significant improvement as compared to last year when it was slightly about €150,000,000 which of course is the result of our successful refinancing during the summer And also the continuously strong cash generation in the business, of course. The leverage ratio, which is The ratio of net interest bearing liabilities over the last 12 months of adjusted EBITDA amounted to EUR 1.09, and that Was simply continuing the improving trend since the Q2 when we had 1.68% and the 3rd quarter when we had 1.32%. So then taking a look into this Q1 of 2021, we announced a further voluntary prepayment of EUR 6,000,000 in total nominal value of the existing bonds, And that will occur next week on the 2nd March. And then we also press released a total further repurchase of our own bonds of €3,300,000 since the start of the year. And with that, I finish the Financial Services And hand over and welcome, Michael, to our quarterly calls, who will continue with the outlook and in particularly development in the U. S. Thank you, Peter. If we would proceed to slide 14 please, so 2 more slides to the European Sports and Casino. So with the exception of the Italian market, most of our European casino brands face continued challenge to maintain their website ranking and traffic. Another exception to that is Adscamblers, which is more of a global product for us, which had a strong finish in the Q4 with improvements in ranking An increase in organic traffic and conversion rates due to continuous improvements done on the products by that team. As aforementioned about 15% of our Business showed no growth, leading the decision to start a transformation program to consolidate our casino segment. And with this, we expect our organizational efficiencies and optimization to grow, Growth and optimization. So both sports and casino faced headwinds in Germany in Q4 due to the tolerance period to the new regulations. In total, sports revenues from Germany dropped by half during the Q4. We do expect the German market to continue to be negatively impacted in the first half of twenty twenty one. In 2020, with many sports events canceled, our business pivoted to promote other products, notably casino and poker, with some success. Although this could not compensate for the loss of sports betting, as Peter mentioned, our business is normalized back from pre COVID in Q4. In the Q4, the business normalized. So, yes, driving sports has been a good recovery. If you switch to next slide please on the U. S. Update. The U. S. Is now live as of January in 12 states, 5 for casino and or poker in the case of Nevada and 12 for sports also including Nevada where we're doing some land based affiliation work. The market openings in Michigan and Virginia and the remote registration starting in Iowa in January were a great start for 2021 for us. Overall in 2020, we had a great year in North America. Tina's share in North America is now 30% of our Businesses total revenues is coming from North America and that unit saw 72% year over year growth. Outlook for North America for Q1. Super Bowl ended the NFL season, which happened to coincide with the launch of Virginia and Michigan. So strong start to Q1, and then we have events like March Madness, which is college basketball in the U. S, Which is good for sports affiliation. The rest of 2021, it's a limited likelihood to see any new states launch. We have a number of states out there With measures and bills, but the likelihood of any of them passing in 2021 seems low. But With Virginia and Michigan launching in January, we have new states for the entire NFL season starting in September timeframe. So we expect a very strong NFL season, as well as strong and steady casino growth In the various states that are allowing that which also now includes Michigan. So, we switch to the next slide please. On the U. S. Potential, so this has changed slightly since the last time we updated because Obviously, we had some states post quarter go live. So we now have 12 states where we have the ability to do affiliation That we're doing affiliation. So in Q4 that was 46,000,000 worth of population. Now into Q1 that's become about 65,000,000. It does decrease our upcoming states, upcoming states being those that are on the near term horizon. We have Illinois, which actually we're already partially Affiliating for because of Governor COVID mandates allowing online to open earlier versus December of this year. And then we have Maryland, Louisiana and South Dakota, all of which have measures, ballot measures passed, but now have city regulations and the like. So We could see them launch this year, potentially the start of next year. But there is still a very large roadmap ahead for North America, Almost 100,000,000 in population in just the 4 large states and there has been fair activity on New York, Nothing concrete that we're willing to say it's within the upcoming states at this point, but lots of great movement in Florida, Texas And New York in particular. And then you have many other states, which they get almost the same size population that are still on the horizon somewhere. And as we've seen in North America at least and with COVID adding to it, nothing is really that predictable on timing, except that things seem to continue to move Fewer than anyone would have expected a year ago. I will now turn it over to What are the key takeaways for Q4? Thank you for that. So if we summarize the situation In Catena, we have a sports