Betsson AB

STO:BETS B

Earnings Call Transcript 2019-Q4

[Pontus Lindwall, CEO & President]

Hi. Welcome to the presentation of Betsson's Fourth Quarter 2019. So I'm going to start with a few bullets on some main topics for the report. We have a strong operating income, revenue at SEK 1,290 million and EBIT at SEK 200 million, with an EBIT margin of 15.5%. So we're strong in converting revenues to profits to EBIT. Well, Sportsbook, very strong turnover. It's an all-time high in the Sportsbook. Sportsbook margin being a little bit lower than average, which has an impact on the revenue, but still a very strong activity, and that is what really counts in the long term. Number of active customers grew by 3% year-on-year, and the deposits into all our gaming systems is an all-time high in the fourth quarter. That's also another sign of a strong underlying operation. We are continuing to do investments in our own technology with big success. We have migrated our NetPlay operations to the Techsson platform. We have launched a Sportsbook in Italy. Before that, we operate only Casino. And we have made a strategic investment in the Brazilian operator, Suaposta. So for the full year, we deliver an operating income of SEK 865 million, with an EBIT margin of close to 17%. We have some temporary downturns during the year with some challenges in some core markets, but they are mainly mitigated by our geographical spread and efficient organization. So despite some temporary challenges on a few markets, our long-term ambition remains to outgrow the market organically and through acquisitions. Continuous investments, we continue to invest in our own technology in order to be able to deliver the best customer experience, which is our aim. We have also, during the year, done a lot of activities to investigate further geographical distribution. So we look for new markets where we can establish our brands. And we think that 5 years down the line, we will be operational in yet another set of markets where we are not present today. We have arranged financing for future growth through the bond during the year. And we have a strong cash flow and solid balance sheet in the company. So some recent product and technology initiatives. We won a prize during -- for the last year as Innovation of the Year for the mobile game frame, which really enhances the customer experience on the mobile -- when playing on the mobile phone, where you can do fast deposits from the in-game and you can search for other games while playing, and we can also communicate directly to the customers as he's playing a game. We have -- we continue to develop our proprietary Sportsbook, which is really a highly competitive product. We have made it B2B-enabled, and we have signed the first deal in the beginning of this year for the Sportsbook with a business-to-business partner. We have also been working a lot on site performance and enhancements for our core brands. We have faster loading times. We have upgraded the product offering for NordicBet in Denmark. And we have done adoptions to the latest regulatory requirements in the Netherlands. So there's a lot of development going on, a lot of investments going into that. But we see that we move our product generally to a better and better position all the time. And this is one thing which is really important for Betsson where we make great progress. Talking about ESG, the Board has adopted a new sustainability framework during the year, which continues -- which consists of a number of areas. It's the people impact, climate impact and community impact. On the people impact, we won a prize recently, Great Place To Work. On the climate impact, we have our ambition to fight climate change. On community impact, we have the ambition to have a positive impact wherever we operate. A very important part of our work within ESG is responsible gaming. And we also won the award Socially Responsible Operator of the Year, which is very good, and it shows that all the efforts we take have great effect within that area. And then there is business compliance, we have the ambition to conduct a responsible and transparent business. We are committed to player protection, and we have done even more development and initiatives within that area during the year. We have launched the website, onebetsson.com, which I think you should all visit and have a look what Betsson does around the globe for -- in relation to CSR. We have rolled out an automated system for customer interaction for responsible gaming purposes. We have revamped the training program for customer support. And in the fourth quarter, 36% of the new depositing customers decided to set a deposit limit. That's quite a big share of our clients who now use the tool that we implemented many, many years ago to set their deposit limits, and we are proud of being in the forefront of that development in the industry. We have also made a revamp of the algorithm of detection system for problem gamblers to further enhance customer protection. I can say we are not done within this area. It's a continuous development, but it's important that we keep on developing and keep on investing in player protection. On the regulatory side, we got a fine for NordicBet, we have appealed. It's still pending. In the Netherlands, the market opening is postponed to July 2021. And applications will be accepted in January 2021. This is, of course, a moving target with new information almost by the week from the Netherlands authorities, which we monitor closely. In Denmark, there was -- it has been announced, the tax increase from 20% to 28%, which will apply from 2021. In Germany, it's also a moving target, but it will be possible to apply for a Sportsbook license from January 2020, so already by now. And Betsson intend to apply for such a license. Now we go into the financial summary, and I hand over to Martin.

