Evolution AB (publ)

Welcome to the Evolution Q3 2024 report. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Martin Carlsund and CFO Jacob Kaplan. Please go ahead.

Thank you. Good morning, everyone. And welcome to the presentation of Evolution's third quarter of 2024. My name is Martin Karlsson, and I'm the CEO of Evolution. With me, I 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 closer look at our financials. After that, I will round off our presentation with an outlook for the remainder of 2024. And then we will open up the call for questions. Next slide, please. The third quarter of 2024 has been continued focus on operational development, and we have successfully launched several new exciting games and at the same time opened two new live studios. We are step by step continuing to build evolution worldwide to meet future demand and make sure that evolution is equipped to capture the great potential from the continued development of online casino around the globe. However, the quarter has also included near-term challenges and events outside evolution that have had a negative impact. But let me start on the positive note. We continue to expand our network of studios throughout the world. During the quarter, we have launched the first table from our new studio in Colombia. This is our second studio in Colombia, and it will be a main studio to serve the quickly developing Latin market. However, this studio will also support Europe as well as Asia. Since we spoke last, we have also opened the first tables in the new studio in the Czech Republic. The Czech studio will primarily serve the Czech market, but will over time also be a great addition to our European capacity and an important piece of our global studio puzzle. I've also had several new game launches in the past period. The major addition to our lineup of game shows is Lightning Storm. It's our most ambitious and advanced game show to date. cutting edge technology and innovative game design come together to create a simply fantastic player experience. I'm very pleased and happy to see that it is an initial success with players. We also acquired Arcadia Gaming Solutions, which is an innovative technology company. Arcadia enables players to engage in real time with physical arcade machines through their mobile devices, offering a unique and engaging online experience And we now look forward to integrate parts of this technology in our future games. In North America, we are step by step expanding our live casino product portfolio. And I feel we have better traction now than earlier. During the quarter, we have added new games like Crazy Coin Flip, Super Sick Bowl, Video Poker, and Crazy Time in several states. Those releases, bit by bit, enhances the player experience and satisfaction in North America. And we see good pickup on new games in North America. Another piece of news in North America is that we are set to launch a Sugi as a standalone brand outside New Jersey. This further broadens our offering to operators in the US and is part of our North American expansion. In Canada, we've signed partnership with the Atlantic Lottery, with the addition to provinces of New Brunswick, Newfoundland and Labrador and Nova Scotia. We can now offer our games to all of Canada. R&D also has a growing momentum as we are continuously expanding our OSS footprint. I'm happy to see the growth of 8.5% in the quarter, and I look forward to the coming quarter, even if I want to remind you that it's not a linear growth pattern quarter on quarter. As I mentioned at the start, the quarter has also included events that have been challenging for us. As I think most of you know, we have had challenges with our operation in Georgia, and I will come back with a bit more details on next slide. However, as a result of the strike and the illegal actions taken by the union in relation to the strike, we're currently operating at about 60% of full capacity in the studio in Georgia, which is a level we will try to maintain. We do not see us returning to full capacity due to the instability. With a new network with over 20 studios, we are able to offset loss capacity in other studios and limit the impact for our customers. But overall, the disruption has been negative and caused negative effect in the quarter. Currently, the situation in Georgia is stable and we will continue to rebuild and increase capacity in other locations in the network over the coming quarters to be able to support future growth but also to increase our redundancy in operative capacity. During the quarter, we have also seen an increase in amounts of cyber attacks against our Asian video distribution. These attacks have impacted us negatively. Cyber criminals use advanced technology to intercept our video feed, manipulate it, and redistribute it without authorization, which leads to loss of revenue. These kinds of thefts will always be a problem for a leading and most desired product. But we have, during the last currency, a more advanced and significantly increased activity. We have deployed several measures to counteract these cyber attacks, but it has negatively impacted the third quarter. Cybercrime is a problem in many industries, and I'm afraid that this is a new reality to some degree. But Evolution is one of the leading companies in the area, and we are increasing our efforts to prevent these attacks. So clearly, we have had challenges over the past period and based on that, I'm very happy and proud of the delivery in Q3 and also how the organization has responded to those challenges. When we face challenges, we will work harder, find smarter solutions and most important of all, never settle but strive to be better every single day. In my view, some of our operational achievements this quarter is not fully reflected in the financial result, but very significant. We have made progress in several key projects that makes us stronger for the future.

Next slide, please.