Operator: During the Q&A session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Martin Carlesund and CFO Joakim Andersson. Please go ahead.
Martin Carlesund: Good morning, everyone. Welcome to the presentation of Evolution's interim report for Q3 2026. My name is Martin Carlesund, and I am the CEO of Evolution. With me, I have our CFO, Joakim Andersson, as usual. I will start with some comments on our performance and then hand over to Joakim for a closer look at our financials. After that, I will conclude, and then we will open up for questions. Next slide, please. Let's start with the highlights. Net revenues were EUR 526.1 million, corresponding to a year-on-year increase of 3.7% and a quarter-on-quarter increase of 1.6%. Adjusted EBITDA came in at EUR 345.9 million, giving a margin of 65.8%. Adjustments include the UK Gambling Commission settlement of EUR 5.6 million and the Galaxy Gaming termination fee of EUR 6.5 million. This was an uneventful quarter, which I believe is something good.
Martin Carlesund: On a quarter-on-quarter basis, all regions contributed to growth for the first time since 2024. The margin remains stable and very strong cash flow. Live revenues increased by 1.3% compared to Q2 and by 2.6% on a year-on-year basis. RNG reported double-digit growth for the second quarter in a row, up 10.1% compared to last year and 3.2% compared to Q2. Nothing spectacular happened on the operational side. It is business as usual with several game releases, new studios openings, and our everlasting credo of becoming a little bit better every day. After the end of the quarter, the new potentially temporary ban on gaming came into force in Brazil, as you know. That will make Q4 not as uneventful, but we do not want to speculate about the final outcome. We will know more after the second round of the election this weekend.
Martin Carlesund: For now, we have closed the studio, but we are ready to reopen on short notice. It is highly unfortunate that populistic agenda can overthrow a regulatory framework that has only been in place for 1 and a half year. However, Evolution has the advantage of our global scale and size, and it is not the first time we had to handle the regulatory fickleness of the market. We now focus on how to handle our employees and the practical consequences as we wait for further clarity. Next slide, please. Let us look at our operational KPIs, first consisting of headcount and then game rounds. Headcount increased by 8.1% on a year-on-year basis and 2.3% compared to Q2. We launched 1 more studio in the quarter, our third in total this year, and our 27th studio worldwide. We continue to optimize the distribution and cost mix.
Martin Carlesund: The Game Rounds Index can be seen as a general indicator of activity throughout our network over time. We have seen a steady increase over the past quarters and somewhat of a jump in Q3. Next slide, please. Looking at the revenue mix by customer location, Europe has decreased slightly, while LATAM and Asia have increased compared to Q2. As a reminder, as we require all our customers to carry a license in a regulated jurisdiction, all our revenues are regulated. The revenue split on our customers, which is an estimation based on the IP number of players received from our customers and purchased third-party geo information, has not changed compared to Q2. The same goes for the estimated share of revenue from regulated markets, which remains at 49%. Next slide, please.
Martin Carlesund: Now I will go through each of the major regions based on the estimation of revenue based on our customers' customers IP number. Europe reported quarter-on-quarter growth of 0.4% and a year-on-year decrease of 4.7%. It is not exciting and we should do better. No matter the regulatory situation or low channelization rates, we should do better. Demand for localized content remains high, and we launched an Italian language Ice Fishing during the quarter. We also opened a second studio in Lithuania. Asia increased by 0.8% quarter on quarter and by 1.6% year on year. It is 1 small step forward compared to Q2, but you all know that there is no quick solution to the cybercrime issues that we continue to see. We are playing the long game, and I remain confident that it will pay off. Next slide, please.
Martin Carlesund: Yet again, we achieved all-time high revenues in both North America and LATAM, but now also in Africa. North America reported 13.6% year-on-year growth. Slots continue to be the dominating game type, and our RNG portfolio performs better. At the same time, Live is slowly finding its audience, and we continue to expand to meet demand. Earlier this year, we opened our second studio in Michigan, and during Q4, we will open a fourth studio in New Jersey that also will serve Delaware. We will then have a total of 8 operative hubs in the US. LATAM reported 23.1% year-on-year growth, and it did not include any effects from the ban in Brazil that came into force early October. If Brazil reopens its market, we are ready to accelerate.
