Good morning, everyone, very welcome to Kambi's Q1 2023 report presentation. My name is Mia Nordlander, I am Senior Vice President, Investor Relations here. Today we will start to hear our CEO, Kristian Nylén, talking about the quarter, followed by our CFO, David Kenyon. Thereafter, we will have time for questions, you can either call in to us and ask them here or send them to me through the chat in the web. Once again, very welcome to the presentation, over to you, Kristian.
Thank you, Mia. Yeah, I will talk you very briefly through about the highlights, and then I will hand over to David, and then I will come back and talk more about the quarter in depth. This quarter, we are having a very busy sporting calendar with a couple of top events, the playoffs in American football and especially the Super Bowl and the March Madness. I will talk more about that later. We are very pleased with the product we are able to produce for these top events and with a perfect performance. That is very pleasing.
Revenues for quarter is up 19%. As I said, it is a very busy quarter, so we expect this and Q4 to always be the two top quarters on a yearly basis. The major news on this quarter is, of course, the renewals of the two of our top operators, Rush and BetPlay. These two are benefiting more than 50% of our underlying GGR in the Americas, so are two very important customers to us, and we're very pleased to renew the contract with both of them. Of course, our AI-driven trading has been rolled out across all major leagues in Europe now, and we're very happy about the results so far, and I will talk more about that later.
For now, I hand over to David.
Thanks, Kristian. Yeah, let me start with the financial highlights for the quarter. Revenue for the quarter was EUR 44 million, up from EUR 36.9 million this time last year. We benefited from launching new customers, from going to some new states in the U.S., and of course, from a full quarter of revenue from Shape Games. Our costs did increase from EUR 29.5 million to EUR 39.5 million. There's some big reasons for that, which I'll get into. Firstly, some structural changes to our P&L. We have additional OpEx from the acquisition of Shape Games, and also the amortization on the acquired intangibles related to that acquisition. Those two alone combine for EUR 3.6 million of that cost increase. We also had certain non-recurring costs in the quarter.
Versus last year, we had a movement in FX of EUR 1.3 million, with a half million cost this year and a EUR 0.8 million gain this time last year. We also had personnel restructuring costs of around EUR 1 million. This was actually a headcount reduction in the business of around 30 people. We realized operational efficiencies which were enabled in large part by our new algo initiative, which we talked about recently at the Capital Markets Day. These personnel restructuring savings will ultimately lead to reduced OpEx on those headcounts of more than EUR 2 million per annum. In this quarter, we saw a EUR 1 million one-off cost. This led to EBIT for the quarter of EUR 4.5 million. We actually introduced a new metric this quarter.
It's earnings before interest, tax and amortization on acquisitions. It specifically excludes amortization on the acquired intangibles from our EBIT number to show the underlying performance, excluding non-cash acquisition-related entries. On this basis, we made EUR 5.8 million versus EUR 7.7 million this time last year. Our net cash showed a healthy increase in the quarter, up significantly in the quarter by about EUR 8 million, and I will show that in more detail. We are down on last year, mainly due to the acquisition we made of Shape Games during the year. Overall, a very healthy balance sheet at the end of Q1. This is the Kambi Turnover Index. It's an aggregation of the entire portfolio, as I show each quarter.
The blue columns are an indexed turnover aggregation, so the operator turnover accumulated on an in-index basis. The orange line is the operator trading margin across the network. You see that turnover took a small dip after Q4, that was as we expected as a result of the FIFA World Cup taking place in Q4. This was offset to some degree by launching into new states, notably Massachusetts and Ohio. In terms of the sporting season, in early February, we saw the culmination of the NFL season, we saw a significant increase in our basketball turnover, with the college season a big contributor this quarter. We're up 12% versus last year. We're live in four more U.S. states. We saw Kindred relaunch into the Netherlands in July last year.
These boosts to turnover probably offset to some degree by the results of Penn National Gaming, where we've seen in their public data that they've seen a loss of market share in key states such as Pennsylvania, Illinois and Pennsylvania, sorry. Then they've talked to how they've moved their focus away from customer acquisition, and that's to some degree shone through in our numbers too. The operator trading margin for the quarter was 8.2% versus 8.1% this time last year. Which brings me to the revenue conversion. As I said, we start on the left with 12% operator turnover growth. Relatively small impacts this quarter from the operator margin, which was in line with last year.