business that is back to normal. We have good development for our businesses in Japan within AG. We faced headwind in Germany for both Sports and Casino and part of the legacy business as well, those areas with headwind summarize up to 15% of the business. And for that, we have put the transformation program in place. We have strong growth in January, showing 61% plus in like for like revenue. So because of all this, we estimate that 2021 will be well above our target of double digit growth. So I will by then open up for questions. Thank Brumberg. Our Our first question comes from the line of Erik Moburg of ABG Sundal Collier. Please go ahead. Your line is open. Morning, gents, and thanks for taking my questions. To start off, on the legacy side of the business and the casino side, You mentioned the transformation program there. Could you perhaps elaborate a bit on this part's current EBITA margins as well as how much On the current cost base, do you think that you will be able to trim down? Thanks for the question. So the transformation period It's about optimizing the businesses for growth. So at this point, I don't think we're ready to comment yet on the exact effects of cost Because it is a process underway. So, it is in order to align our businesses with the consumers and the operators in the markets we work in And yes, again to optimize for growth, so that we can increase the growth in the areas that are not. And as we said, it's around 15% of the business. So it is also to allow the To focus on the other 85% of the business that are growing well. Got it. And could you perhaps elaborate a bit on how this part of the business ended the quarter? Was it was the end of the quarter Stronger than the beginning of the quarter. We haven't really broken out, Eric, that Particular segment of the business in that way for this report. So I don't know that I'm fair to comment on that. We've seen Growth in the end of the quarter in numerous areas. But again, it's not what we desire in the operating Tempo, what's that? Fair enough. And just from a regulatory standpoint, if you look at this part of the business, aside from Germany, Are there any other regions that you foresee year over year headwinds going into 2021? Quite honestly, I don't believe so. Germany has the regulatory. And I think Germany, it should be noted that While the regulatory headwinds are short term impacting, we expect Germany will be a strong market for Kettina in the years ahead. Regulations are ultimately not a bad thing for affiliates that are able to operate and thrive in regulated markets, which is something We are able to do so. So Germany, we will continue to grow that business over time. Just these short Period headwinds are impactful to the current business as the markets modify. In the other markets, we see opportunities for growth in across The Board again, regulation shifting things so that our operating models have to adjust, but lots of potential for growth. So this is not Catena is not just A U. S. And Japan story, there's potential in all sorts of European markets, new ones opening As well as the current ones we've been operating in. So yes, so we're not abandoning any markets or anything like that with the way we talk about transformation. Again, it's optimizing for How each of those markets require a slightly different operating focus? Got you. That's some good flavor. And just looking into towards the later parts of 2021 and then beginning of 2022, Could you perhaps give us a flavor on Netherlands and the potential contribution from that market? So, Netherlands is very exciting for us. We are working down the path there as a operator is Expecting to be an affiliate there, working with the operators that will be coming online, being very cautious. It is a highly regulated market. Again, We drive in such things, so we expect a strong performance there. I don't believe we are at this point ready to break out Our expectations on the Netherlands in particular because there are still a number of factors including does it stay on track from the Country perspective of the expected launch date, etcetera. Fair enough. And in regards to the trading update, To me, it appears like revenue in January at least amounted to say EUR 14,000,000. I assume this partly can be explained by Strong development in the U. S. But could you perhaps elaborate about on the geographic split in the January? And how do you think this will evolve throughout the quarter? But we don't give any geographic split in sort of month by month basis. But as you said, we have a strong development in the U. S. And We have a good momentum in the other businesses as well. So and therefore, we say that based on the So we see that we for the entire year will be well above our double digit growth target. Okay. So would it be fair to assume that the legacy business at least is relatively flat from the exit of December And then it's sort of you West as the main driver of the sequential improvement there. Well, as we said, the legacy business and the German business is still in decline. And those 15% is where we have a transformation program are still in decline. Got it. And then just one more question for me. Just in regards of you indicated that you might Looking at the M and A in the U. S. Going forward, could you perhaps elaborate on your thoughts of M and A versus focusing on organic growth in the U. S? I'm happy to. So I think there is a balance in all companies that need