This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk_0: the day ladies and gentlemen thank you for standing by and welcome to the neo games fourth quarter and four year twenty twenty two earnings conference call at this time all participants are analyst and only mode question and answer session will follow the formal presentation we've noted is conference converts college being recorded today march seven twenty twenty three i did time i'd like to turn the floor over to shops cornet with i see our please go ahead
spk_1: thank you operator and hello everyone by now you'll have access to our fourth quarter and full year two thousand and twenty two earnings release which is available on the neo games website at www dot neo games dot com an investor relations section before we begin our formal remarks need to remind everyone that the discussion today will include for forward looking statements these forward looking statements which are usually identified a use of words such as will expect anticipate should or other similar phrases are not guaranteed the future performance the statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore you should exercise caution when interpreting and relying on them we refer all of you to a recent fcc filings for a more detailed discussion of the wrist the could impact our future operating results and financial condition we encourage investors to review our regulatory filings including the form twenty f for the december thirty first two thousand and twenty two when it is filed with the fcc during today's call we will discuss non i f r s financial measures which we believe can be useful in evaluating the company's financial performance these measures should not be considered in isolation or as a substitute for a financial results prepared in accordance with i far a reconciliation of these measures to the most directly comparable i a far as measure is available and our earnings release on the neo games dot com website hosting the call today we have team little neo games chief executive officer and relieve adler chief financial officer the company they will provide some opening remarks and then we will open the call to questions with that i'll turn the call over to moti
spk_2: thank you that and good morning everyone
spk_3: last night we released our fourth quarter and four year twenty twenty two results
spk_2: before touching on the results i will i like some of the accomplishments which we are proud of as were wrapped up the last year i will then provide an update on the results as one of the trans we are seeing in a market before during the call overthrow the you to run through our financial as in further detail and twenty twenty three guidance we ended twenty twenty two on a very strong not our principal mission is to capitalize on the expansion of the global other industry into the online channel
spk_3: and we think the actions and decisions were made during the past year have moved us further along that path as we continue to build a global leader in the industry as i have mentioned many times before with the lottery business going digital with the an increasing amount of convergence our lottery customers require a broad range of products and services to support them across lottery sports betting an online game
spk_2: combining the again games and aspire last year he's allowing us to deliver the full suite of products and services that our customers demand
spk_3: since the acquisition we have unlocked are potential beyond our core focus in that author industry
spk_4: with the expansion we are becoming a key player within the i gaming and online sports betting markets
spk_3: we see this is a significant opportunity for us as it has allowed us to vastly expand our rest of the market
spk_5: in our view
spk_3: we are very well positioned as an industry leader capable of providing got customers with a full suite of solutions to meet all their digital me
spk_4: recent launch in brazil which i will touch on further he's a perfect example of the revenue synergies we continue to target around the block
spk_3: really will discuss our finances in more detail later however i wanted to touch briefly on some highlights from our financial results on a consolidated bases the total revenues plus or share of and p i revenues grew to eighty three million dollars for the fourth quarter and two hundred and ten million dollars for the year as a reminder the fall here results include a little bit more than half a year of the aspire global business at the high level we continue to experience solid growth across all our businesses and are beginning to see revenue synergies as anticipated from our measure last year
spk_4: in a lottery looking gets revenues in our share of npr ever revenue we had a record quarter and a record year with twenty eight million dollars for the fourth quarter and ninety eight million dollars for the full year
spk_3: in addition we continue to see improve numbers sequentially in each quarter throughout the year in a game on a pro forma constant currency bases compared to the same period last year we posted twenty seven percent growth in the fourth quarter and ninety percent for the full year
spk_2: on the adjusted ebitda line we also posted quarterly and and all records of eighteen million dollars and fifty four million dollars respectively looking closer at the ilo three business we have strong performance across all our key accounts
spk_3: the us lottery market had it's largest ever powerball jackpot of over two billion dollars when it hit the november certainly there was a major contributor to the impressive performance across all us accounts and as a result during the quarter all of our us customers experience both year over year and quarter over quarter growth yes there is another long term benefit as a de la jackpot runs are very effective custom acquisitions and marketing opportunities were benefits accrue to our customers businesses long after the jackpot his head and that allow customers to carry the strong results through
spk_6: the end of the year
spk_2: beyond the impact of the november jackpots we had strong growth you not hear accounts throughout north america
spk_3: our growth and success has also been fueled by several of our own initiative geared to drive organic growth some of the recent game launches from our new game studio into you for contributed immediately for instance we released the land in virginia and it quickly became the most successful game launch for that on a lottery thus far
spk_2: given the success we quickly rolled out the game into additional markets with localize versions where we also see similar success patterns
spk_3: the quality and high performance of near game studio is one of the key advantages would provide our customers with to enable them to reached her leadership positions and full potential in the market all these positive momentum is evident in are fully results for the four year twenty twenty two we grew our north america i lottery business revenue organically by approximately sixteen percent year over year
spk_7: importantly
spk_3: growth has not confined to north america during the fourth quarter in europe we experience growth the costs are key market as well where the year and holiday season and marketing activities seem to have been declared interest we ended the year with terrific momentum and continue to see great progress at then account level as we work to carry that momentum into twenty twenty three as the calendar turn to twenty twenty three in january we formerly entered into a joint venture agreement for nearby the interactive and amended on are michigan jv agreement with polar
spk_4: these agreements will help reinforce the leadership position and continued success of m p i n it's customers of which we are so proud
spk_3: further the agreements provide us with the flexibility to pursue future business opportunities in north america by ourselves should we choose so this flexibility
spk_8: allows us to assess to specific facts and circumstances of each relevant opportunities and consider a path forward that makes the most sense and bring the most value for shareholders
spk_2: we see these agreements as the natural evolution of both our partners you put forward and the markets in which we operate
spk_3: npr your day to the operation and strong performance remain unchanged and collectively our primary focus is to provide continued support to the growth and success of our market leading customers
spk_2: turning into recent news as i mentioned briefly my opening remarks last week was shared some very exciting news about are entering the brazilian market we launched lot of minas either three and only sports betting in minutes or i brazil as second largest state or twenty one million people together with our partner the local lottery operator internal diversity
spk_3: this is the first launch in brazil have a full online offering across a lottery and on a sport been fully of food by lottery i mean error the official lottery regulate during the state we see says a groundbreaking opportunity for us as it positions us for future lottery of sports betting opportunities which are now being widely considered by state lotteries in the country being selected as the technology and services partner is another great example of what we believe would be men that demonstrate the advantages of the by group acquisition in this instance we integrated are either to a solution with be tibet sports betting solution complimented with his by a court managed services
spk_4: no doubt the collaboration set us apart from our competitors and in our view was key to winning the contract
spk_3: given we are the first in the market we intend to be very deliberate and measured in our approach as we ramp learning these new market dynamics we are focused on getting this right and are very excited about the opportunity over the launcher in terms of additional new markets for i not read with the traction a building up in various places across the globe with business opportunities in the us including west virginia that has an active public procurement process as well as in asia pacific plus a few anticipated new up in the next two to three quarters
spk_2: turning to look at our i gaining front we continue to make great progress both in the us and internationally
spk_3: he i gaming aggregation and content we had significant success over the last few months having site a new deal during the fourth quarter and an additional six so far in the first quarter of twenty twenty three in the us when we launched games we'd bet them jam and caesar's while reaching deals with others
