Good day, and thank you for standing by. Welcome to the LeoVegas Q3 2021 Report. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone or submit your questions via the Q&A tab on the webcast. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gustaf Hagman. Please go ahead. Thank you, and good morning, everyone, and warm welcome to our quarterly presentation for the third quarter of 2021. Together with me today, as always, our Group CFO, Stefan Nelson. Welcome, Stefan. Good morning. Good morning, Gustaf. Let's get straight to it. Our Q3 highlights. In the third quarter, our revenues amounted to EUR 99.4 million, and that's an organic growth of 8%. Our normal growth was 12%, and if we excluded Germany, we grew 31%. Our EBITDA was EUR 11.5 million, and this is despite a high level of investments and a number of important strategic ventures, including preparation for the launch in the U.S., a strong focus on sport and investment in Expekt. 66% were locally regulated and taxed revenues in Q3. Our depositing customers, 7% higher than last year, and new depositing customers increased with 5% to EUR 188,221. Almost all of our markets have continued to develop well with double-digit growth in key markets. The development in Sweden is very encouraging with record high revenues during the quarter. We also continue to grow rapidly in North America, which is Canada at the moment. Let's have a look at our product mix during the quarter. Casino Classic, this is basically our slot games, 76%. Live Casino, 14%. Sport, 10%. Business update. The Nordic stands for 44% of the group revenues. In Sweden, we had another all-time high quarter and really strong performance by LeoVegas, and Expekt continued to deliver exceptional growth in the Swedish market. Also in other Nordic markets, good growth in all Nordic markets. In Sweden then, I'm so proud of our teams that have made Sweden and LeoVegas the largest private operator in Sweden. We increased our focus on sports during the quarter. This is a strategic decision that we made. We have a broad brand portfolio covering all key segments in the Swedish market. Strong brand, superior product, and data-driven marketing are key to success in the Swedish market. As mentioned then, according to Swedish tax figures for September, LeoVegas was the largest private operator when excluding the two incumbents. Also the temporary deposit limits will be removed the fourteenth of November, and this is positive and should lead to improved channelization in the Swedish market. Rest of Europe stands for 34% of group revenues. Then the Netherlands, since the September 30, LeoVegas has ceased services for Dutch residents until a Dutch license has been awarded. We will apply for a Dutch license later on this year. The Dutch market was 6% of total revenues in Q3, with higher profitability than the Group's average. Rest of Europe. We have shifted focus from Germany to other markets, and this has shown to be a successful strategy. U.K. is moving in the right direction. We've closed a double-digit growth. I'm really happy about that. Also double-digit growth in Italy and Spain, a really, really strong performance in those markets. If we look at Rest of World, which then stands for 22% of the group revenues. Canada, strong performance with double-digit growth, and we are preparing for the regulation in the state of Ontario. Rest of World, most key markets in the region continue to deliver solid growth. Our U.S. expansion is on track, and we will soon open up a new office in New Jersey. Safer gambling. This is close to our hearts here at LeoVegas. We strengthened the group's safer gambling offering in the U.K., and we've done that with AI-powered on-site message to increase awareness of safer gambling, and also with individual deposit limits through an innovative in-house solution supported by third-party data. General business. One could say it's unpredictable rules in some local markets, and the way we adapted these markets is to be long-term, scalable, and diversified. Look, today, regulation is everywhere, and new local regulations in some of the key markets for LeoVegas, such as Germany, Netherlands, Ontario, and the U.S. then. Existing regulated markets continue to adapt their frameworks. As mentioned, it's challenging environment with the regulators having different agendas. It's a short-term pain, that's the way we look upon it, but long-term gain, also in line with our strategic values, actually, to be in countries that are regulated. How do we mitigate this? Well, a more balanced geographic mix and also more balanced product mix, and operational excellence and synergy creation throughout the group, and of course, focus on product innovation and customer experience. If we look at Germany, I think this is a great example of how we mitigate. Our revenues are actually up 31% when we exclude Germany from the German market. LeoVegas has managed to mitigate the significant drop in Germany with diversification and strong growth in other markets. Example of this are Italy, Spain, Canada. They all grew between 40% and 70% in the quarter and are gaining importance for the group. Then, of course, Sweden is continued to be a solid growth driver as well. All in all, we always find new growth markets. Current trading, we