[Martin Öhman, Chief Financial Officer]

Thanks, Pontus. The fourth quarter was a challenging quarter for the industry, where Sweden continued to be tough due to high competition and decreasing channelization. We have expected to see a recovery in the fourth quarter, which did not fully materialize. Revenue for the fourth quarter was SEK 1.290 billion, which is a decrease by 10% compared to the same period last year, as comparison in Q4 last year showed the highest revenue ever in Betsson's history. The decrease in revenue comes both from Casino and Sportsbook. And geographically, Nordic was the region which had the largest negative impact on revenue in the quarter. However, thanks to Betsson being geographically diversified, we can sort of mitigate drops in some of the many markets by seeing good progress in other markets. Compared to Q3, revenue is on par. On the positive side, we see all-time high in Sportsbook gross turnover, up by 17% quarter-over-quarter and up by 15% year-over-year. Part of revenue is made up by license revenue amounting to SEK 175 million in Q4 this year, and the increase is mainly due to enhanced performance in our Sportsbook delivered to Betsson's B2B partner, Realm.Mobile revenue share as part of total revenue increased from 66% in the fourth quarter 2018 to 71% in 2019. Cost of services provider has increased in the fourth quarter by 32 -- sorry, increased by SEK 32 million in the fourth quarter. And the increase is partly due to increased betting duties in Sweden, but also to increased payment costs, where we can see Norway as one of the markets. However, we think that we are in a good position compared to many of our peers when it comes to finding efficient payment solutions in challenging markets with restrictions and payment blockings, and this is thanks to our proprietary payment platform. Gross profit amounted to SEK 839 million compared to SEK 1.018 billion same quarter last year and corresponding to a gross margin of 65%. Operating expenses has decreased by SEK 38 million, corresponding to a 6% decrease. This is mainly achieved thanks to our continuous operational efficiency. And to add some additional flavor to this, it's worth mentioning that we, in the fourth quarter, have seen costs related to increased activities to broaden our geographical spread. And we have also done a lot of, as Pontus said, initiatives to broaden our product offering, especially then -- the B2B Sportsbook. The marketing spend is lower in the fourth quarter compared to last year due to lower activities in Sweden and regulatory challenges and changes in Netherlands and Italy. We constantly evaluate and monitor and reallocate funds to areas where we think we can get the best return on market investment. Other external expenses have also decreased, but is offset by increased amortization and depreciations due to implementation of the new IFRS 16 standard, with the impact of the rental cost for properties is now reported as depreciation and financial expenses. EBIT amounts to SEK 200 million, and EBIT margin is 15.5%. Betsson's EBIT and EBIT margin stands strong in comparison to many of our peers and conveys its -- conveys Betsson's ability to deliver profitability also during challenging times. Looking at revenue by region, we see a decline in both Nordic and Western Europe in Q4 compared to the same period last year. The CEECA region and the Rest of the World show growth, but cannot fully offset the decreases from the 2 larger regions. The Nordic region represents 35% of total revenue, and in the fourth quarter, we see a continued weak trend from the region due to regulatory challenges. We had hoped to see a pickup in the fourth quarter, especially from Sweden, which unfortunately did not -- has not yet come. The combination of relatively low channelization and the high competition is the main reason for that. In the Norwegian market, payment solutions are still a challenge. However, Betsson's own payment platform gives Betsson the flexibility to offer customer a variety of alternative payment