Q3 2022 Evolution AB (publ) Earnings Call
Yeah.
Good morning.
And welcome to the evolution Q3, 2022 earnings conference call.
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I would now like to turn the conference over to Mr. Callison, Martin called listen thank.
Thank you and Oh, what do you see them.
Good morning.
Welcome everyone to the presentation of evolutions in three and report for the third quarter of 'twenty two.
Sue.
My name is Martin cornerstone I'm, the CEO , but Lucia with me I also have our CFO Jacob.
As usual I'll start with some comments on our performance in the quarter I will now hand over to Jacob for a closer look at our financials and after that I'll round off the presentation with an outlook for the rest of the year.
And then we are of course happy to take all of your questions.
Next slide please.
Yeah.
I am very satisfied to report consistent strong results for the third quarter, the greater salt in the quarter, It's an outcome of our investment in the new games Studios all the hard work performed by our employees.
We see a continuous increase in demand for our products I don't know signs of consumer slowdown.
After landing in North America evolution has significantly growth in the market.
But generally it is there are very promising and we will continue to substantially invest in North America in the quarter, we launched a new student in Connecticut.
Fourth studio in the U S.
Recently, we have also launched several dedicated live dealer environments in our Michigan studio. These environments are customized area. So live studio that are assigned to specific operators. The dedicate the studios look amazing.
Unique incorporate each operator's branding to give players experience that is unique to the operator's Brian .
The construction of a second stood in new Jersey to cover for increasing demand there goes well and I'm looking forward to launch it in the not too distant future.
In the quarter. We have also launched live crafts in Pennsylvania and also at the end of the period on the 18th of October will also launch perhaps in New Jersey crap.
Craps, its another step revolution, and expanding its portfolio in the U S and given players in Pennsylvania, and New Jersey, a full suite of like to see it help Sean.
This game is the very first online live craps game in the industry and the launch of the game is a landmark moment for evolution.
We're very proud to be able to operate our operators and their players in the state of Pennsylvania, and New York City.
To predict the next states that passed legislation to allow gaming is difficult.
I see it it's more a question of when and not if.
We're gonna stay.
Boston News is that we will still have a large catalog of products that haven't been released in the U S. Yeah. So while waiting for new states to legislate growth can continue even as we introduced more of our products driving the share of live upwards.
All in all we have great momentum in North America, and we are well prepared to continue that development.
This quarter was the first one with no limits at the consolidated our long term ambition is to become the world's leading provider of online casino and we have high expectation that no limits will be an important piece to that she'd be submissions.
We of course very much look forward to add no limit as soon as possible to a one stop shop, making them available for all customers worldwide.
The high demand for our product means that we must expand in existence and the nuance to keep up keep the pace with that demand.
In the second quarter, we launched monster in Madrid.
And we are right now expanding both students and fast pace as well as expanding in the fastener. All other indications I also want to mention that we are delighted to have been crown. The best of luck to fly here at the <unk> two SBC.
<unk> awards in Barcelona.
Digital industry supply at the Global Gaming Awards 2022 in Las Vegas.
Very honored and want to say a big thank you to all of our people who made this happen.
Now, let's move to the comex licensee to affect the numbers on all our airports. So next slide please.
Yeah.
Q3, 'twenty to 'twenty two is a strong positive revenue Shaun revenues increased by 37%.
$78 5 million Euro EBITDA increased by 35% to 261 million corresponding to a margin of 69%.
There is more cost inflation than we expected at the start of the energy prices transport service in almost any supply increase in financing cost. However, we reiterate our guidance margin for 2022 is being 69, 71%.
We have not seen any apparent signs of consumer slowdown, but we need to acknowledge that the world is in a very unstable situation. In this context, it's important to state that the investments we continue to be high margin, Mike back quarter on quarter.
The trade off between growth and margin, we will always prioritize growth and market share.
Our R&D business amounted to eight in terms of total revenues in Q3 and represented 82%.
