Gaming Innovation Group Inc
OSE:GIG
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[Audio Gap] Innovation Group, who will present their Q1 Results. We are joined by Petter Nylander, Chairman; and also Jonas Warrer, Head of Media, CEO of Media; and Richard Carter, Head of the Platform & Sportsbook.I will let you start, Petter.
Thank you, Hjalmar, and thank you, everyone, for joining us today, live or listening at this at a later stage. So just doing your overall introduction with the Q1 report, how we see things. So very proud of the fact that we deliver another successive all-time high revenue, in particular Media. If we [ see on the ] Media, we are delivering record high revenue and EBITDA in the quarter. This is a 13th successive quarter with all-time high revenue. So -- and as you know, this is a combination of organic and the acquisitions we have done recently that driving this result, which we are very proud of the momentum.As you know, we also have a new team for the Platform & Sportsbook business entering into the new year, and very happy to see the positive momentum with significant increase in the sales pipeline and also the innovation doing in the sort of core service and the product and offering we're delivering to our clients.So, as you know, a lot of things are happening behind the scene and making us ready for the planned split this year. So we are now operational ready for the strategic split of Media and Platform business. And we communicate today that the split is expected by Q3 this year, pending approvals to be separated.That's the high level. I'll come back with a summary, but with this, I hand over to our CEO for GiG and for the Media business, Jonas Warrer. Please come and present.
Thank you, Petter. Very happy to be here today, because as Petter said, another quarter with all-time high revenue and EBITDA. Revenue ended at EUR 28 million, up 52% year-over-year, of which 21% was organic. As Petter said, the 13th successive quarter with all-time high revenue. And I think when we look at the EBITDA at EUR 13.4 million, up 69%, I think one of the things that should be noted there is that, we actually see also that in this quarter we, not only grow revenue, but we also improved EBITDA margin, compared both to the previous quarter and also, if we compare to Q1 in '23. So very happy, of course, about that. We also see that similar to previous quarters, that the recurring revenue share earnings maintained a healthy contribution to GiG Media revenue.And if we look into the numbers, we can see that 63% of revenue comes from recurring revenue share agreements and the recurring revenue share earnings, they grew 47% year-over-year. If we look into the market split, also similar to the previous quarters, we have 2 main regions that are driving growth for GiG Media. We continue to grow in what we can call our legacy markets, the Nordics and Europe, where revenue is up 57% year-over-year and 14% quarter-over-quarter. Revenues from the Americas increased 82% year-over-year and 41%. Q-on-Q, and I think one thing to note here is actually that we are getting to a level now where Americas -- revenue from the Americas represents 22% of GiG Media revenue. So if we break it down to sort of overall boxes, we can say that we have Americas at around 20%, Europe at around 60%, and then we have the remaining 20% going to some of our big worldwide sites, and to smaller markets around the world. And talking about the market split there, it remains a focal point to try to get even better tracking and better BI, to break those markets even further down. And that's the journey that we are on right now.GiG Media grew revenue across the business in all notable markets. So you can say that the growth is well founded across the business and across the portfolio of our websites and with our partners. I will show you more about that later. And this aligns, of course, with our diversification strategy to drive sustainable long-term growth. Going forward, it is still Americas and Europe that we see as the growth markets going forward and where we will have our focus.First Time Depositors ended at 125,000, growing 13% year-over-year. If we look into the split between Publishing and Paid, player intake in Publishing is up 52% year-on-year and player intake in Paid decreased 18% year-on-year. And to put a bit of flavor to that, and this is probably a little bit more complex message to digest, but I'll try anyhow. I think going forward we have realized, or we have known, but we have seen very forcefully in 2023, that it's not only about making players. That's not the main metric. The main metric is to make players that has a healthy lifetime value for us as a company. So you can say that in '23 it was a year of expansion. For instance, Casino Tops Online now is live in more than 20 languages. We have tried and gone into a lot of markets, tested a lot of markets, and I think the realizations from 2023 doing that is that now in '24, we are moving far more into what I would call consolidation, focusing on higher value markets across the business and less on pure market expansion. And you can see this, for instance, in Paid, where it's very easy and fast to navigate, to move marketing spend around. And this is also why we will we see a drop in Paid. And we'll probably also see maybe not a drop, but at least stable developments going forward. This year, [indiscernible] just about