Evolution AB (publ)

Welcome to the Evolution Q3 Report 2025 presentation. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Martin Carleson and CFO Joachim Andersen. Please go ahead.

Good morning, everyone. Welcome to the presentation of Evolution's report for the third quarter. of 2025. My name is Martin Karlsson and I'm the CEO of Evolution with me our CFO Joakim Andersson. As always we will start with some comments on our performance in the quarter and then I will hand over to Joakim for a closer look at our financials. After that I will conclude with an outlook and then we will open up for your questions. Next slide please. So let's start with the financial and operational highlights in the quarter. And I would like to start by taking the bull by the horns and address the bad performance in Asia. This has been a recurring theme over the past quarters, but unfortunately this time it looks a bit worse. We were, as you remember, very cautiously optimistic about the reminder of the year in the last report. And there is really nothing that doesn't say the Q4 could be better. However, we are experiencing a lot of volatility, which makes the near-term performance hard to predict. At this stage, we want to be realistic and keep expectations low. So what are the main reasons behind the Asian development? First, it's the cybercrime activity that continues to hurt us. Every day and around the clock, we do everything that we can to mitigate the issues. However, some measures do impact also the end users, and this is what makes it tricky. At the point in time within the quarter, we did too much, causing loss in revenue. On the other hand, if we do too little, we lose to the pirates. Towards the end of the quarter, we found a better balance, but it's still volatile. We do constant security updates to our core to increase protection. We will continue to adapt the changes that are working and to fine-tune the methods that are working well and explore completely new actions as well. I ask for continued patience on this, but rest assured that is a top priority. Additionally, in Asia, the newly regulated markets Philippines is volatile, which often is the case when operators and players adapt to the new framework. There are also other markets such as India that show signs of moving towards regulation, which creates a higher level of uncertainty than before. And to clarify with showing signs, I mean that The current heated debate and quick and not widely acknowledged political decisions is something that we often see in the very beginning of potential regulation. Over a longer period of time, it will likely not be noticeable, but on a quarterly basis, it will cause variations like the one we see now. With the context of Asia in mind, let's look at the overall numbers. Net revenue came in at 507.1 million, corresponding to year-on-year decline of 2.4%. EBITDA amounted to 336.9 million, and the EBITDA margin came in at the 66.4%, which is within the range of our full-year margin target of 66% to 68%. What stands out as positive in the quarter is the performance in Europe, which is back to growth quarter-on-quarter compared to the first half of the year. We saw the full effects of our protective ring fencing measures in the second quarter, and this provided a new foundation for growth. Worth mentioning is also that we got recognition for our ring fencing from one of the largest regulators in Europe, where we were pointed out as one of the best B2B suppliers. I'm happy with the progress in Europe in this quarter. North America also performed decently, and Latin America is stronger than what we have seen earlier this year. Our live revenue declined by 3.4% to 431.7 million, while RNG increased by 4.2% to 75.5 million. It is actually the first time that RNG outperform live in terms of growth. Our studios have worked hard, and especially No Limit City has performed great in this quarter. To further strengthen our portfolio, we have launched a completely new brand, Sneaky Slots, from scratch, and it will be very exciting to follow that progress going forward. On live, growth is held back by Asia, but we continue to see good growth in the rest of the world. In both North America and Latin America, live is still in early days and gains considerable attention from operators and players alike. The opening of our new studio in Brazil has been a true success. On the game side, our highly anticipated ice fishing title has finally seen the light And reception has been great across our market. It is mirroring the trend of faster and shorter forms of entertainment that are widely consumed in channels like TikTok and Reels. And it is needed as indeed a much faster experience than, for example, Crazy Time. Another great thing is that expansion of ice fishing to other studios would be fast compared to the more massive games like Lightning Storm. With its success, we will definitely explore more opportunities in the speed game show arena going forward. To conclude the quarter, overall revenue is not where I want it to be, but when opening the lid, it's clear that the development comes from one out of four regions. The development in Europe, North America, and Latin America is overall good and also supports the margin, together with our clear focus on cost efficiency. Next slide, please. If we then move to our operational KPIs, consisting of headcount and game-run index. On headcount, we are growing 4.2% on a year-to-year basis, but we have actually decreased 2.7% quarter-on-quarter. The slowdown is to some extent reflected in the revenue. We don't hire unless we grow, but looking at recruitment pace within a full year, there are sometimes fluctuations based on temporarily slower high pace in recruitment. As we plan for more studio expansion over the next years, the long-term trend is that we will see continued increase in the number of evolutionaires. The Game Round Index can be seen as a general