Evolution AB (publ)

Thank you. Good morning, everyone, and welcome to the presentation of Evolution's report for the second quarter 2025. My name is Martin Carlesund and I'm the CEO of Evolution. With me, I have our CFO Joakim Andersson. I will start with some comments on our performance as usual and then hand over to Joakim for a closer look at our financials. After that, I will conclude with an outlook and then we will open the call for questions.

Next slide, please.

So let's start with the financial and operational highlights in the quarter. The two main operational themes for the first quarter continue to impact our financial results. Firstly, we continue to ring-fence the European markets in order to stay ahead of changes that we know will come to the regulatory landscape. What that means is that we effectively ring-fence the markets with local regulation and ensure that our gains are only available with locally licensed operators in markets where such license exists. What started with the UK has now followed on more European markets affecting our revenues in the region for the short term. The impact of these measures depend on the level of channelization. In markets where it's high, it has had little impact, but in markets where low channelization is, it has meant that it drops in revenue. We firmly believe that the regulation is a driver for the market and we continue to support regulators in any way we can. This is something that we are proactively doing to ensure that we are fully prepared when the landscape shifts. Thereby, we increase our advantage, competitive edge and further distance between us and the competition. However, with that said, the increased regulation are affecting us to somewhat higher extent year on year than we anticipated. Adaptions always take time and the environment in Europe is still a bit turbid, making it difficult to provide exact forecasts. The second operational challenge is to continue cyber crime activity in Asia. We are making good progress in combating these criminal activities and we do everything we can to make sure that we get paid for our innovations and products. In the second quarter, we are starting to see some benefits with Asia being back to growth in a quarter. More on that on the regional breakdown in a minute. For both these regions, we remain cautiously optimistic about the reminder of 2025 as we continue to evaluate the effects of these measures. So let's say a few things on the numbers. Net revenue came in at 524.3 million euro corresponding to year-on-year growth of 3.1%. EBITDA amounted to 345.3 million euro and the EBITDA margin came in at 65.9% which is in line with our full year guidance of 66 to 68%. We do continue to believe that the second half of the year will be stronger than the first half and we keep our full year estimate as before. Our life segment was impacted by the European and Asian developments with revenue coming in at 453.7 million corresponding to growth of 3.6%. We continue to see good momentum in North America and also believe that activity in Latin America will pick up supported by the new regulation in Brazil. R&D revenues totals to 70.6 million euro, growing year on year by 0.3%. One main reason for the slow growth in RNG this quarter is the largest payout ever for us in RNG, affecting the total revenue stream. Overall, RNG has solid performance adjusted for the payout and we still have good potential to grow in this segment. We had several milestones since we last met. We've signed a fantastic licensing agreement with Hasbro to continue to develop more games like Monopoly Big Baller and Monopoly Live. This is really a testament to our innovation and dedication. With this licensing agreement having belonged to a competitor for the last two decades, we are thrilled to be able to launch more high-quality trademark evolution games featuring iconic Hasbro brands. We also signed a new partnership agreement with Ballets Corporation in Rhode Island, constitute a new landmark in our US expansion. We launched our first ever studio in Asia, in the Philippines. The studio marks a significant milestone in Evolution's expansion and serves the regulated Philippine market, which is the first licensed by gaming jurisdiction in Asia. We are today launching, actually this day, our brand new studio in Brazil with perfect timing to seize the opportunities that lies in the vast and newly regulated market. To conclude this summary of the quarter, I would like to say that even though I'm not satisfied about financial results operationally, I'm proud of what we accomplished this quarter. We really push forward, take on our challenges, and we deliver a solid result. To sum things up overall, it's a stable quarter where we really prove our outstanding ability to do business as usual, even when facing challenges. Next slide, please. If we move on to our operational KPIs consisting of headcount and the gain round index. When looking at the headcount, we're almost exactly where we were at the end of the first quarter. Just over 22,000 employees corresponding to year-on-year growth of 5.2%. With plans for new studios and two recently launched, the need to recruit remains very high. We need dedicated persons in all locations to be able to serve demand and keep the evolution trademark quality. We're also changing our resource mix, and we will see a higher degree of efficiency moving forward, and this will compress studios and also affect the number of employees as we move forward through 2025. When looking at our new studios in the Philippines and Brazil, I'm so proud that now, no matter where we are in the world, the same high standards and benefits apply. We give thousands of young people exciting and offering international career, and I'm proud of the employer we are. I would like to take this opportunity to emphasize that we, when building a studio, wherever it is placed, have the same exceptional standard. This means that regardless of if it is in Colombia, Georgia or in Philadelphia, we will have the same great work environment and standard for all employees. In many markets where we enter, we set a completely new standard when it comes to work environment and facilities, and that makes us very proud. Now, the game round index can be seen as a general indicator of activity throughout our network over time. For an individual quarter, it does not always