to be considered in Organic and M and A. So it's again not just North America. North America is the most obvious target for such in terms of Being it is one of the faster growing markets globally, but there is lots of opportunity for M and A and it is a balance then that we have to analyze What would that kind of investment do towards our own sites in organic growth? So it's M and A is about finding maybe there are Certainly, it's that makes sense to bolt on. Maybe there are other companies that are, let's say, in the periphery of this space, Sites that could become affiliation by work with us. So they might not have organic affiliate revenues today, but we could Add that revenue stream in there. So that's potentially interesting and probably the most interesting to me is in long term perspective is Where technologies can be used to leverage our business is not just in North America, but potentially globally. So those are the types of M and A I think we consider and yes, it is always a balance against organic growth, which organic growth is going to be the strongest driver for us, I expect in the near term anyways because if you look at North America, at least the number of large affiliates that would have Significant impact to our bottom line immediately are a very small number and a number of them are our competitors, Larger competitors in Europe too. So, there are some out there, but again, are they worth what they would be versus us investing in organic growth? That's part of our analysis, what we'll have to do. Fair enough. And then just in regard From a value creation standpoint, given the current valuation, do you think that M and A really could add more value than focusing solely on sort of buybacks and organic growth just from that perspective. Do you think that the churn valuation allows you to do M and A? I believe it does. I believe it gives us potential and I'll turn it to, yeah, Joran or Peter to talk more Typically on that, but I think, yes, M and A is not M and A is on the table for Catena Media. The other options are there as well. From my perspective, growth in M and A is a great engine for an organization in the right place. So I think it is something that is on the table. And I'll turn it to Jorgen, who will give you a comment. Well, I agree with what you say. At the moment, the cheapest asset to buy probably our own share. But at the moment, we don't have we have to go to the AGM first to ask for permission to do share buyback. But of course, that will be part of our to in our toolbox in how we create value going forward. Fair enough. And it's in good flavor right there. That's all for me. Thank you very much, Jens. Thank you. Our next question comes from the line of Michael Laffian of Carnegie. Please go ahead. Your line is open. Hi, good morning. Yes, I've got a few questions. First of all, Can you say something about the difference between the net new deposit in customer growth In Q4 grew 32% quarter on quarter and revenue grew by 7% quarter on quarter. So So you're seeing lower revenue currently, what is the reason behind this? Peter. Yes. There are primarily two reasons I would highlight. The one is sports. So sports has been a little bit weaker, of course, in the Q3 in comparison to the Q4. And as So, sports had a little bit of a weak start in the Q4, but then developed and recovered fully towards the end of the Q4, in particular in the U. S. With all the major All slicks haven't been up. The second item has been our performance marketing efforts that I referred to earlier as well, Where, of course, NDCs have been increasing in accordance with our increased spending, which you have seen in the paid revenue as a result of that as Okay. And this group of Segments or regions not growing 15% of the group. Just want to understand Approximately where the sites are or regions are, primarily Europe, but can you talk about this maybe in more detail? Part of it, I understand, is Germany, right? Yes. So I'll take that. This is Michael. It is in our European area. It is there is the challenges in Germany from the headwinds which are external And ensuring we transform our products in order to be ready for the transformations that are outside of ourselves. But then there are just a series of casino products as we said in Europe that have not been optimized for growth. And so those need to be transformed, those businesses need to be better aligned with the countries they work within. So that's the segment. It's not all of our product, it's not all of our casino product. As we noted products like AEG, Escambler's Are doing exceptionally well. So it's being able to replicate some of that success we know we can have in various casino products With the rest of them that are in the European phrase facing markets. Okay. And part of it is Germany. Is that correct? Yes, part of it is Germany. Always will have to be part of Germany as we as the market is changing here, we have to transform to keep up with that. Okay. So how large was Germany in Q4, for example, total revenue Approximately. I'll turn it to Peter. I'm not sure we've broken that out. Yes. We have not talked about the exact size. But as we noted, Germany in itself halved For both the legacy sports and casino parts, and it is part of the 15%. So you can assume it is a considerable part in the 15%. Okay. Got it. So it must be a lot lower exposure to Germany right now. When you into 2021, it must be, I mean, a lot slower than that. Just