Gaming Innovation Group Inc

OSE:GIG

Earnings Call Transcript 2021-Q2

[Hjalmar Ahlberg]

Welcome to the Q2 presentation with Gaming Innovation Group. My name is Hjalmar Ahlberg, I'm an equity research analyst at Redeye. I will be hosting the Q&A session later. But first, we will have a presentation from CEO, Richard Brown; and CFO, Tore Formo. We will have around 20 minutes presentation, and then we'll move over to questions.And with that, I will leave over the word to you, Richard.

[Richard Brown, Chief Executive Officer]

Right. Thank you very much. Good morning, everyone, and thank you for joining me for Gaming Innovation Group's Q2 2021 Interim Report. This quarter marks 12 months since Gaming Innovation Group became a pure B2B business and the change has resulted in a real positive development operationally, financially and strategically. I'm joined today by our Group CFO, Tore Formo, who will be available during the Q&A at the end of the presentation. As an introduction to those of you new to GiG, the company is split into 3 operational divisions covering a range of key areas within the iGaming industry. Our Platform division, which provides cutting-edge and proven highly scalable technology for the industry, supplying a player account management system and its related products, which is the technological backbone of an operator's online offering.Our Media division, which refers end users to operators on a global level via a multitude of localized websites and marketing channels; and thirdly, our proprietary Sportsbook platform, operational and performing in both U.S. and European markets.Each vertical is also complemented with a managed service offering towards our customers, ranging from bespoke front end development through to customer operations, compliance and responsible gambling services. Just briefly for -- GiG is listed on the Oslo Børs and Nasdaq Stockholm Exchanges with offices in Malta, Spain, Latvia and Denmark with approximately 440 full-time employees. Our platform is now licensed in 13 regulated jurisdictions with an additional 7 in the integration pipeline, and our Media business has a diverse global portfolio with primary assets in more than 25 countries. I'll now look at the headline figures for the quarter. Just as a reference point, in the presentation, I will comment and refer to the revenues on a normalized basis, removing the effect from one of our platform clients where GiG due to the contractual structure recognizes the operator's NGR and cost of sales, et cetera, in the reported numbers. It's, therefore, on a normalized basis, you will see a much better representation of the actual development of the company.Group revenues continued sequential and year-over-year growth with revenue rising to EUR 16.2 million, up 23% versus the same period last year, and EBITDA results grew to EUR 5.3 million, up 86% versus 2020 and 16% up versus the first quarter. The EBIT also continued a strong trajectory, 194% up year-over-year and 55% quarter-over-quarter, resulting in a EUR 2.1 million EBIT result. If we look at some of the key takeaways for the second quarter, as you've seen from the previous slide, business continued to deliver meaningful growth throughout the P&L in revenue and EBITDA and EBIT. Our Media business had an outstanding quarter with all-time hires on both revenues and FTD numbers. Two additional clients were signed on to the platform, taking the total number to 4 contracts in the first 6 months of the year and 1 additional client went live on the platform during the period and 2 more new client projects were completed, awaiting client-side launches. This taking the number of new client projects completed to 6 year-to-date.Our Sports Betting segment delivered a year-over-year improvement of EUR 0.7 million EBITDA, and we believe holds strong strategic rationale and future potential as a future potential driver for the group, especially in emerging markets, now that the unit itself is at a more or less breakeven level to EBITDA.The business also delivered positive cash flow during Q2, and our bond was refinanced in favorable terms with a new maturity in June 2024.Now in order to provide some color on our growth dynamics. I will now walk through a short strategic update. In our Platform business, there are 3 main growth drivers: Firstly, is the SaaS revenue ramp model. As contracts are long term, normally 4 to 5 years in initial term. And we take the cost of the integration upfront, as the client revenue grows over time as does our revenue. However, the cost to maintain the client once live reduces meaningfully comparatively to the initial outlay on the setup. And therefore, you can drive the revenue growth leads to margin expansion and a profitability on a per contract basis. Average contract value start at EUR 400, EUR 500 per year in the initial years rolling up annually as to drive growth within GiG and for the customer. The second dynamic is a very important one for us is the number of locally regulated markets that GiG is certified and operational in. This helps to both attract and deliver towards new potential customers and clients, but also leads -- is a lever towards increasing contract value of the existing customers by taking them into new markets. This also increases the profitability long term of any specific market entry projects. Due to the fragmented nature of the locally regulated markets, GiG has a strong focus in this area, and we believe it's a key area that will enable growth over the coming years. And as you can see from the graph on the bottom right, we are tracking well towards the expansion ambitions where by the end of the year, we will look to be operational license in around 16 different jurisdictions, and work is beginning on scoping to continue to drive that number upwards in 2022 and beyond.Obviously, the third dynamic within this growth is the number of clients we have. And as we demonstrated, we've been ramping up sales and customer onboarding over the last 12 months, and this remains a key priority for the business.With 4 new contracts year-to-date, we are targeting around 10 new contracts for the year. We take a global approach as discussed with target clients ranging from North America, Central and Eastern Europe through to emerging and longer-term growth markets such as LatAm and Africa.In our Media business, we continue to drive long-term revenues by -- revenue share as a main early component of the deals. And as is the case with the Platform business, we work on 3 growth principles. Firstly, to increase the current market earnings via revenue share; therefore, focusing on expanding and targeting a value-driving customer bases. Secondly, a great deal of emphasis is in the constant improvement of this business unit's websites or product portfolio, and we've seen a good effect. The work here is reflected in the conversion rates and increasing search ranking visibility over the last periods that has helped to drive the increasing number of capital customers acquired or referred to our operators.Thirdly, a constant effort to diversification and enter into new markets is another guiding principle for growth we have within Media. And as the graph here in the bottom right shows, we continue to move the business and assets into new markets, capitalizing on the general lower barrier to entry within the media space. Now if we look at -- on a group level, this kind of diverse and multi-jurisdiction focus across both platforms and media units enables us to also attack markets in a manner which best produces value for GiG in a certain split period