solutions, resulting in Betsson being able to maintain customer trust, although to a higher cost for payment providers affecting gross margin in Norway. Western Europe constitutes some 30% of the group's total revenue. And the Netherland remains a tough market, since we are no longer allowed to approach new customer through marketing. As you know, we saw a steep drop in revenue in the beginning of 2019 due to the regulatory adjustments that we made, which has now somewhat stabilized. But it's still hard to predict the market conditions in the Netherlands until the regulation is actually in full place. Other markets within the Western Europe region performed well and make up for the decrease in revenues from the Netherlands compared to same year last year -- or same period last year. Revenues from the CEECA region amounts to 29% of the group's total revenue. Although Betsson have been facing challenges also in the CEECA region such as increased gaming taxes and market (sic) [ marketing ] ban in Italy, we see a positive trend with growth in the fourth quarter. We also see growth in the Rest of the World region, a lot, thanks to the strong Sportsbook offering developed by Betsson. In the fourth quarter, Betsson has increased the share of revenue coming from regulated markets by 41% compared to the same period last year. And regulated now -- revenue from regulated markets now constitute 36% of the group's total revenue. Sportsbook gross turnover of more than SEK 7,200 million is all-time high and is an increase by 15% compared to the fourth quarter and 17% compared to the full year 2018. Sportsbook revenue in the fourth quarter amounted to SEK 312 million, which is a decrease of 9%. The decline is explained by lower-than-average Sportsbook margin in the quarter of 6.8% compared to the 8-quarter rolling average margin of 7.0%. In the fourth quarter, we saw growth in the Sportsbook revenues from the CEECA region and the Rest of the World. Western Europe is flat, and the Sportsbook revenue from the Nordic is decline. The number of live betting events continue to increase, and in the fourth quarter, the Betsson Group offered some 50,000 live betting events, reflecting a competitive offering. Mobile Sportsbook revenue accounted for 83% compared to 76% of total Sportsbook revenue last year. Total Sportsbook revenue represent 24% of the group's total revenue, and Casino revenue sums up to 75% of total revenue. Betsson's current casino offering includes 2,700 casino games, of which 2,000 are available on mobile devices. Casino revenue amounted to SEK 964 million, which is a decrease of 10% compared to the same period last year and is mainly explained by the impact from Swedish regulation and adjustment in the offering in the Netherlands. Comparing Q4 revenues to Q3 revenues, we see a slight growth in the Casino revenue coming from the CEECA region and the Rest of the World. Mobile Casino revenue as a share of total Casino revenue increased from 64% in Q4 2018 to 68% in 2019. Betsson has a high cash conversion ratio and show operating cash flow SEK 238 million in the fourth quarter. And operating cash flow is driven by strong operating income and partly offset by a negative impact from working capital. The majority of Betsson's cash flow from investing activities relates to investments in proprietary technology. Acquisition of shares and subsidiaries relates to the strategic decision of the 75% shares in the Suaposta, the Brazilian operator, Suaposta. Cash flow from financing activities amounting to SEK 470 million comprised 2 major events, apart from leasing costs. Firstly, we have redeemed the remaining part of the old bond that was not earlier redeemed in Q3. And secondly, we have repaid an outstanding amount of our RCF, and as of end of December, fully unutilized our revolving credit facility. Betsson has low leverage and as of end of December, a net debt position of SEK 186 million, implying a net debt-to-EBITDA ratio of 0.2 and an equity ratio of 64%. Pontus, I hand over you -- to you to discuss the proposal.

