Gaming Innovation Group Inc

OSE:GIG

Earnings Call Transcript 2019-Q4

[Jonas Amnesten, Equity Analyst]

All right. Good morning and a warm welcome to Gaming Innovation Group's Quarter Report Presentation and Q&A live from Redeye's office in Stockholm. My name is Jonas Amnesten. I'm an equity research analyst at Redeye with focus on the online gambling industry and will also be the moderator during the Q&A session that will follow after the presentation, so in about 20 minutes. [Operator Instructions] And without any further ado, I will leave the floor to GiG's CEO, Richard Brown.

[Richard Brown, Chief Executive Officer]

Thank you very much, Jonas. Good morning, everyone, and welcome to Gaming Innovation Group's Q4 and End-of-Year Results. Pleasure to be here with you today. I'm joined also by our Group CFO, Tore Formo, as well who will be here for the Q&A. Today, I will go through a quick introduction into the company and to the position we're in and then leading into a strategic update that was -- obviously came out predominantly in the news at the end of last week. With that, it will be followed by our Q4 financial results and takeaways and business update, followed by action point and summary and, finally, the Q&A that I look forward to. Very quickly, GiG in brief. We're currently 640 employees in the group. We have a market cap of EUR 60 million, approximately. Offices in Malta; Spain, in Marbella; Gibraltar; Copenhagen; and satellite offices also in the U.S. We are a licensed operator and platform in both Malta, U.K., Sweden, Schleswig-Holstein in Germany, recently, Croatia and affiliate licenses in Romania. And we also have a certification of the platform in Spain. We're dual-listed on both the Oslo Børs in Norway and also the NASDAQ here in Stockholm. Firstly, the final year results. We achieved revenues of EUR 123 million and EBITDA of EUR 14.1 million for the year, which leads into the Q4 result of EUR 29.4 million in revenues, a decline of 26% year-over-year and predominantly led by the impact of the Swedish re-regulation and the termination of a large customer in Q1 2019. Cost of sales were, however, down by 44% to EUR 4.4 million. Marketing also down, as well as other OpEx down by 12% year-over-year. This led to mitigate the relationship to the revenue decrease, and we only marginally decreased in revenue -- in EBITDA, sorry, leading to a result of EUR 4.8 million. Obviously, one of the most key points that we will discuss today is the strategic update following on from the news that came out at the end of last week, that we are divesting our B2C business. I will spend quite some time talking about the strategic logic behind that as well as talking about some of the elements that we believe will be the future growth drivers within this business. I began my role as CEO in November, and the Board and I kicked off a strategic review in -- at that point in time with 2 basically main ambitions to solve. One was to see how we would address the financial stability of the company and address the balance sheet. The second part of that was to see if GiG itself and its current format of the B2B and B2C still strategically made sense and whether it was best that those companies were together or would they thrive better apart. As I mentioned, one of the items there was to decrease the overall financial risk. We also wanted to just decrease the strategic risk of the business. The ever-changing world of online gambling, the consolidation of the market in conjunction the re-regulation of many core markets and global regulation into new markets allowed us to consider this as the main points of our thoughts when we look to the different strategic elements. We also wanted to increase the earnings stability and quality and remove some of the volatility that we've experienced over the last couple of years and then also improve -- or decrease the complexity within the organization and what is perceived within, outward as well. Therefore, we identified that our main strategic action and goal should be -- revolve around becoming a focused B2B operation. And as a consequence of that, the strategic element to divest the B2C was concluded. This allows us to focus on the ambition to become a Tier 1 global B2B provider and divest in B2C, and that helps us achieve that long-term ambition. The current structure, as you see, we divested the B2C organization over to Betsson. We will continue with our Platform and Services, Sportsbook Services and Media Services, in conjunction with the managed service element lying on top, providing B2B customers that transitional point over into their global and digital transformation. Some transaction highlights. As I mentioned and as you're probably aware, we divested to Betsson Group. They will take over the 4 brands that we have as B2C brands: Rizk, Guts, Thrills and Kaboo. There will be a EUR 31 million initial cash payment. Betsson is also committed to keeping the brands onto our platform for the coming 30 months as a minimum, so we believe the total deal value to be in the range of around EUR 50 million towards GiG. They will pay a partial premium rate within that 24 months on top of the initial cash price. And they will also, as part of the transaction, integrate their sportsbook into ours. I will talk a little bit about the Sportsbook and why I believe having a sportsbook-agnostic platform is a very strong selling point for us and a development point for a higher sales capacity in the future. I've talked about them quite some as well, but I would like to also highlight the multiple upsides I see from this transaction to GiG from an operational perspective as well as a growth perspective. Obviously, we're strengthening the financial position of the company. We will use the funds generated from the sale to pay off the 2020 bond of SEK 300 million. We are expecting an EBITDA, as we mentioned, the guidance range of around EUR 14 million to EUR 17 million in 2020 and