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Gaming Innovation Group Inc
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Gaming Innovation Group Inc
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Earnings Call Transcript

Earnings Call Transcript
2022-Q2

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H
Hjalmar Ahlberg
analyst

Hi, and welcome to this presentation of the Q2 report of Gaming Innovation Group. We are today joined by Richard Brown, CEO. And with that, I will leave over the word to you, and then we'll follow up with the questions afterwards.

R
Richard Brown
executive

Perfect. Thank you very much, Hjalmar. Pleasure to be here this morning, and thank you very much. It's very nice to present in person again as well after a couple of years of having to do so remotely. So very pleased to be here. Also, very pleased with how we stand here today for the Q2 report of Gaming Innovation Group. We've made significant progress across the board and very pleased with where we stand.

However, I still feel that this is very much the beginning of what we can go out to set out and achieve within the group and within the companies. For those of you listening in for the first time today, Gaming Innovation Group is a global iGaming company that services several high-value areas of the iGaming in B2B value chain. The business is listed on both the Oslo Børs and NASDAQ exchanges in Stockholm and Oslo. The media business is a global one as is our platform business as is the whole industry within gambling, and we treat it as such. The business itself and the platform has over more than 26 jurisdictional operational licenses or certifications as of today and with another 9 or so in the integration pipeline. And our media business is present in more than 30 different countries with primary assets. We have offices across Malta, Copenhagen, Spain and France and we're approximately 610 employees, as of today.

To talk a little bit more now around the actual business units and how we operate. Gaming Innovation Group is an award-winning technology and marketing for the iGaming industry. In GiG Media, we have a leading iGaming and sports betting affiliate marketing business that provides high-quality and high-value player acquisition by a multitude of different digital marketing channels.

It has a global reach, as I touched on before, servicing as an active and a trusted source for many, many players across the industry. It is powered and underlined and underpinned by first-rate proprietary marketing technology that enables us to act with speed, force and aggressiveness into new markets, but also provides us a scalable structure to build up from in going forward.

The business itself has a diverse revenue portfolio and a very high percentage of reoccurring revenue streams. The Platform and Sportsbook business includes what we consider a state-of-the-art player account management system, often referred to as a PAM.

It also includes now an end-to-end Sportsbook solution of the highest quality. It is built specifically, as I mentioned before, for regulated markets, certified and licensed products in more than 26 different jurisdictions and is designed specifically to respond to those regulations that are upcoming and in the future, we believe that this is going to be a significant and major driving force in the growth of our business and the growth of the industry.

The technology itself is highly customizable, flexible and designed specifically for the customers' needs in order to be able to provide our clients the opportunity to provide their customers with the best gambling experience possible. We also, as part of the acquisition of Sportnco have an extremely strong proven sportsbook with an end-to-end solution.

It enables our clients to differentiate on price in specific markets and marketing via their brand -- utilizing their strength of brand. The product also has an extremely strong player -- trading and risk management platform and an experienced managed trading service that has been operational in a number of high-margin requirement and difficult markets such as France, Portugal as such. And therefore, we're extremely pleased with how the product is being built and developed towards those markets, and we believe is a very, very strong addition to our product portfolio.

Now moving on to the financials for the quarter for the group. Very, very pleased to deliver revenues up 37% year-over-year, EUR 22.1 million in revenue. The adjusted EBITDA came in 47% higher year-over-year at EUR 8.3 million, and EBIT was also up year-over-year at EUR 2.4 million.

I will touch now a little bit more on our overarching strategy for the group. We can categorize or group together our 3 main marketing points, our 3 main growth strategy pillars. Firstly is market expansion. You've seen that we've rapidly expanded our addressable market across the business over the last couple of years, including in the platform business, but also in the media business that continues to operate in new markets on a consistent basis.

This, obviously, we believe, is a strong defense mechanism and against the -- or increasing the barrier to entry for our competition, and we continue to focus on making sure that we operate in a number of newly regulated markets going forward.

That being said, as we can see, not only in our media business, that we are continuing to gain market share in the new markets that we've entered, but we also see in our platform business, the effect and ability to scale up and improve the operational leverage as we go through and -- by adding multiple clients into the same market.