of time. For instance, where we can see there are limited licenses or new client -- the lack of new client entrants to a market such as Belgium, as an example, GiG may not currently see an opportunity for new clients for the platform, but it remains an attractive and lucrative market for those who are within it.So we can actually gain market -- gain from the market with a media entry, vice versa markets where advertising restrictions or a slower uptake in affiliate marketing, such as Latin America, we can take a market approach specific to the platform. And of course, where we see value for both units, we can move cohesively to take a larger share from such market. An example of this would be, for instance, we launched in the Platform business in Croatia last year, and we can see that there was value driving there and we then could replicate and enter with the media business as well down the road.We can now look at the business units in some more detail, starting with the platform business. Revenues amounted to EUR 5.1 million in the quarter, up 9% year-over-year. Adjusted for the B2B white label model that we discontinued last -- at the end of last year, the business delivered a growth of 37% year-over-year. EBITDA was a positive EUR 0.2 million, 126% increase versus 12 months ago. And the onboarding from that 2020 and new market entries have helped to drive that underlying growth within the business and compensated, in particular, the SaaS area and has compensated well for the removal of that white label business and the impact of the new regulations in Germany that had around a EUR 0.7 million impact on comparables to last year.I believe that number in Germany has bottomed out. It was a very large market as you can see from the graph there last year, and we believe it has now bottomed out. And that being said, we still have a number of clients within the pipeline as of today and those market -- clients that are live today who are actually going to target the regulated German market. However, I would say, considering the current structures, it will take some time for it to build out favorably. Currently, 75% of operator GGR runs through locally regulated or soon to be locally regulated markets and mid- to long-term, we expect this to increase.As you can see here on the slide, we've taken a number of live SaaS clients from 14 to 22 over the last 12 months, as we have ramped up sales and onboarding program. As we've mentioned, we've completed development of 6 new client projects so far this year 3 in the quarter, which shows an increasing efficiency of delivery. As in full 2020, we only delivered 5 clients -- new clients, as the graph on the bottom right demonstrates.Currently, we're on a run rate of around 8 to 9 new client launches on a rolling 12-month basis, and we are working continually to improve this and raise the number of clients launched and project completions in a 12-month period. As discussed in the strategy slides as well, work towards this business unit's expansion into more locally regulated markets continues, both in the current integration pipeline and work has begun -- scoping work has begun to enter another 5 to 6 to be delivered close to the current pipeline completion.Our sales momentum continued within the quarter as well with additional 2 new contracts signed, including one for the market entry into the U.S'. current second largest state for iGaming of Pennsylvania. And as we stated, we're currently working on a number of new client launches with the majority of go live aimed before the end of the year. As always, this is both client and regulator dependent. This results overall as an exciting onboarding program and a future sales pipeline development. I am pleased with how we are constantly moving continuously operational improvements on a monthly basis in this unit that has such a strong future potential. Moving to our Media business. It delivered -- the Media business delivered a record quarter with all-time highs in quarterly revenue, EBITDA and FTD generated. Revenues amounted to EUR 11 million, a 28% increase year-over-year and delivered a 10% sequential quarterly growth. Our Paid Media continued to deliver quarter-on-quarter with significant increase in FTD intake, and revenues were up 76% year-over-year and 22% quarter-over-quarter. The Publishing Department grew 19% and 12% sequentially. The EBITDA margin for the segment retained close enough to 50%, 48% specifically, resulting in EUR 5.3 million in EBITDA. As mentioned, another all-time high FTDs with an increase of 37% year-over-year, it's nearly 47,000 customers referred to our partners.If we now look at the next slide, you can see recurring revenues share. Revenue share accounted for 66% of earnings in the segment. The team has continued with new market and asset launches with 4 more in the quarter, but also making real progress, as I mentioned before, in the continued development of our Media product portfolio and the improvement in these assets continues to bear fruit with an increased organic rankings within our Publishing Department over the preceding last months. GiG Comply, our marketing compliance technology, continue to add clients with 3 additional signings in the quarter and several contract extensions for existing clients. I will now move over to an update for -- after the quarter, first weeks of the third quarter have continued positively, and an additional brand went live in the first weeks and 2 go-lives are anticipated shortly. The sales pipeline continues to develop and build momentum, and the Media business delivered another strong month in player intake in July, with FTD numbers being up 32% year-over-year. Finally, revenues in July were 10% up versus the same period in 2020 and 26% up if you adjust for Germany and white label contribution in the previous period. Earlier in the year, we stated our long-term financial targets. So I just wanted to check in against them. We have an ambition to deliver double-digit organic growth revenue growth over the long term. We remain well on track to deliver that this year with revenues up 33% in H1 and a target to move towards an EBITDA margin of 40%, which was edged closer this quarter, delivering 33% EBITDA margin and obviously increased year-to-date figure as well. As part of the target to reduce the leverage ratios, both the business performance and the actions to refinance the bond have helped to drive towards this target with the leverage ratio decreasing 13% comparatively to last year, standing at 2.15% as of the end of June. In summary, business in Q2 delivered a strong double-digit growth in revenue, EBITDA and EBIT. Our Media business performed exceptionally well, reaching all-time highs, both financially and in operational KPIs and progressed along its pathway to launch into new markets. GiG's platform has shown a robust and diverse SaaS revenue and client growth with ever increasing markets with addressable market by the number of clients and a focus on that global market expansion. We have an ever-improving balance sheet, helped by the conversion of a convertible loan, bond refinancing exercise and a strengthening cash position.We have a forward focus and a drive towards accelerating the future development of the business as we see this quarter as another step towards creating long-term value across the company and towards its shareholders. This remains in our eyes, still early stage development for GiG as a B2B business. I'd like to thank you for your time this morning and pass you back over to the team at Redeye for the Q&A session. Thank you.

