Earnings Call: Q2 2021

Aug 11, 2021

Earnings release

Ladies and gentlemen, thank you for standing by, and welcome to the Bragg Gaming Group Q2 2021 Conference Call. At this time, all participants' lines are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Janette Spielberg. Thank you. Please go ahead. Thanks, Ellis. Good morning, everyone, and thank you for joining our Q2 2021 earnings conference call. I'm Denise Spielberg, Chief Strategy Officer of the Bragg Gaming Group. I'll be hosting today's call alongside my colleagues, Ronnen Kanur. Our CFO will present the results and our Chief Executive Officer, Richard Carter, who will comment on our H2 performance and give an update on the business. For the first time on this call, we will be presenting a Q2 presentation. So if you have not already done So you can download our Q2 earnings call presentation from our website at bragg. Games/investors. And on that page, you'll see investors' presentation. The presentation is called 2021 Second Quarter Earnings Presentation to follow the points that Richard and Ronen will walk you through. In this call, we'll review Bragg's Financial and Operating Results for the Q2 of 2021. Following our prepared remarks, we'll open the conference call to question and answer period. I'll start the call with some brief cautionary remarks regarding certain statements that may be made on this call. Certain statements made on this call and today's call and our responses to various questions may constitute forward looking information or future oriented financial information within the meaning of applicable Securities Law. Statements about expected growth, prospective results, strategic outlooks and financial and operational expectations, Opportunities and projections rely on a number of assumptions concerning future events, including market and economic conditions, business prospects or opportunities, future plans and strategies, technological developments and anticipated events, trends and regulatory changes that may be that may affect the corporation and its subsidiaries and their respective customers and industries. While we believe these assumptions to be reasonable, they're subject to a number of risks, uncertainties and other factors, many of which are outside the company's control and which could cause the actual results, performance or achievements of the company to be materially different. There can be no assurances that these assumptions or estimates are accurate, but many of these expectations will prove accurate. For a complete discussion of these factors, please to our recently filed press release and other publicly available disclosures. I'd just like to remind the ones who haven't heard and just joined the call, so This time, we'll be presenting a Q2 press release. You can download the press release on our website bragg. Game /investors. And under the investors presentation, you'll see 2021 Q2 earnings presentation. I'd like to turn the call now to our CFO, Ronnen Knorr. Ronnen? So I think that we have a little bit of a problem with 1 end connection. Richard, do you want to take it and start with the rest of the presentation? And Ronen will join in a minute. He said that he was cut off, so he's calling back. Sure. Do you want me to start with my slides then? Sure. We'll go back to the financials only because we wanted to cut off from the call. Okay. Good morning, everybody. So throughout the second quarter, We made meaningful progress with our strategic growth initiatives, including expanding existing customer relationships, Building out a pipeline of premium in house iGaming content and providing our content and authoring to new markets. These and other strategies are transforming Bragg into a leading global content focused B2B iGaming provider. Now before reviewing our strategic growth initiatives in more detail, I want to address the new iGaming regulatory regime in Germany. So following the new iGaming regulatory regime in Germany, which became effective on July 1 this year, Revenue contributions from this market are expected to decline in the second half of twenty twenty one and into 2022 compared to historical levels. Now these changes are fully anticipated in Bragg's growth forecast and are expected to be offset by strong growth in both new and existing markets as well as from new clients and from increased profit margins as a result of developing more proprietary content and from our acquisitions. In the first half of twenty twenty one, German revenue outperformed and represented 65% of total revenue, which has resulted in a higher base going into the July rule changes. Since those rule changes came into effect, player behavior and invoice revenue has trended in line with our expectations. We have budgeted that monthly German revenue will bottom out in Q4 2021. Looking into 2022, we expect to launch additional new licensed clients in Germany, coupled with launching new in house developed casino content. There is also an expectation that the German regulator should start to address the unregulated offshore operators later in 2021, which should limit some of the offshore flow to unlicensed operators. However, to be cautious, We are not assuming any recovery on the Q4 2021 run rate and anticipate German revenue to compromise approximately 10% of 2022 revenue. This slide that shows that German regulatory impacts for 2021 has been fully anticipated in Bragg's growth forecasts And is expected to be offset by strong growth in both new and existing markets as well as from new clients and from the acquisition of Wild Street. We expect general regulatory impact