Evolution AB (publ)

The presentation of Evolutions year end report of 2023. My name is Martin Karlsson. I'm the CEO of Evolution with me. I, as usual, have our CFO, Jacob Kaplan. I will start with some comments on our performance in the quarter, where after I will hand over to Jacob for a close look of our financials. After that, I will round off our presentation with an outlook for 2024. And then we are happy to take all of your questions. So, let's begin. Next slide, please. The underlying growth drivers for our business remain strong. There's a global audience for the excitement and entertainment that online casino brings, and we continue to see a strong global demand for our games. We also clearly see the trend where more and more countries regulate. Latest and one of the more interesting being Brazil. In Live Casino, both existing as well as new game launches, 2023, continue to attract new players and also new playgroups. At the beginning of the year, I spoke of 2023 as the year of the product, and I think 2023 has lived up to that billing. In the year, we launched more than 100 new exciting games, a record number in any given year for Evolution. In the quarter, we have further expanded our North American footprint by expanding our games portfolio. In December, we saw the long-awaited launch of Crazy Time in New Jersey. This is a landmark launch for evolution for the U.S. online gaming market. We are very optimistic about Crazy Time becoming a favorite online game show in the United States, as we have seen it perform exceptionally well globally. In the quarter, we also launched Crazy Coin Flick in New Jersey, as well as Super Sick Bow in Pennsylvania. The three games are due to go live in additional states during 2024. Another achievement in the quarter is the Craps launch in Connecticut, which means that Craps now is live in all our U.S. markets. The broader portfolio in U.S. opens up for new player types entering into live casino, as it has already done in the rest of the world, and a bit by bit increasing the share of live in the total online casino market. Also worth mentioning is that we recently signed a new content partnership agreement with Fanatic Betting and Gaming for the U.S. market. At the end of the period, we had over 1,600 tables live, resulting from an increase of over 300 tables during the year. The high demand for our products means that we must expand in existing studios and build new ones to keep the pace with demand. We will, as already mentioned, accelerate the increase of studio capacity during 2024. Notable projects this quarter include the opening of a new studio in Bulgaria, as well as a small studio in Colombia, where the largest studio is planned to go live in Colombia later this year. In Q4, we'll also see good pace up in recruitment, and it is now on satisfactory levels. We will continue to have a high focus on recruitment as we need to expand our service base to answer up to high demand. We round off 2023 with strong financial results and come into the new year with a fantastic pipeline of new gains and a strong momentum, which makes us well-placed for further strengthening our market share and continue to widen the gap to competitors. Now, let's move to the coming slides and get into some details of Q3 and also some comments on 2024. Next slide, please. Let's look at the financials. Revenues in the quarter increased by 16.6% to 475 million euro. For the year-to-date period, growth amounts to 23.5%. EBITDA in the quarter increased by 20.5% to 337 million euro, corresponding to a margin of 70.9%. For the full year, we reached a margin of 70.5%, which is in the upper part of our 68 to 71% guidance of 2023. We grew live revenue with 21.1% compared to Q4 last year, summarizing the total revenue of €406 million. In the fourth quarter, R&D revenue amounted to €69.8 million, which is a growth of 4.5% compared to Q3, but a negative growth of 3.7% compared to the same quarter last year. For the full year, it's important to point out that R&G growth is 2.6% in total, which I for now is satisfied with. We, of course, have high ambitions, but we are taking clear and important steps forward in R&G during Q4. I'm very pleased with the margin for the full year 2023, as it is a result of the high demand of our product in combination with that we constantly are working hard to increase efficiency. In 2024, we will increase investments in expansion both in new product, R&D, existing studios and new studios, leading to our EBITDA margin guidance for 2024, which is 69 to 71 cents. It is as always important to point out that in any trade-off between margin and market share, we will opt for market shares. Important also to note that the board proposes a dividend of 265 euro per share for 2023, which is in line with our dividend policy of distributing 50% of net profit back to our shareholders. All in all, fantastic numbers, and I'm very pleased with our financial performance in the fourth quarter, and we are definitely well-placed to deliver strong growth and strong transport. With the fast growth of the company, we need to have an equal high pace in our recruitment, and recruitment will continue to be one of our priorities and one of our key processes. At the end of the period, we were well beyond 19,000 evolutionaries, working hard to delight players every day. The increase in staff year-on-year amounted to 2,195 employees, corresponding to an increase of 13%. The increase in headcount is clearly higher than