revenues in the range of around EUR 70 million to EUR 75 million. There is also a potential upside. We believe that, obviously, the tightening regulation has squeezed many people's margins and knocked us away from it. And in order to be really successful, you need to have significant marketing funds available to support that B2C business. Betsson now are one of the largest European operators. And in order for them to be able to -- we believe that they will be able to grow the brands with that marketing investment significantly over time. This will also lead to increased revenues and the NGR stream as we put a charge on the royalty model with this deal. I've touched before about the Sportsbook. I will come back to that as well, but we believe that the integration of a different sportsbook as well as having our own will enable better sales capacities and onboarding of new clients in different markets. We will also be able to reduce the complexity internally. Over time, while there was definitely synergies of having the B2B and B2C segments together, over time, as the complexity of regulation and conflicting agenda points within the organization and which ones should we capture, which parts of the organization, which territory should we go for? All of those have become a little bit more difficult to manage over time. And therefore, by removing those internal conflicts, we believe the focus and delivery of the organization will be significantly improved. It also helps us with our capital allocation principles. I talked about this in the past where I think perhaps we've maybe got these a little poorly balanced between the various areas of the organization. And now this simplified organization, with a much more greater level of focus and reduction in complexity, will allow better principles of capital allocation and therefore enabling us to fully be focused and dedicated towards becoming a Tier 1 global operator and a B2B provider. As I've mentioned as well, the enhanced sales capacity will -- I believe will actually lead out of this deal. As our companies mature, so does our target audience in terms of customer database. They -- previously, it was not so much of an issue. But over time, it's become evident that those clients take more issue with the fact that we're both a B2B and B2C provider. Therefore, by eliminating this now, we should be able to enhance the sales capacity and onboarding. We're in -- what we come now to our fourth phase, if you will, within GiG. We started off -- we started creating some scale as a B2B and B2C organization. We've then developed, over the past few years, a pretty strong offering with the B2B, which is not only online but omnichannel. So synced with them are our base casinos' operating systems that enable both that transition from offline and capture the online transformation of the gambling industry. And now we enter the next phase, which is that full focus of -- to becoming a B2B provider. Something I would like to touch on as well is something that we released in Q4, which is a new model of pricing for the platform. This is a fixed fee model, which is slightly different to the normal royalty model that the majority of platforms are operating on. We believe this enables significantly enhanced cost savings for the operators themselves. You're not continually getting charged on your margin and therefore, you're increasing our stability and earnings quality within those customer transactions and contract values. This then prevents the return of customers looking to either build their own platform or move and put pressure on price continually. It enables them to grow their business, and therefore, we believe there is a market attractiveness within this deal structure for potential clients and therefore, we believe we can enhance our sales and onto the platform over that time. The full contract value is made up from a base platform fee. This is added on top of -- from jurisdictions. So for instance, if you are just an MGA, you will be running on the base model. And then if you add the U.K. or Sweden, for instance, then you would have additional charges. This is then surplused by managed services on top of them, ranging from CRM to front-end development. And those continue to add up to the full contract value of the client and towards GiG. We signed our first customer on this model in Q4, who are committed to also adding 2 new brands with this model. And in Q1, we also renewed or extended the contract with an existing customer who was on a royalty-based model, who's now transferring over to the fixed fee, who will also add 2 additional brands as part of the model. Also, this is going back to one of our capacities or capabilities within the organization. In January, we launched our data -- new data platform. And we've talked in the past about having modular sales and different elements of the platform being able to be agnostic to our offering itself. So therefore, this is one of the first steps in achieving this. It's a incredibly strong platform itself. It's a real-time data platform. It facilitates payments, regulation, responsible gambling, marketing, all of those elements within -- enable the customer to both improve their operational efficiency but also realize revenue in a much more significantly enhanced manner. As I mentioned, it's agnostic to our platform. This will actually -- data platform can be attached or bolted on to other iGaming platforms themselves and therefore, sold modularly, which again enhances our service capacity and also potential up-sell as well. We talked about media. I think you've seen the media results come out this morning. We, as part of the strategic review, looked at the kind of 3 elements into the 2 different verticals within media. We have publishing, which is traditionally SEO traffic; and then paid media. We identified 3 particular driving factors that will return this sector to organic growth. In publishing, we have a significant