Q1 2022 Evolution AB (publ) Earnings Call
Today, we have this amazing actually.
It's very exciting, Connecticut, and Armenia is planned to go live in the near future.
The opportunities in North America that commentary and we will continue to substantially invest in that market.
In the quarter, we launched life left in new Jersey subject to necessary regulatory approvals and other states. Our aim is sensor life. Nevertheless tables in each of us each of the USA. We are are alive with evolution light product.
And I'll tell you we are live with only the unparalleled since October but.
We are since the beginning of April .
Also live with all the commercial operators.
Worth mentioning in relation to the first quarter is the renewal of our existing agreements with fungible group to become fungible selected provider blood casino across the entire U S.
We have a great momentum in North America in March was a new record months of evolution and we are all well prepared to continue that for another month.
That for us talked about our one stop shop, enabling our operators to reach all our content through one seamless back them that will amend and much faster rollout of new products.
Canada is an example mentioned that all operators from the newly opened Ontario market reached all evolution products through all with us.
Well, it's us it's also making it easier for operators to access and how some of the products.
[laughter].
During the second quarter evolution is launching new fantastic loaded.
I cannot say enough express my excitement for the new normal.
Amazon Netflix and Youre getting close it's powerful seamless beautiful and who the end users very outfit the lobbies smart powerful and personalize and already in April and we are starting to rollout.
And the general rollout would be somewhere in June .
Evolution has a game development hub in Ukraine, we all know the situation there.
They've come out and work with slow since the war become what.
Our efforts have been focused on the wellbeing of our local team.
Evolution strongly come Downs, Russia unprovoked attack on Ukraine.
Evolution has no obsessed with customers based in Russia, the direct financial effects of the war.
<unk> is not material to the group.
At the beginning of the pandemic our student in Georgia was temporarily closed during limits in Paris, and large share of the traffic was transferred and managed by the evolutions Other studios.
All students an evolutionary interchangeable and can be used to offset one another in the same way, but haven't been able to move a large partner development and Ukrainian engineering hub to one or more of our time other hubs across Europe , but also reallocating as many developers as we come out with Ukraine.
To be a global company with sites across multiple territories.
Cost of risk reducing factor.
Now, let's move to the coming to us and see it affects our numbers in product of all our efforts operator next slide.
We continue the momentum for 2020 one.
And have seen very strong start.
Operationally, it's been a bad quarter and I'm pleased to see the strong results we present today.
Revenues increased by 39 substitute three to 7 million Euro everything increased by.
By 43% to 230 million euro corresponding to a margin of seven.
3%.
This is within our guidance of 69 something.
69% to 71% for the full year.
And my view is that we can manage to the guided margin for 2022. Despite the cost increases we see all over the world both in services and products. However stated many times before in a trade off between growth and margin, we will always prioritize growth.
Like casinos ever satisfactory growth of four 4% compared to the two.
Q1 last year.
R&D revenue amounted to $62 3 million, even with the growth of <unk>.
Almost 2% compared to the combined revenue of naphtha from BCG during Q1, 2021 this.
This is in line with our base case expectation. However, we do have high expectations for growth going forward moving forward into 'twenty to 'twenty two.
The powerful growth within R&D is high the high priority the lineup coming in so strong and I feel confident that the performance within the vertical will increase under who see strongest contribution to the overall results from both brown at the end of the year.
All in all I'm back.
Very pleased to be able to it sounds you have to another very strong quarter for evolution.
Definitely website as opposed to thinking of a market share.
Turning to widen that gap to competitors, but that's all what we need to work hard and becomes after everything.
Next slide.
Yeah.
Basketball is to be seen as an indicator of the activity in evolution live network.
The number of basketball from them. This amounted to $22 6 billion, which is an increase of 8% from last quarter.
Very strong increase compared to Q1 last year to go from 31% the fourth quarter normally has a strong seasonal and it's satisfying to see satisfying to see that we can continue to increase the number of basketball is such a high pace during the first quarter.
We can also note that the comparison burden in 2021 was affected by the high network activity and game changing.
It actually is this from the payers.
Due to the Covid lockdown.
As long as we continue to create great games, great games that are exciting and relevant new pace would be affected by the type of entertainment in the Texas will increase at the same time line of the new case that had been introduced live casino. During the recent year continues to accelerate the growth in the long term.
Next slide please.
[laughter].
Expanding our suite of capacity it means that we need a high recruiting pace and in the quarter, we welcomed more than 900, new employees now.
The increase in staff.
The year amounted to 4150 and corresponding to an increase of 40%.
We will continue to increase head count during the year and if we open our new students in Madrid.
That's why that's we're expanding existing studios with the fast growth of the company, we need to have an equally high pace in our recruitment and therefore recruitment will continues to be one of our priorities and one of our key proof of it.
At evolution diversity diversity in all forms is considered a competitive advantage in a massive way.