This obviously not only adds to the revenue growth but also provides a stronger profitability sector as we continue to push through. Our second kind of main growth pillar is around reoccurring revenues. We work predominantly in revenue share, both across our Media business and in our Platform business.

This means that when we bring in new clients or new customers, our revenue grows over time, in conjunction with the growth of either client or the value of the customer over the life cycle of that customer that we have referred. This is a strong growth mechanic, enables both organic stable, sustainable growth, but also multitudes of upside.

We also believe in a great deal in the product driving our market share. In the media business, we are continually focusing on improving the product portfolio, improving the UX of the different assets and improving the content, in order to continue to build a loyal customer base within it.

This will help us gain market share in those particular markets that we're operating in and in our platform an sports betting business by developing superior products to the market, we're enabling not only new contract wins, but then to be able to provide a better service to their customers and customer base, which in turn, due to the reoccurring revenue and revenue share will lead through into our growth as well.

Just to touch on the group long-term financial targets. And now as the business has performed over the last coming -- the last quarters and now with the acquisition of Sportnco and some of the strategic actions that we are taking in pursuit of various different activities in the coming quarters, we've led to us to revise our and refine our long-term financial targets.

Firstly, we have now refined and improved our guidance on revenue growth. We're targeting a revenue growth on an annualized basis of around 20% each year.

Profitability. We have seen, as of our previous guidance or I wouldn't say guidance, long-term financial targets was a 40% EBITDA margin by 2025. We can see not only again by the performance of where we are today, where an EBITDA margin lands at 37%, but we're also at 2 years ahead of where we were kind of anticipating we would be. We're also seeing continued efficiency of going through in the business in the coming months and coming years. And therefore, this is leading us to raise up our profitability and EBITDA guidance to an adjusted EBITDA of 50 -- margin of 50% during 2024.

We also see strong cash generation from the business and going forward, we believe that a lot of the cash conversion will be very effective in the group. And therefore, we will utilize that to lower our leverage ratio going forward, while of course, always looking at the various different capital allocation frameworks in the pursuit of building a stronger and growing business within the iGaming sector.

I will now touch a little bit more detail on the business units. First up is our Media business. Incredible performance, once again, by this particular unit. The teams have in place the strategy for the last couple of years that is continuing to pay off, and we continue to see the strength of how that diversification of global reach and drive within the reoccurring revenues is continuing to build up this business at pace.

We reached all-time highs in a multitude of our KPIs, both financial but also operational. Our revenues for the quarter were up EUR 14.8 million, up 35% year-over-year and 5% versus the previous quarter. Adjusted EBITDA came in at EUR 7 million, up 32% year-over-year, with an EBITDA margin in the normalized range of around 48%.

Both our Paid Media and our Publishing departments performed exceptionally well, achieving all-time high in revenues from both of them. Our reoccurring revenue streams also came in at 58%, and that is in line with our previous quarters and the kind of trend that we would anticipate and work towards.

Moving on to first time depositors. We've increased our first time depositor intake by 70% year-over-year to almost 80,000 in the quarter. It's important to note at this stage as well that because we work on a revenue share basis, the majority of the earnings of those revenue share players that I've referred are actually coming over time as opposed to upfront when we receive CPA structure.

Therefore, when we acquire volumes in the coming periods, we will see the revenue growth buildup as they go through their bonus money, et cetera, and start to become higher-value customers. As I said, 95% of all of the per page of referral have a revenue share component within that. So again, going back to our strategy that we mentioned earlier of having a strong, sustainable and high earnings quality within the revenue share makeup.

That strong development has continued within July with all-time high player monthly intake, up 85% comparatively to the month in the year before. Just to touch a little bit more in detail around the geographical splits that we have within media.

As of today, we currently hold 13 licenses in the U.S. and qualified to do business in 20 different states. The organic -- the business in the U.S. is performing and it's starting to grow. It's been an organic build and to see the positive development, is up 120% in year-over-year in terms of the organic traffic visiting those websites. So we're pleased with the progress. We still think we have a lot to come, and we're continuing to invest and bring that sort of part of the business through.

Revenues for the Americas, in total, so both North and South America, have provided significant growth. Again, going back to what we talked about at the beginning with the market expansion strategy and revenues there are up 170% year-over-year and now corresponding to a 20% of our total revenue geographical distribution.