spk_2: outside of the us we greatly expanded i agree geisha platform with dealers in a few markets
spk_3: one of them is our partnership with that way which includes content and aggregation for it's us operation
spk_2: in alberta we have continued to launch new wizard game content as well as third party content
spk_9: through our aggregation platform
spk_3: with the significant and continued interesting our games across our existing lottery customer base ten are now in the process of rolling out in europe with a few accounts when dissipate we will see additional similar opportunity going forward
spk_4: one region that in gaining momentum in latin america
spk_3: during the fourth quarter notably we recently went live in a new market argentina through a partnership with and his group that is regulated in a size going forward with the latin america has a growing region for our aggregation and games particularly in mexico and colombia
spk_4: where we have gained strong positions and this by core business providing for sweet i gaining solution and services
spk_2: we find a few new brand partners and regulated market including an important deal that we have announced said frequent a quarter and
spk_3: that deal is with leading uk land based casino operator metropolitan gaming to provide our full suite of i gaining solution we see this deal as one that sticks to our strength and successfully delivering everything land based gaming operators need to branch out into the online gaming universe why leveraging their unique player base and assets
spk_2: in sports betting we signed several new deals one i will call out that is interesting is big win in mexico this deal is another great demonstration of the food groups synergies we can bring in different than the to bet was able to go live with it's on sports betting finish
spk_3: any to an existing integration that perry play already had with the operator for segregation platform
spk_10: finally
spk_3: it is also worth mentioning on the a game in france the during queue for the world cup been kept her provided growth opportunity to our business through solid product and operations as sport winning performance grew more than thirty percent year over year and the and sports betting parts of our doing business
spk_2: to conclude my remarks he has truly been a transformational year funny games across all our businesses we are they were positioned to continue executing by our strategy and are excited about the future
spk_3: with that allow them to call over of terrific
spk_11: thanks multi before getting to the results as a reminder when we'll discuss our results i would point out the dollar for i lottery business he north america operates a fifty fifty joint venture new pollard interactive or and be i accept in michigan which is reflected in our main company revenues
spk_3: a contracting virginia new hampshire north carolina and the province of alberta run through npr except for the npr contractor conduct all of our business to new games the result so many counting standpoint as many of you know will generate revenues and earnings throughout all the on operation and throughout equity interesting and be eyes
spk_11: now turning to the results for to mention who ended the year with very strong woman to him across the or entire business
spk_3: during the fourth quarter of twenty twenty two or the news as reported in on the income statements which excludes our sheriff and guy revenues sixty nine point two million of which fifty four point eight million is attributable to the revenues from his by global business excluding this fight global contribution or results of fourteen point five million represents year over year growth of eighteen percent or shelf npr revenues which fourteen million during the fourth quarter of twenty twenty two up fifty four percent compared to the same period last year
spk_11: the total revenues and the company shown and be our revenues was eighty three point two million for the fourth quarter of twenty twenty two
spk_8: with the fully reported revenues were one hundred sixty five point seven million of which is by bilbo results contributed one hundred and twelve point one million or show for npr of in users forty four point five mean and for the year compared to thirty four point one billion in twenty twenty one representing thirty one increase your
spk_11: over here the sum total of these two lovers was two hundred and ten point two million during twenty twenty two representing an increase of about one hundred forty nine percent year over year excluding this by revenue contribution or combined reasons including and b i or ninety eight point one representing an increase of sixteen percent year over year for the quarter are adjusted the be dow was eighteen point one million compared with seven point nine and for the same period last year the presenting one hundred twenty nine percent increase and considering the new game score i lottery business he saw it a db digress to twelve point two million and margin expand to other forty percent with the year this brings adjusted the be that to thirty nine point seven million of nineteen percent year over year further to this i would like to highlight a couple of notre until results
spk_3: as we discuss some previous school exchange rates fluctuation that an impact on performance of this by business
spk_11: with much of the business revenues denominated in euro so british balance fx moves to and twenty twenty two muted the revenue growth when converted into us dollars to provide better transparency on the strength of the business independent of course moose we have again included able to show the business revenue growth on a constant currency basis in our earning release
spk_3: for the fourth quarter spies global revenues of fifty four point seven million dollars reflect twenty seven percent growth when measured on a constant currency basis
spk_11: this growth however is offset by fourteen point six degrees caused by impact of foreign currency exchange rates
spk_8: in addition new this quarter to press releases table highlighting are adjusted earnings per share during the fourth quarter hour fps was impacted twenty four cents per share do to them or decision of intangible assets related to spy requisition
spk_11: just a dps disclosures in intended to offer investors if you as to what our earnings power looks like excluding this not cast recording them what is i should charge net of taksim pet turning to our balance sheet when did the year with forty one point two million dollars of cash and cash equivalents it quarter and are outstanding debt was approximately two hundred and nine point two million dollars or unchanged based on the blackstone on a few fewer basis of two hundred forty eight million euros
spk_3: a weighted average interest rate was seven point forty four percent and we'll have thirty three point five million shares outstanding
spk_8: with respect to bad as a quick reminder of key matter with of discussed since announcing the spark deal over a year ago
spk_3: recall that despised over contractors commercial does the dictated sparkle revenues be recognized on a gross this is
spk_11: this is different from the new games business or contract dictate revenues is recommends a minute basis
spk_3: this is a storyteller resulted in i revenues but lower margin for this global business
spk_11: so explain last quarter would have been working with a spy doubles partners to adjust the commercial terms of the contract to better align with the rest of our business
spk_3: we're pleased to update you that contracts for presenting approximately eighty seven percent
spk_11: of a spark core full year twenty twenty two have been modified to reflect new commercial terms and would be accounted for a that bases effective generally for as twenty twenty three we believe this will improve the clarity of our results in the long term and are sparse segment will now report revenues more in line with our other segments as always with strive to provide shareholders with the clearest pictures of ourselves as we're progressing to twenty twenty three
spk_3: two points to keep keeping mind first twenty twenty three revenue that as reflects the change to net which will distort zero veil comparisons are top line at twenty twenty two will still reflect the prior method of gross revenue recognition
spk_11: second and most important this change has no effect on i reported he be done or the amount of cash the business generates obviously change will show up in higher just a db the margins reflecting the change net from grass the company expects revenues and sheriff and pr of in you see interest to be between two hundred thirty five and two hundred fifty million assuming like for like basis to prior years guy a specific asia's or twenty twenty three guidance would be between three hundred twenty three million and two hundred fifty million reflecting ten point four percent increase year over year at the midpoint when compared to our performer results for the year ended december thirty first twenty twenty two
spk_0: without operator please open delightful questions ladies and gentlemen at this time will begin the question and answer session if you would like to ask a question him a press r and than one using a touchstone telephone but draw your questions you may press star and to if you are you a speakerphone we do as you please pick up the handset pirates pressing the keys to ensure the best sound quality again that a star and then one to join the question que
spk_12: our first question today confirmed gestational france people pleaser had with your question red bank marty majority they are taking the questions
spk_0: these are off your on the it's fire business a iraq war with on a lot stronger than we anticipated going from out of six percent constant currency decline last quarter at twenty eight percent growth this quarter could he just expanded bit more and on what's driving added flexion and as would love to at twenty three are their stony had when in or die from fx still work into that segment whether that regulatory change
spk_13: his of collect bears than anything else or are actually more queen from with from a parents perspective thanks
spk_2: hey just for so good morning
spk_14: spy has indeed delivered good results and that that purely due to or execution on now on solid operations one of the things that have touched was the old thought that part of his bars businesses sports betting and they actually saw that contributing to the way that the business grew and converting players into the other
spk_3: parts of the of the of the with you