LNG LNG revenue now, including no limited this quarter about $68 1 million a growth of 2% compared to the pro forma revenue of Q3 2021 without.
Without MSC, our old R&D bonds had.
With a slightly about 2% for the first nine months of the year.
This is Jeff not satisfactory, but delivered to a few slots games during the last good. However, we remain fully committed to the target of double digit growth.
Great potential.
Now focusing on accelerating Ola.
On the other hand momentum in life is strong.
And within the vertical the growth amounted to 45% compared to Q3 last year.
Hi, Tom Fantastic numbers in line, our focus on accelerating rollouts on R&D, but overall I'm pleased with the financial performance in the third quarter and we are definitely well placed to deliver a strong finish to the year.
As always we will relentlessly further strengthen our market share and continue to widen the gap to competitors.
Next slide please.
Yeah.
At the end of the program were close to 16000 evolutionary.
Spending hours due to capacity means we need a higher recruiting pace and in the quarter, we increased the numbers of employees with 602.
Persons.
The increase in ASP year on year month to over 3600 employees corresponding to an increase of close to 30%.
We will continue to increase head count during the year as we expanded our new students in Spain on media in Connecticut, as well as expanding in other existing studios.
With the fast growth of the company, we need to have an equally high pace of our recruitment. Therefore recruitment will continue to be one of our priorities and one of our key processes.
Hiring and retaining the best people is tough.
The best way to hire and keep top people is to create the company culture with the best people want to work.
You can't buy culture, it's something that you create therefore, great countries keep on growing at such a pace that we are doing and we will always try to improve ourselves as an attractive employer.
Next slide please.
Yeah.
Yeah.
I mentioned last quarter that we wanted to replace in basketball and Metro play your activity on our network.
Basketball side was only relative related to live games did not cover the whole network.
Also representing an uneven distribution of different game types that simply have played out its role as a performance indicator.
This slide is in the town.
At the new Ms. Cheryl of activity on our network. It shows the development of game rooms.
<unk> round is what it sounds like one round Olga game, one round overlapped somehow in the backyard or once in other stops.
They all count this one game room, there are still differences between games. For example, one handle blackjack takes longer than one spin another slot game roundel blackjack typically carries a higher Beth so one game rounds, all else equal in value.
In the short the index side, if a game Ross from live and R&D are weighted according to the revenue contribution.
This gives us a joined the index that includes all gains and the complete network worldwide.
I think that the game rounds in lakes overtime, we'd be in a much better view of the activity in our complete network.
Game rounds.
Not always correlate exactly what revenue each quarter.
You'll see in the short we had a nice development over exceeded that this year in the third quarter activity as measured by rig game rounds increased by 70% year on year.
This is clearly higher than our revenue growth in the quarter.
One reason for that is that we are adding many game rounds from new markets. Like for example, Latin America and in the beginning the best tends to be smaller for new market. Typically is our markets also have smaller average size.
Others.
Altogether. This means the game room doesn't over shorter time birth correlate exactly to revenue.
Next slide please.
Innovation and the best game will always drive evolution, we continue to innovate substantially enhance and refine the paying experience and use of entertainment and satisfaction is and will always be the absolute priority.
Going live in early November we had two new exciting football team table put those to die and proposed to do that.
In time to take advantage of the extra interest in football being generated by the World Cup and.
Another game in Q4 is the new free bet Blackjack variation of our classic blackjack, but what makes this version different our exciting free bets also get ready for gripping experienced with desert <unk> saloon a card game.
Wildlife saloon style environment.
That environment is the one useful on the absolute first slide in this presentation you remember it.
It's truly amazing go back look at it.
In our R&D vertical superstar from that is like an award ceremony nothing comes together a group of the most beloved stock characters and jam them into single online assault accompanied each of them with their own feature.
This is far from our ordinary slot.
The game launches in Q3 have been well received by players Crazy Cornflake is truly unique game combines the best of two worlds slots and live game shows.