of 2021 revenue to be €8,200,000 And for this to be offset by €4,000,000 from underlying market growth and €4,000,000 from the launch of new clients. We also anticipate that Wildstreak will now contribute €2,000,000 of revenue in 2021. This results in an updated 2021 revenue guidance for the group of €49,000,000 up from €47,000,000 previously. We've also today increased our EBITDA guidance from €4,000,000 to €5,400,000 Our previous €4,000,000 EBITDA guidance has been maintained. We have reflected €1,400,000 EBITDA for Wall Street. Now let's turn a look at the group's 2022 revenue outlook. So as already commented, we expect 2020 to be more material and are estimating an $18,000,000 impact, but we expect this to be offset by entering to new markets like the UK, Italy, Canada, the Netherlands and the U. S, which I'll talk about a little bit later. We also expect to see growth from clients launched in 2021 coming into 2022 and from the addition of new clients and by the ramping up of the delivery of games from our proprietary in house content studio. We'll also see a full year contribution from acquisitions. Taken together, this is expected to result in 2022 revenue of between €54,000,000 to €56,000,000 And we anticipate that EBITDA will be at least at the same level for 2021. Now let's look in more detail at strategic growth initiatives we started to advance in Q2, including our in house content strategy, 3rd party conference for new market entry plans that will not only rapidly mitigate the near term German regulatory impact, that will enable the group to transform its future revenue growth opportunity and significantly expand group EBITDA margins over the medium term. An important building block for accelerating the strategic transition was the acquisition of Wildstreak, which we completed on the 2nd June this year. Wall Street will significantly help transform Bragg's business going forward as we shift From primarily providing 3rd party online content to be predominantly focused on providing in house developed online content that will carry significantly higher gross profit margins. Wildstreak, a leading U. S. A European focused proprietary casino content studio, provides Bragg with a library of 40 casino content titles as well as expertise in game design, slot mathematics and advanced game features. As of June 30, Wall Street had 7 online casino games live in key iGaming markets, including New Jersey, the UK and other regulated jurisdictions in Europe, which have helped grow Wildstreak's adjusted EBITDA by 9 40% during the first half of the year. Now looking forward, we believe that material further growth opportunities exist for the following reasons. Last week had only 7 online games at the end of the second quarter, with full release during the 1st 6 months of the year, but now has plans to release a minimum of 16 games per year in 2022 with that ramping up in the following years. In the U. S, Wall Street was operational in only one state, New Jersey, and expect to grow into other regulated U. S. States in the second half. And finally, Wall Street's offering will benefit from the large distribution network available QRX RGS and from the company's player engagement service. Turning to the underpinning growth. Last week has also shown significant growth in GGR from Europe since the beginning of 2021 as shown in the next slide. We released 4 new titles with pragmatic play and plan to release 1 more game in 2021. These games achieved US37 $1,000,000 in GGR in the first half of twenty twenty one and proven to be very sticky It's being deployed underpinning the quality of the Wall Street game mechanics and features. As you can see in the next slide, 3, 4 and 5 after release when compared to the 1st month of release. For example, in month 3, Wall Street Games showed wagering at around 50% of the levels seen in the 1st month compared to 30% of the games we launched from other studios. As already stated, we expect Wall Street to add €2,000,000 to group revenue 2021 and €1,400,000 of EBITDA, Represent a 7 month contribution. While in 2022, at this stage, we expect Wall Street to add €5,000,000 of revenue and close to €4,000,000 of EBITDA in 2022. Now another important milestone in the quarter was the acquisition of Spin. We continue to make progress with the U. S. And Canadian licensing process related to the Spin acquisition, and we expect to complete the acquisition in the 4th quarter as previously communicated pending regulatory approval. The technical integration between Spin Games And our Oryx Hub distribution platform is already completed, and the combined offering will deliver the benefits of Oryx's RGF in house content, advanced player engagement and data tours alongside spin U. S. Market content and operator relationships, providing a differentiated and widely distributed iGaming product offering. Following the completion of the transaction, We will gain access to key strategic operator relationships in the U. S. Where Spin Games has over 30 customers, including iGaming customers such as Drakens, Golden Nugget and National to name a few. We plan to leverage these relationships to initially cross sell our existing European casino content, followed by the new proprietary online casino content that we are currently targeting to address the U. S. And Canadian market. Now let's turn to the near term and medium term market size opportunity for the group. We believe the greatest opportunity for growth is in the online casino segment of the online gaming sector. Within the key markets of North America and Europe, online casino is a larger TAM relative