[Hjalmar Ahlberg]

Okay. Maybe I can start off with a few questions, and then we'll take some from the live stream as well. You discussed a bit here about your targets. And then you obviously did some transformation from you moving from B2C to B2B to a pure B2B company, and you have this targeted out. We heard some of this presentation how you will get there. But could you tell a bit more about maybe -- especially maybe the scalability in the Platform business, how we'll get from this margins we have today to 40%, will be driven by increased profitability in the Platform Services? Or is it mainly that the Media business continues to be the one that delivers strong profitability, so to say?

[Richard Brown, Chief Executive Officer]

I mean if we look at where we are, say, around 32%, 33%, and the EBITDA margin within the Media business is at 48%, I would anticipate that the Media business will retain around that level over the long term. So therefore, the actual scalability and profitability is driven by the platform business in the majority there.As we talked about in the slides, we take a lot of the costs upfront to getting a new client live. So now when we have a heavy onboarding cost, there's quite a lot of investment into that side of things. And then as those businesses actually start to ramp up in revenue is generated over the 5-year term, but the cost to maintain isn't required. So the scalability from a financial aspect is pretty strong that we don't need to continually double up in terms of the resources in order to be able to avoid the customers or to maintain the customers. So as those clients revenue grow, as we continue to onboard and enter into new markets, and bring in other contracts into new markets that we've already regulated, and that profitability scalability starts to drive up the overall margin for the business.