Martin Carlesund: In the meantime, we are planning for further expansion in Colombia, while also building momentum in Argentina with our two studios there. Africa and Other continued its strong performance with a 23.7% year-on-year growth. Next slide, please. Let's look at the products. In Live, two of the main launches in Q3 were MONOPOLY Roll ’em and Disco Balls. Both of them have been off to a very good start. In RNG, we are introducing a new US-focused studio named Spinning Whale. The first game will be available in November, and it will, of course, be distributed through One Stop Shop. This exciting new addition will further cater to the preference of the US players. Looking ahead, I want to highlight one title under our Hasbro partnership that will be launched very soon, Game Night.
Martin Carlesund: It will feature a huge money wheel and five bonus games inspired by Hasbro classics such as Hungry Hippos and Connect 4. It will be the largest game show in the history of online casino and a truly spectacular game. Very much look forward to that release. With that, I will hand over to Joakim Andersson for a closer look at our financials. Next slide, please.
Joakim Andersson: Thank you. Let me start with a five-year trend on Slide 8. Looking at the blue bars and our revenue development, it is encouraging to see another quarter added to the positive trend we have established since the low point in Q3 2025. Net revenue amounted to EUR 526.1 million in the quarter. We reported adjusted EBITDA of EUR 345.9 million, corresponding to a margin of 65.8%. Year to date, our EBITDA margin stands at 65.7%, meaning that we continue to track well against our full-year target of 66%. Next slide please. Looking at the more detailed profit and loss statement, I have highlighted three areas this time that I would like to comment on. First, obviously, as I just said, net revenue amounted to EUR 526.1 million, representing a growth of EUR 8.3 million quarter on quarter, and a return to positive growth year on year at 3.7%.
Joakim Andersson: This performance was driven by positive development with the Live portfolio, combined with another strong quarter of double-digit growth in RNG. The second highlight is our cost development. On a reported basis, total operating expenses amounted to EUR 235.9 million. However, this includes both the settlement fees paid to the UK Gambling Commission and termination and legal costs related to the contemplated Galaxy Gaming acquisition. Together, these items amounted to EUR 12.1 million, and when we talk about our adjusted EBITDA, we are excluding these one-off items to provide a more accurate view of the underlying performance, which also improves comparability with prior periods. Looking more closely at our expenses, you will find that personnel costs show relatively high year-on-year growth, driven primarily by an increased headcount of 8% compared to Q3 last year. On a rolling 12-month basis, the increase is more moderate.
Joakim Andersson: The third highlight is earnings per share, which amounted to €1.29 during the quarter, which is 2.4% higher than Q3 last year. However, if you would compare EPS on an adjusted basis by removing the non-recurring items from this quarter, the improvement of EPS is approximately 7.5%, driven primarily by the significant reduction in shares outstanding resulting from our share buyback program. Next slide, please. Operating cash flow after investments amounted to 334.1 million during the quarter. Working capital continued to contribute positively, adding 32.5 million. I have commented on the working capital initiatives over the past few quarters, and while further opportunities remain, I am pleased to see that the increased focus on accounts receivable is delivering tangible results.
Joakim Andersson: As a consequence of the strong operating cash flow, cash conversion was very strong during the quarter, contributing to a rolling 12-month cash conversion of 85%, as illustrated in the graph. I have limited comments on the capital expenditures. Investment levels remain consistent with the stable trend we have seen over recent quarters, with total investments of 32 million during the period. Next slide, please. My final slide is, as always, about the balance sheet. I have 2 comments here. Total cash and cash equivalents amounted to 656.4 million at quarter end. The cash balance is now on a slightly lower level as a result of the substantial shareholder distributions we are making via the share buyback program. As of 30 September, we had repurchased 16.9 million shares year to date, corresponding to €1.1 billion.
Joakim Andersson: We will continue our buybacks through Q4 and Q1, although at a somewhat lower pace than in Q3, as we adjust the pace to align more closely with cash generation. During the third quarter, we held an extraordinary general meeting to approve the cancellation of treasury shares held at that time. This was necessary because Swedish companies are not permitted to hold more than 10% of their own shares. In order to continue executing the 2 billion buyback framework, a cancellation of treasury shares was required approximately halfway through the program. The equity amounted to 3.6 billion at the end of the quarter, meaning that despite the significant buybacks completed to date, we continue to maintain a very strong financial position. That concludes the financial deep dive for this quarter. Back to you, Martin.
