Thank you operator. Welcome everyone to the presentation of Evolution's interim report for the Q2 of 2020. My name is Martin Carlesund, and I'm the CEO of Evolution Gaming. With me, I also have our CFO, Jacob Kaplan. I will start off the presentation with the quarterly highlights and achievements and give some comments on our new fantastic titles that we have released. Jacob will then go through the financials, and I will conclude to provide some thoughts on the future, followed by Q&A session. Next slide, please. I'm proud to present the Q2 2020 for Evolution. It's been another quarter with high operational activity, given the situation in the world, and almost exceptional financial performance by Evolution. I already now also want to tell you how exceptionally well all employees of Evolution have handled the COVID-19 situation.
It is different and challenging times right now, and to be able to continue to deliver under those circumstances shows how fantastic they are. We have revenue growth of 50% in the quarter. There are multiple factors combined that create this very strong growth. COVID-19 creates a higher degree of activity and an overall positive impact, but we also need to remember that there are negative effects of COVID-19 as we operate on a lower level and also have, for example, Georgia studio partly closed during the quarter. At the same time, we have launched new nothing but fantastic games. During the quarter with, for example, Mega Ball, which supports the growth. On top of that, the global demand for our product continue, and we see continued increase of share of Live and underlying market growth.
The combination of high volumes and a global demand for our product, together with our constant pursuit of cost efficiency, has resulted in a fantastic result this quarter. Altogether, we reach an EBITDA over EUR 81 million and EBITDA margin in the quarter over 63%. Fantastic numbers, I'm very pleased with our financial performance in this quarter. Other significant events in the quarter include the offer to the shareholders of NetEnt and also several new game launches. I'll come back to both these items later in the presentation. Next slide, please. We spoke at length about COVID-19 situation when we presented the Q1 report in April. It has, as we all know, continued to be a factor all through the Q2 . We'll continue to focus on measures to create a safe workplace for employees in our studios and to maintain operations for our operators.
At the same time, a significant part of our workforce has continued to working from home. Overall, we have managed operations well with few disturbances during the quarter. We have been operating fewer tables due to COVID-19, and we expect that it will be several months before we are back to pre-COVID levels in terms of number of operated tables. Right now, we gradually restart across our studios, but we do it with caution to maintain social distancing and all other measures needed. At the end of March, we saw a positive effect on demand with many new players entering the Live segment as an effect that persisted during Q2. In June, we can see some effect from the fact that several sport leagues have resumed play, as well as lockdowns being lifted in many countries.
As I pointed out, there are also negative effects of COVID-19 as number of operated tables are lower, which lowers the revenue. It's also reasonable to believe that there are some long-term positive effects on demand as many new players have been introduced to our Live casino during the last quarter. The first six months of this year have been truly challenging. Through very hard work and a bit of luck, we have come through this extremely difficult situation in a good way. The pandemic is not fully behind us yet, and naturally, we monitor the situation closely, but it's encouraging to see that we are starting to return to a more normal situation in most cases. Next slide, please. On June 24th, we presented an offer to acquire NetEnt.
The same day we had a press conference where we stated what we see as the rationale of combining the two companies, and I will repeat some of that here. If you heard me present Evolution in the past, you know that innovation and product are important to me. I simply believe that we, as a product company, constantly need to develop. We need to make Evolution a little bit better every single day and constantly increase gap to competition. Every day create a little better user experience for our end users. Everyone in Evolution is on a mission to find one thing making us better every day. I would like to start from this point as I see a great potential in what we can do combining Evolution's and NetEnt's capabilities in live and slots.
For the past years, you have seen Evolution inventing and creating the Game Show segment in online casino, combining core Live products with R&D elements. For us now to also add slots and explore what can be done with the combining elements from both sides makes me very excited. To think about what can be created if putting the great minds of Evolution and NetEnt in the same room. We will definitely see more products that form a combination between Live and slots. We need to build the products for the future. We need to constantly develop as our world does.
