Thank you, and welcome to the Evolution Q2 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to hand the conference over to Mr. Martin Carlesund. Please go ahead.
Good morning. Welcome, everyone, to the presentation of Evolution's report for the 2nd quarter of 2023. My name is Martin Carlesund, I'm the CEO of Evolution. With me, I have our CFO, Jacob Kaplan. I will start with some comments on our performance in the quarter, whereafter I will hand over to Jacob, who will also look at our financials. I will run over the presentation with an outlook for the rest of the year, and then we're happy to take all of your questions. Let's begin .
Operator, next slide, please. Operationally, it has, as always, been a quarter with high tempo, and we are taking steps forward in several areas. Everything we do does not show in its effect immediately, but I feel that we, in many areas, achieve our goal of improving a little bit every day.
I want to mention some of the operational highlights in the quarter as we continue to see strong worldwide demand for our products. Evolution operations truly span the world today, and during the quarter, we have launched our first studio in Argentina, and Colombia will be the next location to launch a new studio for Evolution.
The aim is to go live in Colombia with a new studio already 2023, but as always, we have aggressive timelines and high ambitions, so I will get back to you with more details as we move forward. The development in Latin is fast, even if numbers not yet are significant, and it's a region that will continue to develop over many years. The launch of Funky Time in mid-May has been one of the most successful launches of all time for Evolution.
Funky Time now has more players than Crazy Time had at a similar point in time of its launch. Games like Funky Time truly differentiate Evolution from our competitors. Many of our players play their first ever Evolution game round on Funky Time, and after that, move on to play also other of our games. The development of Funky Time involved the collaboration of over 100 individuals and spanned of over a year in time.
We will continue to push the boundaries of game development, never afraid to try new solutions, sometimes fail, but always with the goal of creating the most flawless, exciting experience for players. I can already now promise you an even larger and more exciting game show 2024, that we've already started to work on. We will launch over 100 games in 2023.
Our release schedule for live, but also RNG, is tilted towards the second half of the year. We are now about to enter a very active period of game launches. Looking at the RNG releases, they are about on the same level, first half of 2022 as 2023. The small increase in volume in 2023 is in the end of Q2, having very limited effect on financials. The progress that we have seen operationally in RNG during the first half is very good.
I look forward to the second half. We by now know that the road to good growth in RNG is not a straight line. Expansion of our offering in North America continues step by step, rolling out new products, new features in more states, and to more customers.
During the quarter, we have launched Red Tiger Timed Jackpots in New Jersey, which was an instant success. The jackpots were launched previously in Michigan and Connecticut, and they have been a strong performer for operators. I expect Pennsylvania and West Virginia to launch them any day now as well. We also have added a dedicated studios for several customers. In May, we launched Craps in Michigan.
Craps is now available in three US states, with Connecticut to follow later this year. The focus to bring all of our fantastic products to each state continues. Just recently, we launched Lightning Dice in New Jersey. Lightning Dice is a new game type, never seen before in any US studio. The width of our product portfolio is unmatched in the North American market, and there are many more games to come.
These were just some examples of what we've been doing and what's been going on during the quarter. You will see the financial effects of much of this in the quarters to come. Operator, next slide please. After a strong first quarter, I'm satisfied to report yet another financially solid quarter. Let's look at the financials. Revenues in the quarter increased by 28.2% to EUR 441 million. For the first six months, the growth amount to close to 30%. EBITDA in the quarter increased by 30.8% to EUR 311.7 million, corresponding to a margin of 70.7%.
For the first half of the year, we reached a margin of 70.3%, which is in the upper part of our 68%-71% guidance for the full year 2023. The strong margin is the result of high demand of our products, good growth, in combination with a strict cost control and high focus on continuously increasing efficiency in our operations. For Live Casino, we grew revenue with 33.5% compared to Q2 last year, summarizing to total revenue of EUR 371.8 million.
We have, as I already mentioned, made great operative progress during the second quarter in RNG, and revenue amounts to EUR 69.3 million, corresponding to growth of 5.8% in reported numbers.
RNG revenue is stable Q1 up to Q2. Compared to the pro forma RNG revenue of Q2, it's negative 4.0%. Even if not considering the better product outlook for the second half as well as the operative progress of the second quarter, we can do better financially in RNG. This quarter, we delivered the best margin ever in the history of Evolution. We see a very good potential and look forward to continue delivering in the second half of 2023. Next slide, please.
