Betsson AB

Hi, everyone, and welcome to Betsson's presentation of the second quarter 2026. I'm Pontus Lindvall, the president and CEO of Betsson. Presenting with me today is also our CFO, Martin Amann. The second quarter featured high customer activity, boosted by the FIFA World Cup that kicked off on the 11th of June. Active customers in B2C were up 32% year over year, at a new all-time high level. Group revenue amounted to €310 million, which was also a new record. Customer deposits, including both B2C and B2B, on a gross basis were down 7% year over year. As in previous quarters, the strongest growth came from Latin America, which grew by 32% to new record levels and is now our largest region. The increase was broad-based and boosted by the FIFA World Cup, which contributed to high activity among both new and existing customers. Peru and Argentina were the region's strongest performers, thanks to continuous product investments, strong brands and well-targeted marketing activities linked to the World Cup. Revenue for the B2C operations increased by 14% year on year and also reached a new record level. B2B revenue, on the other hand, remained at a lower level than in the corresponding quarter last year. The trend has stabilized, but at a lower level than during the comparative period. Our strategy is based on a balanced mix of B2C and B2B initiatives, and we are working hard to return to growth in B2B with both existing and new customers. EBIT was 42 million euros in the quarter, down versus last year, but significantly up from the previous quarter. The EBIT margin was 13.6%, lower than in Q2 last year, but up from the previous quarter. Casino revenue increased by 2%, while sportsbook revenue was up 1% year over year. The sportsbook margin was 10.5%, up from 9.5% in Q2 last year. Our balance sheet remains strong. We ended the quarter with a net cash position of 128 million euros. Our main marketing activities in the quarter were focused on the FIFA World Cup that kicked off in June. This is the largest event in football worldwide. Ahead of the event, we launched a new global ad campaign called the Betsson Football Festival, which is a concept built around the passion and energy of football fans worldwide. The campaign consists of a global TV commercial with a newly created anthem specifically for Betsson, a song that is now available on Spotify. We also launched Pride of the Nation, which is an in-depth football talk show featuring players from four of Betsson's sponsored top clubs, Inter, Club Bruges, Atletico Nacional and Racing Club. In addition, we launched the World Cup podcast for the Latin American region with experts, hosts and guests. Betsson's engagement in Padel continued in the second quarter with two main sponsorships. We were the official sponsor of the Buenos Aires Premier Padel P1 in Argentina, as well as an official partner of the BNL Italy Major Premier Padel in Rome. In the second quarter, we continue to advance our positions in Italy, gaining market shares in both casino and sports betting, supported by our sponsorship with Inter. Inter had an amazing season and won the Italian double, which means winning both the league and the cup in Italy. Betsson's gaming sites are largely operated on a proprietary platform. The platform manages payments, customer information, account management, as well as the games. Within Betsson, artificial intelligence, AI, has been an important factor supporting, for example, customer services and various predictive tools. Lately, AI is being used to drive efficiency across all operations in the group, including marketing and product and technology development. Development work during the quarter was focused on preparations ahead of the FIFA World Cup. For example, capacity within the platform and the Sportsbook was expanded and stress-tested in various ways to be able to handle up to five times more traffic than usual. For the Sportsbook, several improvements to the customer experience were introduced, such as new multiplier features based on the number of goals scored. goal rush, as well as the option to let the player coming in from the bench take over a bet placed on the player who was substituted, thereby keeping the bet alive even after the substitution. Super sub. 376 new casino games were launched during the quarter, of which 32 were exclusive to Betsson. Further, several new payment solutions were integrated across some of the group's most important markets. And now I'll hand over to Martin for a closer look at the financials.