Another focus over the past year has been the U.S. market, where Evolution has a leading position in Live and NetEnt has a leading position in slots. By targeting the market with a broad portfolio comprising best of each vertical, we will in an even stronger position capitalize of the opportunities and growth on the U.S. market. We think that USA has the potential to become the largest in the market in long- term. In addition to USA, the new reinforced offering will support further growth and expansion in other markets as well. As stated in the press release, this cost synergies of about EUR 30 million to be released during 2021. We see great potential in creating a cost-efficient, hungry, and lean company. Naturally, that work with an ambition will continue also after 2021.
The upside on revenue side is bigger than the cost synergies, where cross-selling and distribution will be major drivers. There's a global demand for our product. As online casino continues to grow its portion of the total casino revenues, we'll see a long growth runway ahead. All in all, the combination will also provide great upsides to customers. They can feel confident that we'll continue to serve them with the best product, innovation, and operational excellence. Next slide, please. This slide show bet spots, which is a good indicator of the activity in our network. In the Q2 , number of bet spots from end users amounted to 11.9 billion compared to 5.6 same period last year. That is a growth by 113%. Compared to Q1, there's a good increase of 37%.
The high activity in the Q2 is partly an effect of new players that have found their way to online casino with the absence of sports events to bet on and closed land-based casinos. Also, it is an effect of our increasing range of game show-style games that generate high volume of smaller bets. In Q2, the launch of Mega Ball and pre-launch of Crazy Time are both games in the game show category. We do expect that some of the extra volume in Q2 will level off as sports activities come back, and we saw some of that already happening in June. However, we do believe that many of those new players that have been introduced to live casino in recent months will help accelerate the growth in the long- term.
We can clearly see the audience for live games increase, not only by existing players in the online gaming sector, but also with completely new player groups attracted by our game shows. This is success of our strategy to widen live into softer players, which was initiated over three years ago. Next slide, please. The staff and the recruitment of staff is absolutely crucial to our success. Much of the greatness of Evolution is that we have managed to recruit the best talent in all our markets. Due to the current situation with us operating fewer tables, the full-time equivalent, FTEs, are lower in the quarter. We have also had to reduce headcount in Georgia operations at the beginning of April as we had significant fewer tables running.
As I mentioned, we are scaling back up in all locations. I expect FTEs and headcount numbers to increase through the rest of the year. The reason for not coming back to full operation faster is the demands of social distancing and other COVID-19 safety measures. We still see a very high demand for tables. We will continue to grow with our clients, which means a higher recruitment pace as soon as the situation with COVID-19 is more stable in the world again. Next slide, please. This slide shows the breakdown of our revenue by geographic region. The Nordic is stable, our smallest market contributing with about 5% of total revenue. Growth has been moderate since the same quarter last year, amounting to 12%.
U.K. shows a decrease year-on-year growth for the Q2 with 16%, but an increase of 7% in revenue from the Q1 2020. Compared to 2019, U.K. is negatively affected by lower fixed fees as U.K. companies have moved their billing address to other countries in Europe. However, playing volumes are up significantly compared to Q1. The market development in U.K. is more positive than the figures show. Rest of Europe continues to develop well and constitutes about 50% of revenues. The growth rate year-on-year amounts to 42%. Both Asia and North America is growing quickly with 181% and 81% respectively. We see good potential in both these markets and expect a continued high growth rate the rest of the year.
We're especially happy to see the recent regulatory movement in the U.S., which increased the potential. I will get back on that on a coming slide. Other, including South American, Africa, and remaining part of the world, shows a good growth of 42%. Revenues from regulated markets shows a growth of 14% and constitutes 33% of revenue. It's a lot lower than previously, mainly due to lower fees from dedicated tables in the quarter. A large part of our table fees are in the regulated markets. Due to fewer tables in operation, those fees are lower in Q2. It also reduces the percentage share of revenue from regulated markets in this quarter. Next slide, please. We continue to widen the gap to competitors. No one else has a product portfolio close to ours. No one has as many new games.
We've added six new games this quarter, also Baccarat Multiplay is nothing less than extremely good. This year we are launching 12 new games in all areas. New features, twists on traditional table game, new RNG games and new game shows like Mega Ball and Crazy Time. Mega Ball, our first game in the lottery vertical, was a great launch during the Q2 , on July 1st, we officially launched Crazy Time as well. It has taken about a year to develop Crazy Time it has been the most advanced game we made so far, with a cost around double over what the normal game show. Pre-launch, with a limited number of operators indicated that Crazy Time would be the most successful launch Evolution has ever made. Yes, our expectations so far have been fulfilled.