to sports betting and has historically tended to be materially more profitable for operators. We expect the current trend for online casino regulation in North America to continue underpinning the group's growth opportunity. Now Bragg, historically, given its European focus, has operated and targeted markets that represented only US2.8 billion dollars We're only 20% of the US14 $1,000,000,000 European online Casino Market. Looking forward into 2022, we expect to increase the group's total addressable market by a factor of 6 told to $18,000,000,000 This will be driven by entering the UK market with an estimated market size of $5,000,000,000 Entering the Italian market with an estimated size of $2,000,000,000 the Dutch market with an estimated market size of $0.4 billion and the U. S. Market with a TAM currently run rate of over $3,000,000,000 And we expect all this to open up for Bragg during the Q4 of this year. Then as we move into 2022, we are very excited about the opportunities that the Canadian online casino market presents for the group, given we will have relationships with many of the leading North American operators by the acquisition of Spin, coupled with our existing European operator relationships. In addition, via spin, we expect to be licensed in British Columbia with a Q2 2022 go live date already slated. And we are in the process of building our go to market strategy for Ontario for a Q1 2022 launch following the recent enactment of a law that creates a regulatory framework for competitive, high gaming, mobile sports betting market. Now today, the Canadian online casino market is estimated to be currently worth approximately US600 $1,000,000 which includes offshore operators. Following the privatization of Ontario and expected market entry and investment from many of the leading global online gaming sports betting operators into this province. The total online Canadian consumer market is expected to grow materially with an estimated TAM of between $2,000,000,000 to $3,000,000,000 by 2025. Now as a way of reference, Ontario represents about 40% of Canada's population. And if Ontario was a U. S. Stake, it would be the 5th largest state by population. And based on the current New Jersey online casino spend per adult, will have a TAM of approximately EUR 2,000,000,000. Now taking a closer look at our road map for expanding our market reach. We're already ramping up our presence in new European markets. We received our B2B license to supply in Greece last week. We have completed the certification of our games to the Netherland in preparation when the market opens currently anticipated by October 5 this year. We've signed a platform deal with JVH, one of the leading Dutch land based operators, and expect to announce more deals in the run up to this market opening up. As mentioned, we expect to be ready to supply games in the top European markets of the UK and Italy from late Q4 this year, While in 2022, we expect to ramp up in all of the territories as well as rolling out in the U. S, Canada and other markets globally. As you can see on the next slide, the other core pillar of our future growth will be driven by our in house and 3rd party content strategy. We have made strong progress during the first half of twenty twenty one in commercializing our in house studio. And with the addition of Wildstreak, we're now in a strong position to increase our output of games produced from our in house studios, which capture a greater share of the value chain compared to distribution of 3rd party games. The completion of the Spin acquisition and Q4 will also significantly add to this. In addition, we will continue to look to add differentiated and appealing third party exclusive content and are currently in discussions with several Tier 1 studios for the exclusive rights for further slot titles for both the U. S. And Europe. On the next slide, we illustrate graphically the progress we are making and expect to make into 2022. This year in 2021, we expect to release a total of 5 games from our in house RX gaming studio, which will represent about 11% of all exclusive games we will release this year via the RX RGS. In 2022, we have a road map 19 proprietary games to be launched in Europe from our Oryx Games Studio, representing 33% of exclusive games, which we plan to release by the Alex RGS in Europe for the year. In addition, in 2020 we expect to release a further 4 proprietary games from the RX gaming studio in the U. S, while our Las Vegas based Wall Street studio will release 10 proprietary games in the U. S, Giving a total of 14 fully owned online slot game titles expected to go live in the region and representing 37% of all exclusive games are expected to be launched by the company in the U. S. In 2022. Overall, we plan to launch a combined 96 slot titles in 2022, which implies more than 100% year on year growth. And out of the 96 titles, 33% or 30% will be in house generated content versus 11% this year. Now let's look at how these key growth initiatives are expected to change our revenue and margin profile going forward. Today, as you know, the majority of our revenue and gross profit comes from the distribution of exclusive games built by third party studios on our Oryx RGS. The revenue generated from these games is shared with our 3rd party studio partners in the form of a royalty fee, which depresses our gross profit margins. While revenue from our in house platform and our in house developed games converted close to 100% gross margin. As we pivot towards our in house led content strategy, we expect to take our gross profit margins from around 