growing player intake is not anymore a strategy. It is about growing players with higher value. So we drive sustainable long-term growth going forward.Similar to many of the previous quarters, we still maintain that the main bulk of the players we make are made on deals with a revenue share component, either full revenue share or hybrid deals, again, to secure future recurring revenues.I guess, what I've been talking a little bit about here is then diversification, which is one of our core strategies. And you can say in GiG Media we have several, or a handful, I would say, of core strategies. For instance, we know that tech and the development of marketing technology is the ticket that allow us to enter the marketplace and compete. So we need to be tech and data-driven. We also have a core strategy around diversification, where the goal is to make it very simple that more markets, websites and customers should drive revenue and revenue growth simply to reduce the risk tied to singular markets, partners and customers.And if we look at the numbers here, to try to put numbers on it. If you remember, I said that we are growing in all markets and also we are growing in Europe as a wider portfolio and in the Americas. That's the market risk that is being reduced. If we then look at websites, we can see that in the quarter, revenue from all of our wider portfolio websites have grown. And you can say that dependency on our top 5 websites has decreased. So this means that we are more well-rounded, more websites drives revenue.If we look at our partner mix, of course, we also want to have a healthy partner mix, having more and more partners that contributes with revenue to us. And here we can see that in the quarter we took a substantial leap forward in having more partners that generates material revenue for us. As you can see on the graph here, clients with quality revenue above EUR 10,000, went up from 178 in Q4 '23 to 243 in Q1. And that improvement is driven both by the acquisition of KaFe Rocks, of course, but also by sheer expansion with established partners where we try to get more and more material partners. There was a major Google update initiated in the quarter, and this is actually a very good reminder then why you need to be diverse. Some of our websites were impacted negatively while others benefited. And I think if we look into sort of make the sum of everything, the Google update probably had a minor positive net effect on the wider GiG Media portfolio. Of course, where some sites really benefited and where some sites were hit, but overall a minor positive effect. And again, just a reminder how important it is to be diverse and to have a lot of assets and activities that generates revenue.Summing up, all-time high revenue and EBITDA in the quarter. Operational excellence, AskGamblers continues to break records. Q1 was all-time high organic traffic, all-time high player registration, all-time high player FTDs, player generation, all-time high revenue and all-time high EBITDA. Really going strong for the AskGamblers website and the team is doing an amazing job. Integration of KaFe Rocks has progressed as planned and business develops positively just 3 months into operations. And I would say one thing to highlight here is, very healthy EBITDA margin for KaFe Rocks. So very positive to see how in a good state that business actually is after just a few months of working with the team. Also, building on the consolidation aspect that I talked about, we see material improvements to earnings and paid during the quarter. So necessarily not a focus on making many players, but a focus on making valuable players. And we can really see that very fast in the Paid business where we see a strong improvement in EBITDA margin.So this is what I'm talking about, the focus on the consolidation versus new market expansion. We have ample opportunity to grow in existing markets with higher player values where, of course, Europe is one of the markets that stands out.Talking about the Google update, Casino Tops Online, our premium casino website was impacted negatively by the Google update, and we have initiated quite a big force now to turn things around here and to maintain the premium position of the website by delivering stronger value to the user. Then if we look at some of our other bigger sites, we can see that AskGamblers and Time2Play really benefited from the update. So this is simply about maintaining that positive momentum for those 2 flagship sites as well.We executed further on our GiG Media diversification strategy in the quarter, more partners, websites and markets drive revenue growth. We are now also, of course, preparing for an eventful summer with UEFA Euro 2024 and the Copa America strongly matching our market focus being Europe and the Americas. And I think I want to note or highlight one initiative here, adding sports betting to AskGamblers to double the addressable market of the website. And, of course, we believe that having both the Euro and the Copa America marks 2 great events for introducing sports to AskGamblers.Also trading update, strong start to Q2 2024 with April revenue expected in the range of EUR 9.8 million to EUR 10 million, up 39% year-over-year, of which 19% organic growth. This also means that we maintain the guidance that we have given earlier, both in revenue and in EBITDA.Then I think I'll hand over to Richard. Thank you very much.