Well more than 100 nationalities represented an evolution for the company as a whole 59% of the managers across all levels of our teammates.
These numbers are a testament to that equality diversity are an integral part of the day to day operations and a key component of the company's business success.
At the end of the prior year, we were more than 14000 evolutionary evolution family consists of super talented people with winning mindset.
To attract the best talent and put a lot of resources being a modern per employer, which is an ambition I think we are fulfilling.
Next slide please.
In February we hosted an online event to share our plans for 2022 and to showcase 25, new online casino games from across our all around.
I'm excited to tell you so far.
With 30000 industry people worldwide have much the same on the different platform it's been published.
All groups product roadmap for this year is the strongest one ever with great innovation among the existing leases for one six.
Six brands.
The year this year across the group, we would for some of the more successful addition to the bestseller game concepts such as our license family Amazing collaboration with one payments Entertainment Brown, our new unique times to fly non stop.
Needless to say I'm very excited about the new games, but we havent lined up for this year.
Yeah.
As a group we were committed to creating the best gaming.
Every player in both license law.
Crazy conflict conflict.
It's one of the one example, which I already mentioned earlier.
And you saw on the first slide and not the game that we launched in the quarter is an example of a game with a regional super on their behalf. It's a world class online version of a traditional Indian card game stream from a beautiful Indian things to do for a truly authentic gaming experience.
For those of you that like.
Like mid life in the fast Lane I recommend our newest licensed family addition, extreme like Nevertheless, it's an exciting expansion of our award winning likelihood that this is probably the most dramatic and exciting version to rollout ever seen in the world.
All of our R&D brands had a strong lineup lineup for operators and players coming up in the year.
Which would move us towards our aim of the double digit growth in R&D.
In addition to new types of an important part of the product development is constantly improve the gaming experience and our existing <unk>.
Recently several of our first person games have undergone some striking design improvement for me even more realistic three the animated gaming experience.
Stated in the beginning.
Best told my Forever and I'm very excited with the rest of Sunset.
Next slide please.
This slide shows the breakdown of our revenue by geographic region.
We continue to see increased demand for online casino across the globe in 2020 , one we expanded the number of tables with ours with over 300, however, the modeling.
Is so strong.
However, the demand is so strong as were under serving the market.
In Asia, we saw continued growth, which amount to 94% year on year North America is also growing fast with the year on year growth amounted to 70%, we see good potential in both of these markets and especially continued high growth rates going forward in Asia, we have been successful with the paint consumption, especially are variations on backer had been.
Well received by players.
In North America, we look forward to the opening of our fourth studio as well if we have high expectations for the Ontario market.
Worth noting is that we are not dependent on them and so on.
Different states.
Our growth in the U S. We still see great potential in order to regulate they don't open states.
European markets in general have slower growth in the North American nation markets due to the both regulatory changes as well as that they are more mature.
The year ago, the whole of Europe amounted to six it sounds of our revenues today the numbers 47.
The Nordics and the UK are the same size with a year on year growth in UK amounted to one 9% and in the Nordics amounted 30 creeps up the rest of you will have a more moderate growth of four 5% year on year.
After including South America Africa, and remaining part of the World shows good growth of almost 8% year on year.
Revenues from regulated market demand for sand in Q1.
I will now pass on to Jay So for closer look at some assets.
Thank you Martin.
I'm on slide number eight.
Revenue amounted to $326 8 million euro in the quarter, considering the graph that's made up of $264 5 million euro related to online casino product $62 3 million in Europe from our R&D games.
The casino continues to develop really well as Morten also described earlier.
<unk> for the same quarter of 2021 that like I say no interest just over 44% a very good against the first half of 2021 where we had one most extreme growth rate.
This quarter's growth rate also compares well to the pre pandemic growth rates from 2019 and earlier.
R&D revenues increased one 8% compared to the pro forma figures for Q1, 2021 and include Big time gaming and the comparison quarter.
Compared to the previous quarter LNG revenue is lower.
Partly due to a strong Q4 generally high fare activity around year end when Christmas promotions are alike, but of course, we would also like to do better in the Orange area.
We mentioned last quarter that our ambitious reached double digit growth remains even though it will not be reached in the next couple of quarters. We have lots of work going on as you just heard in the Orange area and I'm convinced that that will pay off in the long run, but we have a couple of tougher quarters ahead of us and the Orange area as I see it right now.
Total revenue growth compared to Q1, 2021 it's 39%.
Q1, 2021 of course includes <unk> for the full quarter. If they came into the group in December of 2020.
EBITDA for the quarter amounted to $229 7 million in Europe .
EBITDA margin of 17, 3% in the quarter. This is in line with our margin guidance of 69% to 71% for the year, we do see cost increases in many areas right now both due to our high activity level and we also see price inflation in most markets right now.
Drive costs than we would have to managed up our main priority remains supporting growth so growth over modules, where continues to be our priority and.
All that said however, we do maintain our margin guidance unchanged.