started off Q4 with EUR 31.1 million in revenues, and that's a growth of - 5% compared to October last year. If we include Germany and also the Netherlands, since October was the first month without the Dutch revenues, we managed to deliver a growth of 21%. I think that reflects a strong momentum in our underlying markets. As our colleagues in the industry already have reported, we also had an exceptionally low sportsbook margin during October that affected us. With that, I leave to Stefan to run our business KPIs. Over to you, Stefan. Thanks, Gustaf. As always, let's start with our player base, our customer base. During the third quarter, we continued to expand our player base. Our NDCs, our new depositing customers increased by 5% year-on-year and by 6% compared to the prior quarter. Our returning depositing customers increased 8% year-on-year and a small decrease quarter-on-quarter from the all-time high levels we had in Q2. That results in our total customer base increased by 7% year-on-year and with 2% quarter-on-quarter to a new all-time high level. Meanwhile, if you look to the right on the page, you can see that our average customer spend or player value increased 5% year-on-year, another small decrease quarter-on-quarter. As you can see, also the player value has stabilized during the past few quarters. The long-term trend, as we've talked about many times before, is explained by a larger share of leisure players, as well as a change in geographical mix, which is all in line with the company's growth strategy. Moving on to our deposits and NGR. Our deposits increased 5% year-on-year and had a small increase also quarter-on-quarter. The deposits is a main KPI to show the underlying growth of the business. Meanwhile, NGR increased 12% year-on-year and 3% quarter-on-quarter. The difference between deposits and NGR during the quarter is related to a slightly higher hold during the period. The gain margin increased to 4.2%, small uptick versus 4.1% in Q2. That is above the historical average of 3.9%, and this reflects a change in product mix. The hold, as I mentioned before, also increased slightly, but is still in line with the average historical levels. Moving on to our customer acquisition costs. We had a marketing spend in the quarter of about EUR 36 million. We have, as commented on in previous quarters, continued to hold a high pace of investment in a number of markets where we have seen opportunities to scale up our revenues with favourable terms. We have also continued to push our Expekt brand, which has been a successful strategy. All this has in turn contributed to a greater diversification for the group, and we have also been able to mitigate the revenue drop in Germany during the past few quarters. If we look at Q3, compared to the previous quarter, the marketing costs in relation to revenues decreased from almost 39% in Q2 down to 36.5% in the quarter, which is according to plan, where we had temporarily high levels in the Q2, not least relating to the expansion for Expekt and the relaunch of the brand. Our customer acquisition costs increased year- on- year. That was also reflecting unusually low levels last year due to the pandemic. Quarter- on- quarter, the customer acquisition cost has gone down in Q3 versus Q2. All in all, the marketing ratios reflect our scalable business model. When our revenues increase, the share of marketing investments are expected to decrease in the next few quarters. This leads us to our financials, starting off with our EBITDA results. Both are reported on adjusted EBITDA in Q3, landed at EUR 11.5 million, which reflects an adjusted margin of 11.6%. As you can see, we have no adjustments in the quarter. Our 12-month trailing EBITDA was flattish versus Q1. If we dig into a bit more detail on the EBITDA in Q3 versus Q2, the main driver of the increased profits is, of course, the revenues that were up about EUR 2.5 million compared to the previous quarter. Meanwhile, we paid more in gaming duties, which is natural when we increase our revenues. Worth noting that we have never paid more gaming taxes than we did in Q3. This also reflects that our share of revenues from locally regulated and tax markets continued to expand in Q3. Meanwhile, as mentioned before, our marketing spend decreased compared to the previous quarter according to plan. We saw an increase in operational expenses. They were exceptionally low in Q2. On the other hand, in Q3, we had some costs that we could call of non-recurring character related to some strategic project during the period. Our personnel expenses, meanwhile, decreased from the previous quarter. That is partly due to seasonality effects in the third quarter. If we move down the P&L on the next page, 24, the EBITDA we talked about before. The adjusted EBIT for the period came in at EUR 8.5 million. That's when we exclude amortizations from previous acquisitions. The reported EBIT landed EUR 5.5 million, which includes about EUR 3 million in amortization for the previous acquisitions. We had about EUR 1 million in net financial expenses, and that primarily relates to our outstanding corporate bond. All this leads down to an adjusted net income for the period of EUR 7.1 million. Moving over to the cash flow, we continue to have a strong cash flow