43% today, up to 60% by 2024, which in turn will drive our EBITDA margins from 12%, which were in 2020, to between 20% to 25% by 2024. Now in conclusion, Bragg possesses many competitive advantages, including proprietary modern technology and development resources that enable us to innovate rapidly and develop content quickly. We with our technology platform, growing proprietary premium content portfolio, Value added player engagement tools and global distribution capabilities, we believe Bragg is well positioned to capture growing share of the large global high gaming market. These factors, combined with our low capitalized expenditure requirements and predominantly fixed Operating model will enable Bragg to materially grow revenue and adjusted EBITDA margins over the medium term. That concludes my comments. If Landon is on the line, I'll pass it over to Landon. Yes. Thank you, Richard, and Good morning, everyone, and apologies for the technical issue. I will start with Slide 3. So our revenue continued to grow in the 2nd quarter And increasing by 27.6 percent up to €15,500,000 The key driver to growth derived from the gaming content segment And was driven organically by German facing customers, along with promising growth from European and rest of the world customers, which grew 20% sequentially and represented close to 40% of the total Q2 revenue. During the first half of twenty twenty one, the group launched approximately 20 customers, which should also lead to further growth and a continued improvement to the new customer pipeline for the following years. The wagering revenue generated by customers has increased, rising by 15.9 percent to €3,800,000,000 as compared to €3,300,000,000 during the Q2 of 2020. We've also seen a 21% increase in new players using the Bragg Games and Content, which is up to $2,300,000 from the $1,900,000 last quarter. Both operational KPIs were in a positive direction. The strong growth numbers demonstrate the strong demand stemming from our unique content portfolio and continual technological advancements. The gross profit increased by 37.5 percent to €7,000,000 while improving the margin by 3 points to 45% as opposed to 42% last quarter. This is predominantly attributable to the shift in the proportion of revenue from the games and content into the iGaming and Searching Services, which represents today 12% of the revenue that had no cost of goods impact. The group profitability continued to improve. Adjusted EBITDA for the quarter was up by 8.5 percent to €1,900,000 with a margin of 12.3%. The margin decreased by 2.2 points, mainly because of the group investment in cabinet and technology, compliance and sales teams as part of the group expansions plan. Now I'll comment on the business highlights in the Q2. We are continually adding and expanding our global footprint. During the quarter, we added 5 B2C operators in various jurisdictions. During the quarter, we also strengthened Our foothold in Spain and Mexico by launching new partnership with Cazuma and Lagrad, respectively. We'll give our casino gaming offering by launching 11 new exclusive slots, of which 2 were developed by our own in house OS studios. We launched this new proprietary games across our network with encouraging trading signs with additional games planned for the remainder of the year. Our pipeline continues to grow and have retained 100% of our customers since Bragg's inception in 2018. Although our customer retention is excellent, Our dependence on our top ten customers has also improved with a decrease from 64% in Q2 2020 It's 57% Q2 2021 and we anticipate this trend to continue. Now let's move to the next slide, Page 4, and I'm going to talk about how we reconcile operating loss to the positive adjusted EBITDA. The adjusted EBITDA amounted to €1,900,000 with 12.3% margins and representing underlying improvement performance with an operating loss of €1,800,000 The gap can be traced by 3 main noncash and exceptional items. First is share based payment charge as a result of the award of directors and management in Q1 of these series and our series. 2nd is the transaction acquisition cost related to the transaction of Wild Street and Steam Games and the deployment of the corporation M and A strategy. And 3rd is exceptional costs. This includes legal and professional fees and domestic listing and other non recurring regulatory and data matters. I'll now pass to Page 5 in the presentation. Bragg had a solid balance sheet with improved working capital for continuing operation. Cash balance at the end of June 30 €21,000,000 as opposed to €26,000,000 in December 2021, with no debt facilities, which has hold been cleared early this year. A net working capital of €11,700,000 and reported €6,700,000 at the beginning of the year. The group has a projected positive free cash flow generation and there are no main CapEx of technology debt requirement SaaS strategy. From a cash flow perspective, in Q1, the group completed the acquisition of Oryx Gaming with a payment of €11,500,000 In Q2, we completed the acquisition of Weiszkrig in the value of €8,200,000 and we raised financing for the exercise of warrants relating to last year fund rate in the value of GBP 11,000,000. Now Richard and I are available to take some questions. Thank you. Thank you. Your first question comes from the line of Matthew Lee with Canaccord. Hi, guys. Congrats on the good quarter. I just kind of wanted to talk about the acquisition strategy here. Can you maybe highlight your priorities in terms of targets? And if you feel like you have the adequate capital to capture the full acquisition