Operator, let's move to the next slide please.
This slide shows our P&L in a bit more detail I'm here to 2021 figures do not include any pro forma adjustments.
From the top we have live revenue again, $264 5 million Euro and Orange at just over $62 million.
44% growth rate, which is fully organic for like I say no I'm here because it is a 19% growth rate in LNG compared to the reported figures Q1 'twenty. One so that includes the quiet.
Total revenue of 346 million, that's an increase of 90 million euro compared to our reported revenue Q1 last year.
Moving down to expenses.
<unk> expenses amount to $63 5 million, that's an increase of 30% compared to the same period last year.
And it's also off the notes from the previous quarter Q4, we are expanding in all areas.
Recruiting heavily both within operations, but also within on the engineering side.
I think we do expect to see some higher wage increases this year in many markets.
This year so that's.
So.
Some pressure there.
<unk> amounts to $22 6 million that includes $10 4 million in amortization of intangibles related to acquisitions unless something big time.
Jamie.
Moving to other operating expenses stuff includes items, such as consumable equipment communication costs consultants royalty fees. This line amounts to $33 6 million euro in the quarter, it's up 25% compared to the same period of 2021.
Compared to the previous quarter Q4 in hindsight I can conclude that Q4 dip carrying few extra expenses to attempt to come in at year end and this quarter might be little bit on the low side. So looking at a run rate I would say, it's probably somewhere in the middle of this quarter.
In Q4.
Summing up total operating expenses totaled just over 119 million for the first three months of the year, an increase of 27% compared to the reported figures for the same period last year.
Operating profit $207 1 million in the quarter.
Moving to our financial items. This includes a positive item of the 5 million related to the completion of the compulsory buyout of the remaining left unchanged that did not come with a rigorous shut off for a year ago.
The arbitration was completed earlier this quarter the amount paid was lower than what you'll see in our acquisition analysis.
The follow up period since the acquisition is tough the correction of a goodwill if there's oh.
Over P&L, so 5 million euro positive item on financial items.
Tax is up $13 7 million for the quarter tax rate of six 5%.
These items brings us to a profit for the three months period or $197 7 million euro equally.
For sure for the quarter.
The dilution.
So 50% compared to firstly.
Well, that's a pick up to the next slide.
One.
[noise] controlling financial interest chunk before I hand back to Martin we'd have to look at.
Sure. Thanks to the left in the plan.
Development capital expenditure.
Great.
This represents investments in tangible assets, which is mainly our studio build project.
In the first quarter Capex intangible asset is 14 million Europe .
As mentioned earlier activity.
Very high when it comes to the studio projects right now and we expect to continue doing.
During this year.
We mentioned project in Madrid, the Alabama and also.
Their joint collective good automobile lots of projects right now.
The deficits.
It looks like the investment will continue.
As we expand and build up capacity gradually.
Each project.
The positive side effects of expanding network of studios is that today's after a complete new studios, it's more resilient than ever before and dependency on any single studio is continuously increasing.
As <unk> mentioned.
Okay.
Okay.
Benefit for creators.
The blue part of the bar in the chart the investment in intangible assets related to development of new games and features to the platform at $7 1 million in the quarter.
As we've mentioned before investment in games will continue at a very high pace.
A record number of games coming up this year.
Continue before the full year 2022 estimated would have capex of about 90 million euro so.
During its a step up.
Roughly $60 million for 2021.
During quite attractive, especially I would say, especially in intangible assets also have backup the pandemic did make it difficult to build so some catch up effects of that this year, but also of course are our growth warrants. The continued investments in studios engaged.
Moving on to the middle of the slide we show operating cash flow.
Bigger than a quarter of over 209 million Euro cash conversion on a rolling 12 month basis.
Just over 80%.
So before rising in the slide quick look at the balance sheet 439 million in cash at the end of March Samsung 303 million have been paid out with dividend.
In fact, they want them not earlier in April so right now we have a.
Significantly reduced cash burn.
Strong cash flows we maintain an overall very strong financial position.
Some of the end of my prepared remarks, I'll stop here and back to you Martin I will take your questions.
Thanks you.
A few words next I don't know of course, the outlook for parents to them subsequent to to actually not.
No.
I forget you can you can see that.
Something wrong with our plight is you find it you send a mail them you'll get.
A few words to conclude this report protection this year would be the year of product and innovation with half of the year with good momentum building with Istar.
On the product portfolio in parallel I look forward with enthusiasm to the rest of the year.
We released a record number of new innovative and exciting and fantastic products exciting games inspire all current with what our future players.
It's hectic time.
Today's presentation with a dramatic demand for our products is global and we will continue to invest in products.
And of course in our people in order to fulfill the worldwide demand.
We will continue to push push on the boundaries and we are I don't know if that's ever.
Thank you all for listening and we'll speak again in a couple of months.
Now, let's move to the last slide I'm quite sure.
[noise], Thank you and Google now to question and answer session.