portfolio of very well-ranked sites within Google. However, the -- what will lead them to enhanced rankings, we believe, is a product enhancement. That's followed by geographical expansion of those products or new products within publishing. We started this already in late 2018, saw a good growth of those new projects during 2019, so a continued focus on that geographical expansion is required in order to drive the growth. And finally, within our publishing business is predominantly casino-led. That means that we are kind of only looking at a small part of the addressable market. While it's probably some of the highest-value customers, there's also a large addressable market within sports that we do not have so much of a focus on in the past. So therefore, we would like to invest and to drive growth with it from the B2C -- from the sports segment within media. In paid, one of the biggest drivers for the growth there is the geographical expansion. In paid media predominantly, the channels are opened up as markets regulate, so the re-regulation of Europe and to the U.S. provides us with significant enhancements and opportunities to drive revenues from those new countries. We've seen that recently in some of the European countries, such as Romania and Belgium, and also then in the U.S. has just started opening up for paid as well. Also in conjunction with that, to achieve growth, we're looking at new channels. Historically, we've been very strong within display and PPC and some social. New social channels are arriving all the time as well as apps. There's a multitude of paid media channels that we still have yet to capture, so we are going after them. And it kind of transverses to the publishing business. In early 2019, our paid media was very predominantly based around the sports segment. And we've continued to diversify that revenue, which has led to all-time highs in EBITDA for a couple of quarters running now as well into casino. So that's something we will continue to focus on that we will believe will drive growth in that segment. I will now go through a quick business update and some key takeaways for Q4, just to recap. Obviously, I became the new CEO in November of last year. We initiated the strategic review, which we are now coming towards the end of the completion. With B2C, we still have some elements within sports to address. We extended the hard -- our partnership with Hard Rock. We went online in the second state in the U.S. with sports betting with them, in Iowa. We did retail in September, followed by online in December. We signed Mr Green in Latvia, an extension of our offering within that market. We have renewed, as I mentioned, a contract with Armstrong, who will be our first customer on the fixed fee model. We have entered the Croatian market as a -- or now -- or via the divestiture and supporting Betsson's entrance into that market with our B2C operations -- or current B2C. We were pre-approved -- we were -- received approval for New Jersey for Google Ads as well for our flagship sportsbook site, wsn.com, there in the U.S. And B2C and paid media achieved all-time highs in EBITDA in the quarter. Just as kind of a comment on trading for so far this year. In January, we were 8% higher in revenues than the Q4 average -- monthly average. GiG will continue to focus on its cash position and improving that on cost control basis. We will, of course, as part of the divestiture of the B2C organization, look to reorganize and optimize the organization in order to support the new business going forward, the new fully focused business. Some comments on some other elements in Q4 that led to some savings or -- and some reductions in CapEx was down 25% quarter-on-quarter. We continued that optimization of the marketing spends and focusing on the return on investment from those marketing spends. We -- the headcount overall declined quarter-over-quarter and further increased in efficiency, reduced tech costs by over 8% as we begin that infrastructure migration in addition to administrative, consultancy and other OpEx down by 21% in the quarter. I will touch very briefly on the results of gaming operators. Revenues were pretty flat for the year. As a total, slight decline in -- from Q3 to Q4, predominantly led to the reduction in optimization of marketing spend. But as you can see, that resulted in significant EBITDA improvement. In media, revenues were impacted, as we touched upon in Q3, by ranking -- a Google update in the latter part of Q3 that also followed into Q4. However, that trend's has begun to be reversed in November/December with month-over-month improvements in revenue. And the January, there was a large core algorithm update, largely unaffected or was slightly positive towards media's publishing site. And January revenues were ahead, therefore, by 13% versus the monthly average in Q4. Paid media, as I talked about, has really shown some strength over 2019 and that trend continues, our all-time high in EBITDA again for that particular segment. We've already mentioned that we are approved now in the U.S. for paid ads, so we will begin to investigate the potential return there. And I also believe I've talked about this a couple of times, that the focus on the B2B only and having media is such a healthy part of that business will allow for better long-term capital allocation towards projects that can drive real and high profit margin growth. We also introduced a new management team and structure within media in Q4 that I'm very confident we'll be able to deliver the results that we expect from that division. In Platform Services, we saw a year-on-year decline of around EUR 3 million in EBITDA, predominantly led by the termination of a customer -- a large customer in Q1 of 2019. If we had to do a like-for-like comparison, excluding that customer and in conjunction with our own brands, actual revenues were up 7% year-on-year. So you can see that actual database of customers is growing over