Q2 2022 Evolution AB (publ) Earnings Call
Speaker 1: The.
Speaker 1: you
Speaker 2: Good morning and welcome to the evolution conference call.
Speaker 2: All participants will be in listen-only mode.
Speaker 2: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad.
Speaker 2: After today's presentation there will be an opportunity to ask questions.
Speaker 2: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.
Speaker 2: Please note this event is being recorded.
Speaker 2: We have the CEO marching callison and CFO capcapline.
Speaker 2: I would now like to turn the conference over to Martin Carlison. Sir, please go ahead.
Speaker 2: Good morning, welcome everyone to the presentation of the second quarter of 2022.
Speaker 2: My name is Martin Collison and I'm the CEO of Evolution with me. I also have our CFO , Jacob Kappner.
Speaker 2: As you shall, I will start with some comments on our performance in the quarter. I will then hand over to Jacob for just look at our financials and offer that we run off our presentation with an outlook for the rest of the year.
Speaker 2: After that we're happy to take all your questions. Operator, next slide please.
Speaker 2: The many operational deliveries in the quarter are a testament of the speed we're operating. During Q2 alone, we open two new studios and launched live on two new markets in North America.
Speaker 2: Just after the period we launched a third new market, Connecticut. This is truly a great delivery.
Speaker 2: The new students in Spain will once operating at full capacity be another mid-size studio. The studio will serve multiple markets with local languages to meet the man from our services, for our services from operators.
Speaker 2: Please note that our constant in Spain will continue us now and serve the local regulated Spanish market.
Speaker 2: I was personally in Madred in the end of June and the new student matter is a great new addition to the older existing evolution set of studios.
Speaker 2: The other studio launched is also mid-sized and in Armenia. The Armenians did it became our 15th studio and will cover expansion during 2022 and 2023. They have all started the plans for creating Studio No. 16 and 17, also mid-sized in Europe , to prepare for the MAM 2024 and 2025.
Speaker 2: The North American market is developing rapidly and I'm proud and excited that we in June further expanded our North American footprint when our live gains made their debut in West Virginia.
Speaker 2: Yet another step in the US market expansion is that we offer the perfect launch to our studio in Connecticut, the company's fifth studio serving the growing regulated US iGaming market.
Speaker 2: An additional step for the First and Second Court was that on the Ontario, the largest province in Canada opened up the markets for commercial operators.
Speaker 2: But make this market specialist that the license operators in Ontario will have access to our student networking Europe and therefore also to our full portfolio of lab games.
Speaker 2: Last but absolutely not least, we also initiate construction of an additional state of the art studio in New Jersey to cover the demand we see on this market. We look forward to recruiting around 7.0 new employees in the coming 24-month in New Jersey. We are looking forward to seeing the future of the new employee. In New Jersey.
Speaker 2: All in all, opportunities in North American markets is very promising and it's with confidence I look forward to our development on this market.
Speaker 2: We are in investment phase and during the second half of 2022 we will focus on scaling up all new students and naturally the effect will take some time to show in the financial numbers. We will focus on the financial numbers and naturally the effect will take some time to show in the financial numbers.
Speaker 2: I will come back to the acquisition on all limits later in the presentation, but let's now move to the coming slides and see the sector numbers and products on all our reports.
Speaker 2: Operator, next slide please.
Speaker 2: After strong first quarter, I'm satisfied to report the financially good quarter.
Speaker 2: Let's look at financials. Revenues increased by 34% to 344 million euro. EBITD increased by 36.4% to 238.2 million euro corresponding to margin of 69.3% which is within our guidance of 69% to 71% for the full year.
Speaker 2: The world is in a difficult situation with war, inflation, cost increases and delivery challenges but we reiterate our margin guidance of 69.21% for the full year 2022.
Speaker 2: However I stated many times before in the trade off between growth and margin we will always prioritize growth.
Speaker 2: Our RNG business amounted to 90% of total revenue in Q2 and live represented 81%. Momentum in live is strong and within the vertical the growth amounted to 36.7% compared to Q2 last year.
Speaker 2: R&D revenues amount to 65.5 million euro cost for the growth of 6.1% compared to the combined revenue of NASA's Mb2G during Q2 2021.
Speaker 2: This is a good growth and in line with our plans moving into H2, increased growth within RNG is still high priority. With a fantastic slosh pipeline for the rest of the year, we have higher ambitions for the coming quarters. The goal of double digit growth remains for our existing RNG business. The growth of no limit will be added on top of those ambitions.
Speaker 2: Despite the microchallenges in the world.
Speaker 2: Evolution has great momentum and we are definitely well placed for the strengthening our market share, both in short term as well as in long term. The promise we give is that we will continue to invest in our expansion, both in students and in games and never forget that we always need to work hard and become better every single day.
Speaker 3: Next slide please.
Speaker 2: Bad spots is to be seen as an indicator of the activity in Evolution Live Network.