indicator of activity throughout the network over time, as you know. And for an individual quarter, it can vary quite a lot and does not always correlate with the revenue development. However, as you also can see this quarter, it actually shows a decrease. Next slide, please. Innovation and quality will always be our signature when it comes to our game portfolio. And I am ever so proud of the continued delivery on our product roadmap for 2025. During the quarter, we released Ice Fishing, which I have already talked about, and also Dragon Tiger Phoenix, Super Speed Dragon Tiger, both the latter are based on a popular Dragon Tiger, a straightforward card game that now has been elevated with a new excitement. Rules are simple and gameplay is quick. In Dragon Tiger Phoenix, the Phoenix is introduced as the third legendary card and the players simply bet on which card that will win or if it will be a tie. Another very exciting release is the Sneaky Slots brand, which joins our portfolio that already includes No Limit City, Red Tiger, NetEnt, and Big Time Gaming. We have created Sneaky Slots from scratch, leveraging all our know-how that we have within R&D and using our one-stop shop and global sales network to further boost its launch. Sneaky Slots will fill the gap between No Limit City and NetEnt in terms of game style. And selected releases will use X mechanics from No Limit City that we know that the players love. First title was released was Nip Tak, which will be followed by a new title every month until year end. Among upcoming releases, we have Red Baron, a mix of live and RNG where the goal is to cash out before the Red Baron flies away. The longer you wait, the higher the potential. Another release is Insurance Baccarat, which is an exciting variation of the classic Baccarat that adds a unique insurance feature to protect the stakes. Once summarizing the year, we look back at over 110 releases, which is a truly great achievement. And as time flies, there's now only three months left until ICE, as always, will showcase the most exciting titles for 2026. I can promise that Todd and his team are ready to take entertainment to yet another level. Next slide, please. Okay, let's look at the geographical breakdown. As already highlighted, I'm pleased to see that Europe grows quarter on quarter with the revenue amounting to Euro 182.2 million. We have talked a lot about ring fencing this year, and you probably remember that the effects on revenues were a bit larger than we had anticipated. It is a price that we have to pay to stay ahead of the regulatory curve. But with that said, we have a new base to grow from, and despite the summer without any major sports events, development has been overall good. I should also mention the dialogue with the UK Gaming Commission, which continues, and we are yet to receive the conclusion of its review. What I believe is important to note is that we have been very cooperative and also responsive to various requirements that the Gaming Commission has put upon us. We still have to wait for the outcome, but I truly believe that we have the most sophisticated compliance framework among all providers targeting the UK. Moving on to Asia, where I have already provided the context for the bad development and revenue decline of 9.6% quarter-on-quarter, Even though the market in the Philippines has been volatile, our newly opened studio has been off to a great start. A while ago, there was some media noise on our studio partner losing its B2C license, but it has nothing to do with us or our studio. Everything is working as it should. We did, however, suffer some building damage in the 6.9 magnitude earthquake that struck Sibiu in the beginning of October. our greater to our great relief no employee was hurt and operations continued even though that is secondary when people's lives are on the line next slide please on the contrary from asia north america is thanks to its regulation more predictable and stable quarter on quarter growth is modest but on the positive side On the positive side, the operators continue to invest heavily in live casino solutions and environments. Year-on-year growth is 14.5%. To meet the demand, we have launched our second live studio brand, Esugie, just around the end of the quarter. And we are planning to open a second studio in Michigan during the first half of 2026. I would also like to highlight that we, after the quarter, have launched Crazy Time in Connecticut. Great. Very, very good. Also, while speaking on North America, I would like to mention something on sweepstakes, as it has been a topic of discussion during the quarter. Sweepstakes is a popular product in the US, and we offer it in states where it's not prohibited or in any way under regulatory scrutiny. Sweepstakes is a very small part of our total revenue, but we believe it has some potential. And as you know, as the market leader, we want to offer a great variety of content. In the quarter, a city attorney in Los Angeles made a personal interpretation of the California law, and as our strategy is that we don't offer sweepstakes where there are regulatory uncertainties, we pull this from the market. Simple as that. I'm also quite certain that you will ask us about the completion of the Galaxy gaming acquisition. We're still awaiting some regulatory approvals, but believe me, but we believe we'll be able to close the transaction before year end. However, it's a regulatory process. It's not completely in our hands. Moving on to Latin America, where growth is picking up with 6.4% year on year and 5.9% quarter on quarter. The new regulation in Brazil seems to be done with its initial teething problems and operator and players are becoming more active. Our new studio in Sao Paulo, Brazil, has developed nicely during the quarter and will expand as we move forward. Now I will hand over to Joakim for a closer look at our financials. Next slide, please.