Crazy Time is some of the best work Evolution has ever done. I honestly believe that it's the most fun casino game in the world. It highlights the paradigm shift for Evolution. This game will appeal to audiences far and wide, from slot players to sports bet players and everyone in between. There is truly nothing like it. Looking ahead, coming up later this summer is the Instant Roulette. During the fall, our craps game. The craps game, which is the first ever done online, is a real gamblers game. That of course focus on the North American audience. The environment for the game is prohibition time in U.S. during 1920s and early 1930s. It just looks fantastic. The studio is magnificent. It is important to point out that we continue to innovate, substantially enhance, and refine the playing experience in table games in our core.
Our ambition to pave the way for an entire industry by launching new groundbreaking products and of course continue to increase the distance to our competitors, which we will do if we continue to deliver value to our operators and fantastic play experience to our players. The table games are still our core, but the game shows are aimed at the new audience that might not have found live games before. A way for operators to cross-sell and introduce live games to a wider audience. As I mentioned earlier, the combination with NetEnt will create a great opportunity for game development in RNG as well as live and in the combination of the two. Really looking forward to what we could do together. Next slide, please. In addition to product development, we are continuing to invest in the future in form of new studios.
We continue to stay focused on further strengthening our North American footprint. We have expanded the capacity in New Jersey to meet the growing demand and to be able to serve more customers with new games. The construction of a new studio in Pennsylvania continues, but it's on a postponed timetable due to COVID-19. Michigan will be the third regulated market in the U.S. for online casino. This is a very positive development. We expect more U.S. states to allow online gaming in the upcoming years. We are well-positioned to capitalize opportunities that will open. It's also worth noting in this context that New Jersey has outperformed our expectations in terms of market size, which shows a good total potential for the U.S. market as a whole.
In order to answer up to the high demand of our studios in primarily Europe and Asia, we are planning to build two new English-speaking studios, one in Kaunas, the second-largest city in Lithuania. The construction already started, one more in Europe, which is currently in the planning phase. I will now hand over to Jacob, who will guide you through the financials. Next slide, please.
Thank you, Martin. Good morning to all of you listening. I will take you through a closer look at our financial performance during the quarter. I'm on slide number 10, titled Financial Development. This slide shows our revenue and EBITDA per quarter. We've seen a very strong increase in volumes during the quarter. Top line growth is up 50% year-on-year and up 11% compared to the Q1 of this year. As Martin pointed out earlier, there are both positive and negative effects on our revenue from the COVID-19 pandemic in this quarter. Several factors, not all related to the pandemic, are behind the good revenue number. As we mentioned when we spoke in early April, we saw an increase in volume on our games as sporting events were canceled and players opted for casino games to a larger extent.
We also had a very good underlying growth coming into the quarter as we saw in the growth in the Q1 , which was not very much affected by COVID-19 and also as we've seen all through last year. We've had several successful new game launches during the quarter, as Martin just covered, Mega Ball, Power Blackjack, Baccarat Multiplay, and the official launch of Crazy Time was July 1st, but the beta phase ran through June. There are several factors supporting the revenue development. Yes, there's also a part related to canceled sporting events, and that part will now level off as sports start to come back. The negative effect on revenues from the pandemic comes from the fact that we have reduced the number of tables that are operating.
This means that the number of tables in dedicated environments for operators have also been reduced, thereby we have not fully charged the fixed fees for those environments. Fewer tables means that some players do not find their favorite table or find a seat for blackjack and therefore don't play. Some of this is compensated as players have gone for other games, Scaled Blackjack Games or RNG First Person Blackjack games. Some of that volume comes back. As you hear, there are several effects, both positive and negative, I can't exactly quantify each one individually. All in all, the net effect of COVID is positive in the Q2 , which is also reflected in the extra high growth rate.