We're also launching new sites recently in North America, and in particular, in Ontario, focusing on the newly regulated market there. And our GiG Comply, our marketing compliance software, signed an additional client in Q2 and extended with an additional 3 in that market -- in that product.

Moving over now to our Platform update -- Platform and Sportsbook business update. We completed the acquisition of Sportnco the 1 April, and we're exceptionally pleased with how the integration is going in the performance of that particular business unit. We've already achieved significant milestones within that. For instance, the signing of the contract in a sportsbook-led brand with a sportsbook-led -- sportsbook-only market in North America.

Again, these were kind of points that we alluded to and pointed towards during the M&A thesis as we were going through. So it's very nice to see those coming into fruition very rapidly after the initial acquisition. We're also making strong progress in terms of the technical integration with significant milestones already achieved along the post-merger integration plan.

Revenues for this segment for Platform and Sportsbook were up to EUR 7.3 million during the quarter, up 43% year-over-year. When excluding the Betsson premium fees or the premium fees related to the B2C divestiture, organic growth for that segment was up 12% year-over-year. Adjusted EBITDA increased 322% year-over-year to EUR 1.3 million. Again, very pleased with the progress, but very much the beginning of what we're going to go out and pursue with this business unit.

To give you a snapshot around the client structure and their integrations that we're anticipating in the coming quarters. As of today, we have 41 clients, a client being a single entity that may hold different contracts with multiple brands and such. Each of those brands would normally have an independent revenue stream coming through into us. Our brands were at 58 as of today, 16% up year-over-year and a total of 39% of our total client bases also have a Sportsbook product from us as well.

During the quarter, we had 5 new client projects that were completed, 2 of which went live and 3 that were development complete, awaiting just client go-live -- on their decision to go-live. We have 15 brands in the integration pipeline as of today as well. And as we've talked about historically as well, these SaaS contracts and SaaS businesses, they build over time in terms of the value of the contract. So our first couple of years are starting to build, and we would say that on average, you're looking at year 3, year 4 to -- when they reach what we would say, value maturity.

Now if we look at the actual number of clients, we have live brands. We have live only 36 -- or sorry, 36% of our contracts are actually what we would consider prematurity, i.e., that they've been only live for less than 2 years. And therefore, going back to what we talked about revenue build of reoccurring revenue streams earlier in the presentation, that means that we anticipate those clients to grow over time as they build their brand in the various different markets.

Not only have we been looking at, obviously, the expansion of the existing client database, but we're also winning new business. Seven new contracts in Q2 were signed, and we expanded our contracts in 5 market expansion deals with existing clients. So that takes a total number of clients signed or market expansion deals that we've signed this year up to 15 so far.

We have a geographical spread where kind of approximately we're looking at 40% in the Americas and the rest being Europe. And now also our first contract was signed in regulated African market, a continent that's in an emerging stage of sports betting and online gambling, and we would like to be able to make sure that we get an initial footing in there to then look to expand in that particular market over the coming years. Again, early days, but we wanted to take that first step in regulated African continent.

Just to touch now a little bit on updates after the quarter. We were granted our supplier license for Ontario, the regulator -- which is a recently regulated market, and we're anticipating our first client launch during this quarter. We also, at the end of last week, signed an additional or new client for the Ontario market that we would anticipate to go-live probably in the first half of next year or early part of next year.

This kind of doubles down and goes again as to what I alluded to in the -- when we talked about markets earlier in the presentation, where we are continuing to build into a regulated market and adding multiple clients that utilizes and leverages that operational and investment that we've already made and therefore, improves the profitability of the segment going forward by increasing our volume of contracts in each market.

We've continued our expansion across Latin America, with extensions to contracts with Betsson Group in Colombia and also signed in 2 additional markets for Grupo Boldt, which supports the Bplay brand in the region, and we're looking forward to launching those into 2 new regulated markets as well.

The sales pipeline is remaining strong and continues to build momentum as we also continue to refine and target those existing markets and some of the higher-value newer markets. Our Media business has been making some significant strides in the deployment of our new marketing technology. And in Q3, we already released several new updates to it that we believe will continue to improve our time to market and importantly, improve the UX/UI and product usability for the existing clients, making sure that we're always at the front of how users consume information related to gambling. July has also developed incredibly positively and revenues were up 37% year-over-year compared to the same period last year, whereof 24% of that was organic.