opportunity right now? Well, good morning. We've made a couple of acquisitions recently, which basically closed the hole that we had. So As of right now, we are just integrating those into our portfolio, and we don't really feel the need that we need to make any acquisitions Near term. So we're quite happy with where we are, and I think we've got enough on our plate to manage in that sort of near term. Fair enough. But I mean, if you're thinking about the content library and building the proprietary asset that you own, Would that be possible to be supercharged by a couple additional studio acquisitions? Or is that not something that's right? We can supercharge that and we're in the plan of putting that in place by adding a couple of games producers, which given our scalability and given the resources we've got in place, If we add 1 games producer, we could probably add 20 hub titles a year. So If they add 2 or 3 games producers, we can turbo charge or supercharge our hope of both of them. Obviously, that's something we're looking to do. Of course, if we were if there's the right acquisitions out there, which is at the right price that we think adds value, And we'd obviously look at that. But I think with it has to be an acquisition that adds value to our business and improves our business. And I think as we alluded to in this presentation, the performance of the Wildtree games are the top percentiles of this industry. So it's going to be quite difficult to find that type of acquisition. We've been very fortunate. So we don't really want to be buying things that is dilutive to the underlying performance of what we're trying to aim at, which is at the premium end of the market. Right. And then maybe I could just clarify on the Canadian market. Is it fair to say that Bragg is going to be ready to go in terms of every province as iGaming gets Yes. Well, through the Spin acquisition, We obviously got British Columbia covered. We're obviously in the process and talking to other provinces. So and obviously, if they pivot and regulate, that will be well placed. But we're talking to the incumbent lotteries. And then obviously from an Ontario perspective, I think we're well positioned. So yes, it's the answer to your question. I think we're well positioned Your next question comes from the line of Neil Gillemer with Haywood Securities. Yes, good morning. Yes, congrats on the quarter. And I appreciate the slides that you walked through, particularly sort of understanding the moving parts there with Germany and your revenue guidance. I guess I wanted to touch on one thing or actually a couple of things. Number 1 is your guidance, your revenue guidance for 2022. I That includes the acquisition of Spin. I know you expect it to close in Q4, so I assume that that sort of factored in for the start. Yes. Richard, you made some comments that what was in the press release sort of an EBITDA should be sort of similar to 2021. I guess I was thinking with the launch of all the games that you were talking about, I think you said 33 going into next year. Obviously, the contribution of Wildstreak into Surprise, there's not a little bit of an opportunity for margin expansion in next year aside from what you walked through on sort of your plan to get to 2024. Can you just help understand the reconciliation. Yes. I mean, obviously, as we go through next year, the plan is obviously to build out an established, say, this content strategy. So we've achieved quite a bit of cost Specifically on the technology side, which will then enable us to significantly ramp up in later years and much lower cost. So From that investment, if we were to take that out, then yes, you'd have definitely a bit more expansion. And obviously, we're also growing next year into a lot of these markets, so the UK, Italy. So definitely a bit of cost that we need to put in there to help grow that. So as we go through next year, We'll look at that and hopefully come back with some positive news around that level. But yes, I mean, I think What you're saying makes sense, but we're just given it's very early days and there's quite a few moving parts in terms of growth. And obviously, we want to This is not about next year. This is about 2022 2024. We really think given the content we have, we have a real opportunity here to capture Makes sense and helpful. I guess my second question, then I'll pass it on line. Just maybe digging a little bit further on some of your comments with respect to the German market, What you've put here is your expected impact or whatever. Is there a chance you're being overly conservative? Or you really think that that's sort of where Things sort of trend out too. There's that one slide, I think it's Slide 6 here where you sort of have where it comes down and sort of flat lines and not Q4. It looks like €500,000 a month. Is that sort of the worst case scenario? Is there a couple of different things that you think that might Transpire that could be slightly more positive to the impact of the German business for you guys? Yes. We've obviously given there are quite a few unknowns in terms of Germany. We try to be very conservative with how we back to back end for the business. But In terms of what I tell you in terms of what are the sort of moving parts, the key is obviously a huge part of the market is still being played offshore. So if over the coming quarters we start to see the regulator being a bit more aggressive, Then that is a really big delta. And as more of the market comes onshore, That's obviously going to significantly help with our growth there. So that's the big sort of