Betsson AB

Sportbook across all bets and gaming solutions was more than 1.8 billion euro, an increase of 10% year over year and another all time high. Sportbook margin was 8.0%, which is higher than the 6.6% margin in the first quarter last year and slightly above the two year rolling average margin of 7.8%, but lower than the 9.8% in the fourth quarter last year. Sportbook revenue increased by some 22% compared to last year and amounted to 80 million. The casino turnover is the second highest ever, just slightly below Q4 last year and represents an increase by 9% year on year. Casino revenue increased by 18%, which is also the second highest casino revenue ever, only beaten by Q4 last year by some 1.5 million euro. Casino revenue represented 72% of the group's total revenue in the quarter, and sportbook sum 27%. Reported revenue for the first quarter amounted to 294 million euro, the second highest revenue ever in a single quarter, and an increase of 18% year on year, and 20% organic growth. Compared to Q4 last year, this quarter contains two days less of revenue, This, in combination with the highest port margin in Q4 last year, explains the slight sequential step down in revenue in this first quarter. Revenue from locally regulated markets increased by 60% compared to last year and now constitutes 59% of total revenue in the first quarter. Revenue growth is coming from both the B2C and the B2B business in the quarter. where the B2C business contributed with 204 million in revenue, while some 90 million came from license revenue from B2B customers. The increased license revenue in the quarter is driven by both continued growth for existing customers and the addition of new B2B customers. The acquisition of Sporting Solutions in Q4 2024 and the acquisition of Kikitech in 2022, in combination with continuous improvements and investments into the Sportbook and Casino products, have strengthened the Group's B2B offering. Splitting revenue by region, we see growth compared to previous year in all regions except for the Nordics, which is down by 19% compared to last year. Sweden and Denmark reported decreased revenue in the quarter compared to corresponding period last year, driven by decreased activity in both the sport book and the casino product. The Nordic region represented 13% of the group's total revenue in the first quarter. Revenue from Western Europe increased by 28% year on year, or by 12 million euro. Revenue from Belgium increased compared with the corresponding period last year, mainly driven by the casino product. The Italian market is also contributing to the growth in the Western Europe region, driven by new records for both deposits and turnover. Italy reported all-time high revenue in the first quarter, mainly driven by the casino product. The Sportbook product reported increased activity and increased revenue, both compared with the corresponding period last year and the previous quarter, but is relatively smaller than the casino product in Italy. The Western Europe region represented 19% of total revenue in the quarter. Revenue from Central and Eastern Europe and Central Asia region, the Sika region, increased by 11%, driven by growth in both sportbook and casino. Croatia and Greece reported increased revenue in the quarter with new records for deposit, sportbook turnover and casino turnover in the latter. Lithuania, Estonia and Georgia reported decreased revenue compared with the corresponding period last year. Decreased revenue in Georgia and Lithuania is mainly driven by player friendly results in the Sportbook product. The Sika region represented 42% of the group's total revenue. Revenue in Latin America region increased by 31 million euro, representing an increase of 70% compared to the same period last year, mainly driven by high activity in the Casino product. The Sportbook product benefited from a higher Sportbook margin and reported increased revenue compared with the corresponding period last year. Argentina continued to show strong underlying activity in deposits, increased turnover in both the Casino product and the Sportbook and reported all-time high revenue in the first quarter. Peru reported revenue growth compared to the corresponding period last year, driven by growth in both the Sportbook and the Casino product. As Pontus mentioned, the group received a local license in the newly regulated Brazilian market in February, covering both online casino and sports betting, but we did not go live until April, so no revenue from Brazil was reported in this first quarter. Also at the end of 2024, the group obtained a license covering online casino in Paraguay, and in February, a technical launch took place, but no material revenue has been recorded as of yet. The Latin America region represented 25% of the group's total revenue in the first quarter. The development in operating income in this picture is broken down and explained by the different line items in the P&L. Revenue has increased by some 46 million euro and following that increased cost of services provided as well. The increase in cost of services provided is, apart from revenue growth, mainly explained by higher gaming taxes, following a 60% increase in revenue from locally regulated markets. Gross profit increased by 24 million euro compared to the same period last year and amounts to 188 million euro, which corresponds to a gross profit margin of 64% compared to 66% last year. Marketing spend increased by 5 million euros compared to last year and corresponds to 18% of total B2C revenue and to some 23% when including affiliate marketing costs as well. Increased marketing spend is primarily explained by enhanced marketing efforts in Western Europe and Latin America. Personal expenses increased by some 8 million euro in the first quarter compared to last year due to the addition of some 500 employees following geographical expansion and acquisitions. To give some more color to this, Betsam France was consolidated as from the third quarter last year, following the increased ownership. Sporting Solution was consolidated as from the fourth quarter last year, following the acquisition. And Bukma Helska in Poland was added as from the first quarter this year. This, in combination with organic focus on product and tech development, explains the bulk of the increased number of headcounts within the group. In addition to increased number of headcounts, yearly salary revisions and performance-related compensations explain the increased cost compared to the same period last year. Depreciation and amortization costs are more or less flat compared to last year. Other items include other external expenses, which has increased by some 5 million euro, driven by investments in technology and product development on the Sportbook side. Other items also include capitalized development costs and other operating income and expenses, which are more or less flat compared to previous year. Operating income amounts to 64 million euro, an increase of 11% compared to last year. The EBIT margin was 21.8% compared to 23.3% last year. Operating cash flow amounts to 86.4 million euro compared to 50 million in the same period last year. Operating cash flow is driven by increased operating income and positively impacted by changes in working capital by some 15 million euro. The positive effect from working capital comes from decreased receivable on payment providers. Cashflow from investing activities sums up to 22.9 million and relates to investments in own product and technology development, and partly by the acquisition of BetClick Italy, the acquisition of BookMoharska in Poland, and a deferred payment from acquisition of the BetFirst in Belgium. Cashflow from financing activities impacted cashflow by 4 million, mainly driven by paid dividend to minority shareholders. Betsson has at the end of March a net cash position of 178 million euro and an equity ratio of 63%. On a yearly basis, operating cash flow has increased over time, although we have seen some fluctuations between the intra-year quarters. 2025 has started well with operating cash flow of 86 million euro, which reflects a cash conversion ratio of more than 100%. When it comes to earnings per share, we can also conclude an increasing trend over time, somewhat negatively affected in 2024 by increased taxes following the implementation of the Pillar 2 framework. However, this year has come to a good start with EPS growth of 17% compared to the same period last year, amounting to 0.35 euro per share. Now back to you Pontus to present the trading update and to summarize the start of 2025.