Good morning, everyone, and thank you, Jonas. So I'm going to start this morning by taking you through some of the quarter 1 operational highlights, then I'll take you through the financials. Following that, I'll take you through some of the increases we're seeing in the delivery and sales pipeline, and then I'll wrap up with an outlook. So, since the start of the year, the team and I have been focused on implementing a range of strategic and organizational changes with the aim of transforming the Platform & Sportsbook into a more competitive, more agile and product focused organization that can improve revenue quality and obviously growth, also improve cash generation and lead to sustainable return on investment.And if we now go through the Q1 operational highlights, I think it's evident that we're starting to make progress towards these goals. So in the quarter, we added 4 new agreements for existing regulated markets. We also added 2 existing clients. We signed for PAM in LATAM. We also signed 2 heads of terms for our new CoreX product in the U.K. market, and we also renewed 2 Tier 1 clients. And interestingly, we also added an additional brand. We upsold that, and we also added and upsold managed services to Dunder, one of our key clients.We also launched our new next-generation X-Suite of iGaming and sportsbook solutions, and we're very pleased with the reaction we're seeing and we're already starting to see that feed through into our pipeline. We also upgraded our LogicX, which is our dynamic data driven rules engine, and we're also starting to see strong momentum with upsales there. We also added a new integration layer into the business in the quarter, and this is really important because this will allow us to migrate from other competitors software onto ours seamlessly and it also gives us the opportunity to add higher revenue and higher EBITDA clients. And we also added a number of new integrations to both our Core and CoreX platforms, improving the overall offering.Meanwhile, we also continue to execute on new market expansion. In the quarter, we launched into the Ontario market, which is around about a $3 billion TAM, which obviously increases our overall opportunity going forward. We also launched our sportsbook into 2 provinces in Argentina, and in less than 8 weeks we delivered a PAM solution for one of our existing clients for the new regulated Peruvian market.Also, we've seen a significant increase in our sales pipeline, which now stands at EUR 31 million with nearly 50% of that pipeline either contracted or subject to contract, and we're also currently working a further 20 sales opportunities which will feed into that sales pipeline. We also delivered a fourfold increase in brand launches, launching 8 in the quarter, which was a record high. And we're also seeing a big improvement in the actual annualized value of our recent launches which will feed through later this year into revenue growth in 2025. And the quarter started strongly with 2 new launches and 2 imminent.Now, let's turn to the financials. Revenue for Platform & Sportsbook came in at EUR 8.3 million in the quarter. That's a 17% decline year-on-year, and that was primarily driven by the GiG Enterprise Solution and several client exits. If we look at the revenue excluding the GiG Enterprise Solution, then the Platform & Sports revenue increased 5% and if we exclude the client exits, it improved 20% year-on-year.Adjusted EBITDA declined to negative EUR 0.9 million. And again, that was primarily driven by the year-on-year decline in the GiG Enterprise Solution revenue contribution and also driven by a tactical step up in marketing, senior hires and business development investment. And we also had some one-off spin-off-related costs in the quarter. Adjusting for those spin-off costs resulted in a negative EBITDA EUR 0.5 million for the quarter. We signed 8 new agreements and heads of terms during the quarter, and as I mentioned, we signed 2 contract renewals accounting for 8% of our 2023 SaaS revenue.Now, let's look at our delivery pipeline and how it's accelerating. So we had a record quarter in Q1 delivering 8 new clients versus 2 last year. That's a fourfold increase. And we're starting to see all of the operational initiatives that we put in place during the quarter. We're streamlining development and delivery processes and also increasing the use of automation now starting to really improve our delivery cadence. And we've identified more opportunities during the quarter that we're going to roll out further in the year, which again we expect to improve our delivery capabilities. We also introduced a new client scoping procedure, which is also strengthening our ability to further reduce client delivery times going forward. And also all of these changes are also helping us target much more complex and bigger revenue clients, which is going to help us drive incremental revenue and profitability over the coming years. We