Speaker 2: The positive trend with a strong increase of bet spots continues to accelerate within the second quarter. The number of bet spots from the users' amounts to 24.3 billion, which is an increase of 7.5% from last quarter and compared to two to last year, the growth of 38.5%
Speaker 2: We experience a continuous strong increase in volume, quarter after quarter, but even so we notice that bed spots for live is affected by the game mix, where for example, back dry generates fewer bed spots than were left, and as back dry continues to grow faster, we also see that affecting the growth of bed spots.
Speaker 2: During the second half of 2022, we look into different activity measurements for both live as well as R&D.
Speaker 3: Next slide please.
Speaker 2: At the end of the period, we were more than 15,000 evolutioners, expanding our studio terpaste means that we need a high recruitment base in the quarter. We increased the number and place with 956.
Speaker 2: Increasing staff year and year amounted to almost 4,000 employees, corresponding to an increase of 35%, during the quarter we also reached over 2,200 employees to North America alone. The
Speaker 2: We will continue to increase our country in front of 22 as we expand in our new studios in Spain, Armenia, Connecticut, but also in existing studios. With the first growth of the company, we need to have an equal high-patient recruitment, therefore recruitment, we continue to be one of our priorities and one of our key processes.
Speaker 2: We still see a very high demand and will continue to grow without dials as fast as possible during the remaining part of the year.
Speaker 3: Operator, next slide please.
Speaker 2: Our long-term ambition is to become the world leading provider of online casinos. And with that, with the acquisition of No Limit 50, we add an important piece to achieve that ambition.
Speaker 2: The deal is a natural step in our strategy to offer our operators the absolute best content in the world. No limit is recognized in our industry for cutting-edge technology, a graphically rich play experience, and they will be a great addition to the evolution theme.
Speaker 2: As with all brands, the conscorders on a no limit is innovation. No limit is a product developer with distinct contact, both in terms of style and storyline. They created a unique niche in the market, innovative games, graphically rich dark themes, but with a great sounds of humor.
Speaker 2: The normally emitters proven themselves as one of the most innovative slot developers in the online gaming industry and they certainly stand out in the crowd.
Speaker 2: With the addition of slots to our product portfolio at the end of 2020, it took a big step towards our vision of being global market leader in online casino.
Speaker 2: Now, by adding no limit to our portfolio of slot brands, we are adding additional strong IPs and innovative, fantastic talent, moving us yet another step towards that vision.
Speaker 2: No limit has good distribution already today, but over time we will of course look to how we can support the growth by distributing their slots through our one-stop shop and by that accessing the largest online casino play network in the world.
Speaker 2: NOLIM is rather a new for calendar of 2022. It's expected around 30 million euro with an ABA result of 23 million euro, and therefore we expect the deal to be accreted to EPS 2022. And therefore we expect the deal to be accreted to EPS 2022.
Speaker 2: We acquire no limit with our own cash flow and evolution as the company is completely debt-free both the four as well as off the different transaction. We both the four as well as off the different transaction.
Speaker 2: The transaction is expected to be completed within short and I'm very much looking forward to welcoming the whole team of No Limit to Evolution and work together and create new innovative games.
Speaker 3: Operator, let's go to the next slide, please.
Speaker 2: We continue to widely get to our competitors. No one else has the product portfolio to match ours and no one else has many high quality game solutions.
Speaker 2: We are more than half of our planned releases what we're trying to do in the second half of the year and after a long time we've expected about that.
Speaker 2: Among the new games in the third quarter, you will see glittering addition to our Rolette family, Gold Barolette. This unique new Rolette puts players in control while offering increase entertainment and rewards. Gold Barolette offers a spectacular environment for superb live Rolette experience.
Speaker 2: We will also release Monopoly Big Boiler, a bouncing ball game based on World's best-known board game Monopoly. This game also builds up of our two already popular titles Monopoly Live and MegaBoard, showing how we can leverage our own portfolio of hit games and characters.
Speaker 2: The coming whatever was introduced team passing.
Speaker 2: The hugely popular Asian variant of three-card poker that originated in India. Evolution's Team Pati is a world-class, easy-to-play poker game streamed live to players from a stunningly beautiful studio.
Speaker 2: In our Indeed Vertical, with our World Costs Loafs offering an IP, we aim to reach a high growth in this latter part of the year. The main driver to achieve this is by creating great games with superior playing experience. I think that we have a great R&D roadmap for the rest of the year, but ultimately play is full of the side.
Speaker 2: Beehive, Bonanza and Cornelius are just two or many new titles to be released during H2.
Speaker 2: Beyond everything else, our focus has always been to innovate and push boundaries to enhance the player experience.
Speaker 2: that this goes for live as a foreign G and I'm excited about how the new games that we have in line of the 10th and 2 would further confirm this commitment.
Speaker 3: Right there. Let's go to the next slide, please.
Speaker 2: This light shows the brake panel of revenue by your graphics region. Our global exposure is increasing and we are experiencing growth from all over the world in lines of our customers increasing the diverse videographies.
Speaker 2: Year on year, the growth in North America amounts to above 16 absence, which is the highest growth rate of all regions in the second quarter.