correlate with the revenue development. However, as you can see, for this quarter, we increase our revenues as well as the higher activity in the network. Next slide, please. Now we come to my absolute favorite slide, and really the slide which determines the numbers on all other slides. So let's look at new game releases. We're still in the midst of our product leap years. And for 2025, we have a high ambition with 110 games planned to be released. During the quarter, we have released Super Color Game, a huge colorful flash of excitement coming into our game portfolio. It's a lively dice game that promises big wins and a non-stop action with up to 1,000 X multipliers. You simply bet on your favorite color among diverse betting options, nothing short of a true success. First-person backbone, sure to be one of the most visually spectacular dice game, a captivating RNG-based dice game, similar to Baka. Easy to navigate interface, cutting-edge 3D graphics, and a lifelike gaming action. We also released Lightning Backbone, a completely new dice baccarat game with a 1200x multiplier, dynamic dice action. It's also our last addition to the Lightning family. Among the upcoming releases, we have a highly anticipated ice fishing, a speed game show with a money wheel unlike anything else. The lighthouse will cost for multipliers fish in icy waters. It's truly something different. You might have seen it on The Ice, 2025 in January. This is also the game you saw on the first slide today from the cover page. We have also Super Speed Dragon Tiger and Dragon Tiger Phoenix set to be released later this summer and beginning of the fall. On the R&D side, we released 20 new fantastic games this quarter. So to summarize, lots happening on the product side, just as usual, and we are very excited to see how newly released games are received. I'm so proud of all our brands who consistently break barriers in the industry and show what gaming entertainment should look like. Next slide, please. I briefly mentioned something before that I think warrants some more details. On July 1st, we announced a truly groundbreaking agreement with Hasbro. a world-leading company with iconic brands recognizable in every household. Evolution is now the exclusive global provider for Monopoly and other iconic brands. This worldwide deal, which includes the U.S., covers online content for all Evolution brands, such as Live, of course, but also Netant, Azugir, Red Tiger, BTG, and No Limit City. This agreement comes as a result of a very successful relationship where we have developed Monopoly Big Board and Monopoly Live. Two games, both on our very top of our lineup and two of the best performing games in the entire industry. With these two games, we managed to show what we can do and make out of classic Hasbro brands. It's spectacular and it's very, very nice to have this partnership. So starting January 1st, Evolution would be exclusive provider of Hasbro gaming content. And we couldn't be more excited, as I already mentioned. This is really a milestone for us. We are all so excited. All of the brands, fantastic, iconic. Even if it's hard to believe, online gaming is just in the early days. And with Hasbro, we will be able to forge a new chapter in the history. Meanwhile, even furthering the distance to our competitors. So from that exciting news, let's move on to the next slide, please. Let's look at the geographical breakdown, starting out with Europe and Asia. I would say we have a few things that stand out this quarter. Europe, as I mentioned in the introduction, our ring fencing measures are affecting our revenues in Europe, maybe even to some higher extent than we anticipated. Revenue In the second quarter amounted to 180.2 million, which corresponds to negative growth of 5% compared to the first quarter this year, primarily driven by full quarter effect of the ring passing. In the UK, we continue the dialogue with the gaming commission, and we will let you know when there is an outcome from the review. We continue to work with optimization, the resource mix. We are making good progress and expect to see benefits in the coming quarters. facing continued challenges in asia although we are much better positioned to combat these issues now than we have ever been as our efforts are yielding effects asia came in at a good four percent growth quarter and quarter and revenue amounted to 209.1 million in asia we have also launched our first ever studio in philippines serving the regulated philippine market which is the first licensed iGaming jurisdiction in Asia. This is really a huge accomplishment and the milestone growing our Asian footprint. Next slide. As for North America, it continues a growth trajectory and keeps in its fine momentum. The region is up almost 23% year on year with a total revenue of 73.9 million and performing very well in the live segment. North America is healthy, regulated, with clear rules, making businesses a little more predictable and stable. It is also important to keep in mind that live casino games are still in its infancy in the region. That has been characterized by land-based and online R&D that we now see waking up and taking live casino to heart. With the new agreement with Ballet in Rhode Island, we stand to increase our footprint in the region even more. We are also progressing well with the Galaxy acquisition, and we expect to close the transaction during the second half of 2025. In Latin America, we see modest growth for the quarter, coming in at 3% year on year, with a revenue of 37.6 million. There is vast potential in the region, especially in the Brazilian market, where the adaption to a regulated environment takes time. That's normal. We remain confident that when the regulations set in and the new playbook is fully understood, activity will pick up. And one of the best news for the company and definitely for this region is that today we are opening our brand new studio in Sao Paulo in Brazil. This studio comes at the perfect time to capture the new market. Other regions mostly consist of Africa. We see 20% year-on-year growth. quarter and the revenue amounting to 23.4 million. I believe that Africa has great potential in the coming years and we will work as hard as ever to continuously expand the market. And on that positive note I will hand over to Joakim for a closer look at our financials. Next slide please.