have 18 brands in the integration pipeline, which continues to build strong revenue and margin expansion and we're now expecting, given this improvement in Q1 delivery to launch between 24 and 28 new brands this year, which is over 100% increase from where we were last year. And we're not only accelerating the delivery, we're also seeing a big acceleration in the actual value of the customers we're launching.As we show in these graphs here, the 8 brands that we launched in Q1 are expected to generate revenue of EUR 1.3 million this year. And that compares to all of the 13 brands we launched last year contributing EUR 0.5 million of revenue. And if we look forward using contractual minimums, which we think is very conservative, those 8 clients will have an expected annual run rate going into '25 of over EUR 2 million of revenue. Again, that compares to the EUR 0.5 million of revenue we generated from the 13 launches throughout the whole of 2023. So you can see quite significant improvements there in the overall value. Also, I think what's very important is 6 of those 8 client launches are now taking Platform and Sports, and with the remaining 2 in discussions to launch later in 2024. And that's obviously one of our core strategic pillars in terms of upselling and generating more revenue from our Sportsbook. Now, with the increased launch cadence, an integration pipeline of 18 and a growing sales pipeline feeding through, we expect to be able to replicate this performance in Q1 throughout the remaining quarters and build on that into 2025. And just for illustrative purposes, if we assume a similar run rate from Q1 and a similar launch cadence, then you can see in the chart below that that would equate to over EUR 8 million of revenue going into 2025. And as I said, we are expecting to launch higher revenue generating customers so we think this number should be quite conservative.Now, looking at the sales pipeline that continues to accelerate, we've invested a lot in marketing and business development and I'm very pleased to say that we're seeing the fruits of that investment come through in quite significant increases in lead generation and sales opportunities. Our sales pipeline now stands at EUR 31 million. We're seeing very strong month-on-month growth. The launch of our SportX Sportsbook in Q1 has delivered 22 sales opportunities which have fed into that pipeline. We've recently been doing a lot of business development in the LATAM market and we expect to see that start to positively contribute into our sales pipeline. We're also implementing a much more rigorous sales qualification process which should further improve the quality of our sales pipeline and we're looking to activate sales force to be a driver of that. And we have another 30, another, sorry, another further 20 early-stage sales opportunities with a focus on LATAM and North America currently being worked, which again will start to feed through into our sales pipeline over the coming quarters. And in the chart, the bottom right, you can see what a significant change we've seen in signed and contract stage sales pipeline development. So back at the end of Q3 last year it was standing at EUR 3 million and now we're close to EUR 15 million and we expect that to continue to trend upwards. And this is very important because this is basically embedding future revenue in our business going forward.So now, in summary, throughout the quarter we continued to build, improving operational foundations, which are starting to really see a big improvement in a lot of key metrics in our business. So we're starting to see big improvements in our client delivery cadence, accelerating year-on-year and quarter-on-quarter. Very importantly, we're beginning to see the quality and the value of that integration pipeline and the new launches increase. We're seeing good traction in our focus around cross-sell and upsell of our in-house and third-party products. We saw that in Q1 with the upsell of 3 brands into new markets and the data GiG -- the Logic product and Sportsbook product also being upsold very strongly. We built and deployed a migration layer, which as I mentioned before, is going to allow us to onboard operators from competitor platforms onto our own seamlessly with very limited amount of developer interaction and reducing errors which normally come when you migrating clients. And that really will allow us to start targeting much bigger revenue generating clients.And we continue to successfully execute on one of our key strategic pillars of entering new and existing markets with the launch recently into the Ontario market, which is also driving a big increase in our overall TAM. And our sales pipeline continues to expand significantly and now stands at an annualized EUR 31 million. And we expect that to continue to trend upwards with further investment as we go through the remainder of the year.With that, I'll hand over to Petter for closing remarks.
