Evolution AB (publ) Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Monique Pollard - Citi - Analyst : Hi, good morning, everyone. Thank you for taking my questions. My first question was just whether you could give us some color on profitability per region. So is it that Asia typically is a higher EBITDA margin region than say Europe US, et cetera? And that's what's reflected in that lower margin guidance. Is the ongoing weakness in Asia given the cybersecurity issues. The second question I had was just on employee costs in Georgia versus elsewhere. Just wanted to check if it's still the case that employee costs in Georgia are similar to employee costs in other studios that you have moved capacity to here. And then my final question was just on US growth. When I look at your growth in North America in the fourth quarter, it's quite a lot lower than the overall US i-gaming growth. I know you're working on initiatives to improve that, including, some slot specific games for the US market. But just wondering, if you see a path to getting back to market level growth in the US in 2025.

Question: Monique Pollard - Citi - Analyst : Understood. And sorry, just a follow up there. When you said, part of the margin weakness for 2025 is strength and focus on regulated markets. What does that mean? Is it that in general, the regulated markets have a lower margin? I'm just trying to understand that comment.

Question: Monique Pollard - Citi - Analyst : Okay. Understood. That's very clear. Thank you.

Question: Ed Young - Morgan Stanley - Analyst : Good morning. I've got (inaudible). First of all, on the marginal guidance. A different question, please. You've mentioned (inaudible), you mentioned Georgia and ringfencing regulated markets as factors. Some of those are cost items and some of those that appear to be revenue drags. Can you help us understand the relative impact of each factor? The second is, you mentioned also the need to develop the with the shifting regulatory landscape. Can you expand what that means revolution? Does that mean modifying practices in regulated markets or would you also consider more significant changes to the countries you sell into or contractual requirements to your licensees? And just to be clear, does the ringfencing guidance you've given anticipate going beyond the UK to other markets? We just talk about the ongoing UK at the moment. And then finally, on the product road map, you've described that as perhaps the strongest ever. It struck me at ice that the game releases are more H1 weighted this year. It's been more H2 for the past few years. So perhaps putting (inaudible) to the side, do you think this could drive acceleration in some of your other markets, (inaudible) this year? Thank you.

Question: Ed Young - Morgan Stanley - Analyst : No, that was great. Thank you.

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Thank you. Good morning, Martin. Good morning, Jacob. Just the first question. If we sort of take a step back and sort of exclude all of the temporary headwinds in cyber attacks and the Georgia capacity and everything. So what are your sort of experience with these sort of underlying potential slow down in the live casino growth? You talk a lot about, much more growth to capture and that your excellent position for that. Do you still feel that there is a lot of untapped potential in the live market in the sort of underlying growth here?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Perfect. Thank you. And a little bit on that topic. I think you mentioned in one of the questions here that you're emphasizing to attract sort of new players or new type of players. So could you expand a little bit on that what types of new players that you're trying to attract?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : All right, perfect. And just sort of another follow up on that. I mean, given this, you were at ice, a lot of competitors there, for instance, Pragmatic and many others as well. So what are your experience here? I mean, you often talk about increasing the GAAP to competitors. Have you seen any sort of more investments from your competitors to try to close the GAAP to you or do you still feel very comfortable in your market position? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, EVOG.ST - Q4 2024 Evolution AB (publ) Earnings Call

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : All right. Thank you. Just a final quick one, I'm sorry. Is there any sort of, I mean, given your focus on content and your competitors, maybe not as much of a focus on the content side. On your take rate, have you experienced sort of any pressure from the operators regarding take rates if competitors are going a little bit cheaper than you?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Got it. Thank you very much.

Question: Alistair Johnson - BNP Paribas - Analyst : Good morning, guys.

Question: Alistair Johnson - BNP Paribas - Analyst : I was just wondering, if, thank you. I was just wondering if I could ask about the UK Gambling Commission investigation. Firstly, on whether any update on kind of timing on when we should expect some sort of resolution there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, EVOG.ST - Q4 2024 Evolution AB (publ) Earnings Call And secondly, on, in a sort of worst case scenario where you lose the UK license, should we be expecting sort of ramifications in terms of other licensing authorities revoking your licenses or customers that are sort of unable to work with you anywhere in the world as a result. Thank you.

Question: Alistair Johnson - BNP Paribas - Analyst : Thank you.

Question: Martin Arnell - DNB Markets - Analyst : Hi, guys. I have three questions. I'll ask them one at a time. The first one, what can you say about the potential effects so far from this ring fencing measure that you have applied in the UK? If you would have seen any changes from the trends, would you have commented on that today?

Question: Martin Arnell - DNB Markets - Analyst : Okay. Thank you.

Question: Martin Arnell - DNB Markets - Analyst : All right. I mean, and then when it comes to Asia, you still comment that it was going to take a couple of quarters before you your measures give some effect. Does that still mean that you expect improvements this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, EVOG.ST - Q4 2024 Evolution AB (publ) Earnings Call

Question: Martin Arnell - DNB Markets - Analyst : Yes. Okay. Thank you. And one more, one more question on Asia. The slowdown that we see. Is there anything else that you can comment on aside from the cyber attacks?

Question: Martin Arnell - DNB Markets - Analyst : Or have you started the build in the Philippines.

Question: Martin Arnell - DNB Markets - Analyst : Okay. And any comments on when you, when you expect to open that studio?

Question: Martin Arnell - DNB Markets - Analyst : Fair. Okay. And my final question is, we talked about Ice there before and, given the impressions there, do you still think that you're increasing the GAAP towards your key competitors?

Question: Martin Arnell - DNB Markets - Analyst : All right, thanks. That's all for me. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:00AM, EVOG.ST - Q4 2024 Evolution AB (publ) Earnings Call

Question: Raymond Ke - Nordea - Analyst : Hi, Martin. Hi, Jacob. A couple of questions for me. I'll do them one at a time also. First one regarding cyberattacks in Asia. Am I correct in understanding that this concerns operators stealing streams rather than say current operators and clients being disrupted? And so could you just help me understand if your growth in Asia has been hampered because operators that used to be customers have decided to steal streams instead essentially working with you or if it's a matter of, maybe new clients or new potential clients opting to take this illegal steel streaming activity rather than paying you.

Question: Raymond Ke - Nordea - Analyst : Yeah, that makes sense. And then also follow up on the ring fencing that you've talked about. Could you maybe just clarify a bit more the sort of measures you've taken, especially outside of the UK in other countries.

Question: Raymond Ke - Nordea - Analyst : Got it. And then regarding mergers also, could you sort of explain a bit, what is the primary or maybe a bigger factor in driving your merging guidance for next year? Is it more the sourcing of talent becoming more expensive from shifting out of Georgia? Is it increased compliance or an admin spend or is it more sort of profitability due to being more in regulated markets and more taxes, if that's possible?

Question: Raymond Ke - Nordea - Analyst : Yeah, that makes sense. And you talked about the profitability in the long term. You do see upside there. Where do you sort of see profitability in the regulated markets over the long term? And maybe you even have an example of mature markets today where your sort of profitability there represents a long term level, if you could give any flavor there.

Question: Raymond Ke - Nordea - Analyst : Yeah, makes sense. And just one final one from me. Do you see sort of your customer concentration in the top five trending differently or maybe turning down here in 2025 as you sort of prioritize growth in regulated markets instead any flavor on? That would be interesting.

Question: Raymond Ke - Nordea - Analyst : Okay, perfect. Thank you very much for answering my questions.