The tax and marketing deductibles also relatively small as the vast majority of our business is coming through regulated markets, and that's very steady at north of 90%. The other column is a little lower than it has been in prior months. We've seen a significant increase in our live data costs specifically, which are recharged through to operators. These are revenues which are independent of the level of operator turnover. On the right-hand side, you see the contribution from Shape Games. It's approximately EUR 3 million, and it's of course completely new versus this time last year, with the acquisition happening in the second half of 2022. All in all, that took us to a 19% growth in revenues. Finally, the cash flow. As I mentioned, very healthy increase during the quarter.
We started at 60.7 was our opening cash balance. That's added to by the operating profits, which I've talked through. Those profits were complemented by an increase in our working capital position with some delayed receipts from operators. They were due to be paid in Q4, got slightly delayed, and were paid in Q1, but it's obviously helped our cash position now by the end of the quarter here. We closed with a closing cash position of 68.7 million EUR. Very healthy position for the balance sheet moving forward. With that, I'm gonna pass you back to Kristian.
Thank you, David. Yeah, as I started saying, I mean, as usual, Q1 displays a great sporting calendar. Tennis is back, and we have just Australian Open. The soccer has a very busy schedule. The three main events is playoffs in American football, and the Super Bowl, and after that, the March Madness. Our product has been great. For the football, we during the playoffs introduced cash-out for the Bet Builder, which we together with bet365 was the first in the market to offer. Yeah, we tested it a few matches before, and it worked absolutely perfectly during Super Bowl. The Super Bowl in itself was the second largest event ever, only beaten by the Super Bowl last year.
It's twice the size of a FIFA World Cup final. As you can see on the graph, the 13 playoff games has a massive contribution to our quarterly results. Now since early February, there is no more football until September again. Of course, it has a big impact on the second half of this quarter, but more importantly in Q2 and Q3. During the quarter, we also have March Madness, which is the college playoffs in basketball. Has great interest especially in the U.S., of course. We had a great performance. Year-on-year, we were up 17% on turnover, and mainly it was driven by enhancements in the product, such as Bet Builder, and more player markets.
I would say we had the best product out there for this tournament. Very pleased with all in all the product enhancements and especially, as I said before, perfect performance for these big events. During the quarters, we also had a few partner signings, some of them we covered in Q4. I will highlight only three of them in here. First we have del Lago, which is a upstate commercial casino in New York. We actually used to power it as part of the DraftKings deal back in the days, we are pleased to have it back in our portfolio of customers. As it is only four commercial casinos, it's a very interesting retail business for us.
Together with supplying Rush, their retail casino and also having three casinos for Seneca in New York, we have a very dominant market share on the retail sports betting in the state. The second one, Potawatomi, is a partnership with the largest casino group in Wisconsin. Wisconsin is a state that only have regulated retail and mobile on premise. Having retail deals is more important in these kind of states, of course. Here we have, what I would say, the crown jewel of the casinos in the state, with very close proximity to Milwaukee, the largest city in Wisconsin. Finally on this slide, Shape Games has made a partnership with WAGR a couple of weeks ago.
This is a very interesting partner in itself, yesterday, Yahoo announced that they were acquiring WAGR. Of course, this partnership becomes much, much more important than it was before. We are very much looking forward to work together with Yahoo. As usual, during any quarter, we do a lot of live launches. In Q1 this year, we did 20 launches in 3 new states as well. In Ohio, we completed 11 retail and online launches during the quarter. In Massachusetts, we went live retail just before Super Bowl, after that, we have also added online in March. Finally, as I talked about, we have launched, we've put our army in Wisconsin, making Wisconsin the 22nd state we are active in.
I will say we are unmatched for market delivery and our customers can always trust us to be among the first in any new market coming up. We are consistently enabling our customers to be on market on time. We will continually update you about our development within the five key growth drivers towards our 2027 financial targets as we presented on the Capital Markets Day few months ago. In Q1, we had good progress on the first three of these drivers. I will go through each of them now. Firstly, as I start mentioning, we have done significant added extensions with two our largest customers, Rush Street and BetPlay.