unknown. And we've sort of it's obviously difficult to predict when that will happen, if it will happen. So we take in the view that, that's not going to happen. Now obviously, July has done very well, and we'll have to see. August looks good, so we'll have to see how that continues that Yes, I hope we're being conservative. But given that a lot of the market is still being played offshore, It's difficult to time when the regulator will make any moves, but and we've seen this in other markets across Europe, Where a significant amount from the market, if you look at Sweden, people estimate like 30% or 30% is still offshore. The other, obviously, important bit in Germany is still very, very early days. It's the summer. So I don't think operators started to really We spend a lot of money on marketing. So I think as they get a bit more confidence and if We started to see a bit more move back onshore, then I think you should get some of our operators spending more money on marketing, and that will obviously transpire into greater revenue for us. And then The other area, obviously, is that we believe with the content we have and what we're and our understanding of the general market, We are going to release content into January next year. So that will hopefully also help us from a competitive market position. So There are quite a few sort of moving parts there, and we try to be as conservative as possible to give ourselves some upside Thank you. Your next question comes from the line of Adhere Kotkin with 8 Capital. Good morning, guys. Congrats on the quarter. I just wanted to maybe touch on your customer pipeline. You said you're going to be entering all these several new markets and you've obviously had a good streak of customer acquisitions. Can you maybe talk about what's in the pipeline? I know last quarter you said you had Several different customers in the pipeline and maybe just speak to how they're converting and which markets maybe you see a more Stronger entry into it. Sure. So the pipeline, I think, It's significantly strengthening, and it's strengthening based on the fact that we now have market leading content. And we're still going through the presentation and the road map And the real drive in terms of sort of customer acquisition is going to occur Over the next sort of 3 to 4 months. But based on very early feedback, I'm very it's been very, very positive. So And you can see from Q1 and Q2. So as we go through the second half of this year and obviously as we go into more markets, We're naturally just going to add a lot more operators because these are all virgin territory for us. And there's obviously a lot of incumbent operators in these markets that we don't have relationships with. So I think when we come back in the next quarter, I think we'll be in a bit of a stronger position, and we'll get a bit more update On actually what we've seen in terms of that pipeline, but from what I see right now, it's expanding significantly. And I'm Very optimistic about what conversion we'll get on that pipeline. Okay, great. Thank you. And then I think last quarter, you guys mentioned that you launched Your first proprietary in house consumer games with Oryx. And you said obviously you had 5 more in the pipeline. Can you speak on some of the early results from that one game that you launched last quarter and kind of how you're going to use that for the 5 extra games that you're going to be adding this Yes. I mean, the one thing I'd say is, since obviously we made the WildStrick acquisition, The world has changed upside down, so we've got one of the best game designers in the world with access to some of the best mathematicians. Looking at our game right now versus what's coming down the pipe is not really comparable. Now in terms of the performance of that game, it compared very favorably with The games we launched this year, so that's obviously exciting from that perspective. And then the second game obviously performed better than that. And recently, Doug Fallon, who is a fan of Wild Street, As you know, they're viewing the sort of upcoming games from the RX Studios. So you can't really compare, I don't think, because Just in the recent game, basically just to give you an idea, I think over a 3 week period, We reviewed it and I think changed the math model 5 times and some of the jackpot features. So it's a completely different proposition in game from what we have before. So From that perspective, we're I'm pleasantly surprised with the performance given it was our first two games. And I think with the oversize of Doug and his team, you'll see a material improvement in the next games, Kelly. Okay. That's great. Thank you very much, Wes. Thank you. Your next question comes from the line of David McFadgen with Cormark Securities. Great. Yes, thank you. A couple of questions. Just first of all, in Germany, you talked about how a good portion of the market is still being served by I was wondering, can you give us an idea of what you think percentage of the market is right now that's offshore still? 