GiG has delivered an all-time high in revenues with strong double-digit growth in revenues and EBITDA. We're extremely pleased with where we stand today, but we still believe, as I said at the beginning of the presentation, that we are at the beginning of what we can go out and set to achieve.

We have long-term targets that we are revising and that we're going to go and pursue with force and vigor. Our Media business performs exceptionally well, remains a highly profitable and becoming a fast-growing global powerhouse within the iGaming affiliate marketing space.

We have many other projects. With the Media still in the early phase, we see a long runway there of potential growth opportunity. Our SaaS business is delivering against its platform and sportsbook strategy, entering and supporting regulated markets, and it is now in a much improved financial position. And going forward, we can see a number of operational synergies that will develop and be executed against in order to also improve the operational performance, profitability of that segment in the coming 12 months.

With the acquisition of Sportnco, this company is one of the few full-service turnkey solutions within the iGaming industry. We are reiterating our guidance for 2022, with combined entities generating revenues in the region of EUR 87 million to EUR 93 million and an EBITDA in the range of EUR 30 million to EUR 35 million.

Gaming Innovation Group is positioned for multiple growth opportunities across a diverse revenue streams and increasing addressable market. We are continually working on improving our operational performance to continue to drive forward this business.

Thank you very much for your time this morning, and I look forward to the Q&A with Hjalmar now. Thank you.

H
Hjalmar Ahlberg
analyst

Okay. I will start with a question on the trading update. Could you give some thought on the kind of seasonality coming into August, September? And also if there's something to consider when comparing Q3 last year in that number?

R
Richard Brown
executive

Not necessarily. I mean I would say the only thing July was a lower seasonality than normal. Last year, you had euros and then we have a relaxing of COVID, et cetera. So there's a lot more travel in June and July. But we don't have anything particular there that we wouldn't see outside of the normal course of business or normal annual kind of flow there, so nothing really.

H
Hjalmar Ahlberg
analyst

Right. And you mentioned a lot of contracts signed and also some large brands, I guess, with Aspers, for example. Could you care the kind of -- if you look at the pipeline now, the contracts there, how do they look compared to the kind of average size in the current contract?

R
Richard Brown
executive

It's a bit difficult to comment specifically on the pipeline and the size of the pipeline, and we can maybe talk about that once they're signed as well. But we continue to work on a number of different structures within the pipeline. We see there are always opportunities where we think it's an early-mover that may be a longer-term play, such as, I mentioned, Africa and even some of the markets in Latin America despite the strong performance in that market, still very early days. So we would say, okay, there's some contracts there that we believe very much in kind of the 4, 5 years-plus structure, but potentially not in the first couple of years.

And then on the other hand, there are brands that we would look to be to hopefully migrating across from another platform, so then there would be a balance of revenue from kind of day 1 as opposed to a buildup, et cetera. So it's a kind of a normalized kind of fluctuation where we have new entrants strong from day 1 and then you will have others that maybe will be a more strategic and longer-term build through.

H
Hjalmar Ahlberg
analyst

Right, right. And if you kind of look at the launch schedule, do you see a lot of brands launching in the second half or is there some risk for delays or...

R
Richard Brown
executive

No, we have a very action-packed H2. We continue to work, I mean sometimes the regulators have slowed down and various different items. But on an overall basis, we have an action-packed H2. And you already know, starting into H1 an action packed delivery period. I mean I think we've made some really material changes in delivery process over the last kind of 18 months as well in improving, our technology has consistently been improving as well. So we would start to see continued operational efficiency. Ultimately, of course, there are licensing processes with the various different regulatory bodies. But we feel like we're in a strong place with that, and we will continue to build forward within the integrations.

H
Hjalmar Ahlberg
analyst

Right. And coming to profitability outlook. We now have Sportnco in here, which will continue to improve over the second half and you also updated your financial targets. How should we kind of view the way from current profitability to the long-term target of -- in 2024? Is it mostly coming from the Sportnco synergies or is it more than that, I would say?

R
Richard Brown
executive

It's a combination of items there. I think we've idea -- like as part of the transaction as well, we could say that we were on a very aggressive CapEx run with regards to how difficult it is and how much money you need to invest in order to build that, so very strong position in terms of regulated markets.