As we grow our business, we also expand the headcount. At the end of the period, we were 17,500 Evolutioners working hard to delight players every day. Expanding our studio capacity means that we need a high recruiting pace.
Increase in stock, year-on-year amount to 2,150 employees, corresponding to an increase of 14%. The increase in headcount is not slower than previous quarters. We are focusing to increase expansion in the remaining part of the year. We currently see a very high demand that we need to fulfill. Next slide, please.
The game round index shows the development of the whole Evolution network and includes all games. I stated it before. I will do it again. The game round is what it sounds like, one round on the game. Even so, I again want to reiterate that one round of roulette, one hand of baccarat, or one spin of a slot, all count as one game round.
Also important to note that there are differences between games, since one hand of blackjack takes longer time than one spin of a slot, as well as that each game round of a blackjack typically carries a higher bet compared to slot spin, and as a result, all game rounds are not equal in bets. In the short, the index values of game rounds from Live and RNG are weighted according to revenue contribution. This gives us a joint index that includes all games based on equal revenue contribution.
With this backdrop, we need to notice that the true activity and entertainment of player comes from a game round, and the health increase of 56% we see in Q2 2023 is very good. I'm very pleased with the current activity increase in Evolution network.
The high growth in game rounds versus revenue partly reflects the volume of new players from new regions coming in with lower bet size. Over time, this will develop. Regardless of bet size, I see it as very positive that players want to play our games and find them enjoyable. That's the route for us to be a successful company over time. Next slide, please. In 2023, we launched more than 100 new games. I think it's fair to say it will be a very exciting second half of the year, since the majority of the games will be launched in H2.
During the second quarter, we have released 24 RNG games, which is six more than in Q1. Many of those releases happened toward the end of Q2, we will see a ramp-up of release in the second half of 2023. In Live, just two games have been released in the first six months. Our roadmap for the second half of the year is nothing but fantastic. We have always been the one to push boundaries, to push the realm of the possible when it comes to our gaming industry. Evolution offers an unparalleled portfolio of unique games, setting the pace for the whole industry with the new groundbreaking releases.
Evolution already has the widest, most diverse live casino offering and the widest range of barrier variants available, we are committed to maintain our leadership position in the industry that continues to develop rapidly. In the second half of the year, we are unveiling a wide range of product innovations across all types of games with something for everyone.
The general trend in play state of games has clearly been towards high volatility that you can find in our Xtreme family of games, we also have to cater for those players that want the lower volatility games as well in the coming Prosperity Tree Baccarat and Golden Wheel Roulette. I will mention a few of the games that will come during the coming months.
Lightning family of games, made famous in 2018 by the launch of Lightning Roulette, then followed by Lightning Baccarat, Lightning Dice, Lightning Blackjack, have all proven to be successful for players worldwide, and the latest addition to the Lightning family will be Lightning Lotto. To my knowledge, the first ever pure lottery-style game as a casino game. I expect nothing less than out of the gate success for Lightning Lotto. As with the Lightning family, we are also developing several spin-offs from Crazy Time.
The first game Crazy Time gave birth to was Crazy Coin Flip. The next spin-off is coming late this year, and it is called Red Door Roulette. Both these games are based on a popular bonus rounds found in Crazy Time. One of the most popular 80s computerized console games was Video Poker. You probably all have seen it in a casino somewhere.
It will soon be introduced as an ultimate fusion of nostalgia and modern gaming with our live version of Video Poker. There are many great variations of Baccarat. We offer Squeeze, Control Squeeze, Lightning Bacc, Golden Wealth Baccarat, Peek and Red Envelope Baccarat, and in September, it's time for yet another fantastic version called Prosperity Tree Baccarat.
To have a great Baccarat offering is to offer everything a Bac player could ask for, and that means more than just one Baccarat. Golden Wheel Roulette will also be released the second half, which is an updated version of our most beautiful game, Gold Bar Roulette. With the majority of our planned releases in 2023 ahead of us, we are entering an exciting period for Evolution.
As I said earlier in this presentation, we're already working on the roadmap for 2024 and creating the most advanced and large game show ever seen in the history of iGaming. Exciting times ahead, and as we know, only the paranoid survives, but maybe most important of all, innovation and end user satisfaction is the core of Evolution. Next slide, please. This slide shows the breakdown of our revenue by geographic region.