the two previous quarters, and we are focusing on increasing the expansion phase further. In 2024, as we continue to experience, a very high demand that we need to fulfill. We have high focus on recruitment in recent months, and we have been able to identify inefficiencies and improving speed. It will even so take a couple of quarters to get back to where we need to be in order to fill our studio, build out with new fantastic evolutionaries. Next slide, please. The game round index shows the development of the whole evolution network and includes all gains, and it can be seen as a general indicator of activity in our network. Over time, more game rounds mean more activity leads to increased revenue. This quarter, game rounds increased 30% year-on-year, so high growth rate than our total revenue. Game runs growing faster than revenue development we have seen in the past few quarters, and it's natural and positive as the volume of new players from new regions come in with a little bit lower batch sizes. I'm very pleased with the activity increasing Q4 at the back of all great releases, but also as a result of the higher delivery out of our studios. Next slide, please. Beautiful slide. In 2023, we grew the Evolution live offering significantly, further widening the gap between Evolution and our competitors. Over all categories, we launched more than 100 games. On the slide, you see the logotypes of the 12 live games that we launched during the year. Two of the strongest brands in our portfolio are our Lightning and Crazy Times. In 2023, we kept advancing those in-house brands with spin-offs, including titles like Crazy Pachinko, Red Oralette, Lightning Lotto. We also launched the largest and most spectacular game show we had ever made, Funky Time. In 2023, we completed a fantastic product roadmap. Most games were launched in the second half of the year, and we're only starting to notice the contribution to our network. I'm very pleased of what we have created and proud of everyone at Evolution who never stops pushing boundaries forward of what is possible. Even so, we have greater goals than ever for 2024-2025. First, I want to mention that we in 2024 will launch the by far most advanced and technically complex game show we have ever made. And it will make even crazy times nervous of being pushed off the throne. It will take entertainment and excitement to new levels. Come to ICE next week to see the true spectacle being unveiled. 2024-2025 will revolution be the product leap years. We will, more determined than ever, with R&D, AI, new studios, new technology, take a leap forward to even higher entertainment for our end users. We will expand our portfolio of great games to all markets and with endless energy continue to develop the games of tomorrow. The core of evolution is innovation and the end game is entertainment. The future doesn't wait for you. You need to run to catch up and sometimes take a leap. Never stop. Never be complacent. Always be paramount. Run faster than anyone else and be a little bit better every day. Every year we try to surpass ourselves. There is no one else to look for inspiration. We have to motivate ourselves. We need to stay on our toes, breaking boundaries, create what others dream of, think or think it's impossible on our own. We need to relentlessly continue to create evolution's future, which is the same as the future of iGaming. Our group's product roadmap for 2024-2025 is the strongest one ever. But during 2024-2025, we'll take a product leap. Next slide, please. This slide shows the breakdown of our revenue by geographic region. We have a true global and strong demand for our product, which is also reflected in the spread of revenues over geographic regions. Europe continues to have a healthy growth, with amounts to 9% in the fourth quarter compared to last year. For the full year, the growth amounted to 12%, which is a good sign that we can still develop and grow our most mature markets. In Asia, we saw continued growth, which amounted to 40.5% compared to 2022, and for the quarter, the growth was 33.4%. We still see rapid growth in Asia, and the potential in Asia remains huge, with several billion population. We grew revenue in North America with 8% from Q3 to Q4, and in total for 2023, close to 20%. We worked hard to launch new games in the US, and in December, we were finally able to launch three new games in the market, including Crazy Time. will continue to bring new games to the US market. And next in line is our wonderful retro game video poker. The North American market is still in an early stage of development, and there is a long runway for growth, albeit the pace is unpredictable. Latin America currently makes up a bit less than 7% of our total revenue in the quarter, and with a growth in the quarter of close to 20%, We believe it's a region with great potential and good momentum. We now have one small studio in Argentina, one in Colombia, and we have initiated the construction of the largest state-of-the-art studio in Colombia to cover the demand we see in the market. We see that the regular trend in Latin America continues, and we are very excited about the opportunity in Brazil. Remains the other region, which is mainly consists out of Africa. It's not primarily 3.5% of the growth revenue, and it's a future growth opportunity for us. Share revenues from regulated markets continues to be stable and amounts to 40% for Q4 2023. With that, I'll hand over to you, Jacob, and next topic.