generation. The cash flow from operating activities before changes in working capital amounted to EUR 11.2 million, so it's very close to our EBITDA results. We had a small working capital improvement during the period. Worth noting though is that working capital can be volatile from quarter- to- quarter. During Q3, we also received an income tax refund of about EUR 5.3 million, which had a positive cash flow effect. You might remember that the previous quarter we had the tax payment for 2021, while we got the refund, reported the refund in Q3. We also issued a further SEK 200 million in the corporate bond during the quarter. We conducted buybacks and also paid out our quarterly dividend, which in total amounts to EUR 6.4 million in returns to our shareholders. That finally leaves us with a solid financial position. Our cash excluding pay balances is at EUR 60.7 million, and we are more or less unleveraged. That takes us to my final page, which also illustrates our net debt and leverage position. Our current net debt is at 0.2x our last twelve months adjusted EBITDA, which is well below our gearing target. Again, we have continued to deliver a strong cash flow generation and cash conversion during the past three months and the past 12 months. With that, I'll leave it over to you, Gustaf. Thanks, Stefan. I'm just going to run the summary here before we open up to the Q&A. Let's summarize Q3 revenues, EUR 99.4 million. That's an organic growth of 8%. When excluding Germany, our revenues increased with 31% during the quarter. EBITDA, EUR 11.5 million. Another record quarter for Sweden with strong performance by LeoVegas and rapid growth for Expekt since acquisition. We are more diversified than ever with Italy, Spain and Canada grew 40%-70% during the quarter. Since September 30, LeoVegas has ceased services for the Dutch residents until a Dutch license has been awarded. We will apply for that during the end of this year. October revenues of EUR 31.1 million, and that's a growth of -5% and 21% growth when excluding Germany and the Netherlands. Also remember the low sports book margin in October. Okay. With that, let's open up for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you need to press star one on your telephone and wait for your name to be announced, or submit your questions via the Q&A tab on the webcast. Please stand by while we compile the names. Thank you. Your first question comes from Oscar Erixon of Carnegie. Please ask your question. Thank you, and good morning, Gustaf and Stefan. Two questions from me. Starting with Q3. Quite an impressive Q3 performance here and market share gains in Sweden now for several quarters. What's the underlying driver here? Does it reflect much increased marketing, different marketing mix or an improved product? It'd be interesting to hear your thoughts there firstly. Well, it's a combination of things. LeoVegas is a really strong brand in the Swedish market. We have a great product, and obviously the customers loves it. Then, of course, the launch of Expekt in the Swedish market as well. Clearly, the market wanted to have a new sports book brand. Clearly. What's your feeling regarding channelization in the Swedish market? How has that developed in the past year or so since the deposit limits were started to be enforced? Well, there are several studies showing that the channelization is around 70%-75%. That sort of unlicensed market is between 25%-30%, somewhere there. I think now with the limits and the lifting of the restrictions here during the weekend. Things will change, and hopefully the customers will come back to the licensed markets. It's a really positive thing that the restrictions are being lifted finally. Great. Turning towards the trading update here, obviously a quite weak October due to exceptionally low sports book margins and being out of the Netherlands in October. What can we expect here in November and December compared to October and of course seasonality discussion will be interesting also. What a normalized sports book margin would do and what one could expect here. First of all, it's not a weak start of Q4. It's quite strong actually, given the fact that if you take away Germany, this first month of Dutch revenues being well zero, so to speak, and at a really weak sports book margin as our competitors and colleagues in the industry have reported, I think it's a good start. Now during the quarter, we all know that the strong trend and the strong part of the quarter is ahead of us starting off during this weekend actually, and then the six upcoming weeks with December being the really strong month in the quarter. We are, of course, it could have been better in October, but all in all, given that this really weak sports book margin, and if you compare to our colleagues, it's a quite strong start. Understood. Then two questions here on costs for both you, Gustaf, and for Stefan as well to add on perhaps. First of all, marketing. Any indication on marketing in Q4 here, given the Dutch exit and also the soft sports book margin? Will you try to perhaps invest slightly less to continue to have a solid margin in Q4? Any indication would be helpful. Hi, Oscar. Stefan here. Well, as you know, we have not marketed in Netherlands for the past few years. That