We have a true global demand for our products, which is also reflected in the spread of revenues or geographic regions. Europe reported relatively strong growth of 15% in the quarter compared to last year. Europe has grown nicely, double digits, the past four quarters after several years of quite low growth.
We know that there is a lot of development left in Europe for online casino, even though the product and market is well established, and in some ways, the most mature one. In Asia, we saw continued good growth with amounts of 48% year-on-year. We still see rapid growth in Asia, but the growth rate is in percentage terms, have come down a bit as the base that has become larger. Even so, the potential in Asia remains huge, with the several billion people population, it's clearly the largest region. North America is also growing year-on-year, with about 20% in Q2.
We see good potential growth in the current state, both from increase of share of live, simply put, the portion of live on the online casino revenue and growth of the market in each state as new players familiarizes themselves with iGaming. We're working hard to launch new games, and it takes more time than we want, but the end goal is firm. We want all North American players to have access to all our fantastic games.
Over time, we will also see more states regulate, even if that process also has been a bit slow during the last year, we expect it to pick up going forward. Latin, currently makes up for 7% of our total revenue in the quarter, and we believe it is a region with great potential and good momentum.
We have initiated the construction of additional state-of-the-art studio in Latin America to cover the demand we see and the market, and we have already launched a new studio in Argentina. Remains the other region, which is mainly consists of Africa, stands on nearly deep percent of the group revenue, and it's a future growth opportunity growth. Share of revenues from regulated markets amounts to 40% in Q2, which is on the same level as it has been for a number of quarters now. With that, I'll hand over to Jacob for the closer look at the financials. Next slide.
Thank you, Martin. Good morning to all of you listening. We'll now move on to a couple of slides with comments on our financial development in the period. I will start on slide number eight. Revenue amounts to EUR 441.1 million in the quarter. It's made up of EUR 371.8 million related to Live Casino and EUR 69.3 million from our RNG games. Our Live Casino product has year-on-year growth of 33.5%, an increase of over EUR 93 million from the same quarter last year, and almost EUR 12 million increase from the first quarter this year. It makes up 84% of our group revenue in the quarter.
The Live Casino business continues to perform well in the quarter, even though we see that we are behind on table delivery in Europe, for instance, something we are working hard to come up to speed with at the moment. As Martin mentioned, we have a busy period in front of us with many live game releases.
Today, we have a wide offering in Live Casino with a portfolio of over 70 games across two brands. Of course, as the portfolio grows, the relative impact of game number 71 is less than that of game number 20 in relative terms. Still, the new games are very important as they often serve as an entry point for players in exploring the rest of the portfolio.
Continuing to add to the portfolio with new games, serving all types of players will be one of several growth drivers in the coming years. Moving on to RNG. RNG revenue amounts to EUR 69.3 million in quarter, as mentioned. This is on level with the previous quarter, but it's a 4% decline compared to the EUR 72.2 million in pro forma revenue in Q2 of last year. Pro forma, meaning we include Nolimit City, also in the second quarter of last year.
It came into the group from the third quarter. As you can see in the table below the chart, RNG revenues have more or less varied between EUR 72 million and EUR 68 million per quarter during the past year. While very profitable and stable revenue stream, we're far from our growth ambitions in RNG.
As Martin pointed out, during this quarter, many things have developed in the right direction, so we're definitely not standing still operationally, even though the revenue is relatively flat. Still, I think the comment I made last quarter is still valid when I said that I don't see a quick turnaround for RNG growth in Q2 or Q3. That means real progress towards our goal of double-digit growth before the end of this year and onwards, of course.
EBITDA for the quarter amounts to EUR 311.7 million, giving us an EBITDA margin of 70.7% in the quarter. It's well within our guidance of 68%-71% for the full year, set at the beginning of this year.
It is the highest margin we have ever achieved in a quarter, and it's the result of high awareness costs throughout the organization. Our teams throughout the company put resources where they make a difference and can support our growth. This has enabled us to offset some of the cost increase that affects also us, as inflation is at significant levels in many markets.
Even though recent data shows some decline in inflation levels, we're still talking about 5%-10% price increases in most markets. Altogether, I would say our cost situation is much improved compared to the second half of last year. As we have seen during the past two years, our margins do vary both down and up between the quarters, and we maintain the guidance for this year of 68%-71%.
