Betsson AB

The second quarter was another good quarter with revenue and EBIT growth supported by year-over-year growth in deposits and increased casino turnover, increased casino and sport book revenue and maintained cost control. Number of active customers is more or less flat compared to last year following Betsson's decision in the end of 2024 to pull out the markets without a clear path to local regulation. and a few African markets, such as Kenya and Nigeria, as a consequence of the ongoing evaluation of the group's market strategy for Africa. Another impacting factor is that the second quarter last year included both the Euros and Copa America, where you typically see increased player activity. The gross turnover in Sportbook across all bets on gaming solutions was close to 1.5 billion euro, a decrease of 4% year-over-year. Sportbook margin was 9.5%, which is higher than the 8.6 margin in the second quarter last year, and above the two-year rolling average margin of 7.9%. Sportbook revenue increased by some 15% compared to last year and amounted to 90 million, which is the second highest Sportbook revenue ever, only beaten by Q4 last year by some 1.3 million euro. Casino turnover is slightly up year on year and casino revenue increased by 11%, which is also the second highest casino revenue ever, only beaten by Q4 last year by some 1.5 million euro. Casino revenue represented 70% of the group's total revenue in the quarter and sportbook sum 29%. Reported revenue for the second quarter amounted to 304 million euro, the second highest revenue ever in a single quarter and an increase of 12% year on year and 16% organic growth. Revenue from locally regulated markets increased by 33% compared to last year and now constitutes 66% of total revenue compared to 55% last year. Revenue growth is coming from both the B2C and the B2B business in the quarter, where the B2C business reported all-time high revenue and contributed with 228 million, while some 76 million came from licensed revenue from the B2B customers. Splitting revenue by region, we see growth compared to previous year in all regions except for the Nordics, which is down by 28% compared to last year. All markets in the Nordic region reported decreased revenue in the quarter compared to the corresponding period last year as a consequence of decreased marketing investments in the region. The Nordic region represented 11% of the group's total revenue in the second quarter. Revenue from Western Europe increased by 36% year-on-year or by €60 million and reported the highest revenue ever for the region in a single quarter. The Italian market reported all-time high revenue, mainly driven by the casino product. The Sportbook product reported increased activity and significantly higher revenue, both compared with the corresponding period last year and the previous quarter, but the Sportbook revenue is still relatively smaller than the casino in Italy. Revenue from Belgium is in line with the corresponding period last year, this although lower activity in the Sportbook in this quarter following the big football tournaments in the comparable period last year. The Western Europe region represented 20% of total revenue in the quarter. Revenue from the Central and Eastern Europe and Central Asia region, the Sika region, increased by 4%, driven by Sportbook and Casino. Latvia, Lithuania and Croatia reported increased revenue both quarter on quarter and compared to last year. Georgia and Greece reported increased revenue compared with the corresponding period last year, and Estonia reported decreased revenue driven by lower activity in the casino products. The Sika region represented 39% of the group's total revenue. Revenue in Latin America region increased by 22 million euro, representing an increase of 35% compared to the same period last year. The all-time high revenue is mainly driven by high customer activity with all-time high in both turnover and deposits for the casino products. The Sportbook product benefited from higher Sportbook margin and reported increased revenue compared with the corresponding period last year and also compared to the first quarter this 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 second quarter. Peru reported revenue growth compared to the corresponding period last year and previous quarter driven by the Sportbook product. The Latin America region represented 28% of the group's total revenue in the second quarter. Explaining the development in operating income, this picture is broken down to display the impact from the different line items in the profit and loss statement. Revenue has increased by some 32 million and following that increased cost of services provided as well. The increasing cost of services provided is, apart from revenue growth, mainly explained by higher gaming taxes, following a 66% share of total revenue coming from locally regulated markets. Gross profit increased by 17 million euro compared to the same period last year and amounts to 194 million euro, which corresponds to a gross profit margin of 64% compared to 65% last year. Marketing spend increased by 4 million euros compared to last year and corresponds to 16% of total B2C revenue and to some 22% when including affiliate marketing costs as well. Increased marketing spend is primarily explained by enhanced marketing efforts in Western Europe. Personnel expenses increased by some 8 million euros compared to last year, explained by increased number of employees following geographical expansion and acquisitions. This, in combination with organic focus on product and tech development, explains the bulk of the increased number of headcounts within the group. Depreciation and amortization costs increased by 1.5 million compared to last year. Other items include other external expenses and other operating income and expenses, which are more or less flat compared to last year. Decreased other items relates to increased capitalized development cost following increased focus on product and tech development. Operating income amounts to 69 million euro, an increase of 8% compared to last year. The EBIT margin was 22.7% compared to 23.6% last year. Operating income has increased steadily over time. This although we have continued to invest in growth through investments in both marketing and product development. We have also seen an increased percentage of revenue coming from locally regulated markets. which comes with higher gaming taxes and impacts the gross profit margin. Still, we have absorbed the higher tax cost and managed to increase the operating profit and maintain a high EBIT margin. Operating cash flow amounts to 41 million euro compared to 76 million in the same period last year. Operating cash flow is driven by increased operating income but negatively impacted by changes in working capital by some 50 million euro in opposite to a positive working capital contribution by some 40 million euro in the same period last year. The negative contribution from working capital comes from decreased debt to players and increased accounts receivable. Operating cash flow is also negatively affected by increased pay taxes in the quarter due to seasonality and increased revenue from high tax countries such as Argentina and Croatia. Cash flow from investing activities sums up to 13.9 million and relates to investments in own product and technology development. Cash flow from financing activities impacted the cash flow by 66 million, mainly driven by paid dividend to shareholders, including the first half of the ordinary dividend distribution and an extra dividend payout of 13.7 million. We have also repurchased bonds amounting to 3.6 million in the 2023-2026 bond series. Betsson has, as end of June, a net cash position of 152 million euro and an equity ratio of 60%. On a yearly basis, operating cash flow has increased over time, although we have seen fluctuations in track quarters, mainly from changes in working capital and from paid taxes. But on a year-to-date basis, operating cash flow is slightly up compared to the same period last year. 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 compared to the same period last year and compared to the previous quarter. And now back to you Pontus to present a trading update and to summarize the quarter.

Okay, thank you Martin. Now let's have a look at how the third quarter has started. The average daily revenue for the period 1st of July to the 13th of July has been 5.2% higher than the average daily revenue for the entire third quarter last year. Now let's quickly sum up the highlights of the second quarter 2025. We saw continued profitable growth and strengthened market positions in the second quarter. Reported revenue was up 12% year-over-year and EBIT increased 8% year-over-year. Earnings per share, EPS, increased 9% year-over-year. The growth figures should be seen against the backdrop of the comparative figures for second quarter last year, which included the European Football Championship and the Copa America. Also, we faced FX headwinds in the second quarter, both on our B2C and B2B businesses. During the quarter, we continue to strengthen our market positions in Peru and Argentina. Revenue from LATAM was up 35% year over year. The share of revenue from locally regulated markets was at an all-time high of 66%, up from 55% last year. The higher share of revenue from locally regulated market means that we are absorbing more gaming taxes than a year ago. The business continue to generate significant cash flows and we have a very strong balance sheet with room for continued investments going forward. So that's all we had to say today. So now it's time for Q&A and we welcome your questions.

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