Moving on to EBITDA, also very strong in the quarter at EUR 81 million for an EBITDA margin of 63%. With the reduced number of tables leading to a lower cost level, and at the same time, the revenue effects I just spoke of, the margin is boosted in the quarter. Part of this is a short-term effect, but as we have stated during last year, we have worked hard to establish an efficient setup in our operations. That means that when revenue comes through, we also get a good effect on margin. Our guidance at the start of the year, that we would increase margin 2020 compared to 2019 shows that. As you see in the chart, also Q1 had a strong margin. The short-term effect of the pandemic gives a boost to a trend that we were already in earlier.
We will not change guidance regarding margin for the year at this time. There's a good distance to the 50% margin of 2019 after the first six months of this year. I would not extrapolate from the Q2 level going forward. We do come into the H2 of the year when we will pick up activity in studio construction, increase travel, and also increase activity in other areas. That said, long- term, we still see that we can increase margin when we increase revenue. Operator, let's go to the next slide, please. Let's take a look at the more detailed P&L for the period. Revenues for the three-month period, April to June, amount to EUR 128.3 million. As mentioned, that's an increase of 50% compared to the same period as 2019.
For the first six months of 2020, revenue is about EUR 243 million, which is a 47% increase from the corresponding period last year. Moving down, personnel expenses total EUR 30.3 million. It's in line with the same period previous year, but actually EUR 3 million lower than the Q1 of this year. The reason for the lower personnel cost is that the number of tables have been reduced, as we've mentioned a few times, meaning that we have fewer hours to offer. It has led to a reduction in staff in some locations and generally fewer hours worked in all studios. Most of our employment contracts are a mix of fixed monthly salary and variable pay, so we do not have the same percentage reduction in personnel costs as the number of tables.
As we said earlier, we are now increasing the number of tables gradually, step- by- step. There is also a pent-up demand for new tables once the pandemic allows new construction. We will continue to recruit and increase staff in the quarters to come. Further down, depreciation is just under EUR 7 million in the quarter. That's up 18% compared to the same period last year. Other expenses, next item include, among other items, consumable equipment, communication costs, consultants, and royalties. The line amounts to EUR 16.8 million. That's up 34% from the same period last year. For the six-month period, the increase is 29%. Part of that increase is in royalties which increase as we grow revenues, so those will move together. Compared to last year, we also had higher costs this year for some extraordinary measures in the studios, extra cleaning, transport, sanitizer, et cetera.
Summing up, total operating expenses increased by EUR 5 million or 10% year-on-year in the Q2 , which is a slightly lower increase than what we normally have, and mainly due to the lower personnel expenses. Tax is at EUR 3.6 million in the quarter for a tax rate of 5%. All this sums up to a profit for the three-month period of EUR 70.4 million, and for the first six months of the year, just over EUR 124 million. Profit for the period is up 104% compared to the H1 of 2019. This equals an EPS of EUR 0.38 per share for the Q2 , and for the rolling 12-month period, EUR 1.14 per share. Operator, we can go to the next slide. Before I hand back to Martin, we will also take a closer look at the cash flow.
Starting to the left in the slide, the chart shows development of CapEx. The gray part of the bars show investment in tangible assets. This is mainly our studio construction. It is almost at EUR 5 million in the quarter. The main projects for the H2 of the year is to finalize the studio in Pennsylvania, as we mentioned earlier, and also start construction in Michigan. We also said last quarter that we are planning for one to two new mid-size studios in Europe, and we have settled on Lithuania and the city of Kaunas for one of those sites. We continue to evaluate sites for a second studio, and I would say likely we will come back to that later this year.
As we said earlier, right now we are mainly reopening tables that have been closed due to COVID-19, but these new studios that we are planning will be important to support growth from 2021 and forward. The blue part of the bar represents investment in intangible assets and is related to development of new games and features to the platform. It is EUR 3.4 million in the quarter, slightly up from Q1, but more or less in line with the pace from the full- year of 2019. Altogether, CapEx for the H1 of the year is just over EUR 15 million, which means we are in line with our guidance that CapEx for the year will be slightly up from the EUR 30 million invested during 2019. A bit higher CapEx to be expected during the H2 of the year.