Okay. Thank you, Richard. We are wrapping up and then we are entering a Q&A together with Hjalmar here. So as you heard from us, we are delivering an all-time high in quarterly revenue for the first quarter of 2024. And also very proud of the fact that the momentum continues with GiG Media with a record high revenue and EBITDA for the first quarter. And as you also heard from Jonas, we are starting the first -- the second quarter with a good momentum. So we are up almost 40%. We're off half organically. As you know, we have invested a lot in our Platform & Sportsbook business. We're happy with the new C level and the key KPI for us, of course, looking at what you have just heard, the pipeline building up sort of new suite of products and the solutions we can offer the market. So we are very happy to see how that pipeline is building up and the opportunity and also the onboarding pipeline. So very pleased to see that positive development already when the new team came in now in Q4 and Q1.Given all the work we have done internally and the fact that we have transformed GiG Media now from a regional champion to a global champion, the combination of organic growth with the acquisitions we have done and also with the strong team and all the initiatives on the platform business, we say today that GiG is ready for split of Platform and Media business and the split is expected to happen by Q3 2024.So as said, from the Board, we are very happy to see the development with both business areas, and therefore, we say that both businesses are now well positioned to provide shareholder value from 2024 onwards as stand-alone businesses.Thank you. And with that, I welcome back Hjalmar to stage.
Okay. I'm going to start with the trading update here for the Media segment there. Give some flavor, I mean, was it kind of sequential ramp up January, February, March, April? Or anything particular impact possibly in April that gave you this kind of run rate for April?
No, I would say gradually ramp up during the first, you can say 4 months in the year, right, and also actually previous to what has happened in 2023 where it's also just been steady growth up.
And you mentioned AskGamblers here, I mean, you still see record numbers every month, it looks like. I mean, how much further can you go this at this pace? Are you seeing it leveling up, leveling out or...
April was a really, really good month for AskGamblers alone in player intake. And I think we are still only sort of scratching the surface with what we can do with that asset, also by adding sports and just by keep doing the great work that the team is doing now. So if we look at player intake over the last, what, 4 months, it has really improved a lot. So there's still a lot of things to do then and a lot of potential to realize.
I got quite a few questions on the -- from the viewers as well on the Google update, and you mentioned 1 site impacting negatively, Casino Tops Online, which, I mean, I would assume it's a big brand that could be positive always, and maybe not always, but in general from Google. But can you elaborate some on what happened there and what you can do?
Of course, as you can say, the CEO of GiG Media, I'm of course very sad and affected about the fact that one of our flagship sites got negatively impacted the first time that has happened on my watch, knock on woods. But luckily we had 2 other flagship sites that conversely have benefited, so AskGamblers and Time2Play, right? But, of course, we don't like that things go down. So you can say it's a pretty strong focus point in the organization now to turn things around for Casino Tops Online and position it in a position like Time2Play and AskGamblers that are being rewarded by Google after this big Google update.
And in terms of acquisitions, KaFe Rocks was incurred this quarter. You gave a guidance of that asset for the full year, EUR 23 million, I think. Is that kind of a stronger H2 than H1? Or is the kind of more flattish development this year and the growth after that? If you can elaborate something on that?
I would say prior to taking over KaFe Rocks and now 3 or 4 months into operations with the asset, I think we are more positive than we were prior to taking over the asset. So it's been, I would say, a very positive surprise actually. The strength of the business and also the strength of the teams that you have in KaFe Rocks. So...
And then you mentioned among other Time2Play the U.S. asset that you're seeing good traffic. Do you also see revenue from that this far or is it -- how is that building up?
Yes, everything there is improving and a very strong side and a very, I would call, it just speaks of quality when you go to Time2Play. So growing in player intake and growing in revenue.
All right. Looking at the rest of Q2, I mean, April started off well. You're mentioning Euro 2024 coming as well in June and Copa America. Maybe starting with Euro 2024. Are operators -- I mean, do you see that they are willing to spend this year on the Euro '24? Or any changes compared to historical championships?