[Hjalmar Ahlberg]

Got it. And discussing new client signings, what do you aim to take this? Is this kind of smaller operators, new start operators? Or do you see a big potential in maybe unregulated markets going to regulated where land-based casinos might need help to launch online? Or is that a mix of all maybe?

[Richard Brown, Chief Executive Officer]

It's a little bit of a mix. We do, in general, have a target towards markets that are in the process of regulating, where there is obviously a high demand for our products and services. We have historically and continue to focus on having land-based businesses because we see a strong value within local markets. We have customers such as a relatively strong casino group in Ireland that went live earlier this year with their omnichannel products. We have SkyCity in New Zealand, which is a really strong base potential, and we signed some -- various others Grupo Slots in Argentina, for instance. We believe those markets will have really strong local presence and a local brand affinity that will help to drive those businesses. And the omnichannel product that we've developed that helps to integrate it towards the land-based systems is also a financial driver for the businesses and for us. So we really like the land-based transition businesses and an area of focus for us.With that being said, there's still a lot of strong potential in new market entries, whether that be existing brands looking to enter new markets and don't want to deal with the new regulatory tech stack, et cetera, there's some new digital challenges come up through in every markets as well. So while it remains a broad range, we try to identify the businesses that we think have a strong position within that specific market on the normal case.

[Hjalmar Ahlberg]

Got it. And maybe a follow-up on kind of licenses where you move in, in your markets. What drives the demand of these licenses? Is that you see markets where you want to help your clients to move in? Or is it clients that are asking for you to go into several markets, certain markets?

[Richard Brown, Chief Executive Officer]

Yes. Again, a little bit of a blend. I think the current pipeline is -- we've done a couple of certifications this year that have been requests from clients or ones that we've done for existing clients, et cetera. And then there's other ones where which is sales pipeline dependent. So we do the regulations of certifications in order to onboard a new customer. That being said, as we kind of move forward now, we're starting to be a little bit more proactive in terms of identifying markets where we believe there will be strong demand and therefore go -- or that we believe that we have a superior product, for instance, so we will be able to go into those markets or existing regulatory certifications and try and win contracts there where either the dynamic is a growing market that increases demand or we believe that our product itself will be able to drive transfer of platforms.

[Hjalmar Ahlberg]

Got it. And the market that is in transition now is Germany and we have seen that, of course, many operators suffers here. And you say that you have some clients in the pipeline here as well. Are operators hesitant to launch with this kind of tough rules that are set up there, both in terms of how you can operate and also the kind of high tax levels or will they be able to launch in this kind of market that we have there?

[Richard Brown, Chief Executive Officer]

Yes. I think -- I mean, for example, one of our clients who is nearing probably go-live like -- it's a German operator called TipWin. Now they're very focused on the German market. They have a retail shops. I think they have something like couple of thousand retail shops across Germany and such like that. So for clients like that where Germany is really a home market where they drive a lot of value from, et cetera, then I think it's still -- well a difficult market, a very high-value market. And again, I would anticipate or I would hope that over time, the market matures a little bit and the value is derived there, and I believe it does. We still also -- customers in the pipeline have strong existing customer bases within the brands, within the market, so believing that those will be able to drive forward despite the current challenges within the tax framework in the majority and some of the regulatory framework. But I think if you're locally -- if you have a strong local presence there, existing and/or retail aspects, et cetera, then there's, of course, a strong drive to move online in that area. I think there's -- there will be question marks for more international operators, whether they see the value in that, which is understandable. But again, we're talking about Europe's largest population, high-value customers. They've improved historically as we've seen from some of the results there over various different companies this year, even ourselves included. And as long as there's probably tight controls from the regulator on the black -- to prevent any kind of bleed into it and improve the channelization into the regulation, then the value will still be retained. We've seen that in markets such as Italy or even Spain, where there's a tough regulator there that is a larger percentage of channelization and the market dynamics there still remain favorable.

[Hjalmar Ahlberg]

Got it. And maybe a question on your trading statement for July. I mean you compared July to July last year. Can you give some more flavor to get kind of a picture if July last year was a big difference compared to August, September? Or if you can give us some more flavor about that, how to look at the potential for growth for the rest of the quarter?