65%. Yes. Okay. Maybe a little bit more. And the reason why it's that high, if you think about the sort of the eighty-twenty rule, the really sort of I'm sorry, just disproportionately, it's a higher sort of proportion of the revenue, which is offshore currently. So we're going to need some action from the regulators to sell that. Is that going to be the primary driver to get that down? Well, there's a I think you've got a there's a couple of things. There's the onshore regulated market, which we expect to bottom out. I actually think it will grow considerably once operators start the market, as new players come in. Remember what's happened overnight. You've gone from a market that had On a game, an RTP sort of 94%, 95%. Now those RTPs are down at 90%, 92%. So it's going to take some time for players to adapt to that new market. And I think it's too early for us to comment. I'll leave that to people that are much more qualified than me from an operator's perspective. Sort of slightly pleasantly surprised with what we've seen so far, but it's still very, very early days. Now so you have this offshore market, which theoretically We'll probably continue for some time, especially the high the bigger high rollers. And then you've got this new market, which people Obviously, adapt the new sort of world of this sort of different RTP. And then slowly with More time as it goes by and more innovations and games and then just the industry just growing from a And hopefully, you should see some reasonable growth on the actual regulated marketplace. And over time, I guess what we've seen in other markets is that the offshore market will slowly decrease. But To get that big chunk back onshore, given our 5.3% wage impact, I think it would be an optimistic assumption. Okay. And then just in terms of the new markets, I'm just looking at Slide 8 here. In terms of new markets, the Netherlands, you announced A customer, a very big customer that you're going to be serving. And can you talk about any customers So you're going to be serving in the U. K. And only in Canada? Or is it just too early right now? Not really. I mean, I think you can go through the relationships we have and with quite a lot of the big operators in specifically in the UK. The big operators in Italy are more the incumbent operators that don't tend to operate in multiple jurisdictions. So we have a lot of relationships already with the UK operators that are operating in some of the markets where we focus. But I think we obviously applied for our license and still waiting for that. And once we get that, think it would be prudent to just wait for that, and then we'll talk about it. But clearly, there's quite a bit of overlap We have customers we have today in other markets that are in the UK. So I think we said it before that there's not particularly a great deal of investment needed to sort of turn that on The U. K. It's a little bit more in Italy. And then I guess in Canada, we'll hear announcements of deals that you've put in place? Well, yes, I mean, we've got the British Columbia deal, which is a very nice deal with 3 spin. They'll have other They're talking to the other lotteries, so it expects more of the other lotteries to follow. And then the regs So I was reading Kannau in the last few days, so we've been going through them. And then I think operators will Should start to be ready sort of Q4 ish, like Q4. And yes, and you'll hear from us around that. And given Our, give the Wall Street business and obviously given how well those games perform land based, We're very optimistic about that content and that really resonating in the Canadian market. I mean, just as an example, Dragon Power, which is a game that whilst it was launched, is a top performing game in New Jersey that month in, month out continues to be You know, performing very, very strongly. So, we've got a lot of confidence that the content we have will really resonate in the Canadian market and And quite a really sizable near and extreme for the company. Okay. And then just on that Just on Friday, you talked about the 2021 pipeline. So existing customers in various markets forecast to grow and our growth rate of 10%. Is that the primary driver there is them taking more of your games? Yes, I'm just wondering what's the Tell that again, sorry. Is the primary driver for these existing customers to grow 10 Sam, in the 2021 pipeline, is that from them taking more games from you? You're just using more of your content? Yes, it's a combination. Yes, different things, obviously, them growing their business. They're growing our game. If you look at most markets, most operators are growing 10% to 15% depending on the market. So we're bringing new operators in. We're going to play your content. And then there's also an element of some new Some existing content and then new content, so it's a combination. Not only those, just the underlying market growth. Okay. All right. Thanks for the slide deck. It's very helpful. Thank you. All right. Thanks. Your next question comes from the line of Lisa Thompson with Zacks Investment. Good morning. Good morning. I just have a few questions about what you're thinking about next year. Do you have any feel what your revenue breakdown might be between North America and Europe by 2022? I do, but I don't really want to get into that level of detail right now. But clearly, I think we've given some guidance for Marleste and a good chunk of that is going to be U. S. Of North America. But we'll update on that probably later on in the year, how long it get drawn and Dissecting the Market. Okay. And should does there any significant difference in gross margins between the two geographies? Or is it just based on how many of your proprietary games sell where? I mean, yes, it depends, obviously. Is there any difference between gross profit margins in the U. S. And Europe? Not materially. You could probably argue there's probably we can probably We get more scalability in Europe and the rest of the world because we don't it's not the same processes. And obviously, the U. S. Is Sort of, at the moment, 4 smaller markets, but it's not material. Okay. Do you ever anticipate