Speaker 2: In Asia we saw a continuous strong growth that amounted to close to six knots on the air. With a good potential in both these markets and expected continuous high growth rate going forward. With a good potential in both these markets and expected continuous high growth rate going forward.
Speaker 2: Europe as a whole including UK and Nordics for the growth of close to 8% year-on-year. The Nordics and the UK are the same size with the year-on-year growth in the UK amount into moderate 2.5% while the Nordics reached a good growth of 31%.
Speaker 2: This table does not include the pro forma figures so part of that growth in the Nordics is related to the addition of B2G for the third quarter 2021.
Speaker 2: The rest of Europe had a moderate growth of about 6% year on year. The European market is the most mature as we grow fast in other markets the shares of the total revenue of Europe decrease.
Speaker 2: One year ago the whole of Europe amount to 55 cents of revenue and now a year later it's only 44. Of course Europe is still an important market for us and we feel that there is much we still can do to grow the business here but the figure shows that the increasing globalization of our customers will take the percentage down.
Speaker 2: Other including Latin America and African remaining port of dual shows a good growth of nearly 50% year-on-year. In this market segment it is Latin that is the main driver for growth.
Speaker 2: Revenures from regulated march shows good growth of almost 4% compared to Q2 last year and is increasing from previous quarter to 43% of group revenues.
Speaker 2: The increase in the share of revenue from regulated markets partly due to new regulated more such Ontario and the Netherlands.
Speaker 2: which contribute to the pace in growing or regulated values. I will now pass on to Jacob, for a closer look to our financial details. For a closer look to our financial details. For a closer look to our financial details.
Speaker 2: pace in growing of regulated revenues. I will now pass on to Jacob for a closer look at our financial details. Next slide please.
Speaker 2: Thank you, Martin. And good morning to all of you listening. We'll, as usual, look at a couple of slides with close look at our financial development during the period. On the start on slide number nine.
Speaker 2: Revenue amounts to 344 million euro in the quarter, as you can see to the far right in the chart. That's made up of 278.5 million related to Lightcastino and 65.5 million from our R&G games.
Speaker 4: Light Casino has a year-on-year growth rate of almost 37% and Orange just over 6% year-on-year.
Speaker 4: For like I say, that is a bit lower growth pace than what we have seen during 2020 and 2021. As I mentioned, already lost quarter, the start of last year 2021 was exceptional, with almost 60% growth in life.
Speaker 4: Of course, we're happy for that development and would not have it go away, but to illustrate its effect, if Q2 of last year would have had an average growth rate from the previous two years, it would have grown around 50%. And if so, this quarter in comparison would have been around 45% year-on-year growth. So the comparison does matter. Still having pointed that out, the second quarter of this year is not a very strong quarter for life to see now. So.
Speaker 4: It doesn't completely change the picture. RNG on the other hand has a quite good development in the quarter, comparing to the same quarter last year. Performer, meaning we include, big-time gaming, growth is 6.1%. A smart and state that in his CEO comments, the goal of WDG growth remains for our current RNG business.
Speaker 4: It will not be a straight line development that we talked about also in previous quarters and will take some time. But the result in Q2 is encouraging and maybe a little better than my own expectations from a few months ago.
Speaker 4: Many of the structural changes to the delivery of RNG that we have implemented are supporting growth, but in the end, as always, it's about creating more really high quality games. That's our main focus.
Speaker 4: That will be a session of no limit 50. That was announced during the quarter expected to close within short. I expect to include that in the third quarter, but there's no financial impact of that in the second quarter.
Speaker 4: Moving on, EBDA for the quarter amounts to 238.2 million euro, giving an EBDA margin of 69.3 in the quarter. This is in line with our margin guidance of 69 to 71% for the year. We mentioned also when we spoke of the Q1 that cost increases, we're affecting us in several areas. That development has continued, and it does put more pressure on us to be efficient and find savings where we can.
Speaker 4: We do expect to see continued inflation and cost increases during the rest of the year. But as Martin mentioned, we continue to expand rapidly and we're not skating back on those growth initiatives, even though we face a short-term somewhat tougher economic climate.
Speaker 4: So cost levels do put some pressure on margins, but we also see good growth opportunities which can support margin. And all in all we see that we can maintain our guidance of 69% to 71% for the full year 2022.
Speaker 4: Operator, let's move to the next slide, please.
Speaker 5: Yeah.
Speaker 4: I'll look at the panel in some more details. Let's go through the table from the top.
Speaker 4: Again, live revenue, 278.5 million euro and RNG at 65.5 in the quarter. It adds up to total revenue of just under 344 million euro. This is a growth rate of 34%. There's no perform adjustment in the 2021 figures in this table. So that growth number includes some acquired growth from big time gaming. Adjusting for that performer growth would have been 30% for the total group in the second quarter.
Speaker 4: Moving down to expenses, personal expenses amount to 68.3 million, an increase of 33% compared to the same period last year. As you heard, we continue to expand rapidly in both in our operations, where the majority of our head counter-sides, but also we are recruiting in our engineering teams.