[Richard Brown, Chief Executive Officer]

I think, I mean, without going into too much details on that is -- last year, we had various different needs. We're happy with what we've developed in the underlying business mechanics and the growth across both the -- across the units on a year-over-year basis. Of course, there is a challenge in the comparables there with the white label business in Germany, in particular, which were still pretty regs. But we're very happy with how we've progressed and operationally significant maturity levels have been improved over the last 12-month period as well. So we also had various different degrees of lockdowns in this period, and we probably see a little bit more normal seasonality this year in comparables.

[Hjalmar Ahlberg]

Got it. And you mentioned the COVID-19 lockdowns there. Have you seen any impact, I mean, in the last couple of months here when there may be some countries maybe open up and then maybe going back to lockdown, but do you see any difference in behavior there from your customers' side?

[Richard Brown, Chief Executive Officer]

The only thing I would say is that I think this year, like is -- or at least this summer, excluding the U.S., has probably been a bit more normalized in terms of what you would anticipate in the normal seasonality effect or for casino at least where there is normally a temp towards the lower dip during the summer months. I mean that would be the only thing I don't -- in the markets that we have derived majority of the revenue from, we're in more open status that we have been for quite some time. And I think that hasn't been particularly negative. I think a lot of the retail customers that have moved online still retain online. So I don't see that as a negative, but I think we have a bit more of a normality periods over the last few months and it had been compressing.

[Hjalmar Ahlberg]

Got it. And let's see if there's a few questions here from the live stream as well. I can start off with this one. It's a question regarding which markets are you looking to expand in the most? And are you searching for M&A targets?

[Richard Brown, Chief Executive Officer]

With regards to market expansion, I think I won't go into all the specifics, I mean, there's some that we are doing in that we have as a current client pipelines, et cetera. Then there are some markets that we have quite a strong angle towards. I mean, Ontario recently regulated in Canada, and I think that will be one that we were trying to get done as quickly as we can, and there's some quite strong potential across those markets. We also see the development in various other Eastern European markets that we think is probably quite favorable as well. So we're trying to get ahead in some of those areas in conjunction with North America. I mean, in North America, we have -- as I said, we are planning to do Ontario, which I think they just started opening up the license applications in [indiscernible]. We start that process. We're doing Pennsylvania next year as well, and we will start to look at more what are the elements that are in Eastern Europe, Southern Europe and Latin America, I think, in particular.

[Hjalmar Ahlberg]

Got it. There was also another question regarding M&A. Let's see if I answered this correctly, but this is also kind of relating to how do you feel about your structure? Do you think that there's something in your structure that you can divest? Or is it the synergies between what you have now good? And do you see potential to add anything more in any kind of product portfolio that you have now?

[Richard Brown, Chief Executive Officer]

Yes. So in regard to M&A, I think now that we moved into a position where we've moved the business over the last 12 months into pure B2B focused. We still -- we have a huge amount of potential still within the existing business unit. That being said, I think we're in a place now where we'll start to look at the M&A landscape and see what opportunities there would be for value, but I think we will still retain a very disciplined approach towards anything within the M&A space. And then with regards to -- if I understood the last part of the question, in terms of divesting, we have no plans there at all. I think the Media business, the Platform business and kind of the Sports Betting business, which is we're in an early phase is both complementary of each other from a financial dynamic perspective.But as I kind of touched upon earlier, having the ability to go into different markets at different stages to drive value for GiG at different points in time is actually quite valuable. So I think that remains a very favorable dynamic in a very fast-paced changing gaming industry. So I think the connection between the 2 provides a very strong strategic rationale overall as a group of how we can approach the gambling industry as a total spare.

[Hjalmar Ahlberg]

Got it. And here, a pretty detailed question, but there was 2 questions about Hard Rock Casino, is that powered by GiG and what's the status on Hard Rock was the question if you can comment something on that?

[Richard Brown, Chief Executive Officer]

Yes. I mean as of the end of the quarter, they were still operational on our platform. However, they are progressing towards the migration dates as opposed -- the migration plan. That's all I will say about that, that we progress with that. But yes, there is still operational on the platform as of today.

[Hjalmar Ahlberg]

Got it. And another question regarding the segment in general, we've seen some larger operators moving some operational features in-house, like, for example, can be losing its sports betting to DraftKings and now potentially to Penn as well in the future. How do you see this risk in your business? Do you see risk of losing clients as they become larger? Or do you think this is a different story compared to maybe to a pure sports betting service to have your platform business?

