Good morning everyone. Thank you for diving in today for our earnings call for the second quarter. I will start by commenting on our Q2 performance before I hand over to Mike for a closer look at our financials. After that I will continue with key takeaways and as this is my first earnings as interim CEO I will elaborate a bit on my reflections from these past months. After that, we will open the floor for questions. I'm very pleased with a strong performance in Q2, both operationally and financially. It's another great quarter that we can add to the solid track record we have been delivering to the market. New business continues to be strong. We closed 160 deals, 63 of which were with new clients. Some of the deals mean provision of our games to operators in new locally licensed markets, including Slovenia and Paraguay. as a result our games are now offered in more than 40 locally licensed markets we continue to capitalize on new market opportunities with existing clients and by expanding our client base we launched 17 new games in-house a remarkable performance by our team additionally 17 games were developed by partner studios on open rgs We welcomed two new independent studios in Q2 and this brings the total number of studios on our platform to 11. We secured an Alberta registration following Q2, that's an important milestone for the business in North America. Alberta represents an exciting new opportunity for the iGaming industry and we're now well positioned to offer our portfolio of games to the operators as the market regulates. Revenue amounted to 59 million euro in Q2 and a total of 224 million during the last 12 months. That equals 37% growth adjusted for FX. All growth continues to be organic. Our estimate for the company's global market share remains to be a low single digit percentage and the numbers we delivered this second quarter once again demonstrate the opportunities we have in the industry. Our adjusted EBIT margin was 82% in Q2 and the same 82% is our adjusted EBIT margin for the last 12 months. The company continued to demonstrate significant cash generation with operating cash flow growing by 60% year-on-year and by 38% adjusted for one-time items in Q2 last year. Free cash conversion rate over the last 12 months amounted to 91%. I will now give an operational update. On this slide we see the in-house games developed over the last 12 months. During the second quarter we have continued to expand our team and in turn increased our release cadence to five games per month. Five games per month should be seen as a normalized level and may deviate from quarter to quarter. In this same context we released 17 games in q2 an impressive demonstration by our team of both scale and execution we expect to continue increasing the release cadence over time the operators highly appreciate that we have a lot of content that we can now target different audience with and the more content we have the more important we become as a tier one supplier to the operators Other studios released 17 games during the quarter and 108 games since we opened the platform to third-party studios. As stated during our previous quarters, the cadence of games developed on Open RGS may fluctuate slightly quarter over quarter because several studios are developing games in parallel. We expect to also increase the release cadence on Open RGS over time. Our Open RGS platform continues to attract a lot of interest from third-party studios. In Q2, we welcomed Good Time Studios and Aloha Gamings on Open RGS. We expect to onboard additional studios over time. At the end of the quarter, we had 354 games in our portfolio, up from 241 one year ago. The daily number of rounds over the last 12 months was 30% higher than during the preceding 12 month period. Important to remember here is that the revenue does not increase in direct proportion to rounds as average bed size differs across markets and over time. Player outcomes also fluctuate around the mathematical average in the short term. In addition, our take rate on gross gaming revenue varies depending on the mix of clients and jurisdictions. As a result, the relationship between rounds and revenue will vary from period to period. Our revenues for the last 12 months grew by 31% in Q2 and by 37% adjusted for FX, underscoring our continued strong trajectory. We note that revenues from locally licensed jurisdictions have continued to grow. This is to some extent a consequence of new markets regulating. All in all, Q2 was a quarter of continued high growth and delivery of our strategy. With that, I hand it over to Mike to go to the financials.