In the middle of the slide, we show operating cash flow. It is very high in the quarter as we have a bit of a catch-up effect from Q1 when cash flow was lower. We had a good improvement in accounts receivable in the quarter. I mentioned accounts receivable the last time we spoke, and it has been a focus for us during the quarter. It will continue to be so. We will work to keep it at this level, but we've also seen in the past that payments and payment cycles can be lumpy at times. Good development in this quarter. Cash conversion for the 12-month period is up to 83%, which is a good level. Finally, to the right in the slide, a look at the balance sheet. No major changes show up here between the quarters as it's a snapshot at the end of each period.
During the quarter, we have paid dividend of EUR 76 million. The strong result brings us back to EUR 212 million in cash. We are in a continuous strong financial position. That was the end of my prepared comments. I'll hand back to Martin for some closing words. We'll take questions after that. Over to you, Martin.
Thank you, Jacob. A few words to conclude this report presentation. Everything we do is about one thing, to extend the gap to competition and strengthen our market leadership. The perpetual mission is a common thread in our studio expansion as well as in product development, operational excellence, and recruitment. I see fantastic opportunity in the U.S. market with states becoming more and more positive on regulating online casino. Time will tell at what pace states will speed up online casino regulation, but when they do, Evolution will be there. The top priority for me now is to make sure we can open up in Pennsylvania. Of course, one of the top priorities as well is to close the deal with NetEnt. This is a landmark deal which will accelerate Evolution's move towards becoming the world leader on the online casino market.
The combined product portfolio will include some of the world's most popular live casino and online slot games, and generate revenue upside through cross-selling and improved distribution with both companies' customer bases. We're coming towards the end of this presentation. It's a fantastic quarter with revenue growth of 50%, EBITDA margin above 63%, launch of six new games, where one is the best launch ever. This is not the time to celebrate. This is not the time to relax. Everyone in Evolution did great work, and with that and some luck, we so far got through the pandemic in a great way. Now we have a lot to do, more than ever, actually. We have a lot of studios to build, customers to deliver to, games to build, and other demands to fulfill. We need to work very hard through the remaining part of this year.
We need to increase speed, deliver more, and try to find ways to expand faster. We need to make Evolution better every single day. 2020 has started well, and I look forward to see the rest of the year. Thank you. Let's move to questions.
Ladies and gentlemen, if you have a question, please press zero one on your telephone keypad. We have first question from Ed Young from Morgan Stanley. Please go ahead.
We can't hear you.
Okay. It looks like we have the first question from Martin Arnell from DNB Markets. Please go ahead.
Hi, guys. Martin here. Can you hear me?
We can hear you fine, Martin.
Perfect. Okay, let's start with these effects from the COVID-19 pandemic. You mentioned that the net revenue effect was positive. Can you provide us with sort of a rough estimate on the revenues in terms of percentage points in this quarter?
We came into the quarter from Q1 with a very high speed. You see the figures in Q1. Fantastic revenue growth there as well. We see an effect activity in the quarter where, of course, lack of sports and other reasons, COVID contributes to that activity. We also see that we are not operating in full capacity, so revenue is lower. We introduced new games, that launched, Crazy Time, Mega Ball. To distinguish exactly how these different parts play out will not be possible.
Okay. Fair enough. It's fair to assume a similar underlying revenue growth as you had in Q1 then, I guess?
Yeah. Your guess is as good as ours, so to say. What we're saying is that we had good momentum coming in, and I think it's fair to assume that some of the good results in this quarter, of course, is this added flow that we talked about. Exactly, what is that? What is new games? All the factors kind of work together. As you say, it's a good speed coming into the quarter, and that can be a starting point at least.
Okay, thanks. Great. On your recruitment is a big part of your business, and you had some temporary layoffs in the quarter. I was just wondering, how is the recruitment going for new capacity in the H2 and into next year?
I would say that we are on full speed in recruitment right now. There is nothing sort of holding us up when it comes to recruitment. That part is working well. The challenge right now is, of course, that we need to take the safety for our employees first, and they are social distancing. Even though opening and still scaling up, there are capacity limitations in studios due to the rules and the pandemic. As they change and the pandemic sort of comes to the next phase, we will continue to scale up.
Great. Thanks. In the Georgia studio, what's your occupancy for the moment compared to pre-pandemic?