I'm also delighted to show that monopoly big boiler has been an instant success with debate with the players the players' interest that's being used not only now for this novelty, but also down for our monopoly live game show with the players count existing never before seen height.
Right.
<unk> continued its remarkable success Dorian is rabbit rapidly expanding into.
In the quarter to new local.
Students have been launched for Greek and English speaking phase, which means that like new left now is available in eight different languages.
On that subject Dream catcher Omega money, we will soon also be available at the low class propulsion called Empiric request forms in 'twenty three.
Beyond everything else, our focus on always being to innovate and push boundaries to enhance that takes that this goes for live as well as for LNG and I am excited about how the new games that we have in lineup with <unk> will further confirm this.
Great therapies left them over the next slide.
This slide shows the breakdown of our revenue by geographic region.
See very good growth in year on year in all our geographic markets and it's evident that the mouth is truly global.
Year on year, the growth in Asia up six 6% with the highest growth rate of all all the interest in that in the third quarter.
North America was a continuous strong growth of 57% year on year, we see good potential in both these markets and expect continued high growth rates going forward.
Europe as a whole into the U.
Including UK and Nordics showed a growth of a healthy 12% year on year once U K with our biggest market now its the smallest amounting to five 5% of the <unk>.
Revenues.
In the quarter also the year on year growth rate was the smallest amount that the moderate eight for.
In order to show a strong growth of 19%, but it's worth noting that this table does not include pro forma figures. So the growth year on year to some extent the attributes to know them.
The rest of Europe had growth of Lumpiness.
Sales of 12% year on year European market is the most mature.
We see as we grow fast in the other markets the share of the total revenue from Europe decreased one year ago, the whole of Europe .
51, 4% of the revenue are now a year later.
That number is 42.
Of course, Europe is still an important market for us and we feel there is much we can do to grow our business, but it shows that the increase in globalization of our costs.
Makes a difference.
Our including Ah there, including Latin America Africa remaining part of the World shows a good growth over six 2% year on year in this market segment. It is Latin America, the main driver for growth.
I will now pass it on.
Jacob.
More about the financial leases next slide please thank.
Thank you Martin and good morning, everyone I will now move on to a couple of slides with a closer look at financial developments during the period I'm on slide number eight.
Revenue amounted to $378 5 million euro in the quarter.
The Blue bar on the chart.
That's made up of $310 4 million euro related to like I said six to $8 1 million Euro foreign JJ.
Like I said just over 80% of total revenue in this market.
<unk> reported a very strong development in the quarter.
We add on over $30 million revenue from the previous quarter is the largest absolute increase we've ever had for live casino in a single quarter.
<unk> growth rate is 45%, which is roughly in line with average growth rate for the past two years. So overall very very strong at the base of course increases.
Yes.
No.
The percentage growth.
Harder and harder to maintain.
R&D includes no limit 50 for the first time in this quarter it contributes seven.
5 million Euro the growth rates for R&D, just looking at the reported figures is just over 10% during the quarter that takes.
<unk> acquired revenue growth compared to pro forma figures is 2% in the quarter.
We remain committed to the target of double digit growth for R&D and we have communicated in previous quarters that development will not be straight line towards that goal.
We must admit that the development this quarter is weaker than I expected, let's say few quarters ago as Martin pointed out earlier, the short way to explain it.
The development is that we have not delivered.
And we simply have not released enough new games, and that's really something that we're working on to improve and we're confident we will get there, but it has taken a bit longer.
We see the effects of that with Georgia performed in this quarter.
EBITDA for the quarter amongst the 261 million euro, giving them EBITDA margin of 69% in the quarter year to date EBITDA margin for the <unk>.
Nine month period 69, 5%.
Still in line with our margin guidance of 69% to 71% for the year and make no change to that guidance.
Do see in the slide margins were a little bit higher during the first two quarters of this year. So realistically I see us at the low end of the guided range for the full year.