Martin Carlesund: Thank you, Joakim. Let us summarize and then move to Q&A. Q3 2026 has been uneventful, maybe even a little boring, and business as usual. It is a state that I like. It helps us to focus on things that matter, to continue pushing through the best and most innovative and entertaining products, expanding our footprint, creating revenue and cash flow. In Q4, we have the situation in Brazil to deal with, but it is not the first time that a single market undergoes volatility or uncertainty, and I am sure that it will not be the last time either. We will continue to see volatility from all parts of the world, also going forward. Are Asia cybercrime issues solved? No.
Martin Carlesund: What matters is, once again, to stay focused on the core and recognize the scale of which Evolution runs its business and how stable and good we are in doing that. Entertainment, user experience, people, getting a little bit better every day, growth, cash flow, cost discipline, and entertainment again. That is the core of Evolution, and we continue to be the core. Ready, set, go. Time for Q4. With that, we thank you for listening, and now we will open up for questions. Next slide, please.
Operator: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Nikola Kalanoski from ABG Sundal Collier. Please go ahead.
Nikola Kalanoski: Hi, gentlemen. Just a few questions from me. The first one is on Live growth. Now that you have returned to growth in Live for the quarter, would you say that Ice Fishing has been the key growth driver in Live this quarter? From an outside-in view, Ice Fishing has shown some very impressive player growth.
Martin Carlesund: Ice Fishing is probably the largest game in online history, and it is the third time Evolution created such a great game. I mean, Lightning Roulette, Crazy Time, and now Ice Fishing. It shows what we are doing and what we are aiming to do and what we continuously aim to do. I would not attribute a single quarter to any type of game. It is the combination of all of our games.
Nikola Kalanoski: Yeah, fair. The second one would be on upcoming game launches. I think you are launching Game Night soon. As I understand it, the setup for the game in the studio is quite grand and complex. With that in mind, should we expect you to invest more on a game-by-game basis as you continue to develop some of these increasingly complex game shows such as Game Night?
Martin Carlesund: I think that our investment level on the size we are will remain more or less the same. It is not driven by one specific game or even that we do more complex games. Game Night is going to be spectacular. It is the biggest game ever made in our history and probably in online Live history as well, and it is going to be absolutely awesome. I would not see it affecting the level investment, no.
Nikola Kalanoski: Yeah, I appreciate that. The final one is on Asia. Martin, I think you have historically written repeatedly about volatility in the region and of course the cyber theft issues in the report. If I am not mistaken this time, you did not mention it in the report, but you discussed it briefly during this call. Should we interpret this as you being increasingly confident or satisfied with the measures you have taken, or should we not read too much into this? It is quite well-flagged for a long time now.
Martin Carlesund: We are working very hard. We are taking long-term steps to protect our product, and I think that we have traction exactly on these technical endeavors that we do, and I am happy with them. Exactly how that plays out, there will probably be volatility as we go forward, but we are happy where we are technically.
Nikola Kalanoski: Okay. Thank you so much. That is all from me. Thanks.
Martin Carlesund: Thank you.
Operator: The next question comes from Martin Arnell from DNB Carnegie. Please go ahead.
Martin Arnell: Good morning, guys.
Martin Carlesund: Good morning.
Martin Arnell: My first question is on the growth. You are at 4% growth. Is this a realistic number for you, aiming for growth in line with the market, or do you see it as an exception from easy comps over last year?
Martin Carlesund: I would say that the takeaway should be that when we have the opportunity to do business and focus on our core business, we will see good traction and good growth. I look forward to. We do not need tailwind, we do not need headwind. If we could just be continuing working, then I would assume that we can have good figures also going forward.
Martin Arnell: Okay, thanks. The new games pipeline for 2027, ICE is only a few months away. Can you share anything, any light on the game pipeline rolled up for 2027?
Martin Carlesund: Yeah, we are going to have a spectacular roadmap also for 2027. We are on the late side, as we all know a little bit with the games, because they are super complex, big, and the biggest games we have ever made. I would say that 2027 will be a spectacular year, not only for what we show on ICE, but also what we release.