Now we have -- by probably this time next year or latter part of next year, we'll be in plus-30 markets. So that means that there's a reduction in the requirements for kind of growth CapEx needed because we have a really strong position. And I talked about adding multiple clients into the same jurisdiction, that leverages the operational capabilities today and also enables us to be -- utilize that kind of scale structure.

So on an overall basis, I would say that it's kind of mixed across the platform, the sportsbook business. And we will continue to drive both revenues, but then also the operational efficiency we talked previously that we have, I think, between EUR 6 million, EUR 8 million and that includes the sportsbook EUR 8 million, it includes the Sportsbook of synergies that we will extract over the next kind of, well, I'd say, 9 months from now, that will really help to take us this far, and then it's, of course, the continued optimization of the business, improvements in the technologies that we use slides that enable us to be more effective. So there's a number of kind of category points that we're working through, and we're building a strong plan towards and executing against.

H
Hjalmar Ahlberg
analyst

Right. Right. And you mentioned the CapEx I think this quarter, it was a bit a lift up, but it sounds like that could I mean, flatten out or even maybe come down from there?

R
Richard Brown
executive

Yes. Where we anticipate -- I mean we also now, of course, the CapEx coming over from Sportnco as well, so there's going to be -- on a like-for-like, it's different. But then as you said, we've been very aggressive. We've been launching now. We've been -- this year, we're launching in 3 North American markets as well. So I get -- with new clients in New Jersey, Pennsylvania, Ontario, we've been doing a lot of work there to build us into this position. And that comes with the investment that is required in order to be able to deliver excellent service and product in those markets. But again, going back to it, now that we have a very strong base, continually improving technology, that means that cost of that kind of further adventure, if you will, will start to reduce as well.

H
Hjalmar Ahlberg
analyst

And if you kind of think about -- I mean, you're now slightly below 40% EBITDA margin, but it means Sportnco wasn't in there the full quarter, so you should get EBITDA up just from that. But do you feel that 50% is kind of aggressive target or risk that you don't achieve it or how do you do the traction from here?

R
Richard Brown
executive

We will always move with ambition towards our long-term targets. So we feel, of course, that we have the capabilities to achieve it. But we also have the ambition to go out and achieve it. And of course, everyone always wants to go out and beat targets, that's the nature of humans most of the time. So I think that's the way I would categorize it.

H
Hjalmar Ahlberg
analyst

Right. And just a final question. On the cost side, do you see anything -- I mean, cost inflation in general is increasing, but I guess you've lived with that for a long time, but do you see any kind of change in your market from that?

R
Richard Brown
executive

As of today, no. I mean, of course, we're conscious and actively monitoring. I mean, certain markets have more pressurized cost of living prices and such like that, but it's something that we continually keep an eye on. But as of today, we don't see any kind of macroeconomic challenges towards the costing as such.

H
Hjalmar Ahlberg
analyst

Right. And looking instead on the new growth target, which was -- I mean, before you had double-digit growth, now you're 20% growth, so...

R
Richard Brown
executive

I think in my mind, it's always been 20%, but you can find it now, for sure.

H
Hjalmar Ahlberg
analyst

Okay. Good. But if you look at what will drive that, I mean is it launch in new markets, new products, give some granularity on that maybe?

R
Richard Brown
executive

Yes. I mean there's so many growth opportunities that the business holds. But again, kind of categorizing back into the strategy where we talked about those 3 growth pillars: market expansion; increasing the number of clients per market, so therefore, kind of market share; the product itself continues to be very, very strong across. So there's some various items within there. In our Media business, as I said, the team laid out a strategy a couple of years ago, they stayed very true to that.

We also see, obviously, paid marketing performing very well. That's -- the technology they built in order to support that is extremely strong. And we think that obviously, as more markets regulate, we can then roll that out to further and further opportunities. We have so much opportunity still there as well. Like we performed well in some of our core historical markets.

But we've seen some really good growth in Latin America in that segment. But Latin America is an enormous continent, and we're probably only really making a dent in 1 or 2 markets. So we still believe that there's a huge amount of opportunity there to go out and achieve it.

H
Hjalmar Ahlberg
analyst

Right. And moving a bit out to GiG Media. I mean you've been able to provide a pretty high growth rate in that segment despite U.S. being a quite small market. Has it been kind of taking market share from others or can you talk a bit about that, please?