These two customers are together, roughly 50% or more than 50% of GGR that we are operating in the Americas. RSI is of course, very active in the US where we are active in many of the states, but they also do business in Canada, Colombia and Mexico. Very pleased to have extended that contract. BetPlay is of course the market leader in Colombia. With this extension, they also communicated plans to expand across Latin America further. Talking about Latin America, this is and are a very, very important part of our future growth of course. We are already extremely successful in Colombia.
We're doing great movements in Argentina, where we now are live in 8 jurisdiction, covering roughly 55% of the population in Argentina. It's looking really good. We have really interesting news about Brazil. The government there seem to have come to a tax rate for the regulation of sports betting in Brazil. We expect official announcement to come very soon in Brazil. Of course, Brazil is a third of the Americas, so it's an extremely important market to get live with. As I communicated in last quarter, we believe we have one really strong customer in Rei do Pitaco already.
Of course, we hope to be able to sign, a few more in Brazil, over the next few quarters. One point that we have talked quite a lot about lately is of course, our third generation trading capability. We are now able with AI-driven trading to really make the product much, much better, and we can do it much more efficiently. As I communicated before, we had great success during World Cup, and now during this quarter, we have rolled this out to the top, six European domestic leagues, and also to the big cup tournaments such as Champions League, Europa League, FA Cup, and so forth.
We will of course continue this rollout with more leagues, but more importantly, we expect to be able to do this on live betting as well, in Q3 or Q4. After that, we expect to roll out more sports during the next coming years. Giving our operators and their end users a much greater product, but also making it possible for us to do it with much greater efficiency. As an example of the impact in Q1, the turnover on Bet Builder almost doubled year-on-year because of a better product we could give. To summarize this quarter, we have extended two of our most important partners in BetPlay and Rush Street. We're extremely pleased with that.
Our AI-driven trading illustrates a substantial opportunity, and I think this is something we're quite unique at, and really looking forward to see what we can take it during the next couple of quarters with in-play betting or live betting. We're doing great progress towards our 2027 targets and looking forward for the rest of the year. Thank you very much.
Thank you, Kristian, and thank you, David. Now it's time for questions. You can either call in to us and ask them directly, or you can send them via the chat to me. First of all, over to you, operator. Any questions from the phone?
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Oscar Rönnkvist from ABG. Please go ahead.
Thank you. Good morning, Kristian, David, and Mia. Thanks for taking my question, and apologies in advance if you need to repeat yourself. I entered the call a bit late. First, just on in Arizona, we see Desert Diamond performing quite well. I just want to get a touch on if you have any evidence of locals starting to grab some market shares in other states that we cannot track. Also, I mean, we have seen the start for JACK Entertainment being on the softer side, maybe in Ohio, but do you see any clear signs of them ramping up in the coming months after the launch?
Yeah, I mean, yeah, Desert Diamond is doing great. I think we have a few others doing quite good as well. Can't really comment on non-official figures, but we are in general quite pleased with our local operators. I mean, you can see in our figures as well, but I mean, we're becoming less and less dependent on the large operators in our network. What was the second question? How you-
Ohio.
Jack.
betJACK. Yeah. Yeah, I can't speak for them, I think they are still working out a little bit how to make the most out of it. I think we have started quite carefully, I definitely hope that they will ramp up during the quarter.
Okay, great. On the Turnover Index growth, you grew 12%, down a little bit from Q4, where you had 20% Turnover growth. I don't know if you've mentioned this and how much you can actually say about this, but in the official numbers at least, it seems like PENN has come down quite steeply in some key states. Can you, like, elaborate on the financial impact for you just from the sequential decrease from PENN, and what's the sort of underlying growth if you could just exclude the PENN numbers?