Martin Arnell: Okay, thanks. My final question is on your new studio in New Jersey. Do you see demand to ramp it up quickly, or do you think it will be a slow capacity increase?
Martin Carlesund: I wouldn't say slow. Quick is a relative word, but I think that we will see a good ramp-up in medium term.
Martin Arnell: Okay, thank you.
Martin Carlesund: Thank you.
Operator: The next question comes from Edward Young from Morgan Stanley. Please go ahead.
Ed Young: Good morning. Three questions, please.
Martin Carlesund: Good morning.
Ed Young: My first one is on the growth in Europe. Obviously, overall, you said you are happy with a pretty stable position across the geographies and everything grew quarter-on-quarter, but you did call out that you can do better in Europe and you should do better in Europe, and it does look like there is some market share lost there. Could you help us understand a little bit on what can drive that? I know you have talked about channelization, but there are not any huge changes going on right now. What is it that you think you need to do better in Europe to capture some more of the market growth and get back to a position you were in long before, which was actually gaining market share?
Martin Carlesund: I think that you will see that if we can just have a couple of stable quarters in Europe where we focus on actually working with our customers and get back from all of these external parameters and regulatory changes and taxes going here or there and whatever, even with the situation we have, if it will be stable, we will see to that we will do better.
Ed Young: Okay. Second one on Spinning Whale. Is that much of a departure from your previous strategy? You said it is focused on the US. Does that mean it is focused on low volatility, land-based style games, or are you looking to do something a little bit different there? Given the success you have had in Live by also acquiring the right IP, is doing some deals around land-based IP something you are considering within that? Just a little bit on the strategy of what you are trying to achieve with Spinning Whale would be appreciated.
Martin Carlesund: We want to do a localized RNG content for our North American business, and this is what we are doing with Spinning Whale.
Ed Young: Okay. Finally, on the comment on the buyback, you said you are slowing it to more align with cash generation. That seems like a pretty clear answer, but is it fair to say then you are not considering at this time taking on any debt to fund a greater pace of buyback, or is that something that could or might be reviewed as you get to the full years next year? Thanks.
Martin Carlesund: We have the timeframe to do the buyback, up until Q1 and a little bit more maybe. We will, of course, manage, and if we can do that without taking up debt, that is good. It saves money, and of course, that is what we aim to do, and it looks good.
Joakim Andersson: I can just add a quick one, Ed. The capital allocation framework and the kind of leverage targets remain. We have said that we want to be in the net cash position as kind of a standard where we want to stay, and that remains.
Ed Young: Thank you.
Martin Carlesund: Thank you.
Joakim Andersson: Thank you.
Operator: The next question comes from Charlie Muir-Sands from BNP Paribas. Please go ahead.
Charlie Muir-Sands: Yeah, morning, gentlemen. Thank you for taking my questions.
Martin Carlesund: Morning.
Charlie Muir-Sands: Morning. The first one just reflects your Game Rounds Index, up 23%, I think, year-on-year against constant currency growth after a-
Martin Carlesund: Fantastic.
Charlie Muir-Sands: I beg your pardon?
Martin Carlesund: It is fantastic, isn't it?
Charlie Muir-Sands: Yeah. I was just wondering why it is not dropping through to stronger revenues. I know you have talked in the past about how it is a directional indicator, but can you just share some of the drivers around the main mix effects as to how that translates into only 4% constant currency growth? Is it because RNG is much lower ticket? Is it geographic effects? Are there other things going on? That is the first question. Thanks.
Martin Carlesund: It is a directional indicator. You can see that it indicates how well our games are doing right now and how many plays. There are so many parameters that affect the revenue and when the revenue drops down. It is about which markets that are growing, what type of traction, what type of bet levels you have there, and so on. Over an eternal time, of course, there is almost one correlation between how the activity in the network and the revenue comes out, but that is over a very long time period. Quarter on quarter, even a couple of quarters, there is not that relation.
Charlie Muir-Sands: Okay. There is no change in the underlying take rates that you have agreed with your main customers?
Martin Carlesund: That is a good question. No, we do not see any major price pressure or that type of situation, no.