We don't comment on individual studios, but we are increasing as we speak. Essentially, we are increasing every week right now, coming back into operation. As I said, we follow the regulations of each country, and safety goes first for employees, and social distancing still puts limitations to the studios.
Okay, thanks.
I think you mentioned also during the commentary just that, we said that from what we see right now, it will be several months before we are back to the pre-COVID levels. It's not that we are at back next month. It will probably linger on for maybe the rest of this year.
Yeah. Perfect. The NetEnt acquisition, you mentioned that the most important opportunity here is the revenue synergies. Can you elaborate a little bit more on what this could be?
We stated that the revenue synergies will be bigger and more significant than the cost synergies. Of course, we look at the U.S. market as potential. We see that it's opening up and NetEnt's position together with our position on the U.S. market will create a very attractive offer to the customers in the U.S. and take us to a favorable market position together.
Is it mainly on your client and distribution, or is it combining on product development, would you say?
I wouldn't quantify each part of it, but there is, of course, a major component in the revenue synergies coming out of the distribution and our global demand that we see and the way we can combine the two companies. At the same time, I'm very excited to look at how we can combine the products and how we can enhance both sides, meaning live and slots, going forward together.
Okay. Finally, are any longer-term risks with an acquisition like this that you would highlight?
There is always risks with acquisitions. I believe in hard work, dedication, and focus and high energy, and that goes with an acquisition as well. You need to see that the companies come together fast and that we come into the delivery phase. There is always risks to acquisitions, but I believe Evolution is very well-positioned to take it on. I have a fantastic management. Thank you for that.
Okay. Thanks, guys. I might come back later. Thank you.
Thank you.
Thank you.
Thank you. Next question from Ed Young from Morgan Stanley. Please go ahead.
Good morning. Can you hear me this time?
Now we can.
Yes.
Great. Thank you. Thanks for taking my questions. The first one is for Martin. What, if anything, have you learned about player demand and behavior during the quarter? Given you took out capacity and delivered strong volumes and growth, you've obviously remixed, I guess, towards more scalable games. Does this tell you anything you didn't know before about player flexibility or willingness to try new game types? Does it sort of alter how you think about driving growth in future years? I guess related to that question, is the disruption of the pandemic going to affect your creativity and your pipeline for next year?
Good question. Of course, you learn. We all learn from the pandemic. It's about how to express it and what. I would say that one thing to learn is that we need to be planning better for being more resilient to those situations in the future. We're working on that, and we're well on our way. It's not big things that we need to do, but we need to think a little bit more about that. That's a learning. When it comes to the players, I think that we can also see that players are moving more when there is less to select from. In the medium term, that doesn't really hit us bad. I believe it will hit us in the long term if we force the players to play games that they are not really wanting to play.
It will hurt them in long term, but in the short term, it doesn't really. That's another key takeaway. I also think that the game shows we see how the volume, how attractive they are to the new player types. We were completely right in our strategy three years ago to go in this direction and create and invent the game show segment, which is now very attractive in a situation like that. That's also a key takeaway. I think that to sum it up, players in the future will play more different type of games than they did earlier. They will move around a little bit more. That's some comments.
Thank you. Just the last part of that was in terms of your creativity or your pipeline, how much has that been affected by the pandemic? Do you still expect to be able to produce a similarly strong slate of games for 2021?
Not really much. It's not affected. Not really much.
Great. Okay. The second one for Jacob. Can you help us to think a little bit about the profile of H2 profit growth? I know you don't have to be drawn on margins, but you made a comment there. Given you'll be adding back capacity, is it a fair assumption that H2 EBITDA growth will be more, if you like, revenue-led and less cost-led than Q2?
I guess you could phrase it that way. As you said, we don't give the quarter-over-quarter guidance. The outlook for the H2 is that we will gradually continue to reopen tables, which will mean that we get some of these fixed fees for the dedicated environments will slowly return. It will also drive different costs. Exactly what happens there's of course an uncertainty on the revenue when the final players that come in and play on an existing roulette table have a high margin contribution. How that plays out also, of course, plays into what the margin will be during the H2 . As a broad statement, I think that's fair what you said.
Okay, thanks very much.
Thank you.