Great. Thank you, Martin. And good morning. As usual, I will now zoom in on some of the financial highlights this quarter. Let's start on slide seven, where we have the financial development For the ones that are following us and are used to our format, you will note that we have added the revenue split by regulated and unregulated on this slide. Let's start there. As you can see on the line, regulated revenue is up to 46% of the total this quarter. And even if this will fluctuate between quarters as revenue mix shifts, the longer trend is clear. The portion of regulated revenue will continue to go up. To the left, as mentioned by Martin earlier, we had net revenue of 507.1 million this quarter and EBITDA margin of 66.4%. What is not shown on this graph is that we now year to date are at 66.0% in EBITDA margin, making it within the expected range of 66 to 68% for the full year. As you can see from the chart, our growth has clearly tapered off and even become negative. And this is not something we are happy about. And we can assure you that we are doing whatever we can to reverse that trend. Let's go to the next slide. And here we have our profit and loss statement. A lot of numbers on this slide. So I have highlighted the key takeaways and I will comment on them one by one. So firstly, again, we had net revenues of 507.1 million, which is down 2.4% year on year and down by 3.3% quarter on quarter. Secondly, total operating expenses amounted to 210.5 million, which is 5% higher than Q3 last year, but more importantly, down 3.4% from last quarter, which is good evidence of our efforts adjusting the cost base to the weaker revenue momentum. We are not only trying to work smarter and be more efficient, optimizing how we use our studios and tables, but we are also taking some broad-based cost cutting measures, which would continue for the rest of the year and into 2026. Thirdly, our operating profit amounted to 296.6 million in the third quarter. And finally, EPS after dilution amounted to 1.25. To be noted, the profit for 2024 includes 59.7 million of other operating revenue. related to reversal of the earn-out liability. So to make it comparable with this year, you should probably adjust for that. Let's move on to the next slide, where I'm going to show you the development of our cash flow. First, to the right, our capital expenditures. And as can be seen in the graph, we are down quarter on quarter. The total capex relating to tangible and intangible assets of 29.8 million. With that, we are likely going to be slightly lower than the full year forecast of 140 million that we announced in the beginning of the year. If we then look left, our operating cash flow after investments amounted to 342.1 million in the quarter, which corresponds to cash conversion of 83%. With that, we are back on track after a seasonally and unusually weak second quarter. The change in working capital was positive 35.2 million this quarter, meaning a swing back from the weaker number last quarter, which is good and in line with our expectations. Then finally, for me, some brief comments on our financial position on the next page. On this page you will find our summary of the balance sheet for the third quarter compared to what it looked like at the end of last year. The main items that I usually highlight which are all signs of our financial strength are the value of the bond portfolio of 103.2 million, our total cash balance that amounted to 656.4 million and the equity position at the end of the quarter which amounts to 3.8 billion. We have continued with the buybacks in the third quarter, and in total, we invested 187 million and bought back 2.5 million shares. In total, we have now used 406.5 million of this year's mandate from the board of 500 million. And following the release of the Q3 report today, we'll be back in the market with an aim to use the full mandate before the year ends. With that, I will hand it back to Martin for his closing remarks.

Thank you, Joakim. So let's summarize the quarter and then move to the Q&A. Performance in Asia was bad and left a negative impact on the group revenues as a total. But with that said, the rest of the world is doing decent to good and we are determined to get Asia back on track. I understand that it causes some frustration, especially since we actually saw some signs of improvement in the second quarter. And believe me, I'm frustrated too. I can only repeat that it requires patience while being a top priority. I'm happy to see that the margin has improved compared to the first half of the year, and we don't see any reason why for it not to stay within our target range of 66 to 68% for the remainder of the year. Cost efficiency is something that I feel strongly about as it's part of our roots as an entrepreneurial company. We never spend a penny unless it provides value to the business in terms of growth. This presentation is about the financial performance in Q3. We don't have a separate slide on the movements in the ongoing defamation litigation in the US. We have for four years finally received information on who was behind the false report. This process will continue in court and I will not make any comments about its future development. What I can say is that we believe in fair competition where innovation and excellent operations count. When a competitor decides not to play by these rules, it hurts not only us, but the industry as a whole. With that said, with a little bit more than two months left of 2025, we will continue to run, adapt, and improve. When we summarize the year from a financial perspective, it will have been a bumpy ride, but from an operational perspective, a very strong and important period for evolution. With that, we open up for questions. Next slide.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Martin Arnold from DNB Carnegie. Please go ahead.