Thank you, Martin, and good morning to all of you listening. Revenue amounts to 475.3 million euro in the quarter. In total, this is a growth rate of 16.6% year on year compared to the fourth quarter of 2022. This is fully organic growth as the latest acquisitions were included also in the last quarter of 2022. In the comparison to Q4 2022, there is a negative effect from changes in currency rates. Our estimate is that revenues are negatively affected by just over 8 percentage points. making year-on-year growth in Q4 adjusted for changes in currency rates about 25%. Growth of constant currency is an estimate. We based it on recalculating the GGR generated in many different currencies to Euro using the exchange rates from the same quarter the previous year. We added this disclosure in Q3. At that time, we stated the estimated negative effect that revenues to be six to eight percentage points in the quarter. We provided a range then and have settled on one number now. As mentioned, it's still an estimate, not an exact number. But overall, my view is that the FX have won at a similar level in Q3 and Q4. The total group revenue of 475.3 in the fourth quarter is made up of 405 million euro related to live casino with a growth rate of 21% year-on-year and 69.8 million euro from RNG games. An increase of 3 million euro from the previous quarter, but 3.7% lower than the same period, 2022. In Light Casino, we have managed to increase the number of table launches, and as Martin mentioned earlier, we're in a much better balance and are gradually moving out of the undersupply situation that we talked about in Q2 and Q3. Still more to do, and we have a year of very heavy investment and expansion in front of us, but we have made very, very good progress in the fourth quarter. RNG also shows improved revenue numbers in Q4, albeit Q4 is a seasonally stronger quarter, so some increase to be expected, but we are happy to break the negative trend from earlier in 2023 and look to continue improvements in small steps from where we are today. We can see how one-stop-shop OSS It gives us new opportunities to offer our operators some really compelling functionality. Some of that we will preview already next week at ICE. EBPA totals 337 million euro in the quarter for a margin of 7.9%. For the full year, margin amounts to 70.9% in the quarter. And for the full year, the margin is 70.5%. which is well within the guidance for the full year of 68 to 71%. Every quarter includes a number of expense items that are somewhat one-off or non-recurring, but there's always something every quarter. Sometimes this weighs a little bit negative, sometimes it'll be positive. In the fourth quarter, I would say it weighs on the positive side, so the reported margin is a little bit helped by that in Q4. Looking into 2024, our expectation for EBITDA margin is 69 to 71% range, in that range. The heavy expansion phase we are in at the moment, and will continue to next year, will affect the margin, especially in the first half of the year. And then we expect to improve towards the second half of the year, so starting out probably in the lower end of the range. I'll go to the next slide. This is the final report, the final quarter of 2023. So I've added this slide to zoom out a bit and take a look at the multi-year performance of Evolution. The chart to the left shows reported revenues by year split over live casino and RNG. And as you can see in the chart, year over year, we have added between 300 and 350 million euro in live revenue per year over the past three years, I think 335 in 2023. R&G revenue has also increased since we entered the vertical in 2021. Even though, as you know, we feel we could do even better in R&G, it has been a very profitable high margin addition to the group and a great expansion to the product portfolio. The chart to the right shows EBITDA and EBITDA margin. As we have grown top line, we have also managed to increase margin over the years. This is a product of a scalable business model and also our firm belief that high awareness cost is healthy for an organization. We had a very rapid margin expansion during the pandemic years in the 20 and 21, and we managed to maintain a high margin and also increase the margin some in the past two years. As we have pointed out many, our main priority is revenue growth. increasing market share, and ultimately increasing profits. So while we do give margin guidance for the coming year, the margin is a product of all the things, the other things we do, and not a target in and of itself. Let's quick look at the full year development. I'll move on to the next slide, and then we'll take a closer look at the most recent . This slide shows our P&L in some more detail. Let's go through it from the top. We've covered revenue development, both for the three-month period, October to December, and the full year comparison on the previous two slides. So I'll move down to expenses. Personnel expenses amounts to just under 94 million euro