Charlie Muir-Sands: Great. My second question is just with respect to the improvement in momentum you are seeing in Asia. How much of that would you attribute to easing pressures around player currency headwinds versus underlying participation, and incremental steps you have taken or not taken since the last quarter with respect to actions around your video piracy? Thank you.
Martin Carlesund: I cannot go down into that level. I am happy, as I said, with the technical achievements that we do, it is a long-term play, I believe in what we do, but it will take some time. I am quite happy where we are right now.
Charlie Muir-Sands: Great. Just the last brief question is with respect to Brazil. I know it is not a huge part of the total group, but what proportion of the cost base there are you able to mitigate near term? Can you just confirm that group-level margin targets for stability for the full year are achievable in spite of the fact that you will probably generate zero revenue from the region for this entire quarter? Thank you.
Martin Carlesund: I will only comment from the margin perspective, because I do not want to go into what happens, what we are going to use where and when. We do not even know if we are going to open again. Our margin guidance for the full year remains in line with last year. That remains. There is no change in that.
Charlie Muir-Sands: Very clear. Thank you.
Martin Carlesund: Thank you.
Operator: The next question comes from Monique Pollard from Citi. Please go ahead.
Monique Pollard: Hi. Morning, everybody.
Martin Carlesund: Good morning.
Monique Pollard: My first question, morning, was one for Joakim Andersson on the accounts receivable. This quarter, obviously, you have seen another reduction in the accounts receivable of close to EUR 30 million. You have said that opportunities still remain. I would like to understand, obviously, you have been talking about these working capital efficiency initiatives, and they have been coming through since the end of last year. How much more is there really still to go, or is the bulk of that sort of work on the working capital done now?
Martin Carlesund: Yeah. We started to talk about this in, I think, Q3, Q4, and more so in Q4 when it was at a very high level. Then we said that we are following it. We are not worried. We understand what it is. Then I think we talked about that we have in the past, maybe let our customers use us as kind of a bank to finance their operations and their working capital, which we are not doing any longer. Being more disciplined in the kind of invoicing process, getting the invoices out on time and correct, and then chasing, making sure that customers are paying us when they should. That is really what we have done. It is not there, and that has led to these improvements the last couple of quarters, Q1, Q2, and also now Q3. Is there more to do?
Martin Carlesund: Yes, as I said, there is more to do. We do not want any invoice to be late. It should be paid on time, and there are still some over dues.
Monique Pollard: Got it. On Brazil, for my understanding, I had never understood that that country was geo-fenced in any way. Is it the case that your Brazilian revenues go down to zero in the fourth quarter, or will there still be some revenues in Brazil despite the studio closure in the fourth quarter?
Martin Carlesund: There is no ring fencing there.
Monique Pollard: Okay. The final question I had was just your targets obviously include your medium-term targets that you are going to grow at least in line with the market in your regions for both Live and RNG. Do you think you are achieving that this year? It would seem probably so for RNG, maybe there are some pockets in Live, some regions where you do not think you are achieving growth in line with the market. If you could just give us some sense of how you are doing against that target would be really useful.
Martin Carlesund: Sorry, it broke up for me, the first little part. What were you after about? Ask again, please.
Monique Pollard: It was that long term, one of your targets is to grow in line with the market in your regions for both.
Monique Pollard: Live and RNG. Just wondering if you think you are achieving that in all your regions this year.
Martin Carlesund: I think there is more to do on that. I think that there are markets that we can do better, like in Europe right now, but we have to look at it in a little bit longer time perspective than a quarter on quarter and so on. There is more we can do.
Monique Pollard: Understood. Okay. Thank you.
Martin Carlesund: Thank you. Yep.
Operator: The next question comes from Andrew Tam, from Rothschild & Co Redburn. Please go ahead.
Andrew Tam: Good morning, and thanks for taking my question.
Martin Carlesund: Good morning.
Andrew Tam: Just good morning. Just three from me, which very quickly. You talked about your FX headwinds and how they have affected top-line growth in prior quarters. Just wondering if you have got any comment in terms of what sort of headwind you have experienced to revenue growth this quarter.
Martin Carlesund: In the end of the quarter, we had a clear headwind in Brazil. It didn't really start until 5 October, but that's a typical headwind.
Andrew Tam: Sorry, is that a headwind because in an operational sense or from a foreign currency perspective, which is what I'm asking about?