spk_2: and they had a few good partners
spk_3: in in the mix that have pushed quite significantly on marketing and in queue for some of that was done with assistance from ah from aspired that we made that's really the a to be gone now or later
spk_12: plum putting the side effects changes because the hard to were to predict but the but we do see that that businesses performing well
spk_0: brain it's a duffel bag for the and it's such a years a bit consolidated either a margins down about two hundred bits koran quarter running some some map and utter of the commentary on on the i lottery keith instead the just that was mostly driven more by the aspires that of it is of could you just talk about what's driving then insert how we should think about margins more just irrationally rationally and detroit twenty three you're given it
spk_11: counting change the next dynamics and and from the other person takes your life yes if good morning i'm sick so you were i to say that though we've we've seen now quite them strong he be the largest sunday on the a lot of business during the quarter way way above the forty forty percent they're actually we always said that they were happy with them merging some ranging you know between to hide their just too low forties and this is where where the i look to business at the phone don't you for was significantly and i'm positive about about it runs on the margins
spk_3: i'm on the i gaming side there has been some men some some am head with or sorry i'm headwinds on the on the margins especially with with some
spk_11: you know few on tyler sitting eating the piano mainly due to the fact that they're brazil project was launched by be to bed during the quarter i was in summer some you know few few clouds them he's on the on the piano and costs sided em on the on be beetle that
spk_12: i'm but damn as as you probably can imagine we'd you know with that with the change of the accounting from from from grass to net we simply expecting expansion of the of the of the margins going forward for the i gaming business during twenty twenty three
spk_15: pray that for that a duffel bag voting base or be built about on
spk_0: thank you jeff
spk_16: our next question comes from perry jonas from suntrust regard with your question
spk_17: a guys ultimately it sounds like not much pollard agreement but how would you expect things to different the future as tools come up
spk_4: more directly thanks
spk_2: a good morning again ah i think that you know first and foremost week we care about growth of the existing account as a message what we've done simply gives the flexibility i think we're a per deal we will see what's good for the shareholders what's good for the business one now one simple and obvious example that i can give these for example as we expand beyond our turnkey accounts in order to provide content from arnie a game studios to other north american lottery whether it's in the us or in canada or we feel that that those deals which have little involvement from operations that and be a strong get a better pursued a directly to kneel games in there could be also other these in the future that are rather than just a content or that he will pursue were directly and independently what we like about the set up is that it's it gives us really full range of flexibility something's will we will be able to add
spk_3: capitalize on pretty quickly as i messaged a when with the we truly see during twenty twenty three quite a few
spk_2: content opportunity that in our view can evolve over time to be material
spk_18: and then later on as an opportunity to coming to market we will look at them and the
spk_17: what value any cooperation with ring to the table but the of benefit of that flexibility i think will already been placing twenty twenty three sundays great great an interest in alaska that operates a large jackpot were perhaps lower past just curious in that article or jackpot january i and and and i guess with that curious to give extract we are seeing drop a stiff
spk_19: difference
spk_20: growth rate between
spk_21: and jack search quests
spk_3: no problem
spk_18: but first of all that the jackpot in que foi november was was significant because he'd he does the reached a level that games media attention
spk_13: and even now with the with the elections that took place
spk_2: almost right on the time that jeff what was he than it was hard to carve media attention but just because it he'd ever you know what largest ever check with the parable he did get to level that drove the market for would end and then of course coupled with a good game launches that we had so there was solid the perform with not on of the drug inside
spk_0: but also went on the and game side i well it were not guiding on q one
spk_2: results i could say that we do see that the level of jackpots need to reach a very high
spk_22: in order to pay attention and the the one that that was the in january would not necessarily one of that kind that reached the same level of attention that previous ones head
spk_23: wow billion dollars
spk_24: we're quite quite an artist
spk_17: ah yeah you know you guys you guys need something to to get you out of bed which is more than a billion dollar an hour
spk_20: ah
spk_2: follow up like haven't either a huge difference in terms where you're saying on
spk_3: and draw base or are draw base really driving players into instance just curious about the trajectory of growth between the two
spk_2: since
spk_25: when when we reach jackpot that are very interesting to the market such as the one that didn't happen in a november the brain massive traffic that then he is mostly converted by our customers
spk_0: to playing instance in that light it it followed through or to the rest of the over the quarter of last year i think that at the same time the fact that we are getting to the market to win
spk_26: a you know time and time again with good title is that are launched and are spread across our account allows us to also grow in between the in between jackpots by by leveraging other databases that we collected during the to inject good times and with good marketing by our customers dean
spk_27: great factory factory thank you
spk_28: our next question concern david cats from jeffries the guy with your question
spk_14: ah good morning everyone
spk_2: ah thanks for taking my question i i i i just wanted to take a big picture look at the us forces rest of the world obviously us here her in in some respects our reliance on more legalisations and and those opportunities but we look out of college two to five years how do you think it breaks down for your company in terms of rest of the world versus us from an earnings perspective money they even have led to letter the with this when we look at the ilo three parts of our business
spk_3: we feel that and now and into a very long future us will continue to be the majority of our revenues even if it is dependent on more state of the authorization we do feel that that in a pace that he he's coming as we messaged reminding you that we go
spk_18: who organically sixteen percent year on your on our lottery accounts we still think we can continue to grow the business ah you know why we ramp up additional market and that the same time we do see the destruction in the market you know what virgin aids in a public with human process we should to three other states that are inactive discussing the legislation cycles about how to authorize a lottery so we feel that the us will continue to be on the line i lottery front
spk_13: in the short term and the longer term our biggest markets that doesn't mean that we do not see opportunities in other regions around the world but we are selective about them
spk_2: ah we are going into markets that we feel has scale so brazil is a good example because it's not only the first states that we have launched their but with think they're scaling that market in order to replicate that into other states in brazil and when we look at regions such as asia pacific that has one or two opportunity that are interesting for us in the next you know to have to play for months
spk_3: europe that has some emerging one
spk_2: the were selective about it and we're trying to pick the ones which suggests revenue levels that are in line with the revenue levels that we're seeing also from the north american market on the i gaming site david it's the opposite obviously are i gaming business on only three business units
spk_18: has predominantly the business outside of the u s although apparently an aggregation and content is making very good strides into north america in the revenue share in their avenues of north america is growing rapidly it could very well be that in that specific business line of content an aggregation us or north america overall
spk_27: in the next three to five years will grow to be significant ways a significant i can tell you know if it's more than fifty percent on not but it as an opportunity to be pretty significant
spk_29: it's by global witness for the moment is predominantly in europe and that they will they will venture out into other areas as well and of and be tibet is currently strong in africa making strides in to europe and has at a growing market the latin america so is it will take time before us will be a big market for off
spk_0: or the sport betting even if we think we will be successful in bringing north american these to beat the bit even during twenty twenty three in some scenarios
spk_1: but it's the flip side of revenues of when you lucchino five years into the into the horizon i hope that answered the question the question
spk_30: a very thoroughly thanks very much thank you david
spk_11: our next question comes from chad been on from mccoury please your head with your question morning ah thanks for thing my question and are you just kind of outlined you know more of a medium term outlook by just as we think about the twenty twenty three ah revenue guidance growth of of ten percent wondering if you could help us just a little bit more think about kind of what's included in that motor you talked about you know and exit rate in the fourth quarter that with her strong and then you listed enough amber of of new opportunities that will provide revenue growth it and including brazil so ill at the low end of your guide or you kind of assuming that everything that's already ban agreed upon his is in that and then yeah what's the difference between below and hi and thank you yet chat days for the question so just erm they have to flesh out the the ten percent increases on the midpoint i'm so there's certainly potential there for higher range and the band moved from low to a low to high said basically dependent on few a few items surface of all how successful we were going to be in brazil which was there recently launched two weeks ago and net and yet didn't know and not enough size sam to i'm toot toot to forecast the second one he said