Operator, let's move to the next slide, please. This shows our P&L in some more detail. I will walk you through it from the top. In the three-month period, April to June, live revenue of almost EUR 372 million, and RNG just over EUR 69 million, adding up to a total revenue of EUR 441 million. It's a 28% growth year compared to last year.
There's no performance adjustment in the 2022 figures here, so that includes the acquired growth from Nolimit City. Adjusting for that, we would have a 26% growth for the total group year-over-year in the second quarter. For the six months of this year, growth is 30% compared to the same period last year.
Moving down to expenses, personnel expenses amount to EUR 87.5 million, an increase of 28% compared to the same period last year. We continued to expand in most of our teams, even though headcount increase in the latest quarter was much lower than in previous quarters. Depreciations amount to EUR 30.2 million. That includes just over EUR 11 million in amortization of intangibles related to the acquisitions made.
Continuing down, other operating expenses, that includes several cost items such as consumable equipment, communication costs, consultants, and also royalties. The line amounts to EUR 41.9 million in the quarter. It's up 12% compared to the same period of 2022. This is a cost line that is a little lumpy for us, and in Q2, it's actually lower than in Q1.
Main reason for that recent decline is that one, we had ICE in Q1, which is a big marketing event for us, and some spending around that, and we have also gradually reduced consultant spend during the year. Summing up, total operating expenses amount to EUR 160 million for the period, an increase of 23% compared to the reported figures of the same period last year. For the first six months of the year, total expenses are EUR 317.6 million, which is an increase of 28% compared to last year. Operating profit is at EUR 281 million in the quarter. Moving down, financial items amount to EUR 1.5 million in the quarter.
This includes interest rate income, also includes a negative accounting charge, as every quarter for interest on our right to use assets. There's also FX difference related to intragroup transactions and the revaluation of bank balances in foreign currency that's included here. Number of items moving there. Tax is at almost EUR 19 million in the quarter. It's a tax rate of 6.7%.
For the six-month period, tax rate is 6.8%, so still slightly lower than 2022. I expect around 7% this year, so we'll probably see a slightly higher tax during tax rate during the second half. These items bring us to a profit for the three-month period of EUR 264 million.
That equals earnings per share of EUR 1.20 per share for the quarter of the dilution, and EUR 2.36 for the first six months. It's an increase of 29% compared to the first half of 2022. With that, operator, let's go to the next slide.
Before I hand back to you, Martin, we'll look at cash flow and financial position. Starting with the chart to the left, where we show capital expenditure, the gray part of the bars, as usual, investment in tangible assets, which is mainly our studio build projects. In the quarter, CapEx in tangible assets is almost EUR 10.6 million. Continue to invest in current studios and also add new locations, as was mentioned earlier.
The blue part of the bar, bars is investment in intangible assets. That's related to development of new games and features to the platform, slightly up in the quarter to just over EUR 12 million. In total, CapEx year to date is EUR 45 million, a notch off the pace of our guidance of EUR 120 million for the full year.
The CapEx amount can vary a little with the milestones in projects. I would say we have not quite managed to invest as fast as we thought in the beginning of the year. We would like to increase CapEx spend during the second half. Let's see if we reach EUR 120 million for the full year. I would say that might be seen as a stretch target right now.
In the middle of the slide, we show operating cash flow. We have a continued very good cash generation in the past period. While we don't break it down that way in the slide, the addition of the RNG business during 2021 and 2022, clearly contributes here. In the quarter, operating cash flow amounts to EUR 211 million. Operating cash flow in relation to EBITDA on a rolling 12-month basis is still on a good level at around 78%.
To the far right in the slide, quick look at the balance sheet, maintain very strong financial position. EUR 541 million, is our cash position at the end of June. During the period, EUR 426 million has been paid as dividends, so that has come out already.
Out of the EUR 541 million on balance today, roughly EUR 258 million is, we say, earmarked for next year's dividend, in line with our policy of 50% dividend payout. That was the end of my prepared comments. Hand back to you, Martin, for some closing words, and then we'll take questions. Over to you.
Thank you, Jacob. A few words to conclude this report presentation before we open for questions. Towards the end of 2022, we could see that the cost was increasing, and now we see the effects of the work that we put down to come to good cost control and good margin. You need to believe in what you do, and you need to take action.