I mean, to start, I can't really get into exactly what PENN have contributed in the quarter. I mean, we just can't go there in terms of our in terms of our contract. What I can point to is the public data, and, you know, there has been a massive decrease in the market share in key states. I mentioned Pennsylvania, Illinois, Michigan are the three examples that if you look at those numbers, it's been a massive decrease from this time last year, but also kind of continued from Q4 through into Q1. Yeah. They've talked about not really focusing on customer acquisition right now, so it has fed through into our numbers. Yes, it's a relatively big factor for us, but of course, we'll lessen the impact as and when they do leave the network, of course.
All right. Thank you. Just the next one on the, in the report that you have signed the company called WAGR in Shape Games. Just in terms of the connection to Yahoo, also, I mean, the connection to Yahoo in Great Canadian as well, do you see, like, any other opportunities where you could, like, cross-sell both the Kambi platform, some modules, and some other maybe, let's say if Yahoo wanted to increase their sports betting exposure, would that be sort of a positive read across to, for or upcoming maybe potential signings?
Obviously, we hope so. The Yahoo signing was done yesterday, so we haven't really gathered more information about it yet. For us, it's a great thing that Shape has made this relationship already with WAGR. As you say, we, through Great Canadian, have a relationship with Apollo, so I hope it can be positive for us for future as well.
Do you have anything to say about which states WAGR is supposed to launch in?
No more than where we were active before is Tennessee. That's where we will start, of course. The Yahoo thing is very new, so I guess we will see what happens with that. Tennessee is the one state we know at this point.
Okay, perfect. I have one last question. I know that you focus on already regulated markets, but I've seen Sportradar open a new office in Mumbai, and just talks about like the cricket market could solely worth like over $100 billion growing 20% per year. You have mentioned India as a market where you wanna grow when it regulates or if it regulates ahead of the 2027 financial targets that you have. Is it any possibility that you would be able to launch in such market before it regulates, given the, I mean, complete focus on B2C operators on the regulation part and KYC procedures?
I mean, we are already to some extent active in India, in a very small scale. We have refrained from creating a local product, and therefore I think we are staying on the right side. I think the big step here will happen when the market regulates and when you see more local operators coming in to play. It's so some time left, I guess, but we are already active, looking at opportunities in India for sure.
Okay, perfect. Thank you very much. That was all for me.
Thank you.
The next question comes from Georg Attling from Pareto Securities. Please go ahead.
Hi, everyone. just a few questions from me. If you could just start on the personal restructuring. You said that you let go of 30 people. I'm just wondering, are all of these traders, and will you continue to cut down on the organization, on the staff headcount, or is this the changes we will see this year?
Yeah, thanks. Yeah, they were predominantly traders, yes. Not all, but largely in the trading department. I think in terms of future plans, it really depends on the kind of the speed and timing and success of rollout of the kind of the product roadmap, the different sports that Kristian mentioned. Yeah, we talked about kind of efficiencies we will make from algo when we set those 2027 targets, and this is part of it. Yeah, but we'll keep you posted when the product's in the right place to enable those efficiencies.
Okay. On the PENN transition services fees, how much of those were real recognized here in Q1?
No, nothing recognized in Q1. No, they will be recognized Q3 onwards, EUR 1 million a month for 15 months starting July this year.
Okay. Just could you give an update on Abios? Maybe what revenue they had in Q1 and also when you expect they to really go live with the full offering and the sort of impact you expect from that in the PNL?
Yeah. For now, they're running at about break even. They're running at around half a million revenue and cost per quarter. I think the change there will be when they start generating revenue from the odds, any odds contracts, you know. That could be as soon as, I guess, late Q2, that we start seeing some income from that, and hopefully it ramps up over time, certainly later this year.
Okay. The impact on the WAGR partnership, with Shape, will we see that in Q2 already, or, will that be some delay before we start to see that in numbers?
No, you should start seeing some impact on the Shape numbers already in Q2. Yeah.
Okay. That goes for BetCity as well, I guess, on for Shape. We should see that impact in Q2.
Yeah. I think it's slightly less certain when that will start generating revenue. Yeah, it'll either be Q2 or Q3, I believe.
Okay. Well, that's it for me. Thanks.
Please state your name and company. Please go ahead.