If you have a question time speeches.
They're real and I'm not concerned now turn to the key.
My first question is from March.
Your line is <unk>. Please go ahead.
Good morning, guys I.
I Hope you can hear me.
Okay. So.
Mark and I noticed you mentioned that youre sort of under serving the market.
When do you think that you will be out of such a situation I'm actually be on par with where the demand.
I don't I don't have a timing for that but I and I think that as we go continue Atlantic is down in the market, but I think that we would all be.
Beyond the serving the market for quite some time going forward.
Right now, it's a bit too high.
A little bit faster.
Right.
On the Madrid this open today.
Yes from a launch the steps for the near term and also could you comment on when you expect to come into our lives to built them.
I think the.
In the near future.
Don't want to pick a date.
Neither for Kalydeco for everyone right now, but it's in the near future.
Okay. Thanks.
Looking at your activity in April do you see any and essential tremor.
With a tier one.
Okay.
I am.
The state is that we are very happy with the momentum during Q1.
They're not focused on that we have.
Product Road map.
Gone really slow product.
And we're happy with the momentum coming out of Q1.
Yeah.
Okay.
How how many of the of this games do you have a less so launch for the rest of the 'twenty to 'twenty two.
Mt.
We have it.
Matt.
H E H I didnt do attract months, but we are just in the beginning of the early part of it right now.
Yeah.
Okay. Thanks.
Most of America, Ontario, and you're going to launch kinetic job and you have been you have to like.
Nevertheless game.
Do you expect any.
Our sense of the growth rates during the coming quarters in North America.
We don't guide on the girls side going forward, we were very happy with the growth picks up we have right now I think the great momentum that has more to do.
Expanding in North Brazil.
We continue to expand and also the disposable kits.
Yeah.
Okay.
I saw that you commented in the media. This morning that you had.
The impairment review can you comment a bit more on that.
Yeah.
There were comments about all of the Oregon ever.
When when they get a disproportional screen I said of course, we will do everything in time of day, and we prepare ourselves to handle branding information requested them and of course, a pound a lot of things we could do better we do in all area every day so.
We are we are happy with us without them and move on from that we have a good relationship with our regulators in all over the world.
And how has that impacted the basic material conclusions on your actions such that things like that and the impact on the business in the last two quarters.
That stated before.
Yeah.
Okay.
This new law.
I'm curious about.
What are the sort of if you would summarize the improvements for consumers on the operators what would you say.
The consumers will be.
It would be intuitive it would be something that you want it to come in that you will know exactly what to do.
I stated I think it is a bit like naphtha, just thinking a little bit like Amazon it would be it.
Major step forward for the use next year yeah.
The thing I am finding again.
Okay.
And just two more questions just before I, let the auction leave the car Mart.
Did you expect to reach above 70% already in Q1, when you set that target for 'twenty to 'twenty two.
What's your full year guidance 69 to 71, another as we sat down and we saw that.
We were close to 69 coming coming out of Q4, So we didn't have the kind of quarter by quarter.
I think that the.
Like we said, we would say that the that guidance table.
So we're not we're not ahead of plan or anything like that.
Okay.
Your cash position I think you'll have four in the fourth.
I'm just curious you did some buybacks in Q1, how are you thinking about M&A.
Possibilities potential Todd a new vertical in the long term.
What's stopping you from from those initiatives.
Yeah as I mentioned there.
And the end of the period here, we have made the dividend.
The 300 million. So so our cash balance is lower but GETCO could all good. So so we will be in a cash position again I don't see that there's a material change to our.
Our strategy is there what we've said before we will of course evaluate and look at M&A.
The opportunity is there but.
Primary growth.
But the debate is.
Organic growth.
And David I'd, probably say no change to that I don't know if you want to add something market, maybe I'm wrong.
We are.
Moving and we want to be number one in the world.
No.
Constantly looking what piece that could actually move up in April .
Enable us even quicker on that path. So we were with the thing, but we're thinking we want to find the right.
So that's the comment on M&A.
Okay. Thanks, guys. That's all for me.
Okay. Thank you.
Yeah.
The next question is from young smoking friendly.
Please go ahead.
Thanks, Good morning, Scott.
Three questions. Please.
First of all is on your comments on <unk>.
Anticipation of supply are you, saying.
Can you just shift the supply of your services from your 15 different studios, if I look at Youtube.
Congrats on the New York one of them has almost all that tables in one location, but more than just has one location.
It's just about business resilience. We are also finding it competitive to be helping you win contracts with with the without prejudice.
I think the one piece of it that goes quite time.
One key learning that we all I think they've come from that market.
Resilience some.
And who can shift capacity from one another.
Another important because you never know what's going to happen now what's.
It was horrible war.
So we are.
How quickly we can make the change to pay but between the different studios now.
So what's important to remember that they are very different type of table.
A product.
Let's say at the time could be one.
The thing is that it's another and they have completely different banks at the end.