spk_31: a few new contracts it has been signed recently and announced both by plane
spk_30: and metropolitan in there and uk by bye by spiral so there it sir you know too early to say whether am it's going to move us between the the low end of the burned to death to the iran of the band and in gent generally speaking as you as you probably know we we don't include any any contracts on the guidance which is not yet sign when we when we study or so there's also always said in op's and optionality for new contract being signed during the year and and generating revenue switch share of as he would push for the iran of them and i of the guidance i hope that that clarifies
spk_32: yeah that's perfect thank you
spk_11: and then just in terms of of the balance sheet and and leverage what what kind of the right leverage on this business and you know even though you have an aunt and solution on attack side or are there still opportunities out there were you would yeah consider adding on to to what you're offering her yeah how should we think of capital allocation next
spk_3: yeah them
spk_11: thank you just for that to you know we we we will always say that them that we feel comfortable with them you know to to to run this business on a leverage ratio ratio which wouldn't be
spk_3: a significantly higher than three were happy where we landed in the end of twenty twenty two interests of felt leverage ratio which is which is a i'm a bit lower than three so this is there within their within the guidance that the
spk_33: the with that that was that from from from our board
spk_2: i'm and relative to am too i'm in a opportunities lamb i'll defer to multi to answer
spk_3: that said definitely we're always looking good opportunities in the market we still think that there's good ways to grow from non non organic growth and to do to capitalize on on opportunities that in the current dynamics of the market may present themselves and we're looking at them actively at the same time looking get to it's with things and
spk_30: number one and levine said oh we do not necessarily looking to growing our leverage in order to do those deals beyond work is now so it would probably permit that we would do that they talking acquisition than these are one that that were looking actively pursuing the disciplined metre another matter that we have to them vincent all of this is that the ah
spk_3: an unforeseen nature of how interest rates will continue to perform and that why we at we have to be also disciplined and make sure that we are taking enough far enough margins in the way to to manage our cash
spk_2: to be ready for any a for any scenario for the bottom line of all of these that yes we do see that there are opportunities in two or three area that we have discussed the a few times with the market the in the past or before the moment we would see the most is the as ducking acquisition of that would enhance our business in specific areas that's great thank you and then one more quick one if you don't mind am could you just gotta help us think about the brazilian outlook or other state considering you're not doing what what was kind of just announced his this potentially at a test case i'd just wondering what the what the conversations have been like any other markets and that's all for me thank you
spk_3: yeah
spk_2: that's exactly the way that we see that that it's the i wouldn't say a test case but it's a it's a role model is it's the first case which we are very proud of and we're working very hard with our local local partner the do to make that as successful as we can yes there are a active processes in at least three other states in brazil
spk_31: ah some of them would first of will pursue that concessions that would run lotteries others are considering to split sports betting licensing regime or selecting sports betting operators separately from from lotteries online it really depends on the state but there are at least three states probably even closer to for
spk_0: five which have formed the lottery regulation authorities within them and have message to the market the during twenty twenty three they are planning to come to the market with tenders to select the way that they would approach that into our into the future you could put rio de janeiro in that the a bucket para not even say
spk_34: l powder that had a bid which they pulled from the market before the elections and they are intending to combat back with that and and two or three other states i would definitely using the fact that we are first their i can say that when i was in brazil to celebrate the go live the we had participations from other states after to look at that very carefully and we keep getting a lot of a lot of good questions in order to learn the dynamics of or what we've done that and i think we're also setting the role model to the other states when it comes to clear protection social responsibilities responsible gaming
spk_11: payment solutions in the one that regulators take very close look at and we'll learn from and this is what what we've done he added you recall in the us market which knock on wood than replicated six if to other states and this is what went into the also in brazil thanks for the additional color appreciate it our next question comes from sean kelly from bank of america for yard with your question hi good morning everyone thinks take my questions on first to see kind of going back to i think that beginning as cat has has eating about that the ten percent ah yes ah midpoint growth and and guidance give us a little bit more color on what sort of the underlying with height same store ah increase or same state increase expected in i lottery ah as we look out for for twenty twenty three and in our kind of what's the impact of that that jack potter or pop potentially tough cop and the fourth quarter yeah good morning they're good morning phone so i'm ana on is the same store basis some on the isle of a sudden special and and in the north america market that there has been them
spk_35: so as as multi multi mentioned older older portfolio has grew up here over you by yeah double digits sixteen percent
spk_34: there are dirt been to to states or to i'm a to jurisdictions that to or outperformed standing out from the crowd to to some extent in terms of growth rates we we were suddenly believe that damn those can continue to add to strive also to twenty twenty three and they will obviously a pusher the entire business today are iran of the guidance in terms of from in terms of content opportunities
spk_11: we we have we we have few few deals on the pipeline which has not yet materialise so far but we believe those will be launched during twenty twenty three and also has a good potential and given the them makes you know very very good titles that been launched recently had to push the revenues and even further am into twenty twenty three on ah thank you and and my follow which is the on the love on extent side on his we look at sort of be a what happened obviously the aspire numbers came in in a much better than than we were expecting our by the sales and marketing are and she had a side was also a bit higher than expected
spk_18: he called out a couple one tile and one time i don't get to quantify that and the navy big picture could help but think about ah sales and marketing slashed he had a baby has presented a sales as we look out ah in twenty twenty three what kind of the right ratio a way to think about ah yeah organic growth and and and that expats line on your of year
spk_34: so yeah i mean i stated earlier on the school we we've had few i'm you know one one of fighters both and degeneres as well as the sales and marketing i can point out you know g to i can point out toward lottery congress in vancouver
spk_0: which with participated in you know it's exhibitors that that has been you know significantly boost was for that the numbers from from the costs perspective this is the also expected you know during during que en given that there was participated in ice in a universe significant way from earlier on in in february
spk_36: am and and you know if if if you're looking on a on a trans or or or or ratio i wouldn't take you for as a as a test case relative to the to the percentage of of cells but rather you know que three to queue to rm are are you know could could could reflect better on the trends in the business without any any one time zone or any one timers on a on a on a go forward basis they care much
spk_37: and to try and our next question comes from steve as our from deutsche bank for you have with your question
spk_3: but the patel as possible your phone is on you and sorry about that more morning guys
spk_2: to a little bit of a bigger picture question
spk_38: given some kind of the economic headlines now luck out there cannot other the three verticals with the i lot alike see now and alice be he had hundred talk is how you think about how to respond and an economic downturn in which kind of do you think you would see the impact and first
spk_3: lottery has
spk_24: historically been pretty resilient to or two previous periods of of economics
spk_39: downturns and and i don't think that we have reasons to believe that this one will be different even if this one is different in many other microeconomics levels were differently watching but we we haven't seen anything they are i would say that for the moment that we haven't seen also anything on gaming and on sports betting say they think it's pretty concise
spk_0: and when what others have been messaging in the industry
spk_2: as well
spk_40: i i can not necessarily put the finger of what we think will as you said beat it first
spk_41: because i'm there hasn't been hasn't been
spk_0: historical
spk_14: benchmarks for online gaming and online sports betting so much in the comical close to the the you can look at two thousand and eight than in two thousand and eight and eight there was a bit of a down during those businesses but it rebounded pretty fast
spk_2: so do you know just a quick summary lotteries we're not expecting much and on the others for the moment we're not saying anything we're watching if it will happen than a three showed that the if it with beef it will happen than it has good good reasons to rebound okay great thanks appreciated