For the second half of the year, we are equipped with fantastic product pipeline, with games that will both attract first-time players as well as appeal to advanced players. Have a solid setup and progress of our RNG development and releases. In total, I feel excited about the new games and our opportunities. We're already working on our roadmap for 2024, which will be the best one ever. We want to be better every day and further strengthen our market leadership by continuous focus on the best games experience.
Investments for the future will continue in form of new studios and in constant innovation on new products. As the leading innovator in the industry of online casino, together with a record number of new products released every year, we will continue to relentlessly increase the gap to our competitors.
Evolution has a great speed forward. I can promise you that we will continue to push boundaries as paranoid as ever and also for the coming period. I look forward to an exciting second half. Thank you all for listening, and we'll speak in a couple of months again. Now, let's move to questions, please. Next slide. Last slide.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Your first question comes from Martin Arnell from DNB Markets. Please go ahead.
Hi, good morning, guys.
Morning. Morning.
I just want to ask, the first question on capacity, if you compare the demand to how you're reporting revenue growth and, you know, if there's a lag or, I mean, I noticed that you mentioned that you were behind on table delivery in Europe. If you could also elaborate why that is and how you're fixing it.
We are currently undersupplying a little bit in Europe. We're undersupplying Europe. It's we're a large company with 17,500 persons. It's always a challenge to grow at the pace that we are, and it can be a little bit like that, from time to time, that we are undersupplying. That's the situation right now.
how are you fixing this delivery in Europe? Is that a quick fix, or?
Quick is always relative to the perspective of the question. I would say that it's always something that we need to work on, and now we're in an expansion phase. In the second half, we will do all we can to continue to and increase the speed of expansion.
Okay. When we're speaking about growth, the catalyst that you mentioned for the second half, do you expect that to be enough to sort of stabilize the growth levels, in the second half, or do you expect continued deceleration?
We don't guide on the growth. Right now, the focus is that we have a fantastic pipeline of games. It's still a little bit towards the end. The RNG, as I stated a couple of times already, we did operationally very good in the first half. We're not satisfied with the -4% pro forma, but on the other hand, it's a +5% operationally. Right now, focus on expansion in Europe and the releasing of games.
Okay. North America, the 20% growth rate, I guess you were hoping for more than that. I'm thinking, you know, what do you think about the timeline for new game launches there? You know, when do you expect to launch the first game show in New Jersey, US?
We're working on new game launches and game show launches also in US. We look forward to do that rather sooner than later. We have a 35% growth year-over-year, first half versus last year. That is quite good on a stable market. We also have the 15% growth in Europe for the most mature market, which shows you a little bit where we are in comparison to timing. I mean, the most mature market still grow 15%, and we have 35% increase. How that plays out quarter-over-quarter, I would be a bit careful with the judgment of that.
Okay, my final question is, there's been a lot of activities in the market by competitors lately. One of your competitor announced the launch of game show in New Jersey, for example, and what's your view on all the activities around you?
My view on competition is that it's good to have competition, and it makes you run faster. Then I would say, as I stated many times, that the level of competition has been more or less the same over quite some years. Things will happen in different markets in different ways, but about the same.
Okay, thanks, guys.
Thank you very much. Thank you.
Thank you. Your next question comes from Ed Young from Morgan Stanley. Please go ahead.
Good morning. My first question is on North America, if that's okay. I appreciate you said that, you know, things can be lumpy quarter to quarter, and you sort of remain to focus there. You put in some new games in Q2. I wonder if you could talk a little bit more about what's driven the sequential quarter on quarter decline. Is that within live? Is that RNG impacts? Did you have a particularly high number of dedicated tables delivered in Q1? I'm not quite sure how to think about it. Perhaps you could give us some color on what's driven that North American Q2.
The Q1 was a strong quarter. You have the March Madness and a lot of things, and it fell out very well to us. I would say that I would focus on the year-on-year growth for the first half of the 35% or the 20% growth on the quarter in itself versus the quarter before. I'm quite satisfied, but we could always do better. We could always have launched a little bit faster, we could have got a couple of games out faster, we could have penetrated a little bit better. There are things that we can do which makes it better.
Just to follow up on that, is by product, was Live growing and RNG declining, or was there any product mixes in that, or was it fairly even across both?