Thank you. Next question from Oscar Rönnkvist from Carnegie. Please go ahead. Hello, your microphone is open.
Hi. Perhaps it's me, Oscar from Carnegie here. A few questions for me.
Oh, hi Oscar.
Hi. A lot of stuff happening in the U.S. currently, of course, with operators investing heavily there. What types of discussions have you been having with operators regarding market access to different states and different types of games and tables that they want?
We are engaging in Michigan and Pennsylvania now, of course. Basically, we're in a very good place in New Jersey. Michigan is opening up. We expect to have a wide variety of games. We added games and tables now in New Jersey as the capacity grows. Pennsylvania, we will open a good variety of games. We are in discussion with all operators essentially on the market in these states. The states to come, we are not on that level yet. There is more regulatory and political discussion still.
Got it. Do you have sort of a view on the U.S. market size in, let's say, five years time? What type of acceleration are you seeing due to COVID-19 when it comes to online casino regulation?
No one has a clear view on what will happen in, say, five years on the U.S. market because it's a political process, regulatory, tax implications, all different kinds of things affecting it. There is a paradigm shift in the opinion about online gaming in U.S. You can feel that because suddenly when this pandemic hits, it's sort of affecting people, and they see that if they would have had online, they would have had some revenue instead of a closed land-based casino. There is a change, but how that change will affect the pace of regulation in U.S., it's still very hard to prognose or forecast.
Understood. Two more questions from me here. Have to touch on the very strong growth in Asia. I assume that there was a somewhat negative impact from lower dedicated table fees. What can you say about the mix there growing by over 180% year-on-year in that acceleration? Thank you.
I would say the dedicated fees do not affect Asia that much. They're very hardly any. It's more or less on the network tables, all that volume. That effect is not so much there. The broad statement on Asia is that we see a continued trend pretty much similar to what we've seen all through 2019 and also in Q1. There's no real change in that. Did I answer your question? I'm not sure.
Yes, absolutely.
Okay.
Final question from me. Touching on previous questions here, to understand the dynamics with the personnel costs primarily now in Q2. There are some part-time workers with full-time salary. Will there be a considerable increase in costs as the capacity utilization increases in the H2 of the year, do you think?
As we scale up, the cost will come back. Sure. Yes. It's simply that if we would have been able to operate full during Q2, we would have had much more revenue, some dedicated fees, and then a little bit lower margin. Now we are
Sort of skimming a little bit like we're operating not all the tables. We get higher margin and pushing the players to scalable games in a higher degree. It sort of balance out. Now when we come in to more, as we scale up operations, of course, costs will come back and we will do that as fast as possible and as fast as safety allows. Of course we will get more revenue as a result of that, and it will be a little bit lower margin on that. In the total, we will also get the dedicated fees, which is then in another way.
Yeah. Just to add on to that, it's back to your HQ question earlier, I think you said. On the other hand, you will have some of this kind of extra play that we've had from sports players in this quarter will gradually kind of level off in the third and rest of the year. Those are the kind of the factors at play.
The underlying organic growth is fantastic.
Yeah.
We came in from Q1 with fantastic figures, and if we would just have continued through Q2 without COVID-19, it would be a fantastic quarter. Yeah.
Yeah. Got it. Very clear, guys. Thank you very much.
Thank you. Next question from Lars-Ola Eriksson from Pareto Securities. Please go ahead.
Hi, guys. I just follow- up a final one on Asia where Oscar left off. Would it be reasonable to assume that we will have a relatively larger setback in Asia compared to other regions in Q3, given lower share of dedicated table fees and sports being back?
I don't think I can answer that really. I don't know. Look, I wouldn't say that the growth in Asia hasn't been driven. We've had this growth trajectory for a while. There's probably less of this, the effect of sports or no sports. I would say that's less in the Asia category. There's of course some, but I wouldn't sort of point it out that Asia would fall back significantly more, not for that reason.
The growth in Asia is mainly driven by the additional product and new customers you're simply penetrating deeper into the Asian gambling market.
The Asian gaming market is very large. Maybe 10, even 20x bigger than Europe. We are a small player and it's sort of a green field. I wouldn't say that COVID affected the Asian market for us in any really significant way, not like in Europe.