Completely different set up to do even though one studio couldn't put T south of monetary adjustment side I mean.
A larger part of business. So it's all interchangeable and we work to make it like that and I see that's a competitive advantage in that in order to secure if they pulled off breakfast.
Understood.
North America.
Mark you mentioned that the contract with <unk>, which I think you described as being selected first of all I don't think that's also translate to their exclusive provider.
Taken out some exception in the market or do you think there's a chance at other major operators would look to strike.
Similar.
Kind of structure of deals. So I appreciate the already existing customers that would be major hope he's always or even existing customer but is there a chance I believe thought that kind of structure would you take the tangible Mr. An exception of some kind.
I think that we've.
We've been living in a world, where there's been extra than we are we have been.
Blocked out from some customers in some to some extent, but and it would probably already.
In the total picture I believe in competition I believe in open market or we need to move forward, we need to have the best product, we need to do better.
A day.
Of course, there are elements, where you do something together with Tom on others for me some kind of okay partnership or whatever they want the name is done in those are you do you might have.
The power situation in one way or the other.
Yeah.
Okay.
Third one I just wonder if you can help us with kind of a you mentioned extensive casino services to provide us.
Two approaches in Ontario can you, perhaps quantify what kind of impact like in Q2 and onwards, given given you seem to have launch pretty successfully at the start of the period.
Yes.
Uh huh.
With the launch of her life on the first day with all operators that have a lifestyle.
It's a great market I think it was very well.
Hampered by the regulators and also losses.
We see we see good potential in their own time.
Yeah.
Going forward.
Okay, but perhaps if I could just come back on that I think it's fair to say youre, serving that market from the European Studios existing studios to suppliers.
Demand like it should be fairly quick should we expect an acceleration in north American growth in Q2 on on the previous calls.
Fair assumption.
Yeah.
Correct.
That will support that from for most of the European.
Network.
However, I'll tell you that the market is one market I don't think anymore.
That thing you'd want to build the value is.
It's a great market, but I would say.
Good expansion.
Okay. Thank you.
Yeah.
The next question is from Oscar I'm switched ADT. Your line is now open. Please go ahead.
Thank you and good morning, Morgan M. Jacob Thanks for taking my questions. Good morning, Amit.
Alright, so the first one I'm sorry, if you need to repeat yourself here, but that one year ago in the Q1 conference call well you Wouldnt revise the margin guidance you said there wasn't room on the upside, which eventually turned out to be the case.
In addition, here I know that every year. Your reported margin has exceeded your initial expectations. So that's one third of 'twenty 'twenty. Two that's passed do you have like any additional comments regarding how we should think about the current margin guidance for 2020.
Yeah, it will be a little bit yeah, we won't say room on the upside today. So it it's oh the guidance.
In that range.
Benign 71, I would think that that.
That they incorporate some of the comp increases stuck with it.
And in many areas as we mentioned.
So though.
The Thunder.
Can I add.
I can also add that we are in a situation in the world with Tucson stable inflation is increasing quite at all.
There's a war going on.
We're very happy with it.
Maintaining the guide and I don't think that that sounds fun, given these circumstances coming out for the pandemic.
So oh.
Go ahead okay.
Okay. Thanks, I just have just a follow up so.
Would you say like for.
You made the margin guidance.
Growth expectations are they now higher than initial margin guidance, but when its Melissa.
So we do it at the moment.
The margin guidance of 69 to one.
We were happy with that.
At that time, and now we're selling in Q1 and a quarter of the year.
We maintained it.
It's a good guidance on.
And three quarters of the year to come.
Yeah fair enough.
I mean like we said so many times are our main priorities always trying to.
To maximize growth and.
We do give some it's a fair assessment of where we are on the margin, where we think we can end up but it becomes sort of a math of discussion what both before and after thoughtful. So I would just say that right now, but that's our view is that the numbers were within that range, though.
I will leave it there.
Oh, Okay, and they're not playing.
Communicating cold likes to say one thing and then in up there.
Sometimes in the condensate.
Or sometimes a bit there, but we don't it's not there's no call on pension.
Yep Yep, we go all the way out.
We just try to quantify it.
Alright got it.
So next one.
In person the Lockdowns in Asia, and the rationalization of Ukraine.
So why am I think that one the first one has had a positive impact on your growth in the second one a negative.
To give an example of the Asian part it looks like the baccarat tables are going quite strong at the moment. So could you comment on the impact you think these two events effectively had on this quarter's top line growth.
[laughter].
I want to comment.
Ted.
Russia, we don't have any customers in Russia, where we don't have any direct operators back Uh huh.
It's another large market for us.
Yeah, when it comes to Asia Lockdown from effective that they haven't really made any assumptions off of that.
We have good momentum in Asia to see and the growth we have had that for quite some time that the market at large I see good potential going forward as well.
Okay. Thank you very much just a final one on costs here so.