We don't comment directly on different brands, on different markets or different products on different markets. I would say that the situation is blended.
Okay. The second one is on on costs. Obviously, a very good drop in other operating costs in Q2. You mentioned ICE, Jacob. Is the right way to think about it that costs could be lumpy and perhaps the Q1 other costs were a bit high, and this is more of sort of a normal rate that it will grow, or more is there some, you know, exceptional reductions in Q2 and Q1 was the more right base rate? I'm just trying to think about how we, how we model that going forward.
It is a little lumpy, so it's a hard one to kind of forecast quarter to quarter. I would say maybe the starting point would be somewhere in between Q1 and Q2 when you think about the rest of the year. Every quarter, there are a number of things that sort of move in that category. Over time, of course, it will increase, you know, as we grow, then it's not fixed at this level by any means. The difference between Q1 and Q2 is one, you could say, yes, we have some extra marketing spend in Q1, which, you know, we have every year, but that's one item.
Then, we have the re-reduced consultant spend in this quarter, as we've tightened things up a little bit. Yeah, but I would sort of. If you think about the rest of the year, maybe the starting point would be somewhere in between Q1, Q2.
Understood. Then, final question, just on capital allocation. You know, you continue to build a cash pile despite I know you're already saving for next year's dividend, and, you know, sounds like you're sort of covering that, but you'll continue to build a cash pile as the company produces cash.
Is there a level at which, despite your wish for this to be an entirely equity, not debt-funded business, that it simply becomes inefficient and you would think about returns, sort of extra returns to shareholders or providing the market with some sort of capital allocation framework where you can make clear your kind of philosophy on that?
As the management of the company and as the CEO, we love to have a lot of money in the company. The capital allocation, of course, goes to the board decision, and the dividend policy is currently what it is. In the long run, of course, we can't have as much cash as possible in the company. There will, of course, be time to take decisions regarding that. That is, however, a bit early right now. Half of the cash is the dividend, probably the half of the other half is to working capital, and that little quarter that is still there, we don't need to take any decision on that yet.
Okay, thank you.
Thank you. Your next question comes from Oscar Rönnkvist, from ABG. Please go ahead.
Thank you. Good morning, Martin and Jacob. Thanks for taking my questions.
Thanks.
The first one is just on the quarter-on-quarter growth. I know you like to look at the longer term or the year-over-year numbers, but just in terms of any sort of headwinds that we maybe could have experienced, I'm thinking about currency, for example, also a bit seasonality. We have also seen a lot of operators reporting pretty good sportsbook margins, which could weigh on the activity in casino-wide support. Because I noticed that the game round index is up 8% sequentially, and the top line is up 3%. Any color on that would be very helpful. Thank you.
I can start, and then I'll hand over the currency effects to Jacob. I think that we can't. I already stated that earlier, but we are part of the world. The world is in a quite challenging situation right now, and we can't sort of quantify any effects of inflation or anything. When we took a high ambition, and we started working with cost already in June last year, and that is the effects of now.
Even so, of course, I believe that we are all affected by inflation and salary, and everything else. So that could be there. I think that also the tilting of the product releases towards the end of the year is important to remember when you look at the quarters.
When it comes to currency, I can add it to Jacob, and he can give some color on that.
Yeah, we state in the report that compared to the same quarter last year, there's about EUR 2.5 million effect on EBITDA, some headwind that, you know, if we would have had the same currencies as last year, we would actually have a little bit higher EBITDA this year. It might be a little bit headwind also from Q1, but it's not. Yeah, nothing super significant that we sort of put a lot of focus on. It's more, yeah, Martin, you covered some of the other things between the quarters.
All right, perfect. Just the next one, I wanna follow up on the competition side. Also, we've also seen, like, Las Vegas Sands maybe entering the live dealer space, according to some news. We've seen Rhode Island launching, then we saw Bally's partnering up with Stakelogic, we haven't seen a press release from you. Thirdly, we have seen the Finnish state monopoly operator, Veikkaus, choosing Playtech. I just wondered if you could give some color on that. Is that just sort of coincidences, or is there anything that you could maybe expand on the competition side? Thank you.