doesn't have any effect. We haven't actively been front in the Dutch market for several years. When it comes to sports, as you know, sports margins goes up and down. It's nothing that should change our longer- term plans. I think we're happy with kind of our plans going into Q4, so we don't take any drastic actions. As always, we work with a ROI-driven, data-driven model. As you can see, we have the past few quarters seen that we have good returns on our marketing. As long as we have that, we will continue to invest. With that said, as we have commented in the report as well, we do expect the marketing to revenue ratio to gradually go down as we increase our revenues. That is key for us, of course. Perfect. Just to be clear, I mean, lower share revenue ahead on marketing. Does that also, I mean, apply to Q4 despite October now being a bit on the soft side due to external factors, of course? I was expecting that follow-up question. Well, we don't, as you know, we don't guide on ratios for the coming quarter. In that case, we would have written that in the report. I think it's important to note that Q4 is our most important quarter. As Gustaf pointed out, we have some very exciting months ahead. Of course, that's also important period for customer acquisition. Again, we don't guide on Q4. I think what our ambition is to grow our revenues going forward, and then we will scale down our P&L to EBITDA line. Longer- term, we definitely expect that the marketing ratio will go down as we increase our revenues and scale. I don't wanna commit to a ratio right now for Q4. Understood. No, that's very helpful. Just a final one for me here. You wrote about partially normalizing travel-related costs as well as some expansion in U.S. investments, but also some temporary costs, if I understood correctly in Q3. Could you help out a bit there? Yeah, sure. It's a number of items. Of course, I think it's worth pointing out that even though the pandemic is not over in any way, we are seeing more of a normalized environment. We have more people in the office. We have people from our different entities or different offices who have the need to travel and meet each other. Definitely we encourage that, and we'll see somewhat of an increase in OpEx due to that. We've started to see that in Q3. It's nothing major, but it's still worth pointing out. We also are, you know, working with a new hybrid model that incurs some short-term costs. There are a number of things. I think we are relating to this strategic project. We have done some different, you know, bigger projects. One is, of course, related to the U.S. We're incurring some advisory costs, also looking at some other areas of the business. It's nothing that I want to kind of point out exactly. That will come at a later stage, but it still had an impact on our cost in Q3, which we won't see in Q4. Great. Thank you very much. Thank you. Thank you, Oscar. Thank you. Your next question comes from Martin Arnell of DNB Markets. Please ask your question. Good morning, guys. Morning. Morning, Martin. Let's start with this geographic mix and your diversification here. You have zero from the Netherlands now, and you still have these tough comps with Germany in Q4.And then on top of that we have maybe a more positive situation going forward in Sweden. I'm interested to know sort of how much do you think Sweden restrictions actually have impacted you negatively? When they were implemented, there was a negative effect of around 20%-25% or something. I don't really believe it's gonna be that much of a positive effect or that great a positive effect. It will be. Something will happen, of course. We will see more of the players that played on unlicensed casinos coming back, which is good for the channelization in Sweden. It's a little bit too early to say how it's gonna play out. It will be interesting to see after well, actually after the weekend. On Monday, it's gonna be the restrictions are lifted. 'Cause when you put all the pieces together, the positives and the negatives, you were at - 5% in October, and then you have the Swedish situation in November. Just curious to know if you're aiming for positive organic growth in Q4 or if it's more on the slightly negative side as you saw in October. Well, we have a lot of markets that are performing really well. I mentioned Italy, Spain, Canada, strong growth in all those markets, and then of course Sweden on top of that and U.K. as well. Almost double-digit growth in U.K. during Q3. It's a lot of things happening which are in a positive direction. Of course, you had a huge hit or a hit in October for the Netherlands, but we are rapidly mitigating that. Well, Stefan wants to say something as well. Hold on. Martin, I mean, if you look at, you're asking, you know, do you expect to aiming for growth. Of course, we're always aiming for organic growth, and we have had good organic growth in all our markets except the two mentioned. If you look at sports, the sports betting margin, even though sports is not as big for us than maybe some of our Nordic peers, it still had quite a big impact, you know, how big the sports betting part of it is. If margins would be normalized, we might have grown in October as well, despite Netherlands and Germany. Then of course, the German