Hi, Martin and Joachim.

Hello.

My first question. is on if we could discuss the asia situation just just a little bit more i i think you mentioned it remains volatile and you of course the ambition is to get it back on track and my question would be you know are there any signs that it has bottomed out because the counter measurements that's in your control right so if you have been too stringent you can adapt But the regulatory situation and the effects from that is not in your hands. Is that the correct interpretation?

We are doing everything we can with the countermeasures. And as I said, we did a little bit too much and we have to do a little bit less and we'll find the balance. I think that we are on to it and we're doing the right things. And it's also natural that there will be a situation where you do a little bit too much because otherwise you won't know where the borders are. When it comes to the dynamic and regulatory situation in the region, there's a lot of countries and right now there's volatility in some of the regions, some of the countries, and that affects us as well. I can't predict much more than that.

And my second question would be first on Europe, return to growth, quarter on quarter there. Is that because players finding their way back after the ring fencing through regulated alternatives, do you think?

That's a very good question. And yes, I believe that players in some markets find their way back and want to play at regulated and good content. So that's probably part of it. And we see good development in total. I'm actually happy with the development in Europe.

Okay. And final question is just on investments. Is there any investment that you could accelerate to improve this current situation in Asia? You've always commented that you will prior growth over margins.

There is no If I could throw more money at the problem and I would get a quicker solution, I would do that. I don't see that it's a money issue. We invest and we put the resources, the top-notch resources in the world to do whatever we can. And there is actually, don't quote me on that, please, but there is no limitation when it comes to that money. uh we put revenue and market share before cost but we also we also need to adopt the situation we have so so that's what we're doing right now perfect thank you guys thank you the next question comes from ed young from morgan stanley please go ahead

Good morning. My first question is on North America. Good morning. It's showing the best growth across your geographies, but it's still behind market growth. Could you give us an update on the drivers there? What's going well? What's going less well? And do you expect any material change in the growth rate into next year? The second is on Asia. It sounds like it's a reasonable conclusion from your comments around countermeasures, Martin. You may never be able to fully deal with these issues. So put another way, should we be rebasing fundamentally our Asia revenue and growth expectations or on what sort of timeline do you have optimism over market growth and market share gains in Asia? And then finally, I'll ask it, I appreciate, given your very final comment, you may not want to answer, but what are you looking for as an outcome from your legal action? Are you seeking maximum financial damages? Are you expecting regulators to review your competitors license suitability? What are you looking for? And what sort of timeline do you expect this to play out? Thanks.

Thanks. I got it. So when it comes to growth in US, Live is doing really well. We have a couple of fluctuations. Maybe didn't have the best quarter when it comes to RNG. There are little bit fluctuations over the quarters. I'm happy with the development. I look forward to the future in the US. That's the situation in the US. When it comes to Asia, to address this problem, it's technically difficult. It's very advanced and we're doing it and we're tuning and we're finding. My belief is over time that we will find the right balance and the right solutions and continuously enhance and protect our product to make it even better. So in the longer perspective, I look at a very good situation in the Asian market. Now, I don't have any, I can't share any sort of timeframe on that right now. I'm a bit more cautious with that. When it comes to the outcome, of the litigation process in the US. I mean, I look for fairness, justice. I think that it's horrible to do what has happened to us. Someone is hiding between layers of companies and hiding their true identity and writing a false a number of false statements in the report to us. It's unfair. We are protecting the shareholder value of Evolution, the company as such, defending ourselves from our employees. And the first thing that we look for is some kind of justice, I would say.

Okay, thank you.

The next question comes from Ben Shelley from UBS. Please go ahead.