spk_0: thank you stephen interview with it and ladies and gentlemen with that will be concluding for next question and answer session i like the turn the for back over to management for any closing remarks ah thank you and thank you all for joining us on the call today and ever think we've we've shared with you we hope that you're as excited about twenty twenty three as we are the outlook looks really promising for us and there were also they're excited to have our first capital markets day next week on on march fourteenth in new york and we're inviting everyone to join us either on site or remotely thank you all is always the show continued interest in our company and our story and ladies and gentlemen with that will conclude that a of puppets calling and presentation we thank you for joining you may now this connect your life
spk_1: get a related and gentlemen thanks for standing by and welcome to the neo games fourth quarter and full year twenty twenty two earnings conference call at this time all participants are analyst illicit only mode question and answer session will follow the formal presentation please note the discomfort college being recorded today march seven twenty twenty three i did time i'd like to turn the floor over to shops cornet with i see our please go ahead thank you operator and hello everyone by now you don't have access to our fourth quarter and full year two thousand and twenty two earnings release which is available on the neo games website at www dot neo games dot com an investor relations section before we begin our formal remarks need to remind everyone that the discussion today will include forward looking statements these forward looking statements which are usually identified a use of words such as will expect anticipate should or other similar phrases are not guaranteed the future performance these statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore you should exercise caution when interpreting and relying on them we refer all of you to a recent fcc filings for more detailed discussion of the wrist that could impact our future operating results and financial condition
spk_2: we encourage investors to review our regulatory filings including the form twenty f for the december thirty first two thousand and twenty two when it is filed with the fcc
spk_3: during today's call we will discuss nine i f r s financial measures which we believe can be useful in evaluating the company's financial performance
spk_2: these measures should not be considered in isolation or as a substitute for a financial results prepared in accordance with i have far as a reconciliation of these measures to the most directly comparable i a far as measure is available and our earnings release on the neo games dot com website hosting the call today we have no team a little the games chief executive officer and relieve adler chief financial officer the company they will provide some opening remarks and then we will open the call to questions with that i'll turn the call over to moti thank you that and good morning everyone
spk_3: last night we released our fourth quarter and four year twenty twenty two results before touching on the results i will i like some of the accomplishments which we are proud of as were wrapped up the last year i will then provide an update on the results as one of the trends we are seeing in a market before turning the call overthrow the you to run through our financial as in further detail and twenty twenty three guidance we ended twenty twenty two on a very strong not our principal mission is to capitalize on the expansion of the global other industry into the online channel
spk_4: and we think the actions and decisions were made during the past year have moved us further along that path as we continue to build a global leader in the industry
spk_3: as i have mentioned many times before with a lottery business going digital with the an increasing amount of convergence our lottery customers require a broad range of products and services to support them across lottery sports betting an online game combining the games and aspire last year he's allowing us to deliver the full suite of products and services that our customers demand
spk_42: since the acquisition we have unlocked are potential beyond our core focus in that author industry
spk_3: with the expansion we are becoming a key player within the i gaming and online sports betting markets we see this is a significant opportunity for us
spk_2: as it has allowed us to vastly expand our rest of the market
spk_3: in our you we are very well positioned as an industry leader capable of providing got customers with a full suite of solutions to meet all their destiny our recent launch in brazil which i will touch on further is a perfect example of the revenue synergies we continue to target around the globe really will discuss our finances in more detail later however i wanted to touch briefly on some highlights from our financial results on a consolidated bases the total revenues plus our share of np i revenues grew to eighty three million dollars for the fourth quarter and two hundred and ten million dollars for the year
spk_2: as a reminder the fall you results include a little bit more than half a year of the aspire global business at the high level we continue to experience solid growth across all our businesses and are beginning to see revenue synergies as anticipated from our measure last year
spk_43: he nine or three looking it's revenues in our share of npr ever knew we had a record quarter and a record year with twenty eight million dollars for the fourth quarter and ninety eight million dollars for the full year
spk_2: in addition we continue to see improve numbers sequentially in each quarter throughout the year
spk_3: in a game on a pro forma constant currency bases compared to the same period last year we posted twenty seven percent growth in the fourth quarter and nineteen percent for the full year
spk_2: on the adjusted ebitda line we also posted quarterly and and all records of eighteen million dollars and fifty four million dollars respectively
spk_3: looking closer and the i lottery business we have strong performance across all our key accounts the us lottery market had it's largest ever powerball jackpot of over two billion dollars when it hit in november
spk_2: certainly there was a major contributor to the impressive performance across all us accounts and as a result during the quarter all of our us customers experience both year over year and quarter over quarter growth yes there is another long term benefit as de la jackpot runs are very effective customer acquisitions and marketing opportunities were benefits accrue to our customers businesses long after the jackpot his head and that allow customers to carry the strong results through the end of the year
spk_3: beyond the impact of the november jackpots we had strong growth you not hear towns throughout north america
spk_2: our growth and success has also been fueled by several of our own initiatives geared to drive organic growth
spk_3: some of the recent game launches from our neil game studio into you for contributed immediately
spk_7: for instance we released the lamp in virginia and it quickly became the most successful game launch for that on a lottery thus far
spk_3: given the success we quickly rolled out the game into additional markets with localize versions where we also see similar success patterns the quality and high performance
spk_14: of neil game studio is one of the key advantages would provide our customers with to enable them to reached her leadership positions and full potential in the market
spk_3: all these positive momentum is evident in are fully results for the full year twenty twenty two we do our north america i lottery business revenue organically by approximately sixteen percent year over year importantly
spk_4: growth has not confined to north america
spk_3: during the fourth quarter in europe we experienced growth the costs are the market as well where the un holiday season and marketing activities
spk_2: he too has picked blared interest we ended the year with terrific momentum and continue to see great progress and then account level as we work to carry that momentum into twenty twenty three
spk_3: as the calendar turn to twenty twenty three in january we for money entered into a joint venture agreement for new follow the interactive and amended that our michigan jv agreement with polar
spk_2: these agreements will help reinforce the leadership position and continued success of m p i n it's customers of which we are so proud further the agreements provide us with the flexibility to pursue future business opportunities in north america by ourselves should we choose so
spk_3: this flexibility allows us to assess to specific facts and circumstances of each relevant opportunities and consider a path forward that makes the most sense and to the most value for shareholders we see these agreements as the natural evolution of both our partners you put forward and the markets in which we operate and be eyes day to the operation and strong performance remain unchanged and collectively our primary focus is to provide continued support to the growth and success of our market leading customers
spk_8: turning into recent news as i mentioned briefly my opening remarks last week was shared some very exciting news about are entering the brazilian market
spk_3: we launched lot of minas ilo three and on sports betting in minnesota i brazil as second largest state or twenty one million people together with our partner the local lottery operator internal diversity this is the first launch in brazil have a full online offering across a lottery and on a sport and fully of food by lottery yeah me neither
spk_4: the official to a regulator the state
spk_3: with cd says a groundbreaking opportunity for us as it positions us for future lottery of sports betting opportunities which are now being widely considered by state lotteries in the country
spk_44: being selected as the technology and services partner is another great example of what we believe would be men that demonstrate the advantages of this by group acquisition
spk_3: in this instance we integrated are either to a solution would be to bit sports betting solution complimented with his by a court managed services no doubt the collaboration set us apart from our competitors and in our view was key to winning the contract given we are the first in the market we intend to be very deliberate and measured in our approach as we ramp
spk_2: learning these new market dynamics