Speaker 4: The appreciation on the next line amount to 23.6 million euro. That's of 26% year-on-year. And that includes 10.4 million euro in the motivation of intangibles related to the acquisitions of both net-damp and big time gaming. acompaƱ
Speaker 4: Other operating expenses include items such as consumable equipment, communication costs, consultant, royalty fees. This line amounts to 37.4 million euro in the quarter and is up 23% compared to the same period, 2023.
Speaker 4: Summing up, total operating expenses are just over 129 million for the period, an increase of 28% compared to the reported figures of the same period last year. For the first six months of the year, expenses totaled 249 million, which also is an increase of 28% compared to last year.
Speaker 4: And I've mentioned we do experience some extra cost pressure at the moment, both as inflation and the area has affected us. But the main driver for continued increase of our expenses will be our own expansion. And that will be the main part. And that will be the main part. And that will be the main part.
Speaker 4: Operating profit sums up to 214.6 million euro in the quarter. Financial items include a positive amount of 2.4 million euro. This is related to currency effects. And tax is at 16.1 million euro in the quarter. That gives us a tax rate of 7.4% in this quarter. And about 7% I believe for the year-to-date period.
Speaker 4: These items bring us to a profit for the three-month period of just over 200 million euro. This is equal to earnings per share of 92 euro cent per share for the quarter after dilution and 1 euro 83 euro cent for the first six months of the year. It's an increase of 46% compared to the first half of 2021.
Speaker 4: We'll move on to the next slide.
Speaker 4: Before I hand back to Martin, look at the cash flow and financial position.
Speaker 4: Starting to the left, the chart to the left in the slide, we see the development of capital capital expenditure.
Speaker 4: The gray part of the bars represent investment in tangible assets, that means our studio construction projects.
Speaker 4: In the second quarter, CapEx in tangible assets is 14.8 million euro.
Speaker 4: Activity has been very high when it comes to studio projects and has been for some time and as Mark said during this quarter, we reach a number of milestones. With our first day, the slow-wrenching several of these studios that have been on the development for a while, we do however expect to continue investment as a similar pasting the rest of the year as we continue to expand in these studios and also new ones.
Speaker 4: The blue part of the bar is investment in intangible assets and is related to development of new games and features to the platform. It amounts to 9.6 million euro in the quarter and also here we expect the pace to be maintained.
Speaker 4: For the full year 2022, we estimated capex of about 90 million euro at the beginning of the year and after six months, we adjust our 45 million euro in capex. So in line with our estimate.
Speaker 4: But you see in the slide, the pace of investment is higher than during 2020 and 2021 in the CNAS in Capex in relation to revenues. And especially in tangible assets, then.
Speaker 4: pandemic made it difficult to build and expand as we wanted to. So some catch up of that we see this year. And as mentioned we see that pace continuing during the second half.
Speaker 4: Moving on to the middle, the chart in the middle of the slide, we show operating a casclo. In the quarter, it amounts to 161 million euro, and operating casclo in relation to EBDA on a rolling-cloth mouth basis on a good level at around 77%.
Speaker 4: To the far right, quick look at the balance sheet, we maintain a strong financial position. 294 million in cash at the end of June . That is, off the 303 million was paid out as dividend in April . And in Q3, we'll find a list of no limited deal, which means an upfront payment of 200 million euro that then comes out of the 294 billion within short. That then comes out of the 294 billion within short.
Speaker 4: That was the end of my prepared comments. Having back to you, Mark, I'm for some closing words, and then we'll take questions. Mark. Thank you, Jacob. I'm closing words for me before we open for questions. I'm closing words for me before we open for questions.
Speaker 2: Looking ahead to the second half of the year, there's a lot of exciting things ahead of us.
Speaker 2: Even so, bigger experts than me discuss every day where the world economy is heading.
Speaker 2: I have no strong opinion on that topic. We will focus on evolution and the things that we can control. That means everyday improving and delivering a better playing experience to our players. But as we have mentioned today, inflation and cost increase are a reality for us in many areas right now. And as we continue that continuing during the second half of the year. That said, we maintain our margin guidance for 69-71 cm in the year for the year. And we are in the first half of the year for 69-71 cm in the year for the year.
Speaker 2: We are in a strong financial position with good cash flows and will maintain our high pace of investments in both students and products. And people.
Speaker 2: I very much look forward to the continued development in all our new studios as well as expansion in many of our existing locations. The product roadmap for the second half of this year is simply put very good with many great games coming out to players all over the world.
Speaker 2: Evolution is well positioned and strong and I very much look forward to the second half of the year.
Speaker 2: That is the end of the presentation. And I think you already know for listening. And now we will move over to questions. So operator, will you please turn to next slide and open up for questions?
Speaker 6: Thank you very much.
Speaker 6: We will now begin the question and answer session. To ask a question you may press start at 1 on your telephone keypad.
Speaker 6: If you are using a speaker phone, please pick up your handset before pressing the star keys.
Speaker 6: If at any time your questions have been answered or addressed and you would like to withdraw your question you may press start in too.
Speaker 6: We have a first question from the line of Martin Arnell with D&B Market and please go ahead.