in the three-month period. That's an increase of 15% compared to the same period last year. We've managed to increase pace in recruitment in several locations in the quarter, as mentioned. Personal expenses also is affected by some positive one-off effect as bonus provisions have been adjusted at year-end. Depreciations amount to 34.4 million euro. That includes 11.1 million euro in amortization of intangibles related to acquisitions. Moving further down, other operating expenses. This includes items such as consumable equipment, communication costs, consultants and also royalties. The line amounts to 44.5 million euro in the quarter. It's 4% lower than the same period 2022, but up one and a half million from the previous quarter. It is a line item that is a bit lumpy and we will see continued increases during 2024 as our expansion pay increases, as I mentioned earlier. Summing up, total operating expenses, just under 173 million euro for the period. an increase of 10% compared to the same period last year. And for the full year, expenses totaled 655 million euro, and that's a 20% increase compared to the full year of 2022. Operating profit sums up to 303 million euro in the quarter. Financial items amounts to about half a million euro. This includes interest rate income, which is positive, 7 million euro. but in the quarter, but also negative charges for IFRS 16, these costs and the revaluation of intergroup debts and bank balances in other currencies than the company currency. And the net is happening on financial items. Tax is at 20.1 million Euro in the quarter, with a tax rate of 6.7%. For the full year tax rate is 6.8%. As has been communicated several times during the past two years, tax rate will increase as Pillar 2 regime comes into effect during this year, 2024. There's still uncertainties as to exactly how Pillar 2 top-up tax will be administrated, and the actual top-up tax will be paid first in 2026. So we will see how this plays out. We will be open to adapter operations to achieve a tax-efficient structure where that makes sense. These items brings us to a profit for the three month period of 283 million euro. This equals an earnings per share of one euro 31 euro cent per share for the quarter of the dilution and 4.93 euro for the full year. That's the full year numbers increase of 27% compared to 2022. I'll move on to the next slide. Before I hand back to you, Martin, we'll look at cash flow and the financial position. As usual, we'll start to the left. This chart shows development of capital expenditure. The grey part of the bars represent investment in tangible assets, which is mainly our studio-built projects. In the quarter, CAPEX's intangible assets is 12 million euro, slightly up from earlier quarters, 2023. And as we've mentioned a few times, we are ramping up our expansion projects that will be reflected in higher investment also going forward. The blue part of the bar is investment in in-handed assets, and it's related to development of new games and features to the platform. It's 18 million euro in the quarter. Total capex for the quarter is 13 million euro. For the full year, capex expenditure amounts to 94 million euro, clearly short of the 120 million that was our guidance at the start of the year. And the reason for this is that we think we have not been able to expand the pace we we envisioned at the beginning of the year. For 2024, we maintain 120 million euro guidance for CapEx. But we have picked up the pace in Q4 and also have ambitious plans for expansion during the year. 120 million euro is a significant level of investment, but it's well within our financial capacity. Looking at the chart in the middle of the slide, showing cash flow in the period, we see operating cash flow after investments of 284 million. So financial risk will remain low, even with the increased pace of investment. Cash conversion, operating cash flow in relation to the DA is 80% for the full year, a good level. Finally, to the far right of the slide, a summary of the balance sheet. We're in a strong financial position, fully equity financed. The board proposes a dividend of 2.65 euro per share. That's approximately 564 million euro to be distributed to owners. This is 52.7% of our net profit for the fiscal year 2023. So in line or slightly over our dividend policy of at least 50% payout on that profit. In addition, the board has initiated a buyback program during the period in total 400 million euro. So through buybacks and dividends, 90% of profit for the year will be shifted back to owners while we manage to maintain an aggressive growth agenda for the business. Over the buyback, about 115 million euro have been completed at the end of the period. So 285 million euro remains to be done 2024. At the end of the year, cash balance was 985, after which then 564 million will be dividend and an additional 285 will be used for buybacks. Okay, that was the end of my prepared comments. I hope that you will take questions off of that.