Okay. Also on operated table, can you either provide us with a figure on how many tables you operated by the end of the quarter?
We haven't done that. As we've said, it's a lower number and some type of direction would be, I think, towards the end of the year, we'll be back to pre-COVID-19 levels. You could say where we were in Q1 is probably where we are in Q4 in terms of number of tables. That gives you some idea.
Back to 750 tables by end of the year.
We haven't given an exact number, but what I just said was kind of some direction on it. The reason we don't do it is that we don't see the number of tables. One, it's very variable, almost on a daily basis. Two, it's not the only indicator of revenue. We've chosen to kind of, we provide that on kind of annual level to sort of, it of course indicates the growth of the company as a whole, but it's not the number we give quarter- to- quarter.
On an aggregate level, with more tables being ramped up in Q3, Q4, do you actually believe that the positive effects seen from absence of sports, et cetera, that higher dedicated table fees will be able to compensate the fall off from sports coming back?
I stated I look forward to the remaining part of the year. We have a good momentum in Q1, and you see the revenue growth there, and then we have COVID, which is sort of an odd quarter, and now we will come back to more normal situation during the remaining part of the year. Given that there is not a second wave and other things happening with the pandemic, which no one of us knows.
Okay. On product, you seem really positive on Mega Ball that has been out now for more than a quarter. If you rank it to other game releases the last year, how would you place it?
We don't do top lists of the releases, but we can say Mega Ball is a fantastic new category of game. It's a bouncing ball game, and that's a lottery type of game, which we sort of then penetrate into a new section of online gaming for the future. We also released Crazy Time, which is the strongest release we ever made. There are two fantastic new games that are being launched together with five others, six in total for the quarter, and then Crazy Time coming in the next quarter. We have a product-wise, fantastic quarter to 2020. We should also remember that we do those things, and we release those things during the full pandemic. It also shows that we are pushing forward, even though the circumstances are very hard.
We can rank it number one in the lottery category.
Absolutely.
Okay. I asked this question the last quarter report as well. Now we have more data, but Playtech was let into the GVC brand. What are you seeing? Are you still capturing all the money?
Sorry, I didn't get that. Come again.
I said-
Playtech on GVC.
Yeah.
Oh, yeah. Playtech on GVC. I don't think we have a comment on that. I don't have full visibility on that. That you have to ask GVC.
Okay.
We are doing fantastically well with GVC. It's a valuable customer and a good relationship, and we look forward to continue working with them for the future. We're doing well.
The final question from me here on U.S. and further growth there. How do you see Live Casino versus slots in that market in the next few years going forward? Will it be a preference for slots and then gradually Live Casino will gain popularity? How do you view the market growth there?
I think share of live will increase over time, but I think that slots will do phenomenally in U.S. Both products will have a very bright future as the regulation proceeds in U.S. market.
Thank you.
Thank you. Last question from Erik Malmberg from ABG. Please go ahead.
Morning, gents.
Morning.
Morning.
In regards of other receivables, during Q3 2019, you mentioned that this was due to tax receivable from Malta and that this would come down to normalized level. Still, we have basically seen every quarter an increase on a year-on-year level, and we saw quite an increase now here in Q2, both Q-o-Q and year-over-year. Could you elaborate a bit more on this?
We could. It is actually almost all the other receivables correspond to the current tax liabilities, pretty much 100%. With the increasing profit, also the tax liability is increasing. It's the same placement.
You said it was sort of like a seasonality effect. It usually comes up in Q3, but this is not really the case anymore or?
Well, it depends on the profit that we generate every quarter. I think if it was one or two quarters ago, we have sort of two years, both 2018 and 2019 were in the same. I think it just should be 2019 that's here, and then whatever we've done 2020.
Okay.
All the other receivables are related to tax.
Okay. Fair enough. Thank you, guys.
Thanks, Erik.
Thank you. We don't have any question for the moment, ladies and gentlemen. If you have one more question, please press zero one on your telephone keypad, zero and one on your telephone keypad. There are no further questions. Please proceed with the conclusion.
Okay. Thank you everybody for listening. I was proud to present this quarter. I look forward to speak to you soon again. Thank you.
Bye-bye.