Many thanks, Anna. And hi, everyone. Let's take a closer look at the numbers for the second quarter. So revenues amounted to 59 million, which was up 14 million or 31 percent versus last year. Similar to Q1, revenues for Q2 were negatively impacted by FX movements compared to the same period last year. So on a constant currency basis, the Q2 revenue growth was 33%. This growth is, as we mentioned, entirely organic and primarily coming from additional games released and continued growth in our customer base. Now, our internal view is that we were overall neither positively nor negatively impacted by the FIFA World Cup, But it was very much business as usual during this period. Moving to the expense side, for Q2, our adjusted operating expenses amounted to 10.9 million, which was up 2.5 million compared to last year and reflected the following drivers. First, our personnel expenses continue to increase as we continue to invest in new talent, primarily within game development and distribution. in order to capitalize on the market opportunities and enable continued revenue growth. We will continue to invest in talent, an investment that gives us the best possible return given the opportunities we see. This was partly offset by increased capitalization of development expenses. And also note that we, from this year, accrue for annual bonuses throughout the year instead of expensing them all in December. and this impacted Q2 by 0.3 million. Second, our other operating expenses were up driven by the continued growth and development of the business. And finally, depreciation and amortization increased primarily related to the continued investments in capitalized game development expenses. Although our cost of services sold were stable in this quarter versus last year, we continue to invest in our OpenRGS revenue stream which increases our revenues and profit in euros, but slightly reduces the average margin over time. Open RGS remains below 10% of revenue, and should this materially change going forward, we will provide additional information in due course. Our adjusted EBIT for Q2 amounted to 48 million, which was up 11 million, or 31% versus last year. The EBIT margin for Q2 was 82%, in line with last year and with recent quarters. And during the quarter, we accrued for severance pay relating to the former group CEO under items affecting comparability. Now, moving further down the P&L, financial items improved due to both improved treasury management and to lower FX losses. And in terms of tax, our effective tax rate for Q2 was 5.1% compared to 6.5% last year. and this all leads to our net income for Q2 amounting to 46 million which was up 14 million or 43 percent versus last year and our fully diluted earnings per share reached 0.158 euro now if we look a bit closer at cash flows our Q2 cash flow from operating expenses before changes in working capital amounted to 43 million and was up 32 percent year on year. Changes in working capital were cash flow neutral in Q2 which was an improvement to last year by six million. However last year changes in working capital included negative one-time items relating to the dividend payment in that year totaling four million. This gives that our total Q2 cash flow from operating activities therefore amounted to 43 million which was up 38 percent year on year when adjusting for the one-time items incurred last year mentioned earlier our free cash flow for the quarter reached 40 million which which is 34 percent higher than last year when adjusting for the one-time items incurred last year mentioned earlier and we maintain a very strong free cash flow conversion rate of 91%. This metric shows our ability to convert profit into free cash flow and is calculated as free cash flow for the last 12 months divided by EBITDA for the same period. And also our Q2 capex of 3.5 million increased given our continued investments in game development. And this mostly comprises capitalized expenses relating to the development and certification of new games and functional improvements to our technical platform. We made no major investments in tangible assets during the quarter. And so finally, in terms of our financial position, it continues to be very strong and we further improved our cash balance during the quarter, adjusting for the 116 million dividend paid in May this year. Our total cash and cash equivalents amounted to 99 million at the end of June, compared to 176 million at the end of March and 53 million at the end of June last year. And we still have no interest rate in that. That's it for my comments. So back to you, Anna.
Thank you, Mike. I feel privileged to be a part of a fantastic team performance in the quarter, including strong release cadence of games, both in-house and via Open RGS, increasing the total number of studios on Open RGS to 11, business opportunities continuing its strong performance with 106 deals signed our games now being made available in more than 40 locally licensed markets Alberta supply registration secured after the end of the quarter last 12 month revenue growth of 37% adjusted for FX with 82% EBIT margin and maintained high free cash conversion of 91%. Entering as the interim group CEO gave me an opportunity to witness the day-to-day dedication behind our success, nicely demonstrated in our solid Q2 result. As we have said before, we operate in a large, growing and global market. All in all, this makes me comfortable in our ability to continue delivering on our business strategy going forward.
Operator
With those words, I hand it back to your operator for questions. 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 good morning Anna and Michael.
So my first question is about the release cadence. You mentioned it a lot as a growth driver in this quarter and in the coming quarters of this year should we expect a similar game release cadence like five per month or a little bit more?