The general development of the macro economy during the year with increasing inflation and cost increases.
Many areas has effected also our cost levels during the year assuming.
Assuming out a bit I'm thinking mostly rear view, we see a continued strong demand for our games that the development. The online casino is really in its early stages in many ways. So what cost levels do put some pressure on margins right. Now we will continue to invest in growth capture as much of this developing market as we can and.
As we've said many times prioritize growth over margins.
Operator, let's move to the next slide please.
This slide shows our P&L and then a little bit more detail.
I'll walk through the table on the top.
<unk> revenue 310 million Euro thats fully comparable to 214 million euro in the third quarter of 2021 inorganic growth of 45%. So far this year January to September light revenue amounts to 853 million Euro, which is a 42% increase over the same period last year.
R&D amounts to six to eight 5% and I've covered on the previous slide the reported numbers, a 10% growth from previous year, but that includes no limit.
So.
In this quarter and marked in the comparison quarter.
With us for the first time in this total.
378 million Euro increase of 37, 1% compared to reported revenue Q3 2021 looking at the year to date figures revenue amounts to 1000 49 million an increase of 36, 5% compared to reported figures 2021. There are some experienced during this period with big time.
Gaming coming into the group from Q3, 2021 and no limit added this quarter if I adjust for this acquisition to make the two periods comparable I would estimate organic growth at about 32% for the company as a whole in the nine months period.
Moving down to expenses personnel expenses amount to $76 3 million in the quarter.
This is an increase of almost $5 million compared to the same period last year includes the increase in stuff of course in basically all our team's commercial operation engineering business support.
While expanding compared to last year.
Depreciation amounted to almost 25 million euro debt includes $11 4 million in amortization of intangibles related to acquisitions. So.
Tim gaming and no limitation.
We're no limit safety adds about $1 1 million euro.
Decision of intangible in the quarter.
Moving down other operating expenses include items, such as consumable equipment communication costs and royalty fees.
Total of $41 2 million during the quarter and an increase of 31% compared to the same period last year.
Summing up total operating expenses totaled 142 million.
An increase of 36% compared to the reported figures for the same period last year.
Operating profit.
On the next line from $36 million.
658 million for the year to date period increases of 37% and 40% respectively.
Thanks for the period is up $16 4 million, if you could give the tax rate of $6, 9% similar level looking at the year to date period.
About 1% higher than.
In the same period last year, so a bit of increased opex as we talked about in the past.
All of this sums up to the three months period.
Profit for the three month period of 221 million.
Equally in EPS or <unk> rose two seven per share for the quarter increase of 44% compared to the same quarter last year and for the Rolling 12 month period earnings per share is now to euro and <unk> 85 year or seven for sure.
We'll go to the next slide please operator.
Before handing back to Martin and look at the cash flow financial position, let's talk to the left.
The chart to the left on the slide where you see capital expenditure.
The great part of the bars to talk park, representing investments in tangible assets. So that's our studio.
Construction projects in.
In the third quarter Capex intangible assets is $13 9 million euro similar level to earlier quarters. This year.
Martin mentioned, we've had a very high activity in studio projects this year.
We expect to continue investment at a similar pace during the final quarter of the year.
The blue part of the bar relates to investments in intangible assets, that's developed them from new games and features to the platform.
It's a $9 6 million during the quarter also relatively similar to previous quarters and also here, we expect the pace to be maintained at the beginning of the year. We estimate the total capex for both intangibles intangibles to about 90 million Europe or full year 2022 and for the first nine months.
Total of 69 million. So the pace is just slightly higher than $90 million for for this year.
We'll move on to the middle of the slide or the chart shows operating cash flow in the quarter. It's.
Over 200 million 213 million Euro.
Operating cash flow in relation to EBITDA or cash conversion as we call. It here in the slide on a rolling 12 month basis, it's still on a very good level around 75%.
To the far right into slide balance sheet.
We maintain a strong financial position.
As Martin mentioned, we are.
We are debt free.