Hi, good morning, and thank you for taking my questions. I've just, yes, good morning. I've got three, if that's okay. On Asia, could you talk a bit more about the developments in India in more detail? What exactly is happening on the ground, and how should we expect this to develop over the coming quarters? My second question is on North America. Could you talk more about your sweepstake exposure in the US and how meaningful that is versus your North American revenues? And three, I was wondering if you had any early thoughts on capital allocation for 2026. Do you think 500 million euros is the right starting point for share buyback expectations for next year? Thanks very much.

So the situation on the market in Asia is a lot of different countries. We point out Philippines as very volatile right now. There's things happening in India, but there's also other countries that are fluctuating and things are happening there as well. India is a large country. There are regions that have portions regulated when it comes to sports. There's a desire in some regions to regulate. Now there are suggestions on a sort of federal level to take a few steps towards blocking online gaming. These type of movements we often see when there is talks and happenings about regulation. It opens up for different routes forward. It could go into regulation, it could settle down, or it could go somewhere else. We can't speculate on that. We just see that it's affecting us to a certain level right now. North America, I think that you asked about sweepstakes, and sweepstakes is... We provide to the sweepstakes market where there are no regulatory problems or any legal problems. And we're very lenient. We talk to the regulator. And if there would be a letter or someone, a regulator or an authority stating, don't do it here, we would immediately go away. The U.S. had a history of riverboats that from the beginning traveled on the river, only ashore and they had to have the engine running and then they didn't have to have and then it was on pillar these type of movements have been prediction gaming could be one of these but these type of movements have been there and we want to supply to them as long as there is no regulatory or authority saying no so so we did that in the case of california it's a state attorney in los angeles that made a personal lawsuit and that's that's okay and Immediately, when that happens, we withdraw from that so that we, okay, if that's what you want, then we withdraw from that. So that's the sweepstakes situation. Capital allocation, I don't want to comment on that. It's, in the end of the day, an EGM decision and a board proposal. We are acting on the capital allocation that we have. And you also have the capital policy that we published last year, and I'm sure that the board will continue following that.

Thanks very much, guys. Appreciate it.

Thank you.

The next question comes from Praveen Gondhale from Barclays. Please go ahead.

Hi. Thanks for taking my questions. Firstly, on Asia cyber attacks, so yeah, we are seeing that it sort of continues to be a track on your performance, but do you see any risk of spreading these cyber attacks to your other markets, like Latin America, where black market continues to be big? And then in Europe, can you just give us a sense that between live and RNG which have been the key drivers of your European growth on sequential basis and any sort of steer on how do you expect European revenues to grow from here?

Thanks. The protection measures that we add to our core is valid for the whole core, meaning supply to all parts of the world. So one of the upsides in doing what we're doing now with advanced technology and AI and everything is that it also protects our core in other markets and all over the world. So I would almost say that it becomes a competitive advantage where we increase the gap to competition. Eventually, we make it so hard to steal our products. So if you want to steal the product, you have to go to someone else. So it's protecting everything. So any measure we take in Asia will be accommodated in all of the core. So that's that. And when it comes to the split and the growth, I mean, we're doing very well right now, momentarily very well. Maybe not even showing the figures in the right way, but when it comes to R&D, we're happy with the development. No Limit Cities delivering great games. And of course, it's contributing in a good way to the total revenue in Europe. Now, it's still a smaller part, so live is the big part. So don't forget that. I mean, it doesn't matter if it does tremendously well, it doesn't affect the figures that much.

Thank you. Thank you.

The next question comes from Monique Pollard from Citi. Please go ahead.

Good morning, everyone. Thank you for taking my questions. Three from me if I can as well. The first was just on the regulated revenue increase we saw in the quarter. and you talk about the sort of direction of travel, just trying to understand whether that increase in the regulated revenues is driven by the fact that North America and regulated territories performing better than Asia, or whether there were some new markets that regulated in the quarter that also added to that progression. The second question was just on the UK Gambling Commission review, you mentioned in the presentation that there's no new news, but also in the report, you say you're expecting a conclusion by the end of the year. So just wondered what gives you confidence in that timeline of end of year, please. And then the final question is in relation to the news we had a couple of days ago on Playtech Black Cube. Appreciate you don't want to get into the details of know the types of damages being sought etc but it would be really helpful if you could give us some indication of how you look to assess the damages so you know is the starting point for assessing damages based on market cap movements on the day that these bits of news became public or are there other sort of processes you use when you're thinking about the damages that have been caused by these reports thank you