First, I would say Rhode Island isn't regulated yet, before anything has happened. That may be the first just factual reaction to that. When it comes to the competition, I don't see it as much different from where it's been before. We have to accept the fact that we are a large player. We have a, let's call it, solid market share, and many of the operators are dependent on us. We need to treat them in the absolute best possible, with the highest respect, and we need to see to that they are happy with us. It's also natural that they have different suppliers, and I don't see a big difference in that.
All right. Can we expect you to launch a Rhode Island studio, assuming it will be regulated, or how should we think about that?
whenever a state regulates in, US, we would be having the ambition to be first to market.
Great, thank you. I just have one more, that would be the comment on Europe demand exceeding capacity at the moment. Just to get a sense of the dynamic there, is it like branded tables or like blackjack tables, or in what sort of terms are you not meeting the demand at the moment?
I won't go into exact details of where. That's a little bit too, it would be, I wouldn't want to disclose that. In general, we are undersupplying the market right now, we need to expand faster.
Perfect. Thank you very much. That was all for me.
Thank you very much.
Thank you. Your next question comes from Monique Pollard from Citi. Please go ahead.
Hello. Morning, everyone. My first question.
Morning.
Morning. My first question was just on RNG. Obviously, you make the point about a lot of operational improvements that you've made in that RNG segment, and that, you know, obviously, the double-digit ambition is a sort of a longer-term ambition, but we should see some improvement in the second half. Just wondering if you can give us a little bit more color as the type of operational improvements that you've made.
I can give you a little bit more color, of course. We made a complete reorganization in the delivery of new slots. We engaged a number of new responsible areas. We got better game. The releases comes out now in the way it should, and I'm happy with the releases and I'm confident with the releases that comes out in the second half. There's quite big changes in the RNG setup within Evolution.
I guess, because I just when we just look at it sequentially, it looks like, you know, obviously, Q2, there were quite a few more RNG games, you know, 24 versus I think it was 16 or something, 18 in the 1 Q. Your point is that a lot of those games in the Q2 were released towards the end of the quarter. Have they been performing in line with expectations as we get into July, then?
We have released a little bit towards the end of the quarter. I'm a person that is never really happy, so I think that we can always do better.
Understood. Then just a final question, sorry to come back to it one more time, North America. I guess the way I was thinking about it is, in the first quarter, when I look at just the overall North America, iGaming growth, you were clearly taking significant share in that market. You were growing meaningfully faster than the overall market, whereas in the second quarter, growth was more in line with the market.
Just trying to understand, obviously, you know, you have your plans and you think things can be improved there, should we expect, going forward as we're modeling that market, you to grow in line with the market there or slightly better than the market?
The ambition from us is, of course, to take market share and then to increase our footprint in the market. I think that if you look at the first half, we have taken market share from the market in total. Our ambition is, of course, to continue that. That can be a bit up and down over the quarters. Quarters are depending on hold and what's happening in the company in general. We are not really satisfied with Q2, and we need to do better in Q3 and Q4 and onwards. Our ambition is firm for to take market share.
Understood. Very helpful. Thank you.
Thank you. Your next question comes from Kiranjot Grewal from Bank of America. Please go ahead.
Good morning, guys.
Morning.
just a couple from me. firstly, on RNG, why do you think you're struggling to grow this segment? I mean, initially, you bought NetEnt, which had acquired fast-growing Red Tiger, and you've added BTG and Nolimit City as well. I mean, even if we considered NetEnt to perhaps be slower growing, should the mix of growth not have improved through the following acquisitions? Is there something fundamental in there that's not making it work?
I think that. No, there's nothing fundamentally. I think that we are where we are with RNG. We are in a bit. We're slightly late, as I stated before, with the turnaround, and we have the ambition to double the growth. We have corrected a lot of things now, the platform, the OSS and everything, and we can do a lot of things better. We're not happy with the Q2 in the way that, of course, we could have done other things. Fundamentally, yes, we need to continue on the road where we are.
I mean, related to that, I remember us thinking a lot about one-stop shop a while ago. I mean, how is that progressing? Has that helped, or do you think now that you've revamped RNG, that will help?
It has helped, and it's on its way, and we are on a very good progression with it. Yes.
Okay, just the last one for me, I know we touched on it in one of the earlier questions. The cash pile, in the past, you've said you have a priority to keeping sufficient cash on the book, one. Second, you think about M&A, then third, you think about cash return to shareholders. It looks like there's a lot of cash already there. You've done M&A in the past. Are you considering more, given RNG is not really gone the way you want it, would you sort of broaden your outlook into different areas?