Thank you, Martin. So let's look at how the second quarter has started. The average daily revenue in the second quarter of 2025, up to and including the 27th of April, has been 17% higher than the average daily revenue of the entire second quarter of 2024. During the measurement period so far in April, the sportsbook margin has been higher than the historical average. And now let's quickly summarize the highlights of the first quarter 2025. The high customer activity continued during the quarter with new quarterly records in customer deposits and gaining turnover. Revenue was up 18% year over year and EBIT was up 11% as we are absorbing higher gaming taxes. The share of revenue from locally regulated market was 59%. Our business continues to generate strong cash flows and we have a robust balance sheet that enable us to continue to invest in future growth and return cash to our shareholders. Operating cash flow and earnings per share showed significant growth in the quarter. And so far we have seen a strong start to Q2, up 17% as per the day before yesterday. As the official main partner of Inter, we are thrilled to follow the first leg of their Champions League semi-final tomorrow against Barcelona. And we are not the only ones getting ready for this game. Last year, the four Champions League semi-finals games had over 330 million viewers in total. This is more than double the number of viewers of Super Bowl, for example, and of course gives great exposure to the Betsson brand. Thanks everyone for listening to the presentation. Let's move on to Q&A. We welcome your questions.

To ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Oscar Ronquist from ABG Sundal Collier. Please go ahead.

Thank you. Good morning, Pontus and Martin. Just a few questions for me. The first one just on the trading update appeared quite strong, I would say. So just wanted to hear your thoughts about the Brazil launch. We could see, you know, big contribution from that going into the April numbers or if we still expect, you know, quite a limited contribution from that in the beginning and then to maybe ramp up in the following few quarters. Thanks.

Hello, thank you for the questions. I think we have mentioned before that we are making a slow start in Brazil and hence it's not impacting this opening of the second quarter much at all.

Perfect, got it. Then just my next question would be on the B2B development. It appears also quite strong. I think it's up to 31% of the group's revenue at the moment and grew over 30 percent so just wanted to hear your thoughts about the b2b customer concentration so uh know that you don't comment that a lot but can you say something about i mean how many uh new b2b clients you've expanded with and how the development of the customer concentration has come over the last few quarters and years please

We can't say how many new customers we have on the B2B side, but I think we can say that now we have become bigger, as you say, and we have a less concentrated revenue stream from B2B. So as we get more clients, we get more spread out and more diversified within the B2B leg as well, which we see as a positive.

All right, got it. Then just a quick one for maybe for Martin, detailed one, but the depreciation or especially the amortization level dropped quite significantly between Q4 and Q1. Just wondered if there's any sort of non-recurring effects or if we should extrapolate the Q1 number, please.

I think that the Q1 number is a good estimate going forward.

Perfect. That was all for me. Thank you.

Thank you very much.

The next question comes from Martin Arnold from DNB. Please go ahead.

Good morning, guys. Good morning. I want to follow up on the LATAM discussion there. It was a great quarter there. And what were the main drivers for the improved performance

revenue growth in the quarter um i think we can say it like put it like this the latin consists of several markets and we have been in some markets for some time and of course they are large contributors and in some markets we have been a little bit shorter like in argentina but still we have a strong operation there and that's one market where we have put a lot of efforts so that's also a strong contributor whereas as we mentioned before the the new markets that we have opened recently uh in fourth quarter and in the in the first quarter this year uh contribute less but obviously they give us a good possibility for the future to keep on growing in the latin region and and on the q2 trading if it

not really boosted by Brazil, you mentioned. So what is supporting and driving there? Is it Paraguay or anything else?