Martin Carlesund: I don't have any details on a specific headwind in currency or operational. I think that we are coming out of the quarter with a very good operational, quite stable situation. We're happy with that. All our regions is growing, contributing to growth. Some of them are actually growing very well. In a combined situation, I don't have any typical headwinds.
Andrew Tam: Got it. Okay. Thank you.
Martin Carlesund: It is more stable.
Andrew Tam: Understood. Just on the Brazil and Monique Pollard's question there, just following on from that and the studio closure. Given that there is no ring-fencing, would you say that there is still a net positive for you given what has happened in terms of your ability to still service the market via operator's license from elsewhere?
Martin Carlesund: I think that everyone is flabbergasted about the situation in Brazil, that it is a total negative for anyone in this business that it happens in this way.
Andrew Tam: Understood. Thanks. Just lastly, a bit of a philosophical one. You have done a great job this year of clearing up a lot of the share price overhangs in 2026. By that I mean, the UKGC settlement and walking away from Galaxy. So congratulations on that. That certainly helped the share price, so well done. I guess in my mind, the largest overhang still seems to be the defamation suit against Black Cube. Recent feedback from investors seems to suggest that you are open to potentially settling the suit there, but Playtech is less so. Yet if you drop the suit, given that you are the plaintiff, that overhang is gone. Can you confirm that that is indeed the case, that you are indeed open to settling that and removing that overhang?
Martin Carlesund: We are in a full lawsuit with them, and that will continue as we go forward. I have no comments in other direction. We are doing everything we can, and now there are new steps taken every day, I would say.
Andrew Tam: Understood. Thank you very much.
Martin Carlesund: Thank you.
Operator: The next question comes from Adrien de Saint Hilaire from BofA. Please go ahead.
Adrien de Saint Hilaire: Thank you very much. Good morning, everyone.
Martin Carlesund: Good morning.
Adrien de Saint Hilaire: A couple of questions. Hello. A couple of questions, if you wouldn't mind. I noticed that the headcount picked up in Q3. Can you comment a bit about what's behind this? Should we view that as perhaps an encouraging signal in terms of your expectations for top-line growth in the future? Second question, have you made any progress around AI and the potential rollout of AI live dealers as a potential substitute to your current studios? I am very sorry to come back again to Brazil. It wasn't quite clear to me if you were saying or not that we should expect that Brazilian revenue in Q4 should go to zero given the closure of the studio, or whether you would still generate revenue from selling to operators which are potentially not licensed in the market.
Martin Carlesund: Okay. Let's start with the end, then we'll go backwards. The only comment I have is that we have to monitor the situation in Brazil. No one really knows what will happen. It could be reopened again. It's a negative, of course, that it's closing down in this way that it is in the middle of a presidential campaign. We were very happy with the regulation. The country as such is not ring-fenced, and we will see what will happen with the players. When it comes to AI, we are really working hard with AI in the whole group, evaluating where we can make really good progress with it and how we can replace functionality. I want AI injections which I stated over the years.
Martin Carlesund: So you need to look at where you can gain something from AI, you really push efficiency, and we are happy with the progress of that. AI dealer is a possibility. We are looking into that, or have been looking into that. We will see where we come with that. It is like an RNG live game. It is a complement. I do not think that it will take over Live, as some people ask, but we are looking into that as well. The first question, what was that? Now I did not remember it.
Adrien de Saint Hilaire: Headcount growth.
Martin Carlesund: Yeah, the headcount. Do not read too much into the headcount. It is a little bit like the bet spots. But yes, of course, we are aiming and pushing, and we want to do better. So of course, that comes out of that. We are having a better cost mix as well.
Adrien de Saint Hilaire: Thank you.
Martin Carlesund: Thank you.
Operator: The next question comes from Ben Shelley from UBS. Please go ahead.
Ben Shelley: Hi, good morning, and thanks for taking my questions. I will start with Africa and others, which delivered a strong quarter. What are the key drivers behind that growth, and how sustainable do you think that trajectory is?
Martin Carlesund: The key driver is hardcore, focused business as usual and good work of the region. It is a rather small region, and it is rather volatile. I think that 2024 or in the 2023, +20% growth is a very good growth, and you have to look at it in a longer time period, and then you will see it fluctuates a bit.