time as well. Q-on-Q revenues increased by 23%, and EBITDA was up EUR 700,000. There was a small contribution within that EBITDA from the closure of games, around EUR 200,000. As we talked about, we signed Mr Green in Latvia as a customer in addition to the new fixed fee and the one in Q1, who's also bringing on 2 new brands and 2 new regulated markets. Both on fixed fees as well in Mexico and in Romania. As of today, we have 33 brands live on the platform, and there are 7 in the pipeline to be deployed. Sports betting. Again, this is something that we talk about in the strategic review part, that this is something that we're focusing on now. I'm very proud of the position that we have. There is only a handful of suppliers who are live in multiple jurisdictions in the U.S. However -- and it's with both online and with retail. However, the cost to get in there is obviously very expensive. We are part of that first wave in the U.S. and it is an expensive exercise. Therefore, GiG is currently in the process of looking for a joint venture partnership or other consolation that will enable us to retain that strategic position while realizing either cost synergies, revenue synergies and also finding some financial backing with regards to that in order to get us to a breakeven segment. I've touched on it lightly so far as well, is with regards to the sportsbook-agnostic platform. As myself and the team sat -- are looking at what would become -- what would define the best gaming platform, one of the things that came up was Sportsbook and to have a choice of a customer for the Sportsbook. Sportsbook market vary considerably from region to region, even country to country, and therefore, we're having our -- only our Sportsbook solution is somewhat of a limiting factor, both in sales and also capabilities. For instance, if a market is predominantly focused around horseracing and perhaps dog racing, such as you find in Australasia, then it becomes problematic. Our Sportsbook doesn't have those events, doesn't have that focus. So therefore, in order to capture more of the value -- more of the addressable market, we believe that it was necessary to start to integrate other people's sportsbooks who have other different skill sets. As part of the deal, Betsson will integrate into ours. We will also offer that as a sportsbook to other people, and we're in negotiations with several others in order to bring them and integrate them into the platform to widen our Sportsbook capabilities and offerings to different clients. I will just go through some of the action points I touched upon and the last and some of the ones I've added. Obviously, we're looking continually to improve our operational performance. That's -- and we closed the GiG Games as part of that in the tail end of last year. We are in the final stages of completing the strategic review that we believe will lead to the future growth of this company. We're reducing the nonmarketing-related OpEx on a continual basis. In B2C, we will continue to focus on that and ensure that we deliver Betsson a business that is thriving and to continue to thrive on our platform. By doing this, we will make -- continue to focus on our marketing spend in the right channels and the right markets. And we will also continue that work on the entrance of new markets until the sales completion, which they can take over. We will continue to support those new market entry ambitions from the platform side as well. As I said, we talked about already the Media of what we're focusing on in terms to return that -- and we've already started to see the return to month-on-month of the growth within that segment. And in Platform, we need to accelerate the sales. We've taken some steps already to strengthen the sales team and also build up the capabilities and capacities there fundamentally, both from product but also from a sales team capacity. And in Sportsbook, as I mentioned in the previous slide, we are currently looking for a joint venture or some similar structure in order to provide us with that strategic position going forward. Just a very quick comment on sustainability. It's something that we take very seriously within Gaming Innovation Group. We break it into 3 different areas: fair and safe iGaming, focusing on responsible gambling, making sure that our platform and our products help customers to identify when either problem gambling is occurring or preventing it; the same with responsible ad marketing and advertising; and also making sure that our employees can thrive in an environment that helps us deliver our goals. In conjunction with that, we continue to move the white label model away into a Software as a Service. We're also collaborating with an educational charity about responsible gambling to help educate our staff and help provide further visionary products within the portfolio that can help with responsible gambling. And finally, on that point, we also extended our collaboration with Bournemouth University in learning how our AI programs can also identify problem gambling behavior. In summary, a transformative time for GiG. Q-on-Q improvements in EBITDA for Q4, very pleased with that result. We've refined our position and -- via the B2C divestiture and strengthening both the balance sheet but also enabling the company's full focus and to drive an ambition to become a Tier 1 global B2B provider. We released a fixed fee model, which we believe will give us a significant advantage on the markets and market attractiveness. The Media business is reversing -- is currently reversing its downward trend in the latter part of Q4 and into Q1. And we are now -- we're the company that's diverse B2B company, well positioned for future growth in a transformative online gambling industry. With that, I would like to pass over to the Q&A.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. That gave us a very good view of your quarter report. But let us follow up with some questions.