Is that fair that is fair i mean that's our our new normalized level uh which we actually sort of executed during this quarter so yes i mean that's that's uh the sort of normalized level going forward yes and it's doing sometimes it would be sometimes it will be probably it could be high lower but some it should be at least at least five per month and is it similar also for the partner studios on open rgs you had a similar number of new releases there as well there it depends on both sort of how many studios we can add and then also their release cadence because some of them are i mean it's 11 studios in various
states so to speak or development phase and over time their release cadence per studio will also increase okay thank you and then if we look in in q3 now where we are you had this significant jump of revenue between q2 q3 last year of 7 million euro and so your comps are turning a bit tougher here but you know do you still expect that the growth trend that you're on here could continue in q3 or is it fair to assume all as equal that you know you're going to see growth uh slowing
down a little bit in in in the q3 i mean we don't really guide per quarter i mean but i would say that i mean our views that the long term we should our ambition is to to grow by 30 or more that's still very relevant but on as we've said before if you have it can definitely fluctuate quarter the quarter i mean q1 this year we grew 37 fx adjusted and if you had seen any any major change of trends in the in the first half or in the first weeks of july would you have commented on it then i guess we we don't really sort of uh comment on on inter in intramonth performance
but the i mean the first half showed really strong strong momentum yeah great and and i have also a question on your cost base you there was a step up of personal expenses i guess as you mentioned it relates mostly to recruitment of new developers if are you comfortable with that level or should we see further step-ups throughout the year oh no we definitely can't I mean the best bang for the buck so to speak for us is to invest in new people and invest in in future revenue growth and so we we invest continue to invest in both in game development but also in distribution so yes that is something we see to continue maybe just doing invest responsibly so we invest in a place that you know we can maintain our company culture which is extremely important for us thanks and my final question is on on your agreements you sign a lot of agreements both with existing clients and new clients where is it like global Well, I see a couple of press releases so we can follow that. But overall, how would you summarize the new business that you have signed and what effects do you expect from that?
Yeah, so what we like to highlight is that we are as diversified as possible and that applies to both games, markets and clients. So if you look at the number of deals, it's pretty high, but meaning that we have entered you know both new markets signed new operators and you know continued strengthening our relationships with existing clients so we see that we hope that there will be a very positive effect for me but we cannot comment on any quantification yeah i mean so many of these operators are also new startups so it's really hard to say who will be the the winners and who will not be so it's really hard to quantify the sort of the impact of any one deal i understand thanks thanks that's all for me thank you thank you thanks
the next question comes from halmar alberg from red eye please go ahead good morning um a lot of questions on the release cadence here up to five games at least per month uh what what you see from uh operators are you able to kind of push all these five games fully when you release them or do you see any kind of limitations in terms of operator demands let's say so we keep we have a very close dialogue with operators in terms of of roadmap and so no issues whatsoever in terms of of releasing more games and we're still i mean others are releasing a lot more games than we are so there's still definitely room for for new games understood and and also On the open RGF here, you mentioned that you continue to see high interest from third-party studios. Do you think you can kind of step up the pace on the number of studios added per quarter, or is it actually expected to be roughly the same in the coming quarters?
This will very much depend on the quality of studios that we are talking to in our continuous dialogue. So it's difficult to quantify whether this will be more than what you have said previously. but you know if we see good opportunities we'll make sure to enter new partnerships.
I have also a question on the CapEx here which was up a bit in the quarter. Is that also related to kind of increased game development or in that is that the pace that is fair to assume in the next couple of quarters based on the current release cadence?
It was a bit higher this quarter mainly because of certification expenses for new markets but also that we have stepped up I mean game development expenses in itself but also the game certification actually was a bit higher this quarter all right and maybe a follow-up on Martin's question don't know if you can come with any part about the looking at the seasonality maybe in age two this year compared to last year is there any any difference there is that something you can comment on it's so hard to uh to estimate seasonality i mean i mean i expected q1 to be a bit softer than it came in really really strong but the overall in the industry we see that second half is higher than the first half especially q4 um and also i don't think you can comment on that but in terms of the new CEO, recruitment of a permanent CEO.
Is the progress ongoing there, anything you can comment on that?
No, so this is a process that our chairman is entrusted with, so whenever there is any update he will be communicating to the market.