Good morning. Given the slowdown with PENN, it's going to be a lower base to roll off from in the second half when they start to migrate their online product. How do you see the seasonality Q2 to Q3 and Q4 then playing out given this scenario? This is more some kind of a weird year when it comes to seasonality given the roll-off. Any comments on that one would be interesting. If Q1 turnover initially did match your expectations or if the PENN slowed down more than you thought it would?
I would like to turn the conference over to Mia Nordlander, SVP Investor Relations. Please go ahead. **Mia Nordlander:** Hello, everyone, and welcome to Kambi's Q1 2024 Results Presentation. I'm Mia Nordlander, SVP Investor Relations, and I'm joined today by Kristian Nylén, CEO, and David Kenyon, CFO. We'll start with a short presentation of the quarter, and then we'll open up for a Q&A session. Before we begin, I'd like to draw your attention to the disclaimer on page 2 of the presentation. This presentation contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed or implied by these forward-looking statements. With that, I'll hand over to Kristian. **Kristian Nylén:** Thank you, Mia, and welcome, everyone. Q1 was a solid quarter for Kambi, with strong financial performance and important strategic progress. We delivered a GGR of EUR 44.3 million, up 10% year-over-year, and an EBIT of EUR 14.3 million, up 20% year-over-year. This resulted in an EBIT margin of 32.3%, up 2
I mean, the seasonality, I think it depends when we hear exactly when PENN are gonna roll off. Obviously, that will affect Q3, Q4 numbers. In terms of seasonality, it's so hard to say until we actually know when that time is gonna be exactly. If it happens in Q3, then you'll see some impact in Q3. In the past, we've been able to talk about PENN contributing 10%-15% of our total revenue. Of course, we're gonna keep the retail operation, so part of that will stay. You know, there will be that impact when we know that PENN are leaving. And we'll hopefully be offset by-
Okay
... you know, more signings, more launches, and general growth of the network.
Yeah.
Just to add, retail is currently around 20% from them, looking at the public numbers.
20% of our, you know, lower base, it seems. And also the sequential expectation or whatever you could say about Q2, given the weird football fixtures schedule now with the World Cup mixing up with the schedule in Q1 and Q2. What do you expect for the second quarter this year? We heard your comments on American football, but that rolled off already mid Q1. Any comments here would be helpful as well.
I mean, it's not only the American football that is rolling off. Now we're into a state where the playoffs of both NBA and NHL have started as well. It's still quite a lot of activity because it's quite a few playoffs teams still around, but that will decrease during the quarter. The soccer I think is the one thing that will hold up better than it usually does because the season will continue longer than it usually does. I think you have still some soccer to be played in June even. All in all, I think turnover should hold up slightly better, all things equal, than a normal non big tournament year.
Okay. The, the fair expectation would still be down sequentially Q2 over Q1, I would assume.
Yeah, yeah, absolutely.
Yeah. On the OpEx guidance, just if you could help us with the drivers for the low versus the high end. Seems to be tied to Shape signings. I don't know if WAGR is something that will drive OpEx in either way. I would assume that you've included that in your guidance, but comments on the drivers for the OpEx please. Even if you narrowed it's still quite wide range.
I mean, for start, that WAGR any OpEx related to WAGR is included in that full year guidance. We've narrowed the range from EUR 20 million-EUR 15 million. There's still quite a few moving parts in the expanded business we have now. You know, it's affected by things like an eye on options which are driven by the share price. There's bonuses related to performance. You know, there's a few moving parts which is why we can't narrow down that range to an extremely tight number. You know, over the year, we'll keep narrowing it and hopefully get a much tighter range as we get towards the end of the year.
The Shape contributions, how much of is that in terms of, if Shape would add more customers during the year, how sensitive would that be in the OpEx guidance? What sensitivity does Shape have?
I don't expect it to make us change the range, put it like that. I think the range can handle signings made by Shape during the year. It's just where in that range it's gonna come. I mean, it's yeah, it's I don't think the signings will materially impact the OpEx on a group level.
Speaking of signings, we're coming in now, at a number of quarters, Kambi talking about strong sales pipeline, and of course, you have signed a number of operators and renewed, as well, with some of the large ones. What can you say now, three months after the CMD laid out the modularization agenda? Any delays in that one? I know you're going for large accounts, that takes time, but, any update on that one? 'Cause, I think the market expectations is for that to have already happened, basically. What do you see in terms of adding customers on, Bet Builder, for example?