[Richard Brown, Chief Executive Officer]

Of course.

[Jonas Amnesten, Equity Analyst]

[Operator Instructions] But first of all, do we have any questions from our audience here? No questions. All right. Then we will kick off with the online questions. Okay. So how will the divestment of the B2C segment impact your P&L? And going forward, will the-- what will the contribution be on the revenue and the EBITDA level?

[Richard Brown, Chief Executive Officer]

The contribution will be in Q1.

[Jonas Amnesten, Equity Analyst]

During 2020?

[Richard Brown, Chief Executive Officer]

Yes, during 2020. And then after that, it will move over. Well, as we have now, the B2B revenues are still there in -- from the divestiture. So we would expect that Betsson will be able to grow those brands, as I talked about before, and therefore the revenue we achieve through that.

[Jonas Amnesten, Equity Analyst]

Okay. So those -- the EUR 50 million we're talking about?

[Richard Brown, Chief Executive Officer]

It includes that.

[Jonas Amnesten, Equity Analyst]

Yes. And there was like EUR 19 million after that one they're paying at start, right?

[Richard Brown, Chief Executive Officer]

Yes. So there's EUR 23 million -- approximately EUR 22.5 million upfront and then an EUR 8 million payment upfront as well. That relates partially towards the consideration part price, which is part of the premium rate. And then the remaining rate will be paid -- the remaining portions will be as a kind of normal revenue perspective.

[Jonas Amnesten, Equity Analyst]

Yes. And that will be paid over the 24 month?

[Richard Brown, Chief Executive Officer]

The 30 months, yes.

[Jonas Amnesten, Equity Analyst]

30 months. All right. Perfect. Could you explain further how the divestment of the B2B segment will impact your financial position?