Speaker 2: Good morning Martin and Jakob. I hope you can hear me. Yes, hear you loud and clear. Perfect. So my first question is I want to know sort of what trends you're seeing in the online casino market given this weaker macro environment and is there any change in your own market forecasts at this stage?
Speaker 3: It becomes a quite speculative answer, but we do not see any drastic market changes right now. We, of course, inflation will affect, and there will be cost increases and things like that, and we manage that. You usually won't say that...
Speaker 3: gaming market is quite resilient to those shifts, we don't see any global changes.
Speaker 7: right now.
Speaker 2: Okay, thank you, that's clear. I remember in the last quarter you mentioned that you were underserving the market.
Speaker 2: I would like to know where you are in that context now, in this quarter, and what you expect to have.
Speaker 3: I mean it's a very strong quarter with deliveries as you can see. We go live with two new students in...
Speaker 3: Europe we open up the market in Ontario, open up the market in West Virginia, open up a new studio in Connecticut just after the quarter. So now we're pacing up and as you see we reach 2,200 in the North American market. We're pacing up clearly the effects of that will be coming slower but we are clearly not under serving as much as we did before.
Speaker 2: Okay, so you're more on pace now with the demand.
Speaker 8: Yeah, to conclusion.
Speaker 2: Yeah, okay. And just you mentioned North America.
Speaker 2: I think your growth accelerated there. Is that because of the new states?
Speaker 2: the two ones that you add or say it are
Speaker 2: The North America, the North American number, the growth performance in North America was a bit better than I expected at least. And I was just wondering sort of what's driving the acceleration, is it the new studios or the new state? Or is it New Jersey and Pennsylvania? It's not the new studios I've just recently opened. So it would be Michigan and Canada that is driving out of time.
Speaker 2: Okay, excellent, thank you. And then I have my final question is on this balance between...
Speaker 2: We might need to introduce a limit on number of questions if you go on Namatkin. But one final word. On this balance between margin and growth.
Speaker 2: you say that you will always prioritize growth and
Speaker 2: You're still at high growth numbers, but it's fading a bit. So my question is...
Speaker 2: So, could you not accelerate the growth with higher cost investments or how should we interpret it? That's where margin guidance is intact despite somewhat low growth.
Speaker 3: In general terms, we will always prioritize growth over margin if there is a trade-off between those two.
Speaker 3: The other answer is that in some aspect it might be hard to analyze our result because it's not a three months result. So the trend is, if you look at the global trend, there's plenty of growth in the future for one like I've seen about how that falls out quarter over quarter is more difficult to evaluate. So that's the answer. So that's the answer.
Speaker 2: Thank you. Okay, thank you. That's all for me.
Speaker 5: Thank you.
Speaker 6: We have next question from the line up, add young with Morgan Stanley , please go ahead.
Speaker 9: My first question is on margin, you said you're not content.
Speaker 9: Login to the quarter at 69.3 and you're reiterated as you said.
Speaker 9: guidance. I can see that employee
Speaker 9: It's actually fell per employee 3% in the quarter. Can you talk us how you see wage inflation?
Speaker 9: Lee, where you see it going and could have other drivers have martin.
Speaker 9: To the year, So it is your 69%.
Speaker 9: Is that a flaw for Q3 or Q4 or is that very much just a blended...
Speaker 9: a blended year-end outlook.
Speaker 7: I I think you pointed on AIT.
Speaker 7: Thanks.
Speaker 3: Okay, let's take a few things out. When it comes to the quarter...
Speaker 3: I think that the quarter on an operative and delivery is fantastic. I'm super happy with that. It's great We did exactly what we did. We're really pushing through and then I say that financially it's a good quarter but not great.
Speaker 3: Then the margin in itself 69.3, I would say that if I would select, I would always select growth before margin, so the 69.3% I'm not in particular unhappy with that, I'm not happy with that. So that's in line with our guidance, we say 69.71. So the conclusion that I'm not content with the margin is a little bit.
Speaker 3: I want more revenue. I'm not happy. I want more. Okay, that's
Speaker 3: partly person thing uh... and and and i want to deliver more the margin is uh... okay in the in the in the low range of our guidance okay so that's the first the feeling uh... in the first response
Speaker 3: What is the next question?
Speaker 9: Well, I guess what I'm saying is, could you give us any colour on where you see wage inflation versus where wage inflation might get to? When you think about, I obviously understand it's an output of growth.
Speaker 9: on the revenue side partly, but it's also obviously the cost side. I just wondered if Jacob you could perhaps give us any colour on
Speaker 9: We're seeing in terms of age and patient, how we should think about modelling that going forward.
Speaker 4: ...it's... in the end.
Speaker 4: We said in general terms that we do see wage inflation and wages are increased every year to some extent and then maybe a little bit more so this year and then it varies a little bit between markets. So it's not a hard number. I think you should expect personnel costs to continue to increase but mainly because we will continue to expand. That will be the main driver. But yes we do see a bit more.
Speaker 4: Yeah, more increases in wages this year in many markets than what we have done in the past. This is not really a hard number to give you.
Speaker 9: Thanks, sir. I think my final one.