[Richard Brown, Chief Executive Officer]

I think -- I would actually probably echo a little bit of what [ Kristina Kambi ] said as well, like I think it can be sometimes a mistake for people to be able to pursuing the technology themselves in-house. I understand the rationale that they have, but we disagree with some of -- in some cases, at least. I think it's a little bit more difficult to change platforms at times where the regulatory and the player account management system sits. And I think a lot of our clients, if we look at, for instance, the land-based groups or groups that are focused on a specific local market, the complexity required to build a PAM, let alone a PAM, that has the quality and the services, the data platforms, the integrations and the regulators, all of the regulatory aspect, that gap is pretty high. It's obviously not essentially, but I would be fully open to say but I still think, in general, our client types are more reluctant to build in-house as of today. So I don't see it as a big risk. Of course, Hard Rock is actually moving. They are building their own platform as well. So it's not to say that it hasn't happened, but I still think that what we've positioned particularly in terms of the quality of product, the integrations to the various land-based systems makes that gap and also the number of regulated markets that we're supporting is 1 thing to do a specific 1 market or 1 or 2 markets, but if you're operating with us in, say, Sweden, U.K. and various other markets, that's quite a big gap for you to be able to fill on technologically-wise, product-wise. So I feel that we have a strong position there overall.

[Hjalmar Ahlberg]

Got it. And also some questions on the client integration and client delays. What's behind this? If you can elaborate a bit more on that? And if you would ever consider to, I mean, cancel contracts with clients that do not launch in time and so to say?

[Richard Brown, Chief Executive Officer]

Yes. I think there's a lot of, as I said, there's the complexity of the market and the regulators that we're dealing with have led to some delays that we probably didn't anticipate. That being said, there are also clients who wish to launch for that particular reason. I think for us, the most important thing overall is looking at, okay, the comparable contract length. So does it make a huge difference to us if they launch in Q2 or Q3? Or when we're looking at a 5-year plus term contract, the most important thing is to deliver according to what we are in our project plans. Regulators overall have taken a much longer approach than we -- as I said, I kind of anticipated in some jurisdictions. And again, even the MGA or the Multi Gaming Authority have increased their new -- time to get a new license application. I think if you were to look back to 2019, 2020 even probably in the first part of 2020, it would take approximately 3 months for a new application to get a license. If somebody is applying for a new license now, that's probably a minimum of 6 months. So there's been an extension from a regulatory point of view as well in terms of when we can actually go live depending on the client contract -- client licenses as well because we're not the license holders in that sense. And yes, so I think those are the kind of main drivers as to why. With regards to canceling contracts that people don't uphold their plans, then of course, we would look to do that, and we would look for, obviously, compensation for that as well, if that be the case. So yes, we need to make sure that when we take on clients that they uphold their side as we are held accountable on our side as well.

[Hjalmar Ahlberg]

Got it. Another question also about the unnamed client in Latin America. What's the status of that client?

[Richard Brown, Chief Executive Officer]

Yes. I think we mentioned it in the report, and was kind of alluding to, as I just mentioned there, if clients have -- are failing to uphold their plans, we will seek compensation as far as that.

[Hjalmar Ahlberg]

Got it. And regarding your partnership with Betgenius, do you have any kind of discussions there with potential new clients? Or when could we expect that to be launched with the clients?

[Richard Brown, Chief Executive Officer]

Well, Betgenius trading products, et cetera, and teams have been live on our system since Christmas. So there we've been working operationally with them since then, and we're quite pleased with how that's progressed and such like that.We continue, as I mentioned, to develop our Sportsbook in a very product -- pragmatic way, and we continue to work on various different sales pipelines and sales processes with our Sportsbook.

[Hjalmar Ahlberg]

Got it. I got another question about your contract with Betsson and Rizk brands, do you have any discussions around this? And then do you see potential to extend this when it's -- when the contract ends?

[Richard Brown, Chief Executive Officer]

Yes. I think we continue to work very closely with Betsson on the development of the brands and supporting them non a continual basis. And we would -- we have, of course, an objective to extend that contract, and we believe we will start to negotiate when the time is right around that and about how to manage it. But I feel that we have an objective to retain that contract, of course. And we believe that we really have some very good chance of being able to do so, given the service that we provide as is the same with all of our clients that run on the platform as of today.