Thank you, Jacob. Thank you. A few words to conclude this report presentation before we open up for questions. Evolution offers an unparalleled portfolio of unique games, something that pays for the whole industry with new groundbreaking releases. The roadmap for 2024 looks nothing but fantastic, and our ambition for 2024-25 is higher than ever. We want and desire to do and create what others dream of. And 2024-25 are probably years of revolution, but we will continue to bring exciting new live casino title game shows and slots to players in the whole world. Next week at ICE in London we will show some, but not all, of what we have in store for players during 2024. The roadmap for the year is extraordinary and I'm very excited to bring our entertainment to players across the world. Come visit us at ICE in London next week, which by the way is the last year in London as 2025 ICE will be in Barcelona. Investment for the future will not only continue, it will accelerate 2024. Even so, we are cautious and mindful with how we spend our money, as always. Innovation and R&D is key to increase the end-use satisfaction. Copying someone will never drive development. As the leading innovator in online casino, together with a record number of new products released every year, we continue to relentlessly increase the gap to our competitors. We are well equipped for a fantastic year and exciting times ahead, and I'm very much looking forward to 2024. Now, let's move to questions, please. Next slide.

If you wish 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.

Thanks for taking my questions. So the first one, maybe, Jakob, if you could just repeat what you said regarding the Pillar 2 expectation. So you said something about 2026. Could you just repeat that, please?

No, it's just that the actual payment of tax will be in 2026, the top of tax. But of course, we will accrue for tax already from Q1. So there's no change in what we've said before. That's the same.

Okay, okay. Thank you very much. Then just like a comment on the shareholder remuneration, if you like. So it was 90% this year, as you mentioned. And obviously the DPS was maybe a little bit higher than expected, a little bit higher than the 50% that you have been hovering around before. So just I know this is a question for the board, obviously, but just from your side and from your sort of proposal, do you see still any M&A opportunities or do you think that we could maybe start like a sort of new outlook for the shareholder remuneration with more dividends and buybacks, please? Thank you.

I can answer that. I mean, the baseline of the dividend to the shareholders is the 50% dividend policy. There's no changes to that. And the decision on the buyback is a one-off taken by the board. The future, the long-term future of evolution is the most important thing we have. So we will constantly evaluate M&A and whatever technology or whatever we could add to that. And we would not put us in a situation where we take a dividend policy or any other type of policy that would hinder that.

Got it. Thank you very much. Then just on the foreign exchange headwind, which you alluded to, of around 8%, it was at least quite a bit more than my expectations in terms of the magnitude of the headwind. So could you just elaborate a little bit on what regions you saw the biggest impacts and just trying to get a sense of the underlying growth in the different regions. If you have any comments, that would be very helpful. Thank you.

We haven't broken it down. What was your expectation? I had four expectations. Okay, yeah, so it's a little bit different. But it is an estimate and not a really exact number. So I would say something, like I said, on a similar level. But we haven't broken it down by region.