to understand the impact going forward. I mean, it is naturally much, much lower given the impacts that we have seen in the Q4. That is totally right. Again, we would not comment now on the exact size. But The exposure that we had in Germany in terms of if your question would go, have we reached the bottom? Well, that is hard to say, but we already Took quite a hard hit during the Q4 in relation to the German development. So if you would compare it now year over year, the beginning of 2020, that's quite a considerable change in what we generate out of Germany right now. Okay. Thanks. And also another question on casino versus sports and the mix going into 2021. I was just wondering about the scalability in the sports betting operations because you have a quite good margin in casino I know decent margin sports, but they are lower than in casino. So how can you scale the sports side when that is taking share of the total group? I'll take that. So The sports business is healthy and growing back. It's hard to give some year over year comparisons in 2021 versus 2020 because of the COVID impact on Sports particularly, again in the European front, which got hit during one of the high seasons for sports. Sports and Casino is a great blend of a business in order to cover the seasonality. And our sports continues to grow. Remember though when you look at how much of a casino businesses they have of a company in sports, Sports is inherently a lower value in the player you get than casino. So the amount of work done for sports to get To the same level of Casino, is much larger. So, sports moves Sports numbers grow greater on NDCs faster than let's say the revenues do. And so it is a lot more Extensively content heavy business. So we grow very well at that in North America where markets open. We're growing very well at that In other in various European countries, but I don't think it's fair to say sports versus casino, if you're looking that in just the financial side, They are slightly different animals, if I'm answering your question. Okay. That's good. Thanks. That's it for me. Thanks. Thank you. And the last question in the queue so far comes from the line of Jaume Albeij of Kepler Cheuvreux. I mean you have touched a bit on this, but just To kind of summarize the 2021 growth potential here, where you see potential above target growth. And you've mentioned U. S. Being very start of the year. You mentioned German as potential negative and the legacy business also declining. Could you mention some other Side or downside risks in this target for 2021? Well, if you compare to 2020, there will, of course, be a big difference in the sports segment because we had a large impact last year from Council Spokeshaven. So that is the main difference from 2020. But then we see Continuously, it's good development for AG and Japan as well. Okay. Thanks. And just a question on the U. S. I mean, it's historically been very much about New Jersey and Pennsylvania in terms of revenue. Can you talk a bit about how the different states are growing? Still see growth in New Jersey? And what is the mix of revenue between states now compared to, I mean, Beginning of the year maybe. I know it's difficult to compare because of COVID-nineteen and so on, but if you can give some flavor there. I'll take that. So yes, there is still good Growth in New Jersey and New Jersey probably has more competitors in it every year. So its growth rate probably is Slowing quite frankly compared to some of the other markets, especially when you're talking about comparably to North America. Pennsylvania It's well into its growth phase, particularly in casino. So it's going up And its sports business continues to grow as well, but the casino is, as I was just noting before, casino being the more Valuable players and the like has more impact as the casino business grows. So, all of the states are going very well on Sports for us, Colorado, Indiana, West Virginia has become better than was So each state, you have to take in a little bit of a different context in whether it has sports and casino and as well as in just the size of the total population. Yes, there's going to be a new balance in and a new baseline probably for the U. S. For the coming rest of the year now with Michigan and Virginia launch because Michigan is One of the largest states in the United States and it launched both casino and sports with a very favorable tax rate. You had almost You have almost a dozen operators who were able to operate from the state and from almost day 1 versus something like Pennsylvania that has taken up to a year to get A number of operators live on the casino and sports front. So, you will see us our portfolio shift in balance towards those larger States as more of the large states come on. Illinois, Illinois, like I mentioned earlier, is going well. It's not seen a ton of investment from operators and everyone else yet because it's been an uncertain market of how long it would stay open for because of that Being open under a temporary governor's order, but we continue to invest in it and know that it will become even a stronger market as It reaches a real launch day at the end of the year. So, yes, so there's a balance in our states that will shift around And it will shift also what we saw in January will shift back down quite frankly. Michigan and Virginia both have a launch Bubble to some level in the initial sign ups in sports and pre registrations that we