[Hjalmar Ahlberg]

Got it. There is also a question about working capital drivers going forward. I know there was no more specific than that, but I guess it relates to your working capital in the business, if there's any change in that going forward? Or if this is the business used at these levels?

[Richard Brown, Chief Executive Officer]

Yes. I think like we, of course, look on an opportunity basis and see where we -- if we have an opportunity to invest or to drive after various elements, but we're very happy with where we are today and the progress we've been made. We still believe that we will continue to make progress over this over the mid- to long-term as well and short-term even.So we will continue to focus on discipline, strict capital allocation programs with regards to what we see value drivers. And -- but of course, if opportunities to invest in a project or anything like -- or anything in particular comes to fruition, then we should pursue it for the long-term value of the company and grow the business as well.

[Hjalmar Ahlberg]

Got it. And looking at your balance sheet, I mean, you have extended the maturity of the bond. So that is good, but I guess the net debt-to-EBITDA is still quite big, so to say. Do you have any financial target on that or where do you want the leverage to be long term? And do you want to be a leveraged company long term? Or do you aim to reduce this if you have a long-term view on that?

[Richard Brown, Chief Executive Officer]

I mean, we've reduced the leverage ratio even -- like, as I mentioned in the report 2.15 down 13% versus the 7% last year. Operational performance of the business as we extend throughout the year, we'll also improve that leverage ratio on the current run rate if you extrapolate from today. So yes, we have an objective to reduce that leverage ratio continually. So we feel very comfortable in being able to achieve that target. And yes, we have a new maturity back in 2024. The business is generating cash, and we anticipate that to continue over the coming years as well, which will also help to reduce the leverage ratio as well as the expanding EBITDA margin. So yes, we continue to do it. And then when a question whether do we want to be a leverage company or not? I think that depends on the opportunities presenting itself sometimes having an element of leverage, it's obviously important for business growth perspective. But of course, as I said, we will try and we have an objective as of today to reduce the current leverage ratio, both from an operational performance perspective and from a cash position as well.

[Hjalmar Ahlberg]

Got it. We have discussed the sports betting business a bit, but I mean, it's still very low in terms of revenue generation. What do you see here in terms of what could kick this business off in terms of revenue? Is it new markets? Or are there any clients that are looking to launch sports betting that are in there? Or if you can elaborate a bit on that for me?

[Richard Brown, Chief Executive Officer]

Yes. So we have, I think it's around 3 customers in the integration pipeline. If you take sports [indiscernible], that will help to bring up the revenues there. And as I said, we're focusing both in kind of 2 areas; one, there's some product enhancement that we're in the process of rolling out, which I think will be favorable towards how attractive is the product from a sales perspective. And we think there are some new clients that we'll be able to build up through and also in some of these emerging markets that we're attempting to go into or will also be a driver longer term. But as you said, as of today, like it's a relatively small contribution level -- or very small contribution level in revenues. But we still believe there's an intrinsic value driver for GiG and also for customers who are looking for full-service solutions without that part if we would fall outside of that category. So I think it gives us an element of competitiveness to be able to move forward there.

[Hjalmar Ahlberg]

Got it. And coming to the Media business, this is doing very well. And you have launched in many new markets. How do you drive the growth there going forward? I mean, when you launch in new markets, is that does with a new website? Or is it that you use your existing structure to move into new markets? And how will the growth be driven there going forward?

[Richard Brown, Chief Executive Officer]

Yes. So again, in terms of the market approach, it's also very specific to the different markets and what conditions they have. So for instance, in markets that allow B2C, often we will probably try and enter with those because it's a good route to market. The publishing department takes quite -- because there will be more time for a new asset that's launched in a new market to become meaningful, but we continue to work on -- that's what's been the growth driver, as you can see as of today, the work that we're starting in the last 12, 18, 24 months has driven the results of today. So we continue with that focus. It depends again on what kind of market we're looking at. Some markets we launched specific new websites for that or new channels. And alternatively, some of our more global assets will be -- can be utilized on a language basis and transferred that product over into a new language and a new market entry.

[Hjalmar Ahlberg]

Got it. So I think we've actually gone through all questions both from the live stream and those that I had. So I guess that was the last question. So thank you very much, Richard, for this presentation and for answering our questions.

[Richard Brown, Chief Executive Officer]

No problem. Thank you very much, and thanks for your time today. Enjoy your day.