R
Richard Brown
executive

Yes, certainly. I think -- I mean, again, the growth from the Americas is -- although the U.S. specifically, is not a huge portion of the revenue. We've seen that kind of market expansion growth being one of the drivers, but then also in our kind of historically core markets in Central and Northern Europe, the businesses we've been -- as part of the strategy, we talked about product. The investment that we've made and the quality that the team are producing in terms of the products there in those markets is also making a material impact in the European historical markets that's enabling us to grow that part as well. So while some of the growth comes from new markets, some of the growth is coming because we're capturing market share in various different localized structures that we have.

H
Hjalmar Ahlberg
analyst

Right. Right. And coming to U.S. market, a lot of elites have been going into that market, and we see that you're usually being forced to take CPA contracts mostly. How do you view that market? And will you try to continue to push for a higher share of rev share in U.S. as well?

R
Richard Brown
executive

I think it's a little bit -- we have a balance and depending on which markets you're operating within the U.S. that will allow that. I mean we're actually able to work with revenue share in both New Jersey and hopefully at the end of this year, Pennsylvania because the group holds licenses for that via the platform as well.

So there's a kind of operational leverage that we use there to be able to move into revenue share through that. However, we will always identify whether we believe that the CPA value is potentially higher than the revenue share, in which case, we would maybe look to do that.

I mean one of the reasons we use revenue share is because we see that the value being extracted over time is higher than we would retrieve on a CPA level. So we work with all of our partners, and we work with a very strong data structure that enables us to be able to kind of see which client, which market should be balanced and what percentage in revenue share, which part is CPA. We're also looking at kind of more macro, if you will, elements within those markets.

Okay, is there a potential for tax revision in that market? Okay, maybe we should move into a little bit higher CPA. But on an overall basis, we believe in the quality of the players that we're generating, and that's why we work very much on revenue share.

H
Hjalmar Ahlberg
analyst

Right. And moving back to kind of historical markets. I don't know how big U.K. is for you on top of my head, but we've seen some regulatory changes there. Have you seen any impact from that or any other market in your kind of...

R
Richard Brown
executive

I think we haven't necessarily seen it so much, as of today. I think a lot of the operators have over the last -- or the major operators have over the last probably 12 months already adjusted to what we would anticipate more or less in the U.K. And the U.K. is a good market for us, but it's not one of our largest markets, if you will.

H
Hjalmar Ahlberg
analyst

Good. And looking at the U.S. and moving on to your Platform business, you saw some new signings in Maryland, I think, you mentioned. You also have the Play Store contract that I guess should be up and running any day if it's not already there. What's the kind of the status for the Platform business in U.S. now?

R
Richard Brown
executive

Yes. I mean we've signed a few contracts there now. And as I said before, it was one of the most important things for us as part of the acquisition strategy was also being able to move into sportsbook-led markets. Historically, we've been more leaning towards, obviously, iGaming or casino, and only a handful of states there are regulated. So now with the Sportsbook being of such quality and being able to operate in the U.S. as well, we're bringing that in.

We signed the first contract. So we will continue to pursue that as we do with a multitude of markets. And I'm pleased with where we have. We have an operational experience with the U.S. operating in New Jersey for something like 4-plus years, very confident on that. We're now going into Ontario with the Platform business as well. So yes, we're pleased with where we're positioned. We will continue to move forward within that structure, for sure.

H
Hjalmar Ahlberg
analyst

And maybe a few questions on your balance sheet. I mean you have stronger balance sheet, larger cash flow, large profits. What kind of opportunity would you look for from here? Would you see M&A is the most interesting? Would you consider looking at buybacks or anything else to do with your balance sheet here?

R
Richard Brown
executive

I think, again, kind of referring back to the kind of financial targets, I think we believe that there's going to be strong cash generation and cash conversion in the business over the coming years. And how we utilize that will always be a little bit of timing and opportunity dependent. We will, of course, look if there's accretive value creation within M&A, we'll continue to do that.