Speaker 9: Well, it doesn't, but you're not going to give me a number, so I'll leave it. My last item is just on the revenue and growth outlook for H2. You've obviously won games. You've obviously won games. You've obviously won games.
Speaker 9: This is our skewed to h2 you mentioned a lot of the capacity that came in North America came at the end of the quarter, so I appreciate one angle is Normalized the growth rates. It was still a good growth quarter.
Speaker 9: the comm series or an H2, but how happy do you feel about where the pipe vign is and where that, where will see traction of that capacity come in during Q3 and Q4? Is it fair to respect your positive on Q2 or H2 on revenue within the new world H1?
Speaker 3: I'm very happy and very excited about the products that we're going to launch for the second half. And we have more and a half of the products to launch for the full year. And also to remember is that, I mean, the launch cycle is more.
Speaker 3: Towards the end of the first quarter and the second quarter and then onwards so it's it we really we really just in the More or less in the beginning of the release cycle of the new game, so I'm very excited about that
Speaker 3: I think that the outlook
Speaker 3: for the ten years period hasn't changed.
Speaker 3: So I'm very happy to look into the second half of this year exactly how the courters, I mean, that's a difficult question how the courters will fall out. We don't have any answer to that. And we are, as I said, financially it's a good quarter too, but we're not really content with it. So of course we look forward to do.
Speaker 3: to do better in a lot of different areas.
Speaker 1: Thank you.
Speaker 6: Thank you. We have next question from the line of Oscar.
Speaker 6: Run Cabest with ABGE, please go ahead.
Speaker 10: Thank you, good morning Martin and Jakob, thanks for taking my questions. I would like to start with your top line development. You obviously had quite nice sequential growth in the last two quarters, while it seems like it slowed a bit in this quarter even though it still looks okay. Could you give us any comment on to what extent the expected seasonality impacted the sequential growth and how we should think about H2 then? Thank you.
Speaker 4: Of course there's some seasonality in there. You can say that the seasonality is strongest in probably Q4, and then goes down, down, down, during the year. And now it's the worst time of the year. And then, down, down, sort of. And then, down, down, down, sort of. And then, down, down, sort of.
Speaker 4: Carry on darling this whole aboutgirled its fairly tight That's that this
Speaker 4: There's part of that, but I think it's maybe more, we see the structurations from time to time. If you look at the kind of sequential increase in the quarters, you write both Q1 and Q2, Q4 and Q1 of this year were higher steps of Q3 of last year, or I think more or less on this level. So we've had these structurations in the post as well. So I think it's like I said, it's maybe not as big of a tough comp, but it is not a great...
Speaker 10: slow down in the latter part of Q2 and then can you share any thoughts on the momentum going into Q3?
Speaker 3: It's a very good question. We are early in the quarter and we were early in the quarter, last quarter as well. And then it's hard to exactly say what we are. But we are looking into the second half of the year and I'm really excited and I look forward to that part. We haven't in any particular in our comment the Q3 beginning.
Speaker 10: just out of that reason that it's hard to actually know. Okay, got it. Last one just on the cost side. The other OPEX line, did you expect it to be around the run rate at the moment with the 37 million or is that on the higher or the lower side?
Speaker 4: I mean we don't really give, you know, you can see sort of, we do give guidance on the margin, we don't sort of break out the difference.
Speaker 4: I know I commented on it a little bit specifically in Q1 because it was a notch lower. So I think over time you will see this line increase just like the others with expansion. So it's a little bit more lumpy.
Speaker 4: probably a little harder to model than some of the others, but no, I won't sort of single it out in any direction other than that. For time you'll see it in precisely extent.
Speaker 4: to model them than some of the others. But, no, I won't sort of single it out in any direction other than that. Over time, you'll see it increases as we expand. Okay, understood. Thank you very much.
Speaker 11: Thank you very much.
Speaker 6: Thank you. We have next question from the lineup Monik Pollard with city. Please go ahead
Speaker 12: Oh, morning Martin and Jacob. Morning.
Speaker 12: Morning, just three from New Police. The first one was just on Studio Launches. Obviously you've had a lot of junior Connecticut into the culture. Are there any more studio launches to come in the second half of the year?
Speaker 3: We haven't communicated any new launches. We will continue now to expand inside the existing studios and I do not expect any new launches in the second half.
Speaker 4: Right, and then in line with that. I can add that, let's call it, I mean, when we launch a studio, it's, you know, with a few hands full of tables. And then we continue to invest, to expand with more tables. So you could say right now we have...
Speaker 4: some fixed in studios operational. So the difference between starting a new studio and investing and expanding in one of the existing ones is not that big for us. So when it comes to the capex and the pace of investment, that will be on the same level in the second half, even though we might not launch in any new location.
Speaker 12: Okay, that makes sense.
Speaker 12: And then sort of tied to that, obviously we've seen strong employee growth. So I'm not talking about registration, just the growth of the employees that you talked about and part of that obviously will be those studio launches. Obviously I understand that you'll be sort of increasing capacity and tables in those new studios, but should we expect that pace of employee growth to moderate slightly in the second half of the year?