Thanks Pontus and hello everyone. As we heard Pontus mentioning, the second quarter was a solid quarter with all-time high revenue and increased operating income compared to the previous quarter. Many KPIs are trending the right way with a lot of all-time highs following increased activity related to the first part of the FIFA World Cup. And with that said, let's kick off this section by starting with some KPIs before we go into the details of the financial numbers. Customer deposits in all gaming solutions, including both B2B and B2C, are down 7% compared to the same period last year, but number of active customers is the highest number ever and sums up to more than 1.8 million customers in the quarter, an increase of 32% compared to last year. The gross turnover in Sportbook across all bets and gaming solutions was down 12% compared to the same period last year, and amounts to approximately 1.3 billion euro, and this number also includes both B2B and B2C. Sportbook margin was 10.5%, which is higher than the 9.5% margin in the second quarter last year, and higher than the two-year rolling average margin of 8.9%. Sportbook revenue slightly increased by 1% compared to last year and amounted to 91 million, which together with the revenue in Q4 2024 is the highest Sportbook revenue ever for a single quarter. The casino turnover is down 9% year on year, but casino revenue increased by 2.5%. Casino revenue represented 70% of the group's total revenue in the quarter and Sportbook's up 29%. Reported revenue for the quarter amounted to 310 million euro, an increase of 2% and the highest revenue ever for a single quarter. Organic growth year-on-year was 6%. Revenue from B2C business has grown by 14% or 33 million euro year-on-year, whilst the B2B business shows declining revenue year-on-year by 35% or by 27 million euro, explained by decreased revenue from one of the group's B2B customers. Revenue from the B2B business corresponds to 16% of total revenue and B2C revenue to 84%. Revenue from locally regulated markets increased by 17% compared to last year and now constitutes 76% of total revenue compared to 66% last year. Splitting revenue by region, we see growth compared to previous year in Western Europe and Latin America, whilst the Nordics and the Central and Eastern Europe and Central Asia region, the SICA region, both are down compared to last year. In the Nordic region, revenue decreased both compared to the corresponding period last year and the previous quarter. The decline is primarily driven by reduced activity in the casino products. Both Denmark and Sweden reported lower revenue during the quarter, which is the outcome of an active decision to focus marketing activities where we see the best return on investments. The Nordic region represented 9% of the group's total revenue in the second quarter. Revenue from Western Europe increased by 8% year-on-year or by 5 million euro and reported the highest revenue ever for the region in a single quarter. The Italian market reported all-time high revenue in the second quarter and also reaching new record levels in both deposits and turnover. The growth compared to corresponding period last year is mainly driven by the casino product. The Sportbook product continued to show strong growth with increased revenue both year-on-year and compared to the previous quarter, but the Sportbook revenue is still relatively smaller than the casino revenue in Italy. France reported increased revenue both compared to corresponding period last year and compared to previous quarter. Revenue from Belgium decreased compared to the corresponding period last year, but slightly increased compared to the previous quarter. The decrease is mainly due to lower activity. The Western Europe region represented 21% of the total revenue in the quarter. Revenue from the Sika region decreased by 15% or by 18 million euros. Revenue was negatively impacted in the second quarter by lower license revenue for system deliveries to B2B customers in the region, explained by lower activity in both the sport book and the casino products. However, the B2C segment in the region continued to perform well, where Croatia, Greece, Georgia, Poland, Lithuania and Estonia all reported increased revenue compared with the corresponding period last year. The growth in Croatia and Greece was driven by the casino product, whilst the growth in Poland, Lithuania and Georgia was driven by the Sportbook product. The Sika region represented 32% of the group's total revenue. Revenue in the Latin America region increased by 27 million, or by 32%, compared to the same period last year, and was the highest revenue ever for the region, driven by strong underlying activity in both the Sportbook and the casino. with new record levels across sport book revenue, casino revenue, deposits, and turnover. Argentina, Peru, and Colombia also reported all-time high revenue in the second quarter, driven by solid performance across both the casino product and the sport book product. The Latin America region represented 36% of the group's total revenue and is now the largest region within the group. Explaining the development in operating income, this picture breaks down the different components in the profit and loss statement to display the impact of the different line items. Revenue is up year on year, but not as much as cost of sales, which has increased by 23 million compared to last year. The increase is to a large extent explained by the change in revenue mix between B2B and B2C in the quarter, where we in this quarter see yet a step down in the B2B revenue as percentage of total revenue, and increased revenue from locally regulated markets. And following that, increased gaming taxes by some 15 million euro. Increased cost of services provided is, apart from gaming taxes, also impacted by higher payment provider fees following increased B2C revenue. Year on year gross profit decreased by 60 million euro and amounted to 178 million euro, which corresponds to a gross profit margin of 57% compared to 64% last year. Marketing spend increased by €4 million compared to last year and corresponds to 16% of total B2C revenue and to some 21% when including affiliate marketing costs as well. Personnel expenses increased by some €3 million compared to last year, explained by increased number of employees, yearly salary revisions and continued investments in product and technology development. Depreciation and amortization costs increased by one million year on year as a result of increased capitalized development costs. Other items are slightly up year on year, where decreased other operating expenses and increased capitalized development costs are contracting increased other external expenses. Operating income amounts to 42 million euro, a decrease of 39% compared to last year, but an increase of 24% compared to previous quarter. The EBIT margin was 13.6% compared to 22.7% last year. Operating cash flow amounts to 60 million compared to 41 million in the same period last year. The deviation year on year is mainly explained by changes in working capital, where we this quarter have a positive impact of 21 million, mainly explained by increased short-term liabilities and increased account payables. cash flow from investing activities sums up to 14 million euro and relates to investments in own product and technology development cash flow from financing activities impacted the cash flow by 78 million explained by share buybacks dividend to shareholders of bets and AB dividend paid to non-controlling interest lease payments and external loans Betsson has as end of June a net cash position of 128 million euro and an equity ratio of 61%. And last but not least, Betsson has in July signed a long-term multi-currency revolving credit facility of 75 million euro. The credit facility has a term of two years with an option to extend for an additional year. And the purpose of the RCF is to finance working capital requirements and general corporate purposes, including acquisitions. Pontus, back to you to take us through the training updates.