All right, understood. Just a final one, just the CrazyTime launch in the U.S. Do you have any early indications? Do you see an increased activity in the lobby?

uh we are we it's a little bit too early to give any indication of lobby or other i mean but but we're happy with the launch it's a very powerful launch understood thank you very much the next question comes from ed young from morgan stanley please go ahead

Good morning. Good morning. Your excitement about the product pipeline is very tangible, Martin, but I think I'll save the questions on that price when we can see what you're so excited about. My first question, if it's the case on North America revenue, obviously, you know, it's record revenue there and sort of finally got going again, but it is still a little bit below market growth rates. Is it the right way to read that, that RNG is seeing some market share losses? I think all the major suppliers appear to be from the data we look at, given you've got some big new suppliers coming in there. And therefore, it's fair to say that live is growing above that level. Is that a fair way of interpreting growth? And how should we think about that dynamic heading into 2024?

We're doing very well in live, and I would also add to this that we are doing a great quarter before in North America, but we always state that the quarters are lumpy. It goes up and it goes down. It's a great quarter. We're doing very well in live, and then how exactly the market share will play out is I think that we are doing okay for the full year and a little bit better than okay in Q4. You broke up a bit, I think.

Sorry, can you hear me now? Yeah. So the second question is on capacity growth. You made repeated comments during the call about accelerating headcount and four new studios. You obviously opened Bulgaria at the end of last year, which I assume is sort of an empty box right now to be filled. And Jacob, you made the comment about raising the capex back up to the 120 that you didn't get to do this year. I guess when you say you added 300 tables this year is it fair to say that you expect to add more than that in 2024 and can you perhaps talk a little bit about the bit that's hard for us to see which is addition of new studios versus the sort of ramp within them so how should we think about table ramp in generally through the year thanks

Unfortunately, we don't guide exactly on the numbers of tables, but yes, we are increasing the pace of growth. We're adding four studios next year, and we're adding more capacity than last year, meaning 2023. Unfortunately, I don't guide you on exactly how many, but we're increasing the pace. and and that's natural as we have been a little bit behind during 2023 we were not delivering to demand and we're pacing up and we have a little bit of a backlog so yes we're increasing during 2024. okay and then finally you give your sort of annual disclosure on customer concentration you know it looks like really the business is in a similar shape to how it was maybe five years ago in terms of your

top one, two to five customers, et cetera. Do you think there's a case, given some of those largest customers will inevitably be aggregators, do you think there's a case for disclosing that data on an operator-level basis, which might show more the sort of underlying diversification or sort of concentration, if you like, within the business? Is that something that you would perhaps consider or are you just going to stick with what you've given, which probably looks more concentrated than I guess it probably is underlying?

I mean, they are our customers, and to stretch over our customers and go into and make their revenues fit, I don't see that, at least not currently. That's the answer on that. And naturally, some aggregator will be big, and there will also be other operators that are big.

Okay, thank you. Thank you.

The next question comes from James Roland Clark from Barclays. Please go ahead.

Hi, good morning, everyone. Good morning. Good morning. My first question is just on current trends. I know you don't really like to talk about this, but given all the product investment that's gone in the back half of the fourth quarter, including creative time, you've obviously mentioned a lot. Can you help us with a sense as to whether that has accelerated your group growth trends.

You mean how the first quarter of 24 has started?

Exactly, yes.

We haven't made any statement on that. We don't have any comment on the current quarter. It's still so early in the quarter. But as Martin mentioned, if we look through For the full year 2023, our product releases were a little bit towards the second half of the year. So, of course, some of those products are, yeah, maybe still ramping up, but yet they're all fully rolled out. But, you know, they can still develop and contribute. So that's a general answer. But we haven't made any statement on the first couple of weeks of 2024. Okay. Thank you.

And then on the demand-supply imbalance that in the statement you say is in a better place, I guess, when do you think it might be in the right place? Or maybe you think it is there already?

We are close to that. We will expand a little bit more and we will increase the pace and a couple of quarters in will probably be maybe even oversupply. But we are close to a good place right now.

Great, thank you. And my final one is just on the margin guidance. In 2023, it was 68% to 71%, and now it's 69% to 71%, so you've narrowed it. And you have mentioned the heavy level of investment and expansion that's going into 2024. So I just wanted to get a feel of your conviction on that range and why you have tightened it when you're putting so much investment into the year. So any color around that would be very helpful.