Speaker 13: emm there
Speaker 3: It's hard to give any direction in that, but first, during the pandemic, we had to scale back. We didn't deliver fully to all markets that we should do. So we are still in the catch-up phase, and that's you can see that's why we're sort of accelerating right now. And we will continue to fill the studios that we have now, Lewonston and for fill those markets. And we are here to fill those markets. And we are here to fill those markets. And we are here to fill those markets.
Speaker 3: And maybe it's been fairly aggressive, but I wouldn't expect it to go down drastically during the coming or the second half of the expansion of MPs.
Speaker 12: Okay, understood. And then the final question was just on the UK as you mentioned we've got about two and a half percent growth year-on-year in the UK and the quarter. I just wondered what you're seeing in terms of if there's any hesitancy from operators in that market particularly given the sort of regulatory uncertainty with the white paper not coming out? Everyone, I mean we are not that dependent on the UK market so we are probably more...
Speaker 3: to calm down and be more clear for the future, but how long time it will take to get there, I don't know. The potential of the UK market is of course much, much bigger than what we see today, but the regulatory aspects are difficult.
Speaker 12: Okay, thank you very much.
Speaker 11: Thank you.
Speaker 6: Thank you. We have next question from the line of Oscar Erickson with Carnegie. Please go ahead.
Speaker 3: Thank you and good morning Martin and Jacob.
Speaker 2: three products related to the question for me, if I may. Starting on the very encouraging performance for slots here in Q2, is it any specific gains that are for me well? And then Manotrat, you mentioned some high growth in H2, I believe. Are you still targeting double-ditted performance growth in H2 with more getwards Q4, please?
Okay, uh!
I mean
I mean
I wouldn't single out any specific game. But if I... I mean our extreme series is very good. But I would say that we are now slowly building the right games inside RNG. We are slowly getting it out. We are working on the one stop shop.
We are getting there with RNG, so that's the answer. But I wouldn't sort of pinpoint one single game. I think that we are getting it working nicely. Then we haven't set a time for the double digit growth. I'm happy with Q2.
The growth in RNG, we are on pace to go to WDG growth exactly when that happens, we haven't stated.
Excellent, very clear. And then on the one-stop-shop rollout and impact, it's possible to get an update there. Any positive impact synergies here in Q2 driven by the rollout, given a strong performance in Q2. Thank you.
The one stop shop is being rolled out. We are on pace in Europe and slowly converted. That's of course related to the operators and they should also have resources to change the integration and so on, so that's we're working on. And then of course, we're now, as you know, 100% of the operators in Ontario is using one stop shop and we have the one stop shop in Asia and we are preparing and we are now.
releasing the first games from big time gaming on Wastop shops. So we are moving forward and according to plan with the Wastop shop rollout in the whole world.
Great, and then finally on the live side of things, quite positive comments on the recent releases of Xtreme, Lightning or Left and Crazy Coin Flip. Is it possible to expand a little bit on that and possibly quantify what again had the largest impact on invisible cannibalisation from Xtreme, Lightning or Left?
And then further if you could just comment on what games you're most excited about the live from second half of the year. With a lot of questions there in one they hope. With a lot of questions there in one they hope. With a lot of questions there in one they hope.
would be great to have some color.
I would say that extreme lightning is one of our strongest releases ever, and then one of the, that's not like the D1, but it's a fantastic game, it serves the market, we're very happy with that. Crazy coin flip is a completely new game, attracts lots of players, and it also feels void in the market, and we did something that is highly appreciated. So we're really happy with that too.
If I look ahead, I mean the safe bet
to say about a new big game is of course the monopoly big baller because that's like monopoly. It's a strong brand and we did an amazing studio and it's like it's an amazing game and it's a bouncing ball game and it serves to market and it's also prepared for different parts of the world and it's a great game. But equally I would say that the gold baller will laugh.
It's a game where you can save parts, as you have much more decision making as a player. You can save things in your vault and you can come back later and you can play them. And that is a very intriguing and interesting mechanic. And we look forward to also explore that. So those are the releases where I would look forward. And also them.
a little bit more flavor to the conflict on extreme lighting.
Thank you, Mortim. That's very interesting. I'm equally looking forward. Thank you very much.
Thank you.
Thank you. We have an express train from the line of George Utland with Pareto's security. Please go ahead.
Good morning guys. Just a question on Asia. We're seeing.
quite roughly decelerating growth, just like a level though we...
Could expect a forward-ward or you're seeing some temporary issues in the market, even though the absolute correct is obviously strong, will be my first question.
There are a few customers, there are a few things, there's a couple of high payouts, wins which is fantastic because the player gets the money and there are a number of different reasons for nothing in particular when it comes to the growth in Asia. The outlook has not changed, we're still looking in the tania perspective, it's like a great fascination.
Exactly how it falls out over the quarters is hard and now we as you see a little bit weaker quarter, but then again a stake or state that I mean you can look at Q3.
last year and you will see those happening from time to time.
Okay, great. And then my second question on Ontario, I heard there was some issues with payments in the early parts of the regulation. Is it something that you can comment on if it's affected you or if you think the role in Ontario started in line with your expectations?