And the strong strong balance sheet is something thats, an asset coming into an uncertain macroeconomic environment like the one we're experiencing right now our.
Our cash position is 319 million euro at the end of September during the quarter, we have made post payment of the <unk>.
The upfront payment of $200 million.
No.
As already to come out of the cash here.
That was the end of my prepared comments I'll hand back to you Martin we'll take questions after that.
Thank you Jacob.
So we are on slide 11.
Ill.
A few words to conclude this report presentation.
Demand for our product is a global phenomenon and we need to invest in products and studio capacity in order to reach all corners of the world and we have to stay on our toes and never delayed back and compound in order to keep increasing the distance our competitors.
Well you can expect revolution is that we will continue to push boundaries and create the best games with the highest plan entertainment value for the future. In addition to product development, we continue to invest for the future in the form of New studios.
We're constantly working hard to restructure the cost base to reach effectiveness and cost are behind us and I'm confident that we will be able to fulfill our margin guidance for the year.
Going forward here from here we are.
We will have high focus on accelerating rollouts in increasing this growth will slow and I'm confident.
And at our R&D, but it's going to have a bright future.
Latin America is still in the infancy regarding online casino and I expect the market to continue to develop to develop well.
We have great momentum in the market and we are well prepared to continue our expansion here.
Our newly launched students in Madrid in general are still smaller go onto the number so the table, but we're ramping up in a fast paced and they will all contribute to continued growth in fund III.
We are currently in full preparation of the roadmap for cross country developing is going on at full speed and I can assure you it looks very good.
Last week, we had the official opening of our students Yerevan Armenia.
And what you see on the next slide is the Amtrust of our new state of the offshore deal early in the morning before we started the settlement.
It's a view.
Beautiful simply state that the auditions evolution today, we have about 200 employees and anemia.
And the Romanian team, but in the coming years is too proud to contribute the local society by creating thousands of jobs for young talented automate Armenia.
Looking to start the Korea, and an international alignment.
This difference the difference evolution, making for these people.
<unk> make me very proud.
<unk> has a great speed forward and it's built up.
16000 crew of Fantastic talent My core has been some huge decided to win the module will be constantly push myself under 16000, please to the next level.
It's actually as simple as that.
Thank you all for listening and we'll speak in a couple of months ago.
Now, let's move to questions. Please.
Thank you very much.
We'll now begin the question and answer session.
To ask a question you May press star and one on your telephone keypad.
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At this time, we will pause momentarily to assemble our roster.
The first question comes from Joseph Mcnamara from Citi. Please go ahead.
Yeah.
Good morning, Martin morning, Jacob sick well good morning.
My first question I'd like to ask you about your game launch targets between students to please especially.
Given you've called out kind of delivering tissue games this quarter dry verbal weaker R&D growth could.
Could you tell us sort of the number of your own stance and also kind of where.
Oh, whether youre still comfortable to hit DHA targets for full year.
Without going into details on it but we're around 61 console releases and we are well on target for our assets.
Okay excellent.
Second question could you touch on North America, please and the trends youre seeing that namely just in the context of growth.
Slowed sequentially a bit more than other regions, despite kind of the obvious tailwind not market and I guess the question of whether youre maintaining share that.
Okay.
It can fluctuate quarter on quarter there is no.
Theres no.
The real reason for it and honestly I think we actually gained market share this quarter, but.
That's just normal fluctuations I would say.
Okay great.
And then finally.
Just if you could provide some color on salary cost pressure across the business.
Is it just in context, I guess with personnel expenses are employee increasing sequentially. So I guess are there any notable regions to point out in this context.
And then also it's kind of I guess.
Personal expenses per employee a good metric to kind of look at it.
The Q3 level that we've seen.
Expected just kind of Q4 and beyond thank you.
It's hard to point out any one.
In general.
There is a cost increase in many areas.
If the inflationary pressures that we see in.
As a side note I think that also comes through.
Right.