spk_3: we are focused on getting this right and are very excited about the opportunity over the launcher in terms of additional new markets for i not read with see traction a building up in various places across the globe
spk_2: with business opportunities in the us including west virginia that has an active public procurement process
spk_3: as well as in asia pacific plus a few anticipated new up in the next two to three quarters
spk_2: turning to look at our i gaining front we continued to make great progress both in the us and internationally
spk_3: in i gaming aggregation and content we had significant success over the last few months having site eighth new deal during the fourth quarter and an additional six so far in the first quarter of twenty twenty three
spk_2: in the us when we launched games we'd bet them jam and caesar's while reaching deals with others
spk_4: outside of the us we greatly expanded i agree geisha platform with dealers in a few markets
spk_3: one of them is our partnership with that way which includes content and aggregation for us operation
spk_2: in alberta we have continued to launch new wizard game content as well as third party content through our aggregation platform with the significant and continued interesting our games across our existing lottery customer base ten are now in the process of rolling out in europe with a few accounts
spk_4: when dissipate we will see additional similar opportunity going forward
spk_2: one region that in gaining momentum in latin america
spk_3: during the fourth quarter notably we recently went live in a new market argentina through a partnership with on his group that is regulated england a size
spk_2: going forward with the latin america has a growing region for our aggregation and games particularly in mexico and colombia
spk_3: where we have gained strong positions
spk_10: and this by core business providing for sweet i gaining solution and services we signed a few new brand partners and regulated market including an important deal that we have announced said frequent a quarter and
spk_3: that deal is with leading uk land based casino operator metropolitan game to provide our for suite of i gain and wish him
spk_2: we see the deal as one that sticks to our strength and successfully delivering everything land based gaming operators need to branch out into the online gaming universe why leveraging their unique player base and assets in sports betting we signed several new deals one i will call out that is interesting is big win in mexico this deal is another great demonstration of the phone groups synergies we can bring in different than the to bet was able to go live with it's online sports betting finish
spk_3: and to an existing integration that perry play already had with the operator for segregation platform
spk_11: finally it is also worth mentioning on the a game and from the during queue for the world cup been kept her provided growth opportunity to our business through solid product and operations as sports betting performance grew more than thirty percent year over year in the on sports betting parts of our doing business
spk_3: to conclude my remarks he has truly been a transformational year funny or games across all our businesses we are very were positioned to continue executing by our strategy and are excited about the future with that allow them to call over of dorothy
spk_11: thanks multi before getting to the results
spk_3: as a reminder when when discuss our results i would point out the dollar for i lottery business he north america operates a fifty fifty joint venture new pollard interactive or and be i accept in michigan which is reflected in our main company revenues a contracting virginia new hampshire north carolina and the province of alberta run through npr
spk_11: except for the npr contractor conduct all of our business to new games the result so many counting standpoint as many of you know will generate revenues and earnings throughout all the on operation and throughout equity interesting and be eyes
spk_3: now turning to the results for to mention who ended the year with very strong woman to him across the or entire business
spk_11: during the fourth quarter of twenty twenty two or the news as reported in on the income statements which excludes our sheriff and guy revenues sixty nine point two million of which fifty four point eight million is attributable to the revenues from a global business excluding this fight global contribution or results of fourteen point five million represents year over year growth of eighteen percent or shelf npr revenues which fourteen million during the fourth quarter of twenty twenty two up fifty four percent compared to the same period last year the total revenues and the company shown and be i revenues was eighty three point two million for the fourth quarter of twenty twenty two with the fully reported revenues were one hundred sixty five point seven million of which is by bilbo results contributed one hundred and twelve point one million or for npr of in useless forty four point five mean and for the year compared to thirty four point one billion in twenty twenty one representing thirty one increase year over year the sum total of these two lovers was two hundred and ten point two million during twenty twenty two representing an increase of about one hundred forty nine percent year over year excluding this by revenue contribution or combined results including and b i or ninety eight point one representing an increase of sixteen percent year over year
spk_3: for the quarter or adjusted the be dow was eighteen point one million compared with seven point nine and for the same period last year the presenting one hundred twenty nine percent increase
spk_11: and considering the new game score i lottery business he saw just a db digress to twelve point two million and margin expand to other forty percent with the year this brings adjusted the be that to thirty nine point seven million of nineteen percent year over year
spk_3: further to this i would like to highlight a couple of notre until results
spk_11: as we discuss some previous school exchange rates fluctuation that an impact on performance of this by business
spk_8: but much of the business revenues denominated in euro so british balance affects most to and twenty twenty two muted the revenue growth when converted into us dollars to provide better transparency on the strength of the business independent of course moose we have again included able to show the business revenue growth on a constant currency basis in our earning release
spk_11: for the fourth quarter spies global revenues of fifty four point seven million dollars reflect twenty seven percent growth when measured on a constant currency basis this growth however is offset by fourteen point six degrees caused by impact of foreign currency exchange rates in addition new this quarter to press releases table highlighting are adjusted earnings per share
spk_3: during the fourth quarter hour fps was impacted twenty four cents per share do to them or decision of intangible assets related to a requisition
spk_11: or just a dps disclosures in intended to offer investors if you as to what our earnings power looks like excluding these not cast recording them what is ocean charge net of taksim path
spk_3: turning to our balance sheet when did the year with forty one point two million dollars of cash and cash equivalents
spk_11: it quarter and are outstanding debt was approximately two hundred and nine point two million dollars or unchanged based on the blackstone on a few fewer basis of two hundred forty eight million euros
spk_8: a weighted average interest rate was seven point forty four percent and we have thirty three point five million shares outstanding
spk_11: with respect to bad as a quick reminder and key matter with of discussed since announcing this barb deal over a year ago
spk_8: recall that despised over contractors commercial there's the dictated a sparkle revenues be recognized on a gross this is
spk_11: this is different from the new against business or contract dictate rubbing his is recommends and in it basis this is a storyteller resulted in higher revenues but lower margin for this by global business
spk_3: so explain that quarter would have been working with spy goebbels partners to adjust the commercial terms of the contract to better align with the rest of our business
spk_11: we're pleased to update you that contracts for presenting approximately eighty seven percent of the spark core full year twenty twenty two have been modified to reflect new commercial terms and would be accounted for a net bases effective generally for as twenty twenty three we believe this will improve the clarity of our results in the long term and are sparse segment will now report revenues more in line with our other segments as always with strive to provide shareholders where the clearest pictures of ourselves as is progressing to twenty twenty three two points to keep in mind first twenty twenty three revenue that has reflects the change to net which will distort zero the comparisons are top like it's like twenty two will still reflect the prior method of gross revenue recognition second and most important this change has no effect on our reported he be done or the amount of cash the business generates obviously change will show up in higher just a db the margins
spk_0: reflecting the change net from grass the company expects revenues and sheriff and pr of in you see interest to be between two hundred thirty five and two hundred fifty million assuming like for like basis to prior years diner specifications like twenty twenty three guidance would be between three hundred twenty three million and two hundred fifty million reflecting ten point four percent increase year over year at the midpoint when compared to a performer results for the year ended december thirty first twenty twenty two without operator please open delightful questions
spk_12: ladies and gentlemen at this time will begin the question and answer session if you would like to ask a question you may press star and than one using a touchstone telephone withdraw your questions you may press star and to
spk_0: if you are you a speaker phone with you as a please pick up the handset pirates pressing the keys to ensure the best sound quality again that a star and then one to join the questions you
spk_13: our first question today come from gestational france people pleaser had with your question
spk_3: red bank marty majority they are taking the questions
spk_11: these are often you're on the fire business