[Richard Brown, Chief Executive Officer]

I -- without going into too much detail, there's obviously lots of moving parts, but we believe, again, we will have a significantly stronger balance sheet is one of the aspects of it. And secondly, we believe that the results over time, as we continue to grow the B2B business, will solidify that and continue to grow and push forward. We guided for the year. We really believe, approximately EUR 70 million, EUR 75 million and EBITDA range of around EUR 14 million to EUR 17 million, a little bit dependent on when the transaction completes as well as lots of moving parts.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And in conjunction with the B2C divestment, you also announced that you will add Betsson's sportsbook offering?

[Richard Brown, Chief Executive Officer]

Yes.

[Jonas Amnesten, Equity Analyst]

How will this impact your existing Sportsbook offering?

[Richard Brown, Chief Executive Officer]

As I said before, one part of it is that we're currently kind of finalizing strategic review on our own Sportsbook. We're looking for a potential partner there to help solidify that area. But it's also, as I mentioned before, I think there's lots of different companies looking for sportsbook that require different elements. That can be a casino who just wants a bolt-on product, could be a part of a more traditional -- there's many flavors, if you will, to sportsbook or the desires that the customers have. So therefore, having an alternative which we believe will be able to drive -- or alternatives should be able to drive the actual sales of the platform itself.

[Jonas Amnesten, Equity Analyst]

All right. And looking at your Sportsbook, is there -- is the plan still to make it profitable during H1 in 2020?

[Richard Brown, Chief Executive Officer]

Yes. As we said before, we are looking for a joint venture partnership that would enable the transformation of the financial performance of that.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And another question here about Sportsbook. As the Sportsbook is moving from providing proprietary data to becoming an aggregator for others' data, how does that impact pricing and revenue? I'm not 100% sure what the question was.

[Richard Brown, Chief Executive Officer]

I think I understand what they're coming at. But actually, because it's a combination of both sportsbooks, they will be products sold separately. So if, for instance, a customer were to choose a third-party sportsbook, whether that be Betsson's or another party, they would use their sportsbook in its entirety, facilitated by our gaming platform. But then if they were to use ours, then the full revenue stream would be via our platform.

[Jonas Amnesten, Equity Analyst]

Okay. And do you see a need for further divestments? Or is that something that you don't want to touch?

[Richard Brown, Chief Executive Officer]

No. I think in the remainder of the business, in particular, obviously, the Platform and the Media business, it's not something we're looking at all at the moment. We believe that the strategic rationale of having those 2 particular companies together is very strong. They have no conflicting agendas, no conflicting priorities within the business models. They run relatively independently of each other. And I think the very strong one is in a kind of different phase of its life cycle as well. One is very, very profitable at the minute. They can support the whole business move forward. And there also are significant kind of combinations from the clients. They're attacking different client databases, but they could also be cross-sold to each other as well for the various elements. So I'm quite pleased with the strategic position the remainder of the business has.

[Jonas Amnesten, Equity Analyst]

Okay. And what do you see as the main growth drivers for GiG going forward?

[Richard Brown, Chief Executive Officer]

I think there are multiple elements to -- I think the re-regulation will actually drive growth for us from a platform perspective. We see, as markets regulating, there are significantly more interest. Whether that are coming from either land-based casinos or land-based groups in conjunction with perhaps, media houses, et cetera, those companies who would not have necessarily touched or looked at gambling when it -- in an unregulated form, they were becoming stronger in desire. And their desire to use third parties rather than build their own tech is quite significant. I also believe that our products and continued product enhancement will continue to drive growth and desire for our platform. We talked about the data platform as well before where that's being sold agnostically to our platform. We believe it's a leading -- or one of the best platforms I've -- data platforms I've seen at least. And I think by attaching that to either other platforms as well, that can help to drive growth. And in Media, I touched in quite some detail about kind of the 3 key areas, which I suppose you could group together as product enhancement and some diversification in the models as well as global or market expansion will be the growth drivers there.

[Jonas Amnesten, Equity Analyst]

Yes. And do you expect to continue to grow with Hard Rock, for example? And can you...

[Richard Brown, Chief Executive Officer]

I'm not going to comment specifically on the Hard Rock relationship or our client relationships and stuff like that. But I think as I said, one of the things I'm really incredibly proud of is that we are live in 2 different U.S. states where it's incredibly difficult to actually achieve that, and we've done it in a very short period of time. And yes, there's only a handful of other suppliers actually live with the offering -- similar offerings to what we have, so that's something I'm very proud of. And I think that depending on how the states regulate, we should be able to expand in the U.S. as well.