took for months before. But that new baseline will be higher and it will be Have you ever contributed to by some of the new seats? Thank you, Shneur. Okay. Very good. Thanks. And then one last there, Ramon. I mean, you talked about this performance marketing. It sounds like you see a bit better profitability here. You said that you wanted to have more, I mean, organic revenue and less PPC. But is it right to understand that you now also see some potential to add Revenues as well. Yes, I take that. I mean, exactly as you say, Jarmar, It's part of the toolbox. It is, of course, also a possibility, if you take a look at the part of the business from the legacy side, To mitigate certain shortfalls and contribute, at least in the short term, on that transformation. But the main part, of course, is where do we see profitability Back to both the sports and the casino products from a PPC, a pay per click spending and paid revenues. It is not that We do not see as part of the strategy to increase these parts or do acquisitions that are PPC related. That is Definitely not on the plate, but it is contributing in the overall balance of revenue streams. One thing, of course, to keep in mind is, and you may see it in other companies, is paid media or performance marketing has, of course, a considerably lower margin. So one has to be a little bit more careful and mindful about what is the impact on the overall margin, gross profit and operating margin of the entire business. So We are carefully taking a look at that. So I do expect that we will overspend in that area. But we see good potential, and that's why we took on that. Okay. Thanks. And just lastly, the financial segment, I mean, you divested Hammerstone. Do you see potential to do more divestment there? Or is it to find buyers of this kind of assets? We have no certain plans at the moment. So Michael, you can continue. Yes. I guess what Joran was saying, I think that's still an analysis we're doing. I disagree that there would be not buyers interested in such, but it's for us to consider What is the long term plan for that? So that's yet to be determined. Okay. Thank you very much. I have a written question here as well. And that is, will the strike price for the warrants be changed if we start to pay dividend? No, it will not be changed if we start to pay like normally ordinary dividend. So the strike price of 18.9 will still be the same. Thank you. And just to check if there are any further questions on the phones, please dial Okay. There are no further questions on the phone at this time. I do have a few questions on e mail. And the first one is regarding U. S. And how many active pages do we have? It's for Mikael to answer. It's also a question about how many active states and how many of them not available to the statement has been And Michael, will you please answer that question please? Of course. Thank you, Asa. So when they say active pages, I'll assume we're talking about Sites versus pages, because pages is in the 1,000 or 1,000,000 even when you talk about all within all the websites. We're about 70 active websites. To be quite frank, I don't have the at hand number because it is a constantly shifting Number, so we run a multi tier strategy in North America. So we have our national brands, which are a few like Legal Sports Report For the lines are large sports products. We have PLAY USA, Bonus Seeker, And then we have Play New Jersey and Play Indiana and the Play brands across the states and then you have the tiers below that which are specific sports and casino and Forest racing for particular states. So there are numerous sites. And when it comes to what are active states versus non active, so As we have mentioned in this brief, there are about 12 states we are active in for regulated gambling. There is also daily fantasy sports And social casino and sweepstakes casino and other things, which is what we do a lot of affiliation on in the non regulated Markets because it's all legal to run those businesses as well. So we affiliate for companies that seek that traffic. So that's what we do with a lot of those sites that are, Let's say in Play MA or Massachusetts brand or Play FL, Florida, they're not wide yet and They're not as heavily invested in by Catena at this point either, quite frankly, in the amount of pages or news flows, etcetera. But There is still a revenue stream coming off those. So there is no stone unturned, let's say, when it comes to opportunities in North America. And that holds true in other markets too and what we're able to do when markets haven't opened yet but we're building ahead of time there's opportunities for such often. So, yes, so that's where we stand on states, 12 states currently active in some way for regulated Sports and casino betting, sports and or casino betting in North America and many, many other states, almost 37 other states or so that we can do social casino and deal with entity. So yes. Thank you, Michael. No further questions on the email. And there is still no further questions on the phone. So I'll hand back to our speakers for the closing comments. Okay. So to summarize what we have said is that We have had a good start in 2020, and we are sort of mitigating The various headwinds that we have seen, the 15% with the transformation program and otherwise, We remain the rest of the business is performing very well. So we are very positive when we look into the 21 and onwards. So thank you very much.