spk_14: a fire core on a lot stronger than we anticipated going from out of six percent constant currency decline last quarter at twenty eight percent growth this quarter could you just expand a bit more and on what's driving added flexion and it's would not to twenty three or their study had in or die from fx still work to do that segment whether that regulatory changes
spk_3: it is cold to bears than anything else or our actually been more queen from with from a person's perspective thanks
spk_2: pages for oh good morning
spk_3: spy has indeed that delivered good results and that that purely due to or execution on now on solid operations one of the things that have touched was the old thought that part of his bars businesses sports betting and they actually saw that contributing to the way that the business grew and converting players into the other
spk_0: parts of the of the activities and they had a few good partners in in the mix that have pushed quite significantly on marketing in in queue for some of that was done
spk_11: with assistance from ah from aspired that we may actually be a to be gone now or later ah plum pudding the side effects changes because the hard to were to predict but the but we do see that that businesses performing well
spk_3: brain it's a double date for the and it's a switch gears a bit consolidated even a margins
spk_11: i doubt about two hundred bits koran corner running some some map and utter of the commentary on on the i lottery keith instead the just that was mostly driven more by the aspires validated can you just talk about what's right and then insert how we should think about margins more just irrationally in detroit twenty three you're given the accounting change the next dynamics and on the other person take their life yes of good morning and i'm so you were i to say that though we've we've seen them quite them strong he be the largest sunday on the a lot of business during the quarter way way above the forty forty percent
spk_3: they're actually we always said that there were happy with them
spk_11: lodging some ranging you know between the hide they're just too low forties and this were where the i to business the phone don't you for was significantly
spk_3: i'm positive about about the trends the margins
spk_12: i'm on the i gaming side there has been some men some some am head with or sorry headwinds headwind sunday on the margins especially with with some
spk_15: in a few one timers eating eating the piano
spk_0: mainly due to the fact that they're brazil project was launched by be to bed during the quarter i was in summer some you know few few cloud some
spk_16: the heat's on the on a piano and costs sided em on the on be tibet
spk_17: i'm but damn as as you probably can imagine we'd you know with with the change of the accounting from from from gracetown at we simply expecting expansion of the of the of the margins going forward for the i gaming business during twenty twenty three credit for that a duffel bags about the base of evil or better thank you jeff
spk_4: our next question comes from perry jonas from suntrust regard with your question
spk_18: a guys
spk_2: three it sounds like not much cheese tray with pollard agreement but how would you expect things to different in the future as tools come up more directly thanks a good morning again
spk_3: ah i think that the know first and foremost week we care about the growth of the existing account as a message what we've done simply give the flexibility i think we're of for a deal we will see what's good for the shareholders what's good for the business one now one simple and obvious example that i can give these for example as we explain
spk_2: and beyond our turnkey accounts in order to provide content from arnie a game studios to other north american lottery whether it in the us or in canada
spk_17: how we feel that that those deals which have little involvement from operations that and be a strong get a better pursued a directly to kneel games in there could be also other the in the future that are rather than just a content or that he will pursue were directly in independently what we like about the set up a that it's a good that's really full range of flexibility some things will we will be able to capitalize on pretty quickly as i messaged i went with the we truly see during twenty twenty three quite a few content opportunity that in our view can evolve over time to be material and then later on as an opportunity to coming to market we will look at them and see what value any corporation would ring to the table but the of benefit of that flexibility i think will already been placing twenty twenty three sundays
spk_19: great great interest in alaska
spk_20: that pick up rates a large jackpot were perhaps lower past just curious
spk_21: in that article or jackpot
spk_3: now january or and i guess with that curious to give extract we are seeing drop a difference
spk_2: difference rural growth rates between and jack search requests
spk_22: no problem
spk_23: but first of all that the jackpot in que foi november was was significant because he'd he does the reached a level that games media attention
spk_24: and even now with the with the elections that took place
spk_17: almost right on the time that what was he than it was hard to carve media attention but just because it he'd ever you know what largest ever check for the bible he did get to level that drove the market for would and and then of course coupled with a good games launches that we had so there was solid the perform with not on your the drug inside i'd but also and on the and game site by well it were not guiding on q one
spk_20: results i could say that we do see that the level of jackpots need to reach a very high notes in order to pay attention and the the one that that was in january was not necessarily one of that kind that reached the same level of attention that previous ones head wow billion dollars
spk_2: you quite quite here at it
spk_3: ah yeah you know you guys you guys need something to to get you out of bed which is more than a billion dollar now
spk_2: ah
spk_25: the follow up like have either
spk_0: difference in terms we're saying on
spk_26: drop east workers distraught base really driving players
spk_27: it's just curious about the trajectory since
spk_28: when when we reach jackpot that are very interesting to the market such as the one that did happen in a november the brain massive traffic that then he is nicely converted by our customers
spk_2: to playing instance in that light it it followed through or to the rest of the over the quarter of last year i think that at the same time the fact that we are getting to the market when ah a you know time and time again with good title of that are launched and are spread across our accounts allows us to also grow in between there are in between jackpots by by leveraging at the databases that we collected during the during jackpot times and with would marketing by our customers dean great victory thank you our next question comes from david cats from jeffries for guy with your question
spk_18: hi good morning everyone
spk_2: ah thanks for taking my question i i i i just wanted to take a big picture look at the us forces rest of the world obviously us here her
spk_45: in in some respects our reliance on more legalisations and and those opportunities but we look out in a of college two to five years do you think it breaks down for your company in terms of rest of the world versus us from an earnings perspective
spk_2: money they even have led to have you with this ah
spk_13: when we look at the idol three parts of our business we feel that a now and into a very long future us will continue to be the majority of our revenues even if it is dependent on more state of the authorization we do feel that that is a page
spk_2: that is he's coming as we messaged reminding you that we grew organically sixteen percent year on year on our lottery accounts with still think we can continue to grow the business ah you know why we ramp up additional market and that the same time we do see the destruction in the market you know what originate in a public with human process we should to three other states that are inactive discussion the legislation cycles about how to authorize idol three so we feel that the us will continue to be on the lie the i lottery front
spk_18: in the short and the longer term our biggest markets that doesn't mean that we do not see opportunities in other regions around the world but we are selective about them
spk_27: we are going into markets that we feel has scale so brazil is a good example because it's not only the first states that we have launched their but with think they're scale in that market in order to replicate that the into other states in brazil and when we look at region such as asia pacific that has one or two opportunities that are interesting for in the next you know
spk_29: to to twenty four months europe that has some emerging one
spk_0: the were selective about it and we're trying to pick the ones which the jets revenue levels that are in line with the revenue levels that are seeing also from the north american market on the i gaming side david it's the opposite obviously are i gaming business on only three business unit has predominantly busy
spk_30: outside of the us
spk_1: although apparently an aggregation and content is making very good striving into north america in the revenue share in their avenues of north america is growing rapidly it could very well be that in that specific business line of content and aggregation us or north america overall in the next three to five years will grow to be signal
spk_30: the way a significant i can tell you know if it's more than fifty percent on not but it has an opportunity to be pretty significant it's by global witness for the moment is predominantly in europe and that they was they will venture out into other areas as well and of and be tibet is current strong in africa making strides in to europe and has at a growing market in latin america so is it will take time before us will be a big market for up for
spk_11: sports betting even if we think we will be successful in bringing north american these to beat the bit even during twenty twenty three in some scenarios but it's the flip side of revenues when you lucchino five years into the into the horizon i hope that answered the question the question a very thoroughly thanks very much thank you david our next question comes from chad been on from mccoury please ahead with your question morning ah thanks for thing my question and are you just kind of outlined in know more of a medium term outlook but just as we think about the twenty twenty three ah revenue guidance growth of of ten percent wondering if you could help us just a little bit more think about kind of what's included in that motor you talked about you know and exit rate in the fourth quarter that was very strong and then you listed a number her of of new opportunities that will provide revenue growth