[Jonas Amnesten, Equity Analyst]

And you see that the scalability in the Hard Rock partnership will continue to increase or...

[Richard Brown, Chief Executive Officer]

I mean I'm not going to go into the details of the Hard Rock relationship and its specifics.

[Jonas Amnesten, Equity Analyst]

All right.

[Richard Brown, Chief Executive Officer]

But as I talked about, I think the U.S. states opening up in various different levels, and it's happening very quickly in terms of regulation approvals. And how those will actually be put in practice is maybe taking a little bit longer as well.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And how is the change in the -- how the pricing model from [indiscernible], how will that impact the future sales?

[Richard Brown, Chief Executive Officer]

I believe it will drive sales because, as you talked about initially as well, once you -- once the supply actually reaches a scale point, it actually starts to become cheaper for them to run, so therefore, they will be able to use that money to invest. And whether that's creating new brands or whether it's potentially not leaving the platform as well, that's sort of really is important thing for us. Retention of customer is as important, almost as signing new customers as well. There's also the transition from the white label model will have some impact on revenues in some sense as well. But also, the cost base associated to white label models is also addressed at that point as well.

[Jonas Amnesten, Equity Analyst]

Okay. And will there be any like, short-term effects from this pricing change or...

[Richard Brown, Chief Executive Officer]

It depends a little bit on how long. We're giving people time to transfer over to their own licenses, et cetera, so a little bit dependent on how clients are onboarded at the same time as people are moving.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And have you considered a joint venture for the Platform Services?

[Richard Brown, Chief Executive Officer]

You -- depending on what consolation you're talking about here.

[Jonas Amnesten, Equity Analyst]

I'm not sure here but...

[Richard Brown, Chief Executive Officer]

I mean I think we're always open to business opportunities that will drive growth. I would definitely never say no to a meeting if somebody is looking for some business ventures that would drive both value for the business and for the shareholders. So I think that would just be a natural thing.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And another question here about America. Are there any additional American land-based operators in the sales pipeline for the Platform Services or...

[Richard Brown, Chief Executive Officer]

We continue to negotiate with multiple companies within multiple jurisdictions.

[Jonas Amnesten, Equity Analyst]

Perfect. You have been promoting the GiG Comply products quite a bit. Does these deals have any significant impact on your revenues going forward? Or how should we view this product?

[Richard Brown, Chief Executive Officer]

Not hugely material in terms of comparison to, say, a platform deal. However, the very steady income, and they provide both good leverage. The business unit itself is very profitable because their costs now for us are pretty minimal. And we have some account managements and tech just to maintain and to put some product development, so it does provide some bottom line contribution. It also provides us with like, both reputational marketing as well as the quality of the product is very high. I believe that we can continue to take the market share. There are other products in that market, and I think we can continue to take market share in that particular area as well.

[Jonas Amnesten, Equity Analyst]

Okay. But there are any like, huge impact on revenues going forward?

[Richard Brown, Chief Executive Officer]

It would not be -- not materially in the group scheme of things, if you will.

[Jonas Amnesten, Equity Analyst]

No? All right. And we got a quite long question here. The benefits of scale in affiliate marketing is significant as GiG Media has experienced through numerous profitable acquisitions. Does it make sense to have 4 medium-sized, publicly traded affiliate marketing companies in Scandinavia? Or do you expect there to be transaction in the market in the near future? And if yes, will -- where does that put GiG Media?

[Richard Brown, Chief Executive Officer]

I think it would be -- there was consolidation in the gambling industry as a whole, so I wouldn't be -- necessarily be surprised if that happened. However, I think affiliate business itself is a large and very diverse one. And while in Scandinavia have some quite large and prominent ones on a global scale, it's also quite a considerable amount there outside of 4 without -- outside of the Scandinavian rim and also have quite some significant scale as well. I think it's a little bit dependent on like, how those companies themselves are actually performing as well, so yes.