hit happened, the big hit came back basically in the beginning of December last year. Of course, if we're looking at the year-on-year growth, our comparables are also easing in a month or so. Great. Yeah. I mean, that these are a few things to consider. Yeah. But, but- That's good. That's good flavor. Thanks. When I look at that LTM EBITDA chart in your presentation, it looks like you didn't have that one big quarter this year like you normally have in Q2, and it looks like you've invested more in marketing. How should we think about the payoff from that marketing going forward compared to where you were a year ago or two years ago? Stefan here again. I mean, that's a good question because as you say, we have invested a lot in marketing. We talked about that the previous quarter as well, you know, abnormally high marketing ratios. This has been a deliberate strategy. We wanted to mitigate the German impact, which has been huge, right? Maybe, you know, 15% of our business has vanished due to the German situation. We wanted to mitigate that as soon as possible, so we took a strategic decision to ramp up in, or scale up in several markets at once, maybe a bit faster than we would have done otherwise. We also, as we know, relaunched Expekt and have taken quite big initial investments, went on TV straight away, basically, when we had the Euros in June. That has also had a very good impact for Expekt. These things coming together, of course, we have invested a bit more than we would have done otherwise to mitigate the negative impact as soon as possible. I think that the growth we have shown now in Q3, not least, is kind of a testament to that has worked. Going forward, of course, we do scale a lot when we increase our revenues. We have a very scalable business model, and that's, of course, what we're aiming to do as well. Okay. Thanks. On Germany, is there any news circulating of what will happen there, going forward? Or should we just leave that behind? No. Well, leave that behind, I would guess. Okay, thanks. The U.S. expansion, I want to ask you on that as well. I mean, how should we think about the near-term investments and how controlled will that be in the next year? Well, we just opened up our new office in the U.S., which is really encouraging and exciting, of course. I think a majority of the costs will come during Q1, Q2. It's worth noting as well that most of our costs right now are kind of development of the platform and adapting it to the U.S., and we of course capitalize quite a lot of that. In that sense, we will, when we feel that the costs are big enough to comment on, do that in the reports. As you can understand, there are of course some U.S. costs in Q3 as well, but we chose not to highlight them because it's not, you know, substantial enough. Of course, when we go live, it will be a different story because we will want to invest to gain market share, but that's in a couple of quarters. It's fair to assume that you will show us your revenue and your costs for the U.S. initially? I think that's we haven't decided exactly how we will show it, but that's I think a good guess that we want to highlight that. We of course want the U.S. to have a positive value for us, and then it's important to highlight the U.S. business case standalone. Okay. Finally, just Canada. Is there anything special to consider there ahead of the Ontario regulation? Well, it's been postponed, so it's not gonna happen in December. It will probably happen in February, March at some point. Well, from a positive angle, we don't pay any tax then for those months, it's postponed. Then again, in the long term we always like to be in countries that are regulated. It's well, yeah, that's the way it is. It's not gonna be growth excluding Canada next year? Nope. It's not gonna be growth excluding. It's gonna be growth including Canada. Thank you. Thank you. Okay, guys. That was all for me. Thank you. Thank you. Thanks, Martin. Your next question comes from Rikard Engberg of Erik Penser Bank. Please ask your question. Good morning, guys. Good morning. I have one question, and that is, can you please elaborate a bit about the game margin and the change in mix, since I've noticed a quite good trend during the last year? Sure. Stefan here. That's correct. We've had a bit of an uptick in the game margin. It is due to a shift in product mix. It's partly due, of course, to sports, and it's also due to a change in geographical mix. We do have a bit of different margins in different countries and on different suppliers. That has always been the case, but it has also been a bit of a mix shift there. I would say, you know, if the margins would expand from here, it would probably be due to that sports has a higher share of our revenues, because sports, as you know, has much higher margin than casino slots or Live Casino games. Cool. Is there certain kind of games in the casino market you see that expand the margin? No, not really. There's nothing specific in that sense. Good. I have one more question. Can you please discuss your investments in open banking during the quarter and how that development has been? Well, it's quite stable, and more and more customers are enjoying open banking, and it's so far only open in the U.K., but we're looking into more