Wage inflation I think probably more some of that is probably a bit more in front of us coming into next year. When salaries are reviewed again thats normally an annual process for the most part so.
It is a little bit higher this quarter.
I think the numbers.
It is a number when you do this sort of the call.
For employees. They also fluctuate a bit quarter to quarter can you talk a little bit on sort of exactly how much we hire in this outcome <unk>. So theres a bit the movement. There I think we were similar levels.
Salary principally in Q1 to what we are now is it kind of.
It's not dramatic but yes, the trend is for higher costs.
Hello, Sir.
Excellent. Thank you very much guys.
Thank you.
The next question comes from the line of Scott runs commit with <unk>. Please go ahead.
Thank you and good morning, Jacob Thanks for taking my question.
So I would like to start with your top line development, you, obviously had quite a nice sequential growth in live so could you give us any comment on to what extent any skewing factors. This number mainly thinking about the large payoffs message mentioned in Q2.
Yeah.
No.
I did.
No. There is no skewing factor sits more organic growth this quarter I have no.
It's a fixed to point out in that direction.
And finally, how we never mentioned the absolute payout.
Albert.
It's a fairly normal yeah, I would say.
Okay understood.
Alright.
Looking into the momentum if you could elaborate on the trend in the quarter.
So your thoughts on the magnitude of the seasonality effect in Q4.
Yes.
Specifically, if you'd expect any support from higher activity across operators following the World Cup in Q4.
Ask David default rates will of course increase public.
Marketing budget than others. So that's of course, a positive you can you can't deny it but when we're growing at the pace, we are with the 45% increases you've seen in <unk>.
Q3 seasonality, we go through the seasonality effect I think should be.
It should be.
Carefully looked at not not not in anything that should add non stop the pace is so high already.
So that activity in Q4.
Appropriators, yes seasonality.
Capital with us.
Okay got it.
So just a final one.
On costs are you satisfied with the current Opex growth.
Should we be viewed as they're looking for a R 22.
So could it accelerate from these levels or what do you think.
I think that.
The whole world, including us privately as well as evolution need to prepare for a little bit tougher than what we have had in the past couple of years due to the situation in the world.
You need to you need to really focus to be better every day increased cost awareness, even on a higher degree than what you have done before you need to be careful with money.
And if you do that in time, and you are hungry and energetic with that.
I think it would be all good.
But steel cost will increase.
Over the coming years.
Alright understood I think that was all for me. Thank you very much.
Thank you very much.
Thank you.
Question.
Comes from the line of ADM with Morgan Stanley . Please go ahead.
Eddie Your line is in Doc Martin if you have muted DSS from.
Thank you Sir.
Specifically your question.
Yes.
Yeah.
Your audio is breaking up.
Yeah.
Okay, you are traveling to site.
Alright.
I had one sorry about that.
So.
I guess in many ways the <unk> growth.
So if you don't mind I'll ask my first question on R&D.
I just wondered if you could.
Talk a little bit more about what the what the plan is that you've been very clear Martinez satisfied with Macquarie. You said you want to improve it you said that will be lumpy, we will understand that but I just wondered if you'd give any any any additional color in terms of.
What do you think the drivers of it.
Is it.
Take up has been slower than expected.
Issues with particular of the Cdos that is netting to tiger.
B and I guess what the.
What's the plan to turnaround this does it require.
What are your structural personnel changes or is it simply mozzarella.
Execution, and you think you'll get there.
That'd be very useful.
Yes.
We need to accelerate the rollout so we need to accelerate simply getting out and getting more games out so to.
To put it simple execution has to increase in speed.
We have done a lot of background work with Oss and all of those platforms and that is right now we need to accelerate the rollout.
Simple answer.
Okay.
On cost structure.
You mentioned personnel costs.
On that but I wonder if you could just elaborate little bit on energy.
What are the months, where <unk> as a percentage.
The cost base.
No one.
Thanks, Tim.
Working with spot prices.