spk_31: it and including brazil so ill at the low end of your guide or you kind of assuming that everything that's already been agreed upon his is in that and then yeah what's the difference between below and hi and thank you
spk_30: yet at days for the question so just erm as to flesh out the the ten percent increases on the midpoint i'm so there's certainly potential there for higher range and the band moves from low to a low to high said basically dependent on few a few items surface of all how successful
spk_32: if we were going to be in brazil which was there recently launched two weeks ago and net and yet didn't know and not enough size said to i'm toot toot to forecast the second one is sir
spk_11: a few new contracts it has been signed recently and announced both by plane and metropolitan in the uk by bye by spiral so there it sir you know too early to say whether am it's going to move us between the the low end of the burned to death to the iran of the band and in gent generally speaking as you as you probably know we we don't include any any contracts on the guidance which is not yet sign a when we when we study or so there's also always said an option and optionality for new contract being signed during the year and and generating revenue switch share of as he would push for the iran of them and i of the guidance a i hope that that glorifies yeah that's perfect thank you
spk_3: and then just in terms of of the balance sheet and and leverage what what kind of the right leverage on this business and you know even though you have an aunt and solution on attack side or are there still opportunities out there were you would
spk_13: yeah consider adding on to to what you're offering her yeah how should we think about capital allocation next
spk_2: yet them
spk_3: thank you just for that to you know we we've we will always say that them that we feel comfortable with them you know to to to run this business on a leverage ratio ratio which wouldn't be
spk_30: a significantly higher than three were happy where we landed in the end of twenty twenty two interests of felt leverage ratio which is which is a i'm a bit lower than three so this is there within their within the guidance that the
spk_14: that with that that was that from from from our board
spk_2: am and relative to am too i'm in a opportunities lamb i'll defer to multi to answer that said definitely we're always looking good opportunities in the market we still think that there's good ways to grow from non non organic growth and to do to capitalize on opportunities that in the current dynamics of the market may present themselves and we're looking at them actively at the same time looking gets to it's with things know or one and levine said oh we do not necessarily looking to growing our leverage in order to do those deals beyond work is now so it would probably permit that we would do that they talking acquisition than these are one that that were looking actively pursuing the disciplined metre another matter that we have to them into all of this is that the ah an unforeseen nature of how interest rates will continue to perform and that why we at we have to be also disciplined and make sure that we are taking enough far enough margins in the way that we manage our cash to be ready for any up for any scenario so the but line of all of these that yes we do see that there are opportunities in two or three area that we have discussed the a few times with the market the in the past before the moment we would see the most is the as fucking acquisition that would enhance our business in specific areas that's great thank you and then one more quick one if you don't mind am could you just gotta help us think about the brazilian outlook or other states considering you're not doing what what was kind of just announced his this potentially at a test case
spk_31: just wondering what the with the conversations have been like any other markets and that's all for me thank you
spk_0: yeah of with that exactly the way that we see that that it's that i wouldn't say a test case but it's a it's a role model is it's a first case
spk_34: which are very proud of and we're working very hard with our local local partner the do to make that as successful as we can yes there are active processes in at least three other states in brazil
spk_11: ah some of them would first of will pursue a concession that would run lotteries others are considering to split sports betting licensing regime or selecting sports betting operators separately from from lotteries online it really depends on the state but they are at least three states probably even closer to five
spk_3: i've which have formed lottery regulation authorities within them and have message to the market the during twenty twenty three they are plenty to come to the market with tenders to select the way that they would approach that into our into the future you couldn't put rio de janeiro in that the bucket para not even felt
spk_11: powder that had a bid which they pulled from the market or before the elections and they are intending to combat come back with that and and two or three other states i would definitely using the fact that we are first their i can say that when i was in brazil to celebrate the go live the we had participations from other states after to look at that very carefully and we keep getting a lot of a lot of good questions in order to learn the dynamics of or what we've done that and i think we're also setting the role model to the other states when it comes to player protection social responsibilities responsible jamie payment solutions in the one that regulators take very close look at and we'll learn from in this is what what we've done it as you recall in the us market which knock on wood than replicated six if to other states and dishes what went into the also in brazil thanks for the additional color appreciate it
spk_35: our next question comes from sean kelly from bank of america africa with your question
spk_34: i good morning everyone thinks take my questions on first to see kind of going back to i think that beginning as chair twice as eating about that the ten percent ah yes ah midpoint growth and and guidance he just give us a little bit more color on what sort of the underlying with height same store ah increase or seed state increase expected in i lottery ah as we look out for for twenty twenty three and in kind of what's the impact of that that jack potter or pop potentially tough cop and the fourth quarter
spk_11: yeah good morning good morning so so i'm ana on is the same store basis some on the isle of a sudden special and and in the north american market that there has been them so as as much multi is multi mentioned older older portfolio has grew up year over year by yeah double digits sixteen percent there are dirt dabbing to to states or to i'm a to jurisdictions that to or outperformed standing out from the crowd to to some extent in terms of growth rates
spk_18: we we suddenly believe that damn those can continue to a to strive also to twenty twenty three and they will obviously a pusher the entire business today are iran of the guidance in terms of them in terms of content opportunities
spk_34: we we have we we have few few deals on the pipeline which has not yet materialise so far but we believe those will be launched during twenty twenty three and also has a good potential and given the them makes you know very very good titles that been launched recently had to push the revenues and even for
spk_0: they're am into twenty twenty three
spk_36: on ah thank you and and my follow up which is the on the lot on extend side on his we look at sort of be a what happened obviously the aspire numbers came in in a much better than than we were expecting on by the sales and marketing ah and and she had a side was also a bit higher than expected i think it the couple one time i one time i don't could you quantify that in the navy big picture could you help us think about sales and marketing flash today maybe as a percentage of sales as we look out our in twenty twenty three what kind of the right ratio way to think about ah you know organic growth in in in that expense wine on your view sure i mean i stated earlier on the school we we've had few i'm you know one one of fighters both and degeneres as well as the sales and marketing i can point out you know g to i can point out toward lot congress in vancouver
spk_37: which with participated in you know it's exhibitors that that has been you know significantly boost was for the the numbers from from across perspective
spk_3: this is the also expected you know during during que en given that there was participated in ice in our universe significant way earlier on in in february
spk_2: am and and you know if if if you're looking on a on a trans or or or or ratio i wouldn't take em for as a as a test case relative to the it to the percentage of of cells but rather you know que three to queue to rm or are you know could could could reflect better on the trends in the business without any any one time zone or any one timers on a on a on a go forward basis
spk_3: they care much
spk_24: and and our next question comes from speed as our from deutsche bank for you have with your question that the patel as it possibly are funded on you
spk_39: hey sorry about that more guy
spk_46: i'm spend a little bit of a bigger picture question
spk_2: given some kind of the economic headlines now luck out there cannot other the three verticals with the i lot alike casino and alice be e hundred talk is how you think about how to respond in an economic downturn in which kind of you think you would see the impact and first lottery as
spk_40: historically been pretty resilient to or do previous periods of of economics
spk_41: downturns and and i don't think that we have reasons to believe that this one will be different even if this one is different in many other microeconomics levels were differently watching but we we haven't seen anything are i would say that for the moment that we haven't seen also anything on the i gaming and on sports betting say they think it's pretty good
spk_0: didn't win what others have been messaging in the industry
spk_14: as well i i can not necessarily put the finger of what we think will as you said beat it first
spk_2: because there hasn't been hasn't been historical
spk_0: benchmarks for online
Disclaimer