Yes, I think, yes, it will be a good time for the iGaming industry, both for operators and I hope also for us. So, yes, of course, we see -- it's not -- of course, we are mainly, you can say, a casino affiliate, but there is a big spillover from sports players into casinos worldwide. So this is where I think it's interesting for operators also to work with us. So they sort of benefit from all of this increased activity that you will have in the iGaming industry and then also on casino. Of course, we have sports sites that we are working on very hard now to get the most out of the Euro. And one of them, as I mentioned, was of course, adding sports to AskGamblers that we really have, I can say high hopes for.
And how about for the Platform and Sport business, do you see any big impact from the Euro 2024 championships?
Well, I'm hoping it's going to be a very positive impact, I mean, especially for the sports operators. But yes, it's generally obviously dependent on results. But if you look at the last 3 or 4 European championships, the margins have been pretty strong. The teams are all quite closely matched. So fingers crossed. There's lots of draws, but no, overall it should be a very positive for all of our clients.
Any clients that are launching in connection with that?
No, actually, from a launch perspective, I think most people don't want to launch before ahead of it. So actually we're trying to get as many through the door as quickly as possible. You won't see any, obviously, launches during that process and then we'll obviously have a lot of launches after that sort of September onwards. So from a sort of launch cadence, sort of guidance, we're going to be a lot more sort of Q3, Q4 weighted.
And in terms of South America. We got the Copa America and also some regulatory changes going on. Brazil hopefully looks like coming into regulation, I guess, second half at some time. How do you [ see it ] impacting maybe first on the Media business? Do you see operators waiting for regulatory development before they spend on marketing?
I think that's a little bit of a mix, depending on which operator you talk to. I wouldn't say there's any sort of conclusive movements there. It is a very I don't know what to call it, volatile, dynamic.
So, yes, I mean, the regulations, some people are saying it's not going to happen until next year. Some people are very optimistic it's going to happen this year. I think my money would be probably on not until 2025.
Yes, yes, I guess that's good. Yes. People get, rather get delayed...
But we've just been -- the team have just been in Brazil and the traction there and the enthusiasm and this obviously going to be a tremendous amount of opportunities once this market gets regulated. And what you tend to find in these LATAM markets is that, there's obviously been a lot of sort of sort of dotcom markets and now with regulation, obviously, the platforms that you have, have to sort of focus on different capabilities of reporting and things like that. And I think that's where GiG comes into its own. So we're looking at some really interesting opportunities in Brazil, which we expect to come through in 2025.
All right. And you mentioned AskGamblers, this point was expecting launch there. I mean, are you betting that this will a big impact or trying to see if this works or how should we view that potential?
I have to put my hopes that it will have a big impact. I think AskGamblers can, of course, also be about sports betting, it can be about asking who are the best tipsters out there that performs the best. Where can you get the best odds under various leagues that you have, is Unibet better at Premier League Darts than bet365? There's a lot of things that you can actually say, where AskGamblers has sort of a place in the world when it comes to sports betting. And, of course, there's also the complaint service where I'm quite sure that there will be a lot of activity related to sports betting, right?
Right. Another slide you had there in your slide package was on the revenue contribution from Tier 1 sites and the smaller sites. And we could see that Tier 1 was actually down a bit quarter-over-quarter, I think. Can you explain that? Is that seasonality? Or why did we see that?
Yes, seasonality. And then also, of course, Casino Tops Online took a little hit now with the Google update. I think we will see now that AskGamblers and Time2Play will continue to grow as 2 of the main top 5 websites. But then also we have just a wider and wider portfolio of websites that generates revenue. So what do we count now? Is it over 160 material websites that we have in the portfolio? And very happy to see that sort of a, that width and that substance because it enables a very strong foundation that we are standing on.
And you had a slide on FTDs as well and your focus on higher value also question from the audience there. I mean, you want to focus on the best FTDs. Maybe using Publishing is one way. But also I wonder, do you look at other metrics like churn and so on, when you think about the value FTDs?