Thank you very much, Martin. Now let's look at how the third quarter has started. The average daily revenue for the third quarter so far, including the 13th of July, has been 13.7% higher than the average daily revenue of the whole third quarter last year. During the start of Q3 in July, customer activity has been boosted by the FIFA World Cup. And now a quick summary of the second quarter. In Q2, we saw record levels in group revenue, sportsbook revenue, and active customers. We reported continued good growth in Latin America and Western Europe, but SEKA and Nordics declined year over year. B2C continued to be the growth engine, but again, there was a decline in B2B compared to last year. The share of revenue from locally regulated markets was at the highest level ever, at 76%, driving higher gaming taxes compared to last year. The lower B2B revenue and the higher gaming taxes had a negative impact on profitability in the quarter compared to last year. EBIT and the EBIT margin declined year over year, but both increased compared to the previous quarter. We have seen a solid start to the third quarter, with average daily revenue up 14% versus the full third quarter last year, boosted by the World Cup. Thanks everyone for listening to the presentation. Let's move on to Q&A. We welcome your questions.

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

Good morning, guys. Good morning.

I have a question. I remember when you reported the Q1 numbers, you mentioned that you've seen a stabilization. since December in the B2B license revenue. Would you say that is still the case where we are today?

Yes, that would be the same answer. We see a stabilization there.

Okay, can you give any color on the recent development in B2B license revenue and how it's done in June, for example, with the World Cup?

Not really, but we can only say that it has stabilized through the quarter compared to the last quarter. And yeah.

Okay. And any color on the strong numbers in Latin? How much of it is a World Cup boost and how much is sort of your underlying progress there, would you say?

Of course, it's impacted by the FIFA World Cup, but then again, World Cup is only around 20 days of the quarter, so it has an impact, but it's also the underlying growth that we have in the region from the efforts that we've made and from the product development that we do. And as we usually say, these big tournaments, they have a bigger impact on customer intake than on the revenues as such.

And on the World Cup, I know it's a hypothetical question, but do you think you would have been up in your trading if it weren't World Cup in the period?

That's a tricky one. I don't know if I can answer it.

Fair enough. I just wanted to try. But okay. And my final question is when we look at your revenue, if we look at it, if we try to look at this year on year, and I mean, it's obvious that the B2B license decline is impacting your profitability. It's a similar drop of your... revenue in B2B license system as it is in your EBIT year on year. Have you discussed sort of taking any cost actions or putting a little bit more pressure on sort of cost reductions given where you are today compared to a year ago?

I would say that we are always very cautious about costs and we have made cost reductions on the first half of this year, but more as a housekeeping thing that we always do. If you look at the big cost items that we could really impact, there's mainly marketing and staff costs. And we are in a good position. We spend the marketing money in markets where we see good traction. And we have a lot of good product development going on, which supports B2C, but also existing and new coming B2B. So it wouldn't be wise to cut those costs at the time being. And as I said in previous quarter, I'm still very optimistic for our future outlooks and we need to march on and look forward.

Okay thanks and I just have one minor question on your sports book. Are you happy with the competitive edge of your sports book right now and also have you considered entering into prediction markets product, which there are signs of traditional sports book like yourself is sort of monitoring and going into that area as well.

Yeah, the first part, we're very satisfied with our with the performance of the sports book and also with the from a technical angle, what we can offer and the market depths and the special special betting options that we have developed that were raised in this presentation. and also now we only have a few games left in the world championship and the sports book has technically worked very very well under very high pressure so that is something that we can really be proud of and that we are happy about on the technical side we also made a lot of let's say UX enhancements before the World Cup with the special World Cup lobby and things like that made it easy for customers to find things to bet on. And I have received personal feedback from many people saying that this is a very good experience in the sports book that we have now. So we're happy about that. Regarding prediction markets, something that we look into and follow with great interest. However, in most of the markets where we are strong, the prediction market model doesn't really fit in in the same fashion as it does in the US, where they kind of follow a different regulation than the gaming regulation. In our markets, if it was to be allowed, it would fall under the gaming regulations. And then again, it's not much of a difference from normal sports betting. But it's something that we follow very closely and monitor. Some parts of the user experience that we see there is definitely interesting to look at and monitor.

Okay, thank you. That's all for me.

Thank you.

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

Yeah, there's a question from the credit analyst Jonathan Anderson from Arctic Securities. Hi, Pontus and Martin. Congratulations on the report and the strong sequential growth. A few questions from my side. Could you provide some color on what the external loan payment in the quarter is related to? First question. Second question, could you also provide some color on the intended use of the RCF sign after the quarter end? And third question, do you have any update on the expected timing for the Reiner acquisition?

Okay, thank you for the questions. The first question regarding the external loan repayment, it's actually not the repayment, it's actually a granted loan to our B2B customers. Secondly, the RCF, firstly, it is a complement to our existing bond financing. And the purpose of this is for working capital financing and general corporate purposes, including M&A. Thirdly, expected timing of the Ryan acquisition. That is still the same as we said when we communicated when we signed the agreement. the intention is to close it and Q2 or beginning of Q3. And since we are now in the beginning of Q3, we are close to sign that. So most likely in the coming weeks or so.

I think that was the last question. Roland, no more questions? No, no more questions. Okay. Thank you very much for listening in and see you next time. Bye-bye.