Okay, understood. And also a question, I mean, you're seeing increasing your number of games released, you're more, we've seen more games on third-party studios how do you see competition developing or do you see other studios catching up or maybe other larger studios catching up on your RGS or anything you can can add that would be interesting to hear nothing that that I'm aware of that that we have seen so so no I couldn't really comment on anything new there perfect just a final question maybe if you have seen any kind of changes in regulation or anything in that that's worth mentioning that could be interesting or
important to know going forward no not not not not in the last periods i mean in the beginning of the year and the end of last year there were a few european markets that tightened but no nothing nothing in the recent period okay thank you very much thank you the next question comes from jamie base from Citi, please go ahead.
Morning, Anna. Morning, Mike. Thanks for taking my questions. I have three, please. I'll go through them one by one. So the first one is, I didn't see anything on any activity from Hacks or Ventures, so could you just sort of walk us through why there was nothing there? Was there just nothing that you saw as an attractive opportunity in the quarter?
Yeah. So again, we just launched Hacks Ventures in Q2. this is something that we see again as an opportunistic opportunity so we will be investing responsible like we said we don't expect any major capital allocation that would affect the group but when we see new good studios where we see potential we will make sure to onboard them and communicate our investments to the market but we're constantly in dialogue with different studios yeah absolutely um and then on alberta so obviously it's after the quarter that you've um secured the license could you give us some color on whether you expect that to be sort of material for fy26 or is this just a smaller incremental market so again that's difficult to comment on because as you know we enter every single market with an operator so at the end of the day it depends on how our games perform you know how these operators push them and what the player preferences are so again what we have said previously we should not be impacted by a single market not positively nor negatively but again we just see it as a great opportunity to continue growing yeah that makes sense and then i guess this sort of flows from that is my final question on you know you've obviously signed a whole load of deals with existing and new clients in the quarter when you look at the roadmap moving forward do you see any sort of material gaps where
you could find single large agreements that could be incremental at the group level or do you see it as sort of potential to just consistently sign smaller deals that over time build that's really hard to comment on i mean game i mean deals the deals definitely vary in size so it's really hard to comment on on future deals fair enough okay that's everything from me thank you thank you the next question comes from jack cummings from barenberg please go ahead good morning both um my first question is just on um some kpis i think uh this quarter the ggr
from top 10 games increased to 49 percent and i think in q1 it was 43 percent um kind of what drove that that re-concentration was it that there were kind of hit games in in in the quarter and anything you comment on there would be helpful no so so as we've commented commented I mean diversification has definitely improved over time and that's also the long-term trend both in terms of in terms of per game per operator per market and so and geography and so forth however in any given period that can I mean our as you see our revenue model is there are many moving parts in our revenue model so in any given short period like a quarter they can be fluctuations so I would say that there's no underlying trends to this but that's just how the quarter ended up. Thank you and then my second question was with respect to the release cadence and so clearly moving to five a month and what has enabled the step up is that the investment in headcount is that investment in the platform is that using more AI within the business kind of what's driven the confidence in that increased release cadence so I would say that from December 24th to December 25th we almost doubled in size in terms of headcount a lot of that was in game development and then it takes a few months for for a developer and I mean or a person in the game development process to to come up to full speed and that's what we see now so the capacity sort of is a bit delayed in terms of recruitment.
Okay perfect that makes sense and and my final question is just on cash obviously you paid the dividend in Q2 but the cash pile is close to 100 million euros um your market share is as you mentioned in your opening remarks is at low single digit rates and what is the outlook like and the appetite for management for for potential m a do you think there are potential opportunities out there that the business could explore given the growing cash pile thank you so we're not looking into any transformative m a long term like you said we are focusing on you know growing organically and making opportunistic investment in these ventures.
Apart from that, we don't see any transformative big M&A coming up any near term.
No, sir. I mean, our main capital allocation policy is to distribute back 75% or more to shareholders, either through dividends or share buybacks. And that's continuing. Thank you very much.
Operator
Thank you. as a reminder if you wish to ask a question please dial pound key five on your telephone keypad there are no more questions at this time so i hand the conference back to the speakers for any written questions and closing comments so we're just going to go through the questions here um so there is a question on the view on the buybacks um so as we said before the board has
been given the mandate to execute the buyback at the AGM but we are supervising market conditions so that will depend on both the liquidity and the share price.
Sorry, just looking through the questions here. I think that we have covered most of these questions.
Yeah, good so I would like to thank everyone for the questions and see you in the next quarter.