I think that we are on a good margin level. I mean, we deliver 70.5, 70.9% in the quarter. So we're happy with that. And the incremental margin is, as the margin is a little bit higher, of course, over 70.5. But now we're coming into an investment phase and we're going to do even more. So we're staying with the guidance that we have, 69 to 71. The 1% that we added was more added last year as a result of the instability and uncertainty with inflation and interest rates and everything else. So we're just narrowing it back to the 3% where we were before.

I think it might look more scientific than it actually is. We normally, we used to give like a 2% rate or 3, I guess you could say, range and then we widen it as Martin said. So just go back to what we did before. So that's...

Okay, thank you very much.

Thank you.

The next question comes from Kiranjot Gurawal from Bofe. Please go ahead.

Hey, morning, guys. Just a couple of questions from me. Firstly, can I just go back to North America? I mean, growth seems still relatively low there. What's behind the softness? Is there something more technical in there, maybe lapping of initial fees, for example, that's making the growth a bit lower? Some color on that. The second question is around Asia. Asia growth still looks strong, but slowing slightly quarter on quarter. what's behind the slowdown, and do you think anything there to do with Macau's recovery that could be impacting the Asian performance? And then the last question is around that step up in recruitment in Q4. I think that was really encouraging to see. What's behind the expansion? What have you fixed? Is it just the fact that this new studio is coming out now in different regions that's helping you, or is there something else? Thank you.

Let's talk a little bit on the growth in North America. I'm very happy with it. I'm pleased with the quarter. We grow 8% quarter on quarter, and I think that is a good bump up in North America. The total for the year is 20%. Could always do a little bit better. We had a couple of quarters which weren't as good, but I'm happy with Q4. You feel good? No, I don't see it that soft. So when it comes to Asia, It's a very large market, also that it's a bit lumpy, but with the size that we have, we're growing 30, 40%, and that is significant. And I'm also happy with that. So that's how I look at it. When it comes to the pace up of recruitment, we were a little bit slow on investment. We didn't get all the studios there. So one parameter, of course, is that we are growing in We added Bulgaria, of course, and we added capacity in other studios. And we also focused on sort of that we corrected some inefficiencies in the already existing studio. So it's a combination that we now got back to where we want to be. And it's not the situation where we fixed it in one month and then in Q4. course we notice where we were already in q1 and it takes a little while to change it and that's also why it takes a little bit while before we are exactly where we want to be even if we're close to that level right now got it thank you the next question comes from martin arnell from dnb markets please go ahead

Thank you. Good morning, guys. My first question is, this is the second consecutive quarter with underlying live growth stabilizing. Do you think that the initiatives you've taken so far is enough to avoid deceleration of live growth in 2024?

We don't guide on the growth of live 2024, but I am a firm believer that we are doing exactly the right thing for the market. We're pushing it and now we see Brazil is coming and we are seeing signs of regulating of states in the United States. We see opportunity, we see growth in Europe on the level which we haven't seen before. So I'm full of confidence, and the growth runway is the same as before, where maybe 80%, 85% or 86% is still land-based in the world, and we're moving forward. And we see the first regulatory science in Asia, where Philippines is regulated. I'm very optimistic, product coming, world is stable, more stable, and we're pushing forward. Exactly how that plays out in the percentage growth for quarters, very, very hard to say. If there are a couple of states regulating 25, it would mean a lot to US. If Brazil is coming out, it would mean a loss for Latin America, but we don't know exactly when that will happen.

Yeah, thanks. That sounds promising. And on your recruitment, you stepped up in the quarter. Why did you wait until late 2023 for this big push on recruitment? Was it because the new studios wasn't in place, or how should we think about that?

Yeah, it's not like we sat and waited, and then 1st of October, we did what we were supposed to do, and you see the figures. And of course, we see that already in Q1 that we are sort of not where we want to be. And there is a multitude of things. We didn't expand fast enough. We didn't have the capacity. And you want to balance that. And then we built out and moved up to Bulgaria. And we expanded in existing studios. And we got it going slowly, bit by bit. And now you see the effects of that. So there's many things to do. And don't forget that when we indicate even on a 94 million euro investment, it's a lot of investments, a lot of build up, a lot of things to do. And coming into 2024, we're aggressively pushing towards 120, and there's a lot of build-up. But sometimes it takes a little bit longer. There's someone that is going to deliver something they don't deliver. And you probably all know that from renovating a bathroom at home or something like that. But sometimes unforeseen things make it take time.