The regulatory percentage, 46% in the quarter, good development. We're moving in that direction. That's nice. That comes out of, of course, that the regulated markets are outperforming the non-regulated, and it's affected, of course, by the situation in Asia. So more and more gets to be regulated, and I might remind you of that. as soon as it tips over to 50%, and if the revenue grows equally, it will continue to increase more and more. So we're in good position with that. When it comes to the UK Gaming Commission timeline, unfortunately, I don't have any other information than what I... It's in the hands of the regulator, and we have been... Our estimation is that it will be by the end of this year. I have no further information. That's what it is. For me, when it comes to the Playtech situation, I would say about the same things all over again. When someone behaves in that way, hides during four years doing this type of action with that type of company that the Black Cube is using, Judah as a PR company, it takes a bit away from my belief in humanity and in fair play and in ethics and moral. Exactly how we will assess the damages, that's a later question, but it's a severe amount.

Understood. Thank you very much.

The next question comes from Adrian de St. Hilaire from Bank of America. Please go ahead.

Hello. Good morning, everyone. Thanks for taking the questions. Hello. So first of all, on Asia, again, it's been a volatile region now for a while. I'm just curious, high level, if there is a point where you might draw a line in your commitment towards that region and refocus towards other markets. Secondly, you touched on this, but cost of employee was down quarter on quarter. Can you explain a bit what's going on there and the sustainability of that? And then, sorry, this is a bit like technical perhaps, but there's been quite a switch between current liabilities and other non-current liabilities in the quarter. Can you explain a bit what's going on there, please?

Okay, I will start with the first two and then I will, with warmth, hand over the last one to Joakim. So, we look forward and we are engaged and we actually think it's intriguing, even if it's tough, to find a solution to protect our product in Asia. But I think it will become more and more important also for other markets if we look in a longer time perspective. So we don't have any line that we will draw against Asia. We'll continue to fight that. And as I stated before, it's not about money. It's not the cost that is the problem. It's to find the real good solutions and the level for that. When it comes to cost per employee and the cost base, we have talked about all since actually July 2024, we had the strike in in Georgia and that situation and the cost mix and we had to shift a little bit so we had an unfavorable cost mix now we're starting to be able to shift that which is what we have talked about during the quarters that we need to have a better and favorable cost mix it's not like we're cutting delivery right now it's we are putting the delivery in the studios which are good so so that's that's the that's the reason why we come to that And then I will hand over to you, Joakim.

Yeah, of course. Sorry, the balance sheet question. It's simply a reclassification of earn-out liabilities that we have moved from being long-term to short-term in this quarter, as they indeed are shorter than a year. I think that's the one that you are referring to. Well spotted, by the way. Thank you.

Thank you.

The next question comes from Raymond K. from Nordia. Please go ahead.

Hi, good morning. A couple of questions from me. I'll take them one by one, starting with no surprise maybe at Asia as well. Compared to say Q2, how much of the decline here that we saw in Q3, which is due to cyber attacks and how much is from regulations and changes in geographies like Philippines and India would you estimate?

I don't split that out. There are sort of three components in the situation. One is cyber attacks. And the cyber attacks is, of course, the constant level of it, but also our action that was a little bit too tough and then we had to retract. And then there is the instability in the region when it comes to regulatory situation. And here we point out India and China. and Philippines as two of those, but there are also others. So unfortunately, I don't want to go into exactly where in detail. And it's also very hard to see that.

Got it. And then regarding the regulatory situation in not just Philippines and India, I understand it, but how many months of impact we just made that we have seen here in Q3? If we compare it to ring fencing back in Q1, do we have the full effect? How much should we expect ahead? It would be really helpful to understand.

i know i i i understand you i assume that you're talking about asia right yeah that's correct so i think that there is a difference between the situation in europe and uh and asia so to speak that the ring fencing has a little bit of a tail i think that in asia the situation is more momentarily okay this is where we are right now and we need to take it from there and then we need to see that we do the right things in the coming quarter and see to find the balance.

Got it. And then on North America, your sequential sales growth was flat here in Q3. You had momentum going into Q2 where it added 2 million euros on top line. How much of the trend here in Q3 would you say is due to withdrawing from California and stake? Is it the majority here or is there other explanations?

I wouldn't say that that affects significantly.

And finally, just one more if I may. Could you maybe help us get a better understanding of how you intend to reach your margin target with the revenue we see here in Q2? How much should come from say revenue growth? How much should come from additional cost savings? Is it sort of equal equal or how should we think about that?