that maybe your top 10 customers might not be the same top 10 next year? Yes, definitely. Okay. And just trying to relate to your proprietary games, as an old video game analyst, Is there a possibility to kind of like breakout games that are wildly profitable and popular? There is, obviously, and we're hoping we get that. We're not assuming that. We've taken Extremely conservative assumptions around that because it's very difficult to sort of forecast that. But If the games in the U. S. Are anywhere near the same level as Dragon Power, then we're massively underestimating the performance of our games. If the games are going to be anywhere near like the games that have been launched so far on pragmatic again, we're significantly underestimating. And it's very, very difficult. You can talk to all the content studios. It's very difficult to predict. I speak To all these entrepreneurs that run these studios, they can't tell you if the game is really going to be a breakout game. They can tell you if it's going to be a good game. So yes, I mean it's very, very difficult to predict a breakout game. But I mean as a business, we need to provide A consistent level of performance to our partners. And if we're able to just do that, Then that just will materially strengthen our relationships, and that will allow us to grow and be an incredibly profitable business. If we obviously were able to get a hit, then obviously that would have A halo effect as well, and that will just obviously lead to the advantages of having that So in terms of just publicity and obviously underlying performance from that game. But it's about consistency rather than having a 1 hit wonder. We want We're in a position where we ramp up into 2023 2024 and our games are just consistently performing, which is What's been the case with the Mar Street games over the last few years? In your industry, do you have the Opportunity or the to say license things, characters Or on the opposite side, get ad revenue? Did you incorporate did a game for some hit movie or something? Is that the thing? Yes. So in the last 3 weeks, we've been having conversations with third parties and looking at brand licensing. So a lot of the major land based operators, specifically in the U. S, will tend to have a portfolio, a brand licensing portfolio. Cygames has James Bond and IGT has its own licensing and Hasidra has it. And it's similar in the online space. And so, yes, we're currently looking at those options. And I think we will probably definitely look to have some branded content over the medium term. Your next question comes from the line of Daniel Weiss with MCO. Hi Richard, how are you doing? Okay. Thanks. I'm just wondering if you could give the update on the Nasdaq listing? Any color there? Well, not really. I mean, the color is we put in the presentation. I mean, Yaniv, do you want to talk about where we are with it? Yes. Thanks. It's just a procedural process, as Richard said, Daniel. It's the paperwork has all Filed with the regulators. It's just a waiting game now. It's obviously hard to say how long is the waiting game because it's regulators. But we're confident, as we said in our last press release, that it will happen soon. So we're just waiting to get the approvals. Your next question comes from the line of Peter Reilly with Kraftwenty. Peter, your line is open. Hi, good afternoon. Thanks for the call. Just a final question from my side, most of my questions have been asked. Just on and the competitive landscape acquisition target like Wild Street and SpinStream. Can you maybe just talk to us how competitive is that market out there? Sure. Well, I think we've got a lot more competitive in the last 3 or 4 months. I think You're starting to see more people sort of looking at the sort of strategy that we've been putting in place. Cygamesport, lightning bolt. And there's no doubt that the valuations on these businesses are definitely increasing. So we've been very fortunate that we were able to do the acquisitions when we did them. And we're also very fortunate That we have the technology and the infrastructure to significantly scale up our business. We're just adding A few more mathematicians and a few more game producers. We don't need to go out now and pay the sort of prices that people I'll ask you, Paul. But there are still opportunities out there. And I think one of the advantages that we bring Is that obviously, we will we are obviously pivoting to list on the NASDAQ and just having that equity angle. And obviously, the 2 deals we've done so far, a very significant proportion Of those two deals, the 2 founders took equity, and obviously, they believe in the long term combination of the businesses. So yes, there's definitely a bit more competition. I think there's definitely a bit more people sort of circling and looking at casino content. And I'm sure you've all seen the DraftKings Golden Nugget And I think and also the commentary around casino and the profitability of casino and the growth that it offers. So I think it's definitely a bit of a hot space. And yes, just a little bit of that. Hope that answers your question. At this time, there are no further questions. I will now turn the call back over to management for any closing remarks. Thank you, everyone, for joining the call. I hope we answered all your questions. And of course, as always, if there's any questions remaining, you can always reach us at infobragg. Games. Thanks, everyone, and enjoy the rest of the day. Thank you. Ladies and gentlemen, that does conclude today's conference. We thank you for participating. You may now disconnect.