I can comment. There is a. Right now, we have our hands full to work with RNG that we have, and we're very happy with the brands that we have acquired. Don't forget that it's highly accretive to margin, and it's contributing a lot to Evolution as it is right now. That's where we are with RNG. When it comes to the.
Yeah, no, there's no. I would say it's the same answer on capital allocations as actually through the past years. If you look back, I mean, there has been buyback a little bit more than, you know, beginning of 2022, there was a buyback, EUR 300 million. M&A is a little bit stochastic. It's our growth strategy is organic, you know, that there can be opportunities for M&A that can support that. You know, we could be here next year and no M&A, and that would be fine. Or there could also be opportunities during, you know, during the coming year that we think are right. The components are the same.
You know, there's a dividend policy to begin with, 50%. We think that we should be in a cash position, but of course, the cash pile does not need to sort of be endless, and, you know, hasn't in the past either, where, you know, those buybacks and M&A have happened. I would say the components are the same as they've been before.
Okay, perfect. Thank you so much.
Thank you.
Thank you. Your next question comes from James Clark, from Barclays. Please go ahead.
Hi. Good morning, everyone.
Good morning.
Good morning.
Good morning. Just on your EBITDA margin guidance of 68%-71% for the full year, which you know, you're reiterating today. Your first half was 70.3%. I guess, would you be comfortable pointing consensus towards the sort of top half of that, the consensus is 69.3% at the moment, or will the game launches and sort of investment that you have in for the second half pull that back to sort of, you know, mid-middle of the range, and you're happy with that consensus today?
Yeah, I understand the question, but I guess we're given the range, and we're not sort of giving a range within the range. We're keeping it there. Like you say, I mean, we're definitely in this a little bit. We're far from the far, but we're not in the bottom end of the range. I mean, we don't see maybe that. We're not looking to 68% margin in the third quarter. A little bit as the year goes on, you know, you could say you can kind of narrow it down. We haven't made any change to the guidance. There's nothing additional to say there really.
Okay, great. Thank you. A sort of related question is that the employee count growth in the second quarter is 14%, the revenue is growing at 28%. There's a bit of a dislocation there. I apologies if you did actually mention this earlier, and I missed it. Should the staff growth pick up again in the second half to get, you know, to grow a little bit faster, I guess, as you know, add the 90 in the studio in Colombia?
Yeah, I think that's not maybe only with Colombia, but as we say, I mean, the we are a little bit under supplying the market in several regions, but mentioned Europe, and that's a lot connected with the headcount growth. We hope that we can increase a little bit more on headcount during the second half of the year. That's right.
Okay. On the Colombian studio, is that a Q3 or Q4 rollout that we should expect?
Yeah.
Colombia.
Colombia.
It's a very aggressive time frame. As I said, it's like we get back to that, and you got it more as a wishful and a good ambition. If anything, it will be very late than 3.
Thank you. My final one is just on RNG to come back on. You know, you're happy with how things are going behind the scenes. You've got a very exciting roadmap in the second half. Is that exciting roadmap enough to deliver double digits, do you think? Or do we wait for longer because you need, you know, the 2024 roadmap that you said is gonna be the best ever. Just can you help us with, you know, with some color on that?
As I said that, I mean, I was the, I don't see the same statement as maybe I said already in the beginning. It will take some time, so no, it's not double digit in Q3. I mean, I think we see towards the end of this year, some direction towards that, it will take into next year as well before we're truly there.
Okay. That's very helpful. Thank you.
Thank you.
Thank you. Your next question comes from Estelle Weingrod, from JP Morgan. Please go ahead.
Good morning. Just one from me on the new studios. On top of LatAm, could we expect one new studio in Europe in the second half of the year, or is it also more like a 2024 story? You mentioned earlier in the call there's been some delays. What were you referring to? Could you elaborate a little bit on this? Is that staff shortage related or something?
We're full speed, and we're really pushing forward to add a new studio in Europe also this year, but time frames are tight.
Okay. Thank you.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Carlesund for any closing remarks.
Okay. Thank you, everyone, for listening. Pleasure to be here. Pleasure to answer your questions. See you soon in a couple of months.
Bye.
Bye-bye.
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.