Obviously, the personnel costs increased quite a lot from from Q4, but also the other operating expenses decreased quite a lift from Q4 and you said there.
Q4 was a bit high on the other operating costs.
That he wanted to hear whats on the lower side and we should be thinking like in the middle of that range going forward, but on a run rate. So how should we think about the personnel costs going forward.
The year or I'm, sorry, the sequential growth here.
On the personnel costs I think that there is that Oh, well, we'll continue to grow from this level will continue to recruit the contingent stuff. So there's no.
But that's that's kind of normally what we've seen through the year.
They grow in more types more staff more engineers more evidence.
Personnel costs, so hooked up.
Was it up and like I said other operating costs.
A lot of items that go in there and yes they were.
A little bit on the low side this quarter and of course, a little bit high in the previous coker so somewhere.
Somewhere in the middle there what would be sort of a run rate thinking about it.
Yeah, let's say like I said it it is at all the moving parts end up though.
We'll see where it ends up but all all in all I think the margin guidance, but it gives you an idea of how we see that the cost development.
Alright fair enough I think that was all for me. Thank you very much.
Thank you Raj Thank you.
Next question comes from Munich, Oh luck.
Your line is open. Please go ahead.
Hi, Good morning, everyone I've, just got a couple of inches Gen.
The first one just on Russia items in your Russian revenue in Asia.
No rush wrapping a patient lives.
Like single digit previously I just wanted you to understand exactly how that had <unk> in the quarter or if that was from revenue it's Ben.
<unk> maintained.
With that and how we can oh yeah.
And then secondly on the R&D Grace.
Wanted to understand if you're still confident to achieve the double digit growth and aren't you at some point.
Or is that 2023, given the each mentioned the next couple of quarters it would be.
More challenging on the grain side.
That division.
When it comes to Russia.
No. We're now than it was before so it's coming down.
Tough to comment on that.
Uh huh.
Yeah.
That's the situation there.
Of course moments around sanctions and whatever would come in and what we would do them.
The regulators regarding that.
Yeah.
When it comes to the double digit growth. That's our ambition, that's where were having was on there exactly what timeframe I would I would want to state that we are in the base case, we're not we're not the basketball around the base case, we're not really compounds when it comes to the development in R&D, but it could be much better or better.
They said exactly when we reached double digit growth I wouldn't come back to that.
Okay. Thank you.
Thank you.
Your next question comes from Scott I shouldn't call Nikki.
Please go ahead.
Thank you and good morning, guys.
One of those guys.
A couple.
Couple of questions from me starting with.
With the U S, which are growing rapidly.
America.
U U S states, perhaps book necessary for continued high growth, but you mentioned long term bump.
Can you talk a little bit about the timeline for the Connecticut Light Casino launch would come in Q2 Q3.
Also I mean.
New states.
You see here for I guess 2023 22 seems like.
It's been lacking new states. So it's looks like Kevin. Thank you.
We very much look forward to Connecticut. After news based on of course are doing it.
And I stated I don't I don't want to give you a date for Connecticut, but in the near future.
Joseph I can get to you today, it's in the near future or in the foreseeable out in Connecticut.
When it's due to it's more or less ready and we are building now.
So we're finalizing now.
And when it comes to new states.
It's like what web there.
Be tomorrow because of course now there's movement in New York.
Senator and talk to them about system.
There will be regulation in New York.
Could take anything from that.
Absolute minimum nine months.
Too long to you we don't know so that's good.
Situation that number talks and it's about Illinois, and yammer, but there might be something else coming up in between that so it's very hard to predict political process now of course, the monetarism, we help in any way we can.
But it's hard to actually decide or no.
Uh huh.
Understood. Thank you that's very helpful.
And then.
Oh, the UFC gym.
Can you say something about how the processes.
More like a casino games license are going do you expect it to accelerate but it's meant to or will it continue to be sort of a bottleneck in the scope.
What about <unk>.
Yeah.
First the first out there, it's not a thing but it will never go.
So it's about it like that.
That's clear.
Unlike.
I'm really really well.
We need to move faster.
Put the game that I hope that we get more games new games, all its an education partner to work with the regulator. They are they're there they're all different moving parts.
<unk>.
And that's something that they didn't know who work with all our regulators right now regulators in the United States right now too.
To lie.
Blackstone and educate them and get them I guess that would imply about how we do it and that's the again the coastal part of it.
In the end of the day up and down with the regulators there. So do we work with them and.
Try to do with them I hope to be able to release more yes.
But I think we can add them it is compared to a year ago or so.
It's a good process, but it's a process that does take time. So we will continue to work and if it will happen but.
I think it's a very good process.
Got it.
Moving forward rapidly.
No.
Understood. Thank you.
Uh huh.
On Latin America.
Seemingly grew strongly sequentially could you and will support a European operators in the region and he mentioned it in the comments as well.
What can say about the development there what is your capacity what can you say about the plans and the potential.