Yes, good question. Yes. You can say we have put a lot of emphasis into building our business intelligence system and have moved quite a lot with what I would call granular tracking. So we are able to understand on a campaign level the players that we generate and also the player values. And actually having that capability now we take the consequences of having that data and that insight and then we want to apply it in the marketplace where we want to have a stronger opinion about where we should make players and where we should invest. And I think you can start to see that now, very notably in Q1 now where there are simply some things where we are saying, okay, we can make 1,000 players here a month, but if it generates EUR 2,000 in revenue, is it worth anything? And I think going forward with having stronger and stronger BI and more and more granular tracking rolled out, we will be harder and harder there. So I think going forward it will not be a metric just about player intake. It has to be quality players. So we know that we create long term revenue growth.
And coming back to the Platform business a bit there, a question both from audience and from me. Looking first on the kind of outlook, it looks like you're really building a strong sales pipeline and looking at, I mean, Q1 now we have the kind of negative impact Enterprise Solution, but it looks like from this level it should really be kind of sequential upwards, but yes, maybe more towards end of year 2025. But if you could give some...
Yes, I think we still got some impact of the Enterprise Solution just to feed through because of the accounting rules. So it also took quite a big amount in Q2 and it got smaller and smaller in Q3 and Q4 last year. And then, obviously, the launches start to scale up, they invest more. The minimums, obviously, I showed in the chart, take you to that number. We would obviously like to do better than that. So, yes, as we -- and obviously there's a bit of timing on setup fees, and obviously other client launches. But, yes, I mean, it'll be a -- I think, a gentle sort of improvement throughout the year. And then, obviously, I think a big inflection in Q4 and then very significant growth into 2025.
Right. And when you're becoming a stand-alone company, also a question on the -- I mean, you now have a negative EBITDA. You ramped up OpEx because you wanted to have more growth, of course, but how do you say it stand-alone? Did you see it self-sustaining in terms of the investment needed and the cash flow generated?
Well, obviously, yes, because if you look at the revenue and how it's trending upwards, then if we can add, and obviously, I was giving you very conservative numbers, but if you imagine that you can keep adding at least EUR 8 million to EUR 10 million each year, then the revenue significantly ramps up and EBITDA becomes very positive and the cash conversion starts to flow through. The Board and myself, we took a strategic decision that we needed to invest in this business, there's huge opportunities. We sat around, we showed them where the current pipeline was back in September. You can see where it is today. So I think that investment is starting to bear fruit. Now, it's a case of executing, delivering, which we're starting to do and you can see that improvement. And then that will feed through to obviously bringing through cash conversion. We've got to be very focused on costs. So we're being razor focused on making sure that we stabilize the costs going forward. And therefore, as the revenue comes through with a SaaS business model like this, it starts to convert to the bottom line very quickly.
So we should see a good operating leverage if you see growth from here?
As we go -- as we get through this year, obviously, we've still got some headwinds in the next quarter or 2, but as you get into '25, then you'll see very significant improvements. And then into '26 and '27, then we're very optimistic about really adding a tremendous amount of EBITDA to our business.
And you showed your expectations of brand launches this year. I mean, 13 last year, 24, 28 this year. I mean, I guess, last year you saw also some brands moving off the platform. What kind of net number this year do you still brands moving out this year or is it more?
Yes, so I mean, if I look at our net number last year. So we launched 13 and probably netting that off, we probably had 4 or 5 client exits. And one of the key focuses that me and the team have been doing is that, for this business to be successful and to get that cash conversion, we have to stop client exits. And by the investment we've been making in the product, the marketing team, the sales team, also on the delivery side and the account management side, then that's going to be one of the key ways of stopping that.In terms of this year, we will have some client exits which are historic before I arrived, but in terms of a net number, it's going to be at least 20. So netting off. So there will be 4 or 5 leaving. And then obviously as we get into '25, we'd expect to continue to do sort of that level and hopefully we'll have much less client exits.
And if I understood, it sounds like you also are expecting to get more revenue per brand, if I understood your [ message ] correctly or...