Give us some idea about how much that might move in the other operating cost line.
Yes energy is of course, one item that.
Increasing.
Along with many others.
So even though we of course consumer local electricity, we have launched the server products and so forth.
Total cost base, it's not.
A very significant number.
1% to just use rough numbers, it's something like that so it is a low no precise number then you could say if it doubles that make 2% so it still matters, but it's not.
It's not really.
And I assume that that's very impactful for us in and of itself down of course, the cost increases across the board not just energy that's something that we see.
And then finally a question on capacity.
First of all thank you for the new disclosure on game round suddenly happened to Gabon properly but.
Another area I just wanted to check on was on.
Capacity growth you talked about a lot of a lot of space within the Bulks, if you'd like we did in Madrid, and Armenia, but I just wondered if you could remind us on where you are with your with your planned more broadly obviously, you've now launched in Connecticut. So I'm not aware of any of the U S projects, making you've mentioned in South America and the pulse said you might say that in Europe . So I wonder if you can just speak.
Your broad thoughts on steel.
TD on capacity additions.
The broad situation is that we are good right now, but we need to expand that as I said that almost all of the pseudo some and we will see continuous expansion in the students who have during.
2023.
Coming into 'twenty.
Three we are in the planning phase for a couple of New studios.
Different parts of the world on how to come back to that somewhere in Q2, but we are in the planning phase for those thoughts now.
Okay.
And Dan you have any more questions.
Thank you.
Thank you. Thank you. Thanks. Thank you.
The next question comes from the line of Mike in Ogden.
<unk> end markets. Please go ahead.
Yeah.
Hi, guys.
Thanks for the.
Question there.
You mentioned that you see.
<unk> patted on time, so both consumer slowdown.
But could you mentioned <unk> changed anything between.
Well done.
September October .
If you look at them or.
Suggests more amongst has come out and say the upswing that you see.
No.
I can't see.
We can't make any conclusions on the consumer slowdown due to the one situation, we can't see that right now, but it's important.
I mean, we don't know what's ahead of us.
The only one in the world right now.
<unk> acknowledged uncertainty in the world, but as of now we do not see neither in September and August were earlier in <unk>.
Signs of any slowdown.
Okay. Thanks.
When I look at your regional breakdown.
So it's going to be in the <unk>.
Comment a little bit on the <unk> effect.
In that breakdown, because you don't disclose the regional breakdown by live in London.
Yeah.
We have a little bit of traction with RMG in the region, while still insignificant numbers.
Exactly so it's mainly a typical to Europe .
That's the goal.
Currently yes.
Yes.
My final question.
On your labor.
Cost inflation what.
The like for like.
As mentioned.
And in the Sunrise Jacob if you could comment on help us understand.
The cost increase.
It's hard to single out exactly what this due to inflation.
And what sort of general increases.
It's not there's not really a hard number that is of course a bit of both I think that metric also depends a little bit on where we add staff. So we're expanding a bit in north America, relatively remember that contactor and little bit so.
There is some upward pressure on wages.
But the.
It's not it's not only that thats in the increase in this quarter.
And then I expect to see some of that also during next year I mean, I think we.
Like we said before.
Saturday reviews next year will probably be at it.
As a bit more than what they were the previous year. So.
Let's see where it ends up.
Some upward pressure on cost in general not just wages.
Okay. Thanks, a lot guys.
Thank you very much.
Thank you.
The next question comes from.
Joe.
With Bank of America. Please go ahead.
Hey, good morning, guys.
Hey.
B to C.
There's been a few operators that said that they've launched exclusive live games.
From what I can see what dawn to partner with some of your competitors is there is ongoing demand for exclusive live games would you consider partnering up or whacky to create these will be to see operators.
Sometimes that can be we are not in favor of the exclusive deals in general, but sometimes it can be investment that needs to be done I'm done you need sort of a little bit longer time period.
Then what you usually have so then you could.
It makes some channel during the during a certain time period now.