Okay, thank you. And my final question, maybe to you, Jacob. you had this negative 8% FX effect in the quarter. Based on the current spot rates, when do you expect FX to be zero year on year?

Broadly speaking, I think the large movements were, let's say Q3, Q4, Q1 of them, 22, 23. So as we come into sort of Q2 and second, if the rate, you know, in general, it's hundreds of different currencies and they all move a little differently, but then it should be less. I would say. I think also important to remembering in this currency adjustment system, it's not that the rates from Q4 last year were the correct rates. I mean, some of this, they might never go back to where they were a year ago. So I wouldn't think of it like, aha, it's It should have been 25% growth. I mean, it's probably less than that. But, yeah, it's an attempt to sort of illustrate this. So to answer your question, I would say towards Q2 at the current level, I think we should see less of a headwind than what we're doing in Q3, Q4.

Okay. Thank you, guys.

The next question comes from Imago Lijacevic from Carnegie. Please go ahead.

Good morning, guys. Just two questions from me here. One on the Latin American revenue here in Q4. I know you said that revenue over quarters is lumpy and it's expected to be in the future as well. But I guess Q4 is seasonally strong quarters. So if you could just provide us with some more color on what's happening in Latin America in Q4 and just how to reason about the quarters in 2024.

Good question. Brazil is 60% of Latin America. They are regulating in December. Prior to regulation, there is always a little bit of, let's say, uncertainty on the market and someone might withdraw and there might be changes in the market and those effects. You could see that.

Okay, understood. So pretty much no expecting no change pre-q4 2024 kind of like share growth but but you know that's just so that effect of some player or some operators withdrawing etc will persist kind of throughout 2024 is that correct

i think that it's very i would rather put it like this it's a bit hard to predict exactly what would happen in brazil right now as it's regulating and everyone is waiting for exactly how we are going to act on that and potentially with the studio and everything like that so i don't think that there would be any more withdrawals or so on but but but it's a bit of an uncertainty on the market right now which i assume will settle towards

the middle of the year maybe a little bit earlier or so okay thanks that's very helpful and there's just final question to Jacob here again on the margin guidance just to make sure here I think you said that H1 will be weaker in terms of margin than H2 and if I'm not mistaken you said that H1 perhaps would be you know at the bottom end of the 2024 guidance

Yeah, that's really what I said. I mean, basically, we've given the range 69 to 71% for the full year. And we will sort of beginning of the year will be in the lower end of the range. That's what we said. Due to the lot of expansion and what we talked about earlier. So we won't sort of give guidance on quarter by quarter, but to give you a feel for how we see the year. And that's how we look at it.

Yeah, and just a follow-up on that, looking at my numbers, kind of even with a step up in operating costs and investments throughout 24, it sounds like, you know, let's play with the number 69.5 in the beginning and 70.5 in the end. It's just a big swing for a couple of quarters. Does that indicate that, you know, you're also expecting, let's say, sales to be slightly slower in H1 and then accelerate in H2 as well, if you get my question? I want to thank you.

I'll get your question, but I don't, I think I'm able to answer, honestly. It's a lot of things, of course. Mainly we see how we will... What we control is mainly sort of how we invest and how we expand. And there we know we have a lot of activity probably throughout the year, but especially in the first half. So that's kind of the basis of my comment and how Topline develops that we'll see. Like I said, the main priority is top line growth always, and the margin, we do give the margin guidance, but it's more to give you an indication of how we see it right now. Yeah, hope that helps.

Okay. Thank you very much. That's all for me.

Thank you.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much for participating. Pleasure to talk to you and ask your questions. See you soon again. Thank you.