countries to launch open banking solution. Of course it's extremely positive for us because the transaction costs are a lot lower within open banking. We eventually will save a lot of money in transaction costs. Okay. Do you see that in the coming quarters or the coming years? It's a gradual rollout throughout 2022 and 2023. I think you will see it first, or well, 2023, I would say. It's gonna show off quite a lot. Okay, thanks. That was all for me. Thanks. Thank you. Thank you. Just to remind you, it's star one on the telephone to ask a question. At this moment, there are no further questions coming through on the line, sir. Should we go to some web questions as well, Philip? Yes. We have a couple of questions from the web. Starting out with two questions regarding Expekt. Given the success with the relaunch of Expekt in Sweden, do you plan to launch Expekt in more markets in the near future? Well, yes, we are looking into that, and it's been extremely encouraging to see Expekt launching here in Sweden and also launched in Finland. We're looking into more markets, definitely. Good. So far, is the brand profitable or are you still investing in more growth going forward? Well, it's a growth case. Good to hear that. If we go back a bit on Canada to expand a little bit on Martin's question. When Canada regulates, do you see an immediate positive or negative effect on revenue? The market will open up, that's what we know. At the same time, you will have more competition, and pay taxes locally. Could you talk a little bit about what's gonna happen in Canada when it's regulated? Well, I can start off here a little bit. Yes, it's both on the positive side and on the negative side. When a country or in this case a state regulates, of course, it will open up a lot of new marketing channels such as Google, Facebook, et cetera. Those are digital channels that we are mastering, so we're really good at those ones. I believe we will continue to drive a strong position in the Ontario market. Of course, the tax will have some impact. What do you say about it, Stefan? No, I agree. I mean, we're quite encouraged by the Canadian regulation process so far. We also believe that Canada. I mean, Canada is quite a big market in terms of population and still quite under-stimulated in relation to some European markets that we've seen regulate. I think you're right. I mean, we will probably see some new competition coming in, not least some U.S. players. On the other hand, I think it's been quite a fragmented market with a lot of smaller operators, which, you know, probably won't be able to cope with the regulatory requirements on platform reporting compliance. So, you know, we don't know yet, of course, how the landscape will look like, but we'll probably see some new competition and then some operators leaving the market. At the end of the day, we think it's super positive to have a regulated Canadian market, which is one of our most important markets, and now we can finally start to work with all channels in a regulated manner. Good. We have the final question from the web that is connected to the trading update in October and the sports book margin. Are you seeing any recycling benefit from the low sports book margin in October? Are players restaking a proportion of their winnings through November in either sports book or casino? Hi. Stefan here again. I mean, we have a trading update for October and don't really comment on November. With that said, that's, you know, usually the case, right? If players win more frequently, they have more money to spend on the products they enjoy. It's in theory, that's a kind of fair assumption. Good. Thank you. The last question then, do you have a concrete plan for your new bond loans in the near future? Well, no. I think we're quite happy with the financial position we are in and don't see any need for an increased bond tap, if that was the question. Good. Thank you. A solid balance sheet then. It's all questions from the web. Hand it back to you, Gustaf. Thank you, Philip. If there are no other questions online or on the web, I can't find anything more. Let them- Excuse me. We do have one question come through. Sorry to interrupt you. We do have one question come through on the audio. Would you like to take it? Sure, of course. Okay. The question comes from Pontus Hagnö, a private investor. Please ask your question. Hi, guys, and good morning. Good morning. I got one question for you. It's about an application process for Holland. Can you explain a little bit where you stand on that in terms of timeline? If I remember correctly, Kindred mentioned something about that they have made an audit, a prepared audit, something that was a part of the application process. Is that something that you've done as well, or where are you in terms of that process? Well, we are about to hand in the application during Q4, so it's in a few weeks that will be sent to the Dutch authorities, and we expect a license during the spring. Okay. Basically, you've done whatever is needed so far? Yes, exactly. Okay. That's it for me. Okay. Thank you. There are no further questions. Thank you. With that, we close off this Q3 presentation 2021. Thank you everyone for listening in. Thanks. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.