Ben Shelley: Perfect. Thank you. Just a question on Brazil, again, if I may. We have seen instances historically when regulatory change initially created some revenue volatility for you, but soon stabilized. India comes to mind in Q3 and Q4 last year. Is that a reasonable framework for Brazil today, or is this situation different?
Martin Carlesund: I think that this situation is new, where it is so abrupt, it is regulated, the operator has paid for a five-year license and so on. It is very difficult to say where we will end up. We are working on it, I have tried to do everything we can for our employees and everyone on the ground. It is difficult to say.
Ben Shelley: Okay, thank you. My last question is just on capital allocation and shareholder returns. You have had a lot of success with going 100% buybacks this year. With that in mind, how do we think about capital allocation in the years to come?
Martin Carlesund: I think that we are very happy with the capital allocation this year. I am happy with the way that we did it. I know there was a lot of frustration about the timing. I think it came out very well in the end, which I also emphasized there. We will be better in time with what we will do next year. That is the only thing I can do. We are happy with what we have done so far this year, and we will continue and be in better time with this year.
Ben Shelley: Thanks very much for taking my questions.
Martin Carlesund: Thank you.
Operator: The next question comes from Rasmus Engberg from Kepler Cheuvreux. Please go ahead.
Rasmus Engberg: Yes. Hi, guys. Thanks for taking my question.
Martin Carlesund: Hi. Good morning.
Rasmus Engberg: Can I just come back briefly to the previous question? Given the extremely high margins you have and a very strong cash flow, why is it that you want to run this with the net cash balance sheet? It seems a bit inefficient to me.
Martin Carlesund: That could be a financial question to the CFO, but the actual answer is that we are in a volatile situation in online gaming. A lot of things happens, and we want to push forward, and we want to be free to make the investment we need, and we want to be self-sustained. So over time, we have taken the decision to be net cash positive and no debt.
Rasmus Engberg: Okay. Fair enough. Second question is what I guess everybody is trying to get their heads around is on the cost side in Brazil. If we are to just take any business or Evolution overall, what would you say is the variable cost, typically, of your costs?
Martin Carlesund: I think that we have a fantastic business model, and I think that we, as a company, are super fast in acting whenever there are circumstances changing to adjust our cost base. Our variable cost in Evolution, due to the great managers that I have in the company, which I am lucky to have in the company, are fast, agile, and to the point. It is very hard for me to put a percentage to it, but I think we are fast in adopting, and we are fast in adjusting.
Rasmus Engberg: Fair enough. Thank you so much.
Martin Carlesund: Thank you.
Operator: The next question comes from Karan Puri from J.P. Morgan. Please go ahead.
Karan Puri: Hi. Good morning, everyone.
Martin Carlesund: Good morning.
Karan Puri: Just one quick question from my side with respect to the temporary closure of the Brazilian studio. Could you maybe help us understand better what sort of impact that could have on markets outside of Brazil?
Martin Carlesund: On markets? Sorry, I did not get that.
Karan Puri: In terms of the studio providing games for other geographies outside of Brazil, other Portuguese-speaking countries, is there a way to understand what sort of impact the studio closure could have?
Martin Carlesund: No, that would be, at the moment, marginal.
Karan Puri: Okay. Thank you.
Martin Carlesund: Thank you.
Operator: The next question comes from Richard Stuber from Deutsche Bank. Please go ahead.
Richard Stuber: Hi. Thanks for taking my question. Just a quick one.
Richard Stuber: Following up from Andrew's one on the Playtech Spectrum. In the report, I think you mentioned that you take some revenue from what they consider prohibited markets. Could you say what proportion of revenue of yours is taken from these markets which are prohibited? I know the DGE has signed it off, but it would be interesting to know what proportion are from prohibited markets. Thank you.
Martin Carlesund: No, I do not comment on that.
Richard Stuber: No. I could take some other questions that have been answered. Thank you.
Martin Carlesund: Thank you.
Operator: There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Martin Carlesund: Okay. Thank you, everybody. Nice to speak to you. Look forward to seeing you again in, I guess, a little bit over a quarter, because then the next time it will be 2027. Thank you.
Operator: The host has ended this call. Goodbye.