Okay.
If we if they put the timing aside.
I think long term, it's a phenomenon phenomenon.
Yes, that's a great for timeshare.
And it starts to move with Argentina, Colombia and.
In Brooklyn.
They're all provinces and read down some a little bit of a challenging when it comes to the regulatory aspect.
Because each of the regions.
Oh, probably because they didn't want to regulate.
It's a phenomenal market I mean, if we go out 10 years, I think that Latin America would be.
A good market and a large market for evolution.
Perfect.
Final question here.
It seems like operators with high exposure to regulate the European markets or seeing some pure COVID-19 post COVID-19 effects, while other markets or performing what do you see the same thing in terms of post COVID-19 .
With us more of a regulatory element certainly.
In European markets.
Hi, I would lean towards the situation predominant in Europe has to do with regulatory aspect more of them to cope with the COVID-19 situation.
There are headwinds or difficult when it comes to certain market.
In Europe it can be.
Some operating doesn't get the license some markets and some market issues.
Yeah.
And there are.
Elements of it.
Important port in U K, and so I would say.
That's a first.
And evolution, we do not look at it and have not looked at it from this COVID-19 bump off inbound film of course isn't bad real estate net productivity.
The catch up in the neighborhood they were kept at one time and it's not at all.
New truck and then on the other side.
The new Corona capability goes up in a deliberate.
Maybe the network activity for many states is down but it's come down more because we don't really looked at it that way.
Perspective.
Very clear thank you Martin M. Jacob that's it for me.
Thank you.
The next question comes from Tien Tsin stand alone.
America <unk> east.
Sure.
Hey, good morning, guys.
Most of my questions.
Firstly I know you mentioned, you're happy with April from performing to date, but there's quite a few concerns on go to economic performance across Europe .
Seeing where do you expect to see any impact from a tougher consumer environment.
Uh huh.
Yeah.
The situation in the world.
Barry on stepping up the momentum.
And we have had no material impact of that in Q1 were actually pushing forward my sense I don't see good figures and we're very happy with the seven points.
For some logged in them, but the almost nine months ago.
Going forward we have.
We guide on the six to nine to one on the margin and we see that would come into Q2 with a great mall.
Quite pronounced.
Fantastic released as a product.
Exactly what happened in the world and what a crazy person or the person like food industrial don't do affect the whole war on almost all of it if that happens and I have no predictions on that.
Okay. Thank you and can I, just dig into the R&D performance, a little bit RMG pulled back I know, you've got a pipeline of new games going through it but.
Are you able to comment on why we have that pulled back in Q1 are you losing market share when the game launches be enough to get you back.
Well, we havent, we havent good roadmap footprints.
It leans.
A little bit towards the end of the year, we knew that already.
The top two biggest.
In Q1, we look forward to strengthening through the year, our ambition to double.
Uh huh.
Did you grow is firm and we are working towards that.
Well, we can reach that level.
I don't want to say that we are in the base case for our funding costs aren't equal.
Yeah, Okay satisfied and good luck.
You can take another step.
Okay.
Just the last one you've gone live in Ontario are you able to comment on the size of the base, we should be building in from that switch Sean I know you had you alive with luxury as well, but now that the bigger players about what should be the bump up.
Oh.
Now for this.
Is it the same way that I mean, it's a fantastic market. We're not allow went live on the first day I'm sorry, My fault, everyone did a fantastic job in evolution to do about the machine.
And we see potential then it would go particularly well.
Not one single market in the U S. What sort of shape change the total of the North American market or the North America market. So the way.
I wouldn't over value that there are more states, we're doing well.
Good for kind of central to continuing.
Okay.
And a good way.
Alright, thank you.
Your next question comes from Richard.
It seems to spend the money.
Please go ahead.
Good morning, guys.
Good morning, Good morning early morning morning.
I have one question regarding the development is not small.
And and head counts.
Given that you had.
<unk> got more than beat that stops year on year do you think you would maybe accelerate the growth in Mexico. So it's all about the coming quarters.
Yeah, a good question.
It.
Okay.
For Q1.
Tom.
And then you see a big bump.
Caused by the Covid.
Along with me single I guess on the bump up.
100%.
Got that.
Is that look at the actual growth in basketball.
Yeah.
The picture and also looked at the growth from Q4 to Q1 with a plus 8% so.
We are building on that.
Yes.
Okay, good and a follow up question given me if you look at from Q1 from Q3 last year Q1.
But you see that's due to increased capacity or is it due to a higher activity in the network.
Predominant the game shape.
Type game type sheets, and higher activity with that capacity.
So.
Yep Yep, Okay. Thank you.
Thank you.
Okay.
Okay.
The next question comes from Simon Davies for Chicken.
Please go ahead.
Yeah morning, guys can you hear me.
Hey, Brian .
I'm sorry, I just got three quick ones from me please.
Firstly, a number of tech companies talking about a war for talent.