Now, if I jump in and take that, I mean, in Q3, clearly we are within, right? It has a separate quarter, 66.4 this quarter. And also, as we said yesterday, it's 66.0. So if we just repeat what we now delivered in Q3, we are there, right? So it doesn't take a lot to make it for the full year. And we are quite confident that we will make it for the full year.

Thank you. Much appreciated. I'll get back in line.

Thank you very much. Thank you.

The next question comes from Rasmus Engberg from Kepler Shoebrew. Please go ahead.

Hi, good morning. Good morning. Thanks for taking my question. Do you anticipate that India could potentially have an impact also in the fourth quarter? That's the first question.

I can't comment on that. I look at Asia right now and I'm cautious when I make any predictions due to the situation that it's so volatile.

Fair enough. Can you explain the next step in

in your legal battle with regards to to play take what happens next and could you also perhaps give us an indication of what the run rate of costs is that that you're incurring if possible the first question i can uh i can answer it's like the this the thing that happened this week is actually a non it's not a it's not a action that affects evolution in any way When we initiated the litigation, it was with a fake name, Joe Rowe. And that was Playtech, but we just didn't know that it was Playtech. So right now that is just exchanged for Playtech because we finally got the name. So that's what happened. And then we gave you to the market all the information we had relating to that, and that's it. So from our perspective, and the next thing is that there are a number of depositions and and potential information that should be shared and the legal process will continue just like it had been. When it relates to the cost, it's naturally very expensive to do these type of exercises. We do it to protect the shareholders. We do the value for the shareholders. We do it to protect the company. We think it's unfair. It's unheard of. It's a behavior that we just don't understand. Now, we won't split it out right now. Maybe in the future to come, we will look into it. But right now, we don't comment on the exact cost.

Okay, thanks. Fair enough.

Thank you.

The next question comes from Jack Cummings from Barenburg. Please go ahead.

Good morning, everyone, and two questions, please. The first is just on the ring fencing in Europe. Is there any more that you still have to do, or is all of the European ring fencing now completed? And then just on my second question, I appreciate it's a little bit early than when you normally talk about full year 26, but based upon your comments on costs, shifting costs next, Would you expect to see EBITDA margins expand in full year 26 on full year 25?

Thank you. When I look at ring fencing, I think that we are in a very good position right now in Europe. Things can happen in both directions, but I don't know any other actions that are ahead of us right now. When it comes to EBD margin, we have full focus on 2025 to deliver the 66 to 68%. And we look forward to do that. And then I assume somewhere when we release the Q1 report, the Q4 report, sorry for that. I'm a little bit ahead of the curve. Then we will guide you for 2026. Research makes this positive. Thank you.

Thank you.

The next question comes from Karen Puri from JP Morgan. Please go ahead.

Hi. Most of my questions are actually answered. Just one on Europe, I guess. Wondering how we should be thinking about a more normalized growth profile in 26 onwards once you sort of lapped the ring fencing adjustments. If you could share a bit on that, it would be great. Thank you.

the answer to that I don't guide on the future but historically over the time Europe is the most mature market and we had a pace of growing 9-10% quite consistently over a number of years that's the best knowledge we have of the situation and right now we're ring fans and we're starting to see a little bit of growth from that

Thank you.

The next question comes from Andrew Tam from Rothschild and Co. Redburn. Please go ahead.

Good morning, both. Just one question for me. Can I just clarify just your position on India? You talk about the regulatory volatility there. I just wanted to just fully understand what that means. Obviously, you've seen in recent weeks one of your largest customers globally decide to exit that market entirely with the real money gambling bans. Are you saying that that is a market that you would look to ring fence as well should you get some more regulatory clarity going the other way against you?

Ring fencing has to be done in relation to regulation and what is there. We are watching it closely right now, and there are volatility in India, as you understand. At the time, if there will be a ring fencing, that will be later down the road.

Okay, so no plans for ring fencing in the immediate future in India?

We're watching it carefully right now and see what will be there. Understood. Thank you.

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

Yeah, I just had a follow-up question on R&G, actually, because I saw that you had growth improvement there. Could you just say, is it because No Limits has a strong edge in the market, or do you see the market for R&G has improved?

We are doing better and better slowly bit by bit when it comes to our R&D offering.

Okay. Thank you. 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, listening to us. I really look forward to see you in a quarter.