[Jonas Amnesten, Equity Analyst]

Yes. I guess it's a bit difficult to comment on that. Another question here. Do you still see Malta as -- will your headquarter for GiG stay in Malta or...

[Richard Brown, Chief Executive Officer]

Malta still remains an important part of the kind of online gambling ecosystem. We have clients there. We have an office there. We have a lot of our staff there who are delivering the technological platform. So for the time being, we see Malta as being our headquarters.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And another question here. Following the divestment of the B2C, do you recognize that predictability and line sight of remaining in business is better than earning given that operator market tend to be volatile?

[Richard Brown, Chief Executive Officer]

Yes. I think that should help with some predictability level there as well. I mean the volatility of the gambling or the B2C market is quite predominant, especially as markets regulate and how quickly some of them are regulating as well. There will be probably some volatility in earnings and potential future earnings as well. So I do believe that this will also enhance -- this divestment will enhance the stability and earnings quality, if you will, over time.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And what's the strategy in terms of headcount for Q2 and Q3 in Betsson?

[Richard Brown, Chief Executive Officer]

We're still in the transitional period until the deal is closed as well with Betsson. So we will address that once all of the moving parts around that have been completed. So we will kind of come back to that at a later stage. But we will, of course, organize the business as best as possible to support the B2B focus going forward.

[Jonas Amnesten, Equity Analyst]

Okay. Perfect. And here we have another question about GiG Media. When is the initial investment will be covered as we can't speak about growth if the investment isn't covered yet? I'm not sure what these questions really relates to. Do you?

[Richard Brown, Chief Executive Officer]

Maybe I can interpret it at least that -- I think what he's asking is just like, has the investment already happened in Media? I think that's what the crux of the question was. I would say that we've been investing pretty slowly and gradually over the time into various projects, I think, in quite a staggered and sequenced way in order to not flood the P&L with a huge amount of investment cost. And I think one of the things with Media in general, especially in publishing, is the length of time on return is quite long. It takes quite some time to build up publishing particular capacities. And websites, they take some time to gain the trust of Google and continue to rank. And as you improve those products, they do so. So we've been continually working on that over a period of time. And if we see an opportunity where we need to heavily invest for a period, then we will do so. And we will continue to gradually build up the investment that we've had done and is continually sequentially improving. I mean in paid media, on the other hand, we will look at new market opportunities to see whether we should go in with a gradual inclusion and ramp-up when -- which correlates to the revenue streams or if we wait and -- or if we were to go up, preempting revenue streams, if you will.

[Jonas Amnesten, Equity Analyst]

Okay. Perfect. And I have another question about the Media. So XLMedia took a hit in Google rankings for casino vertical. There are benefits from diversifying an affiliate business in terms of vertical. Is this something GiG Media has considered or will consider?

[Richard Brown, Chief Executive Officer]

I assume the question there is about diversifying away from gambling. I think I talked about what we're trying to do is diversify as well not only within kind of casino but in jurisdictions as well, the sites are interlinked or not interlinked, and therefore, we believe we are quite safe in that regard. However, so as it happen, we're looking at sports more in publishing. As I said, that's a large addressable market that we're not really touching in that segment. And then outside of gambling, I think our core focus and our core skill set lies in gambling. That's the subject matter that we know. So therefore, we believe that we can project well to the customers and therefore, Google will appreciate that. So I think we'll obviously, of course, look at other verticals to see if there's an interest in our ability to diversify away from gambling, but I think our core focus, at least at this point in time, should be around the gambling segment.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. So that was our last online questions. Do we have any final questions from our audience here? All right. In that case, we will wrap this up. I'd like to thank GiG and Richard.

[Richard Brown, Chief Executive Officer]

Okay. Thank you.

[Jonas Amnesten, Equity Analyst]

I'd like to thank our viewers and our audience for watching, and I hope to see you all next time. And until then, take care, and have a great day.

[Richard Brown, Chief Executive Officer]

Thank you very much.