Yes. So in terms of, one of the other focuses is that, historically, this business has taken on clients that quite frankly weren't the right clients for this type of company, didn't generate the right level of revenue, didn't have the right sort of analysis before engaging with them. So what we've been doing in the last sort of 6 months is going through that pipeline, getting rid of the ones that weren't going to make a proper return on investment for us. We're now launching clients that have significantly higher average revenues than what we have historically, and then in the pipeline, because of the investment in the new products, we're now starting to onboard much bigger sort of Tier 1 clients, some with existing revenue. So recently we developed this migration layer that I talked about and we've actually migrated 1 client using that. And obviously that client starts with bringing hundreds of thousands of players and having a revenue base straight away and growing. So these things are all helping grow. And as we move forward, we're expecting each year as we go on that the average revenue per new client launch will continue to trend higher.
Right. Also another coming in here from the audience on the Enterprise Solution. Is that the product that you will offer going forward? Or will you not offer that going forward?
It's not something that we're openly selling from -- since I arrived. There may be some agreements that we have in place historically that might have an element of the Enterprise Solution included. And we'll use it more as a sort of strategic tool. So, for example, obviously back when I was at SBTech, we did a deal with the Oregon Lottery and there's only 1 online operator in Oregon. So maybe we would go and sell our source code solution to the Oregon Lottery in that state, just as way of an example. So we'll maybe use the Enterprise Solution as a strategic ad hoc basis. But in terms of the sales team, in terms of what we're looking to do going forward, no, it's not something that I want to be selling like we have done historically.
And also a question from audience in terms of regulatory changes. I mean, we have South America ongoing. In the Nordics, we have -- I mean, Finland might be upside going forward, but also some negative changes. I mean, tax are increasing in Sweden. I guess, a small market for you, but Nordic has been doing well. Did you see that momentum maybe coming down if you see the negative impact from tax changes in Sweden?
No, we are still growing in the Nordics. I don't think there's anything unusual in this quarter. Actually, the previous quarter, when it comes to all of the regulatory things happening. It is what it is. And then you just need to find revenue in other places, in other markets. We are still growing in the Nordics and I think there's still opportunity to grow there. Yes.
And also a question on the mix of local regulated revenue. Do you disclose that on revenue or EBITDA for the Media segment?
In what way, sorry?
Local regulated revenue?
No.
Okay. Good. Let's see if we had more from audience. Yes. On the guidance, which was interesting for me as well, the guidance for Media. So the number we should relate to there, is that the [ EUR 125 million to EUR 135 million ] number you gave in connection with the...
Yes. EBITDA margin between 45% to 50%.
Right. Good. And then the wider guidance, I guess, question for you maybe is still 20% plus organic growth and 50% EBITDA margin for 2025. That remains for the group, I mean, that one still relevant.
Yes, it's a new sort of reality given that we are splitting up in 2. So we have to come back on that number. So, given that we are in this transformative stage right now.
Right. And some questions on M&A opportunities as well. I mean, you did AskGamblers, KaFe Rocks. How is the M&A market looking for the Media segment?
Very interesting. I think the trick when it comes to M&A is, of course, to do acquisitions that have a strategic fit, a fit with the organization. And then, of course, also there's the timing element. So you can say we need now to onboard KaFe Rocks fully and to excel together with them. And then there would be maybe a bigger acquisition that we could consider again. But I think there is a limit to how many acquisitions you can do in order to be successful both in your existing business and in what you acquire. But it is a very interesting market out there now for M&A lot of things happening.
Right. I think there was some questions here on the split up. Maybe that be a final question, see if we have some flavor on that. I mean, you gave a Q3 execution date. What are we waiting for mainly? Is it regulatory things or timing or...
Exactly. So we've been working really hard internally. So we are ready by Q2 internally. But, of course, we are a listed company. We have to sort of subscribe and accept all the regulation out there. So with that assessment from adviser, it's Q3. That's going to be the hard quarter where we are ready from a regulatory perspective and also everything that we -- all the boxes we need to tick from a regulatory perspective. So that's why we communicated today Q3 is when we can commit to the split, but internally we are ready by Q2.
All right. Thank you very much for [ joining today ].
Thank you very much.
Thank you.