I would say it's a mix of all our established markets, more so than Paraguay, and especially Paraguay's only casino market. So I think we can say that the strong start of of the second quarter is, first of all, we have a strong position in the company and we are on a strong growth path, but it has been strengthened further by a favorable sports betting margin in the beginning of the quarter.

Okay, thanks. And on a negative point, I note that SEK, if we try to exclude the B2B system revenue, It looks a little bit weaker this quarter. Is there anything that stands out there that you can comment on?

Not really. I mean, we have quite some markets on the B2C side performing well in the Zika region, but also a few markets where the Sportbook margin was not as good as expected, where we see kind of decreased, especially Sportbook revenue, but nothing alarming. I think many markets are performing really well in that region.

Was there a specific sport or a specific league that you can comment on why the sports margin would lower in some market there?

Not really. I think I mentioned a few markets in the presentation and I don't think that there are any specific sports, but in general, the sports margin was lower there.

Okay, thank you. And my final question is on We see that you're absorbing the higher gaming tax. We can see your betting duties as percent of sales continues to go up, but you're scaling and you're increasing the earnings. You expect the betting duties to continue up, I guess, in percent of sales. Will you be able to continue to defend your margins and absorb that higher tax, do you think? And what are your tools here that you can work with?

We normally do not give any guidance on margins going forward, but what we know is that part of locally regulated revenue will most likely continue increasing. That's the trend at least that we see in most markets going forward.

But yeah, I'm not asking for guidance at all. I'm just asking sort of how can you protect your margins? Because I guess you are doing that really well and you can work with payments. There are other items, there are OPEX, et cetera. What are you focusing on when you're seeing and focusing on improving, increasing your percent from locally licensed markets?

I think that we will be I mean, as we get bigger, we get some scalability in the company. And I think when you read this report for the first quarter, I think you can see that we have not stopped investing in our future growth. It's actually the other way around, where we put a lot of money into staff and into marketing, which are the main kind of investments that we do for future growth, but which go all through the P&L and we managed to do that and still maintain a good profitability. So I think we will continue to work in this way going forward as well and hopefully be able to continue with a nice profit margin, even though we are not in a position to guide anything on it.

And as you say, Martin, I mean, the dynamics of this market is that payment costs normally go down when you come to locally regulated markets and marketing efforts normally get more efficient in locally regulated markets. So, yes, there are benefits of this as well.

Perfect. Thank you, guys. That's all for me.

The next question comes from Dennis Peterson from Private Investor. Please go ahead.

Hello, Pontus. Hello, Martin. I have three questions. The first one, I guess I might have been missing some kind of press release or some comments, but what has happened with the acquisition you made in the Netherlands that was presented a few quarters ago and was pending the KSA approval?

Yeah, it's still pending KSA approval, so it's steady state compared to before, and we are waiting for that approval to happen.

I see. Are you having any communications with them, or are you just in a, so to say, quiet period and waiting?

Right now, we're just waiting.

Okay, thank you. And do you see any impact in the start of Q2 in terms of customer deposits subject to the VAT increase in Colombia?

Colombia is a fairly small market, but yes, of course, all tax increases and everything, all regulatory changes impact business. However, it does not have a very significant impact on our total numbers, no.

Okay, thank you. And there's been some talk about the Brazilian market, but what can we expect going forward? I mean, I guess Betsson starts from a different level in terms of brand recognitions compared to the launch in the USA. But do you see any risk that you get the same outcome as in the USA and in the Colorado launch that wasn't that successful, I guess, that we all hoped.

No, I don't. There are not many similarities between the Colorado launch that we did. That was mainly for show off for the B2B product that we had there. But speaking about Brazil, it's a huge market. We want to start off in a soft way and make sure that the product is calibrated for that market. And then we're going to start marketing and see what kind of traction we get. And given that we have really good traction in other markets in the region, we believe that we will be successful over time.

Okay, thank you. That was all for me.

Thank you. Thank you.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.

Yes, we do have one question from the web audience. Can you elaborate on your plan for the Polish market given the acquisition communicated in the report That's the first question. The second question, can you also comment a bit on the start in Paraguay?

Yeah, I can take that one. Start in Paraguay is easy to comment because we started just recently and there's nothing to say about it because we're more or less just opened up for customers and made no marketing efforts whatsoever. So that remains to be seen at the later stage. In regards of Poland, Poland is an interesting European market. Poland as a country is quite big, growing well, the economy is growing well, and we have been cooperating with a local partner there for some time in the sports book area on the local brand Bukmarschelska. And now we have acquired that business fully and it's a big European market where Betsson wants to have a presence even though it's just a sports book market for the time being. So no more questions? Okay then there are no more questions and we want to say thank you for participating in this call and see you next time bye bye