One of the strengths within GiG is as well as having kind of a very diverse structure enables us to be quite opportunistic in multiple areas when it comes to M&A and look for value for the business and for the shareholders there. Then, of course, like we said, we're kind of aiming longer term to bring down that leverage ratio meaningfully with the cash that we generate. So it's a little bit dependent on that, but I would say that we would, as we build through, be able to identify which is the strongest value to shareholders as well.

H
Hjalmar Ahlberg
analyst

Right. And have you already started kind of looking at refinancing your bond to maybe a cheaper financing or is this something you will do when it comes to maturity?

R
Richard Brown
executive

It's only 12 months since we renewed it. So it's not like -- but I think we will continue to look, and we appreciate that the cost of debt is -- on that particular bond is a little bit higher than we would have liked. So we will continue to look at whether that's the best structure and what the debt structure is. I mean, again, we believe that the cash generated from the business will give us a lot of opportunity when it comes to the actual debt position and where and how we finance that or how we pay it, et cetera. So I think a little bit of a broad answer, but we kind of probably next year start looking in more detail about exactly what we're going to do. But we haven't believed in a lot of strength there. We have multiple opportunities to look at how we have financed in that regard.

H
Hjalmar Ahlberg
analyst

Right. And mentioning cash flow, I mean, you had pretty good operating cash flow this quarter. What kind of conversion rate do you see going forward? Do you see any big swings in working capital or something that's unclear?

R
Richard Brown
executive

No. I mean we're not going to provide a kind of guidance on the cash conversion at this stage. But I would just go back to what I said before. As I said, we believe that we have very strong cash conversion. We're consistently working on the operational performance. We've talked about some material savings, both through OpEx and CapEx, it will result in cash conversion improvements.

So in that regard, we're really content with what we're targeting and what we will continue to drive towards. The quarter itself was good. So the operations delivered around EUR 2 million. It was quite a lot of moving parts related to the transaction of Sportnco, both paying out the actual purchase price, transaction fees, et cetera. But yes, we're pleased with how we're building through. And we're targeting more to come, I think, is what we would like to be able to push towards.

H
Hjalmar Ahlberg
analyst

Right. I was going to moving back to the kind of cost structure. I mean the cost increases, obviously, now it is mainly kind of marketing, that's kind of growth costs. OpEx was pretty stable this quarter, I guess. How should we view that from here? I mean you have the synergies, would you actually see OpEx coming down or is it more like you see...

R
Richard Brown
executive

It will be across OpEx and CapEx synergies that we'll extract, as I said before. A lot of the CapEx we delivered over the last period is growth CapEx as well. It's very much the investment in order to bring us to this very strong strategic position in terms of the number of regulated markets, but yes, then we will see. So we will see both OpEx and CapEx moving down as we realize those synergies.

The marketing spend, we will continue to be opportunistic and aggressive where we see value. I think that's an important thing to say. I mean, again, when we work in revenue share, it gives us quite a strong flexibility in terms of being able to identify when there's value or not. And therefore, we can pursue aggressively. We've been ramping up that marketing spend because we can see that the return on investment very -- and forecast the return on investment very thoroughly, and that means that we can continue to do so.

If we see, for instance, a period where the value or the price of acquisition is squeezed, then we can pull back. And we can do so without affecting our actual revenues because we're on revenue share, so they can continue to build from the historical players that we've acquired.

H
Hjalmar Ahlberg
analyst

Right. And maybe just a final question again on the kind of long-term growth target. You kind of specified now to 20%. I mean how long can you go for 20%? Can you do that in the 10 years?

R
Richard Brown
executive

In the region 20%. I think, again, like it's a long-term growth target. I mean we anticipate -- obviously, we're going to strive and target above and beyond whatever we can achieve. But we see that there's a significant growth both within the industry, both within the opportunities that we have.

We have significant migration from retail to online, which is part of what we support. There will always be fluctuations and regulations and how they play through and some will take longer than others. We have very large markets that are -- sportsbook currently, not only in the U.S. but also in Europe. We have France, Poland, large European markets that are basically only half of the available market of what could be there.

So both from a market dynamic, from a position of what we have in terms of product, both across Media and in Platform, so we have the absolute goal to go out and continue to deliver on those levels.

H
Hjalmar Ahlberg
analyst

Sounds good. So thank you very much for a good presentation and answering my questions.

R
Richard Brown
executive

Thank you very much, Hjalmar. Pleasure to be here.