First of all, I think we said already when we started talking about this a year ago that Q2 was our target. It may be changes on that. It depends a little bit what happens with sales on other areas of a more fully managed services.
The thing I can say is that the pipeline looks very, very strong. I'm quite pleased with where we are. I can't give you very much more color until we do signings.
Okay. Fair enough. The financial targets, you include in the CEO letter that the development until 2027 won't be linear. Do you expect a hockey stick in 2027 from a flat development until then or what do you see? Not linear, but gradual improvement until then?
I mean-
Just help the market understand what kind of timing you're seeing on improvements.
I mean, you have a couple of headwinds here. I mean, PENN coming off will obviously be a headwind, for instance. The tailwinds that we can't really estimate when they will happen is things like your regulations in major places, Brazil, Asia, California, and so on. Many of those are obviously expected to happen more like 26 or 27. Yeah, that's a big reason why we expect it to not be linear.
Okay. Thank you. Also final question on Americas. How much is the U.S. of that and how much is Latin America? I have a feeling that the market think the U.S. is larger than it actually is. You want to share something on the split between the two markets?
I'm not sure.
I think we're still missing some public numbers, but I think in a few weeks we can comment on that. We're still missing public data. That's the only thing we can refer to, unfortunately.
You can't give us not the exact figure, but just rough estimate of the relative sizes between the two maybe.
The trouble is, right now our Latin America revenues are kind of dominated by a couple of operators, so we, you know, giving that number pretty much gives their numbers. That's why we can't do that, I'm afraid.
Okay. Fair enough. Thank you very much.
Okay. Thank you so much.
There are no more questions at this time, I hand the conference back to the studio for written questions or closing comments.
Thank you, operator. We actually have quite a few questions here. David, I start with you. When you bought Shape Games, you wrote that they had revenue of EUR 7.6 billion for 2021, with expectations of 100% growth in 2022. In the annual report, we can see that revenue was EUR 11 million for 2022. Considering that, you closed the transaction in September, it is a very big difference. What happened?
Yeah, there's been some delays in a few signings, basically. Obviously, when the acquisition happened, that kind of impacted a few certain deals that were ongoing. Maybe the focus got shifted onto the acquisition. No, you know, I'm really pleased with the WAGR signing. That was one that, you know, has now come through, and, you know, there remains a really strong pipeline for that business. Yeah, there were some delays in achieving those revenues, but I'm very confident about the future revenues for that business.
Thank you, David. Kristian, next one is for you. You had an interview with Di+TV this morning and said that RSI and BetPlay accounted for the majority of the revenue in North and South America. It is correct to assume that they account for at least 27% of the revenue? Well, we did say we couldn't really comment on that, so any other color you want to make on that?
No, I, as I said, I mean, the underlying GGR, for BetPlay and Rush is more than 50% of our Americas number, and that's as much as I'm willing to give.
Okay. Thank you. This one is for you, David. On the cost side, can you please elaborate a bit on the reduction of personnel compared to Q4? The increase of staff costs and the one-off during the quarter.
Let me start with the restructuring. I'm not sure I answered the second part of the question. In terms of the restructuring, you know, around 30 people unfortunately had to leave the business because we recognized efficiencies we could make. That led to costs when they left the business for around EUR 1 million. Of course, there were immediately some ongoing savings of a few hundred thousand EUR because they're not in the business. Like I said earlier, longer term, that will lead to, you know, in excess of EUR 2 million a year savings on the P&L. Yeah, we've taken EUR 1 million cost, which hits us this quarter, but longer term, of course, it's for the good of the business and will help the P&L. The second part of the question was?
just go back. The increase in staff costs and the one-off, I think that's the non-recurring. The non-recurring you said. Yeah, I think it's just, some, salary increases.
Yeah, of course, it's the annual pay review process. Yeah, and the pay, the severance pay we talked about.
Thank you, David. Kristian, I think you already mentioned, here, but how does the sales pipeline of Bet Builder stand-alone model look like?