To partner up and limit us in.
The market would not be interesting I mean, we are we are the largest.
Yes.
Online Casino network in the World and we look forward to serve with a one stop shop and anyone wanting to engage with high entertainment. The best products in the online casino markets S&P to be suppliers. So that we would not see a limitation in that.
Beneficiary.
Okay got it.
And then alright, sorry to come back to R&D bet.
I suppose it's kind of underperformed not just this quarter, but for a while now and it seems to be because there hasn't been enough games launched I mean is there anything behind that do you need to recruit is have you lost some talent do you need to recruit people I'm, just trying to what I'm trying to work out what.
That step change towards double digit going forward now.
I think that we are coming into the party, we simply need to accelerate the rollout and I think that during the past period.
We have focused a lot to get the structure rights to we'll have to put the games both for big time gaming.
And for Red Tiger as well as for naphtha.
Bit more focus has been on to create that hard barrel, where the starts should be in now going forward, we need to accelerate the rollout.
Got it and last one on live casino. When you. Please sort of look ahead 2023 of the next 12 months.
Regions are you most excited about now.
So growth potential I can see some of the usual.
So doing very well Asia still doing well.
Once the keto coffee.
Okay.
It's a little bit like picking one of his children.
And usually the answer is like I am.
Actually very excited about all it they have all their different characteristics.
Great opportunity in North America, there's great opportunity in Asia, Latin America, as sort of Bubbling coming up.
Europe is showing good signs also this quarter, so I think that.
All of the different regions, all real exciting for the country.
Perfect. Thank you.
Thank you.
Thank you.
Our next question comes from the line of Simon David with Deutsche Bank. Please go ahead.
Yes, good morning, a few from me.
Asia very strong performance there.
Can you comment were there any one off factors at play there and can you talk about any of that.
Countries.
The key drivers behind that growth.
Well done.
There were no one offs around a little bit of the question, which skewed.
One thing I don't see any one offs in quarter three I don't see that.
Was the growth across a wide range of countries and were there any specific areas of.
Particular, Grace, we don't we don't split up the region as such but we see good growth and throughout the region.
And secondly, just on the World Cup is that should that be a positive or a negative for you obviously.
Online audience should increase but a lot of that audience will be focused on sports betting.
No.
Little always sports event is always a positive.
It creates a new players.
I can see that the March thing and a lot of a lot of other side effects. So it's a positive for us yes.
Yourself.
And lastly tax rates nudging upwards can you give us any guidance or why do you think that settles for 'twenty three and beyond.
I think the reason for the tax rate increasing now it's that.
As we expand the operations throughout the globe.
We pay taxes.
In all different countries.
So I would probably say continuing upwards a little bit as it has the last last year or so.
The bigger question on taxes, what will happen to the pillar two debate.
15% minimum tax that's been discussed.
Uh huh.
The latest I think its a.
The thing in 2024 25, but during this quarter, maybe I'm not.
I would just say from my vantage point, it's lost a little bit momentum it's not.
Quite moving as quickly as we saw before but.
It's still there I think that's something that.
That's to be considered in the future. So so taxes are they would be higher in the future. That's how I see it regardless of this pillar two we're not we will trend up a little bit.
Where we are today.
Alright, thank you.
Thank you.
Again, if you have a question. Please press Star then one.
Okay.
Yes.
Yeah.
This is a reminder to the participants if you have a question. Please press Star then one.
As there are more questions. This concludes our Q&A session.
I would like to turn the conference back to Mr. Martin <unk> for closing comments over to you. So.
Thank you very much everyone for listening to us this quarter another strong quarter for revolution.
We will speak again in a bulk quarter.
Haven't learned I say thank you.
Thank you.
Thank you the.
Vince has now concluded. Thank you for attending today's presentation you may now disconnect.
Thank you. Thank you very much you are great column I'm. Good. Thank you very much have a nice name Mumbai.
Thank you.
Bye bye.
Okay.