I haven't had any such problems. I would say that on the entire you started, we had very high expectations we usually have, but they started in line with high expectations and doing well.
Okay, that's clear. That's all for me. Thanks.
Thank you very much.
We have next question from the line of Marlon Bonnick with Nordia. Please go ahead.
Good morning Jacob and Martin. Thank you for taking my question.
First, I'm a bit surprised by the strong performance in North America, but also the weak performance in other markets. I know you already touched the North America market ready, but can you please comment a bit on the other markets? What's the reason for kind of the momentum slowing down here? QOQ growth. Any comments? Thank you.
More or less the same answer as last. There's no specific reason here or there. We look forward to the second half of the year. There has been a couple of payouts, a couple of things that have happened during the quarter and those quarters happen from time to time and you can look at the other quarters and sequence of growth and it's hard sometimes to...
every quarter will not be sort of on a line. It's like it would be a little bit up and down. So right now we have a great momentum in North America. We're very happy for that. And at the same time, a couple of things making the pace a little bit slower for this quarter in other regions. Yeah, and just can you give us an upstate? What's the plan in terms of launching a life capsule? You know it in the South American markets? Any comments here?
We are into that and there is also a lot of regulatory discussions right now and we need to have the right setting. But we are on to that. But as I also stated we don't expect to launch any studio on the second half of this year.
Yeah, clear. And just lastly, I mean, besides the macro uncertainty, what's the main risks you see here going forward and do you find the little remark yet? I mean, can you ramp up stuff as expected and hold this at actually holding some potential growth back? So this is actually holding some potential growth back.
Yeah, clear. And just lastly, I mean, besides the macro uncertainty, what's the main risks you see here going forward? And do you find the labor market? I mean, can you ramp up stuff that's expected? Or is it actually holding some potential growth back? Any comments here? Thank you. I'm going to be a little bit more. I'm going to be a little bit more. I'm going to be a little bit more.
Yeah, it's a good question. It's of course a very hard, difficult question, but all in all labour market will be better for us that are recruiting a lot because there will be more people available. As inflation and salaries go up and the climate is a bit difficult. So I'm not worried about recruitment. There might be some timing when it comes to inflation goes up and put pressure on wages and salaries and then before that sort of comes to rest.
good cash flow and we will continue to be that free and good cash flow.
Perfect, thank you, it's open now.
open the
Thank you. We have an express train from the line up, Kieran Jodg-Greval with Bank of America. Thank you. Thank you. Thank you.
See you in the morning. I hope you try.
So I know the cost inflation questions come up a few times or the margin question. Let me just try and ask you. It's like a different way. I mean, this quarter was all about rollouts, new studios with Virginia and even Connecticut rolling out after. Should we assume this was probably the biggest quarter in terms of cost pressures? And they should use going forward despite the cost inflation. And then secondly is on the UK.
That was the softest region in Q2. Could you offer more color here on the softness? Is it a lower spent, you know, lower spent per head that's happening there? When did you start seeing the softness? And perhaps on cost simulation again, are you seeing similar level of pressures in all your regions or other some regions you would call out as being worse than others? Thank you. I think the...
personal cost a little bit more. So there's no, yeah, we haven't broken it down into any guidance on the specific lines like that. Other than that, we will try to maintain our pace of expansion, maintain our pace of investment and sort of push forward.
The UK question, I would say that the softness there has been for a long while. Someone mentioned the white paper and I think there has been a bit of uncertainty for operators in the UK market for quite some time. So it's of course a bit unfortunate now that we seem to be waiting for the white paper yet for some more time. I think that would give some clarity and sort of make it clear for operators how they can act. So that's probably holds it back.
Nothing, nothing other than that that we see in them.
What was the third part of your question? Repeat that.
Yeah, it was on cost inflation. Are you seeing a similar level of cost inflation pressure in all your regions or is one region even Europe a bit better than North America? How do you feel?
I would put it like this, I mean inflation has been with us during the last five years as well. I mean many times it's like okay we didn't have any inflation in Sweden and then no one has inflation but I mean if you look at Georgia they have had 5, 6, 7% for the last years and some months it's been 8, 9. inflation varies per country.
and it will continue to do so and we need to manage and monitor that. And there is no...
And now it's a little bit higher all over the world and pressure on it. But we don't act differently. We will continue doing what we're doing in just the salaries, according to what is possible and be tight on cost. But yes, it was a little bit of a biography. But yes, it was a little bit of a biography.
Okay, thank you.
Okay, thank you. Thank you.
Ladies and gentlemen, that was the last question. I'd now like to turn the conference back over to Martin Carlson for any closing remarks. Over to you, sir.
Thank you very much for listening. It's a pleasure answering your questions, and it's an honor to present, and look forward to speaking again a couple of months.
listening. It's a pleasure answering your questions and it's an honor to present and look forward to speak to you again in a couple of months. Thank you.
Thank you very much, ladies and gentlemen. That concludes this conference call. Thank you for attending today's presentation. You may now disconnect.
I.