Are you seeing any signs of increasing staff churn rates or are you finding it more challenging to chill jumped vacancies.
Second question.
Asia market very strong can you identify any key markets with it not to put cookeville performed particularly strongly.
And the last one but just on the competitive environment, we've seen playtech is problematic increasing like casino capacity.
Any evidence of that competing more aggressively on price and are you seeing any any pricing pressure and negotiations for new contracts.
Uh huh.
Recruit however, we have already stated are there.
We want to recruit 1000 engineers and they're coming from 436 months, that's a lot of engineers and all our different town and we will have more on.
There is of course.
I'm wondering maybe call. It a war Oh I would say that there is high competition to get the best people and we are aiming to get them back. So that's all with challenging and you all to get the right people.
The right number of people so it's about it or challenging but our goal is firm.
Yeah.
Clinical finisher.
Yeah.
As you know.
Haven't broken down the regions into individual countries. So so really nothing to point to sort of call out better.
One was around price pressure.
I'm talking about.
We have a huge problem with a cry.
So let me pass the evolution and bought it but it's low.
Yeah.
And I think that we have so much value.
They're often here in this year.
And I'm actually serious that we have.
So much about your Dcs.
Sometimes the price upfront.
Tag along with that value add.
So and having that study both with the negotiation with each and every customer and whatever that once you have one on the problems always hard to change systems Evaluable.
I've been with outcome, it's hard negotiation, but I wouldn't I wouldn't I would say that it's not the.
Common cause pressure or price pressure it.
I would argue that we should we should have a bigger call rather.
Walter.
Great. Thank you.
Thank you.
Thanks, Tom.
Last question is from mom and baby.
Okay.
Hum.
Hi, Good morning, I'm Lucky I called the Academy.
Yeah, I need to find out what their lovely.
A follow up question here on the studio opening.
I think <unk> to take us through for example, with a lot of that just Didnt know studio how do you assess the Gulf coast.
Do you see yourself with America.
With the lockers and opening and in Hawaii.
Might be a little thing to do.
[laughter].
We will expand into stock.
In Latin America, and we will also pursue deals that we already have.
We will do it in the right way with the right.
Quality.
Ah side.
And we're working on it right now it's very good development for negotiation with a lot of different customers that either.
I look forward to.
The one other thing.
Something like that.
Clear.
Okay.
So my question here I mean, given the pent up demand you see.
Have you seen any supply chain problems in the quarter that does dampen growth isn't as particularly that Jim spoke something materials like Dices four terabytes and so on any comments here.
We have we have yes, we have had a challenge.
Or any other company in the world.
Hi.
And.
It comes down with him to conduct or something to hope to get from the.
Containers are.
Instead of being where they should be they are in China or elsewhere, sometimes that's.
Yes.
Right.
Thanks Omar.
It is a constant challenge.
In the World right now.
And then when it comes to.
Any gaming equipment and some licensing.
Regulatory aspects of society.
Oh.
Shannon.
But all in all we are.
One thing we do right.
Continuously getting better every day.
After Oh.
Every day.
And then given these I mean, all the industries you can really just at our relatively more and I think you said it was.
I would assume for example, North America region here.
Hello.
I think that.
Okay.
Yeah.
No I would say no.
The market for certain.
Societal worldwide.
It's not that they're not intended to Europe .
Or anyway.
It's more the supply chain that is.
No I wouldn't I wouldn't think about kind of thing.
Thank you.
Lastly, one broad question here I mean looking to past two years the unregulated shadow.
Slightly decreased despite the very strong Asian growth soon.
Based on what you see today with more and more gets triggered isn't like a city.
No.
The trend of unrelated share of cigarettes decreased seeing a trend do you expect to continue.
Any commentary would be appreciated.
Regulatory.
Yes.
Yeah.
Okay.
In the longer term.
Much much more.
Revenue in all like I say that with.
The regulated countries, we recognize that.
That's a prime role with them.
Anything else, so, but it will take anything from one year to five years.
We do not know and we also have to remember that irregular.
The regulatory situation in Europe , which is the more mature online market is quite new.
Many of the countries in Europe as regulated 20 times that they plan to country walnuts up to 19.
So.
The Euro Boston a nonregulated.
Yeah.
Era for very long time.
The other parts of the world will be and that the airports are very long time and I believe that was why we wouldn't we would transition through that part of it like we did in Europe . So in the long run.
It didn't go up roughly 100 something could go up.
But I don't know if they have to have loss and all that.
It was down for I don't know eight.
85, or 88% of the poker casino revenue today.
Predominant abnormal casino so F. Ter regulation proceed more and more of that revenue would also come into offline.
But it will take some time, but it will go up.
Thank you very much ultimate.
Thank you Matt.
There are no further questions I have that ghd.
Uh huh.
Thank you very much for the thing it looks attach it to talk to them and for all your questions. Oh do you have a great day and.
See you all soon in a couple of months.
[noise].