I think, we have focused very much on fully managed service the last quarter. It still looks quite good, but it has not been the main focus for last quarter. It's. Yeah, we're very excited for both parts of the business.
Thank you. Next one for you, David. How does the growth look, organic without Shapes and year-over-year? Basically what is Shape?
Yeah, I mean, it's like I said, it's around EUR 3 million of revenue in the quarter. You know, of that growth from EUR 36.9 to EUR 44, EUR 3 million is Shape. Also the cost is increased by EUR 2.7 on pure OpEx and another EUR 0.9 on the amortization. You know, on a profitability level overall, but it's not really changed that significantly where we were before.
Yeah.
The revenue is EUR 3 million.
Thank you. This one is for you, Kristian. You have talked about a strong pipeline during quite a few quarters now. When do you think that will come through in form of new Tier one and Tier two customers?
Can't comment on that, of course. Yeah, I'm excited.
Yeah. If you look at the recent signings, is there any of them would consider as a Tier one operator?
The one we have talked very much about as something very exciting is Rei do Pitaco. Whether it will be a Tier one or not in the end, we don't know. It's a little bit too early to consider it a Tier one, I would say.
another one for you, Kristian. You mentioned earlier in the year there are further multi-state opportunities in the US still to be won. Is that still the case? There have been some articles in the press flagging yourself and Bally's. Would this be a high priority contract?
On the first question, yes, it's still the case. Obviously, Bally's is a contract we would love to win, but it's not up to us mainly. Of course it's a high priority for us.
Thank you. In Q1, you mentioned that you had originally assumed contracts win-wins in the quarter, which had been delayed rather lost. Is this still the case? I think we already answered this, but is the outlook for Shape still good?
Yes. I think, the outlook for Shape is very good. I think they have had to change their focus slightly and focus more on the customers where we can work together. Yeah, I'm very excited for the Shape business.
It can be the delayed contracts still?
Yeah. I don't know what else I can say on this topic.
Thank you. David, this one is for you. How many employees do you think you will have at the end of this year? Do you have a view of that?
Not really. What I can say is we're not significantly recruiting right now. You know, from where we are now, right now there's no big plans to increase, which I guess is a little bit different to what we've been doing in the past. It's more probably, yeah, it won't be massive recruitment, I would suggest. But I don't want to venture a forecast on kind of headcount.
Yeah.
Quite difficult.
Thank you. another one. Do you have any buyback share plans?
Well, like I said, I mean, nothing right now. We've done it in the past, so of course we could activate it again in the future. As I've talked about a lot earlier, we've got a pretty healthy cash balance now, so we've got the firepower to do that or other things with the balance sheet, so.
Chris, many questions today.
Yeah.
Kristian, this one is for you. Your 2027 targets, do you assume Kindred has left the network? As a follow-up, in the short term, are you assuming a change in control of Kindred will lead them to leave the network sooner than 2026?
I can't comment on Kindred, of course. I'm pleased we have a contract with them with a minimum revenue guarantee over the next 3 and a half years. I guess it very much depends on if they are bought, who are buying them, whether we have an opportunity to serve them or not.
Thank you. Another one from for you, Kristian. Have there been any tailwinds in the US towards outsourcing? Noting some recent public comments from retail casino operators here.
I think a general sentiment we see, both in Europe and the U.S., I would say, is that, I mean, it becomes more and more important with profitability and that is always a good thing for suppliers, I would say. I think we are in a very good shape.
Let's see. This is in line if the competitive landscape has changed in the US, or are the similar competitors presented in RFP processes?
Depends on when you look at it, but it's quite the same. Since SBTech left, I think, it has been very much about us and OpenBet. There is a few other smaller ones that are trying to come into the business, but us and OpenBet are the two big ones at the moment.
Thank you. Another one for you, Kristian. I think this is the last one. Which of the product offering do you see biggest potential in? Is it module full sportsbook?
For the moment, yes. I definitely believe that different kind of sophisticated trading products will also be very interesting for us, for the future.
Okay. Thank you very much for the questions. Thank you, Kristian. Thank you, David. We will be back here for our Q2 report, the 26th of July. As always, if you have questions, feel free to reach out to the IR department. I wish you a very good day.