[Pontus Lindwall, CEO & President]

Thank you. So the Board proposes a dividend of SEK 2.84 per share to the shareholders, which is in line with the dividend policy. So on the trading update, we have seen a strong start of the new financial year. And I would say that the good activity that we saw in the fourth quarter that didn't really convert to revenues has converted better so far in the first quarter. The daily average revenue so far today -- well, not today, but to February 9, was up 6% compared to the same period last year. And then we have to think about that same period last year was the strongest quarter ever for the company. And we are up also compared to last quarter. Fourth quarter, we are up even more so far until the February 9. We have a strong Sportsbook margin during the first 6 weeks in 2020 that supports this revenue growth. So to summarize, for the full year of 2019, we delivered an operating profit of SEK 865 million despite some market challenges, and this puts us in a very good position. We have learned that the reason to run a company is to earn money and give profits, dividends, and I think we have proven over a very long time that Betsson can do that. And it also gives us a very strong position, financially, to be active in consolidation. We are also very confident about our long-term opportunities. The Sportsbook is performing great, and now we have this new opportunities with the B2B side of the business. We are looking into increased focus on geographical spread, and we are ready for M&A. So -- and we also will continue to work on cost efficiencies in the company so that we will keep our company very fit and strong. So our strong financial position and our proprietary technology provide us a very strong foundation to manage market changes and to offer competitive product solutions. And having said all that, I think we go into questions.

[Martin Arnell, Analyst]

Martin Arnell with DNB Markets. My first question is on these challenges that you mention in the report, Sweden, Norway and the Netherlands. Do you expect to see any changes in terms of the level on those challenges in 2020, aside easier comps in Sweden?

[Pontus Lindwall, CEO & President]

Yes. I think -- starting with Sweden, I think we kind of realized during the year that Sweden was a little bit different from what we expected, and we have made changes to our operation during the second half of the year. And I hope those changes will materialize and turn out in revenues for this year. So I am positive about a shift in trend from a negative trend to a positive trend in this year. Regarding Netherlands, we're a little bit locked up by the decisions of the authorities. It's not much we can do. So we just -- we will just try to protect the revenues that we have. Norway, we had some challenges on the payment side, some changes implemented by the government. We have made changes to adapt to those changes, and I think we are on a positive trend in that market as well.

[Martin Arnell, Analyst]

Do you expect to launch a pay-and-play offering in the Nordics and Sweden? Would that be organic or something you would consider to acquire?

[Pontus Lindwall, CEO & President]

Yes. I -- we are looking into that area. It's obvious that the pay-and-play area has become a part of the Swedish market, which is appreciated by a certain customer group. And this is something that we are looking into for the year.

[Martin Arnell, Analyst]

Okay. And then on Norway, payment costs are on the rise. Is this a new level? Or what do you think going forward?

[Pontus Lindwall, CEO & President]

It's hard to predict. We can see that during the last year, the 2019, the costs for payments went up, not only in Norway, but in general. And I don't think we will see an accelerating trend, but it's obvious that we have reached a new level. And hopefully, of course, we will fight that as good as we can, but it's hard to tell where we will end up.

[Martin Arnell, Analyst]

And you mentioned Germany that you have the ambition to apply for a Sportsbook license, but do you see a risk for a cooling off period in Germany going forward?

[Pontus Lindwall, CEO & President]

This is nothing that I have heard anything about. On the other hand, I can say that the visibility on the regulatory side in Germany is not that great. There are constantly new changes and new proposals. So let's see how it turns out. One thing we can say for sure, and that is that the regulatory environment is developing towards the regulated markets. So -- and we will, of course, take part of that if it's viable.

[Martin Arnell, Analyst]

And on your Sportsbook turnover, which is -- I guess, you're quite happy with, can you just go through what's changed in the product? And why it has improved?

[Pontus Lindwall, CEO & President]

There -- I would like to say there are thousands of things that have changed. If we compare a few years back, then we can say that definitely now we have an offering, which is very competitive in terms of size and depth. We have a stability, which is -- which we have had for a number of years, but which we didn't have many years ago. And the product is now very fast and comfortable to use. So we are ticking all the boxes, and we are keeping on to work hard to improve the product even more.

[Lars-Ola Hellstrom]

We can return to Sweden. Given the decline we have seen in Sweden in 2019 and the marketing commitment you have with [indiscernible] and so on I guess Sweden is not a profitable market for Betsson. So how much larger volume do you need to get back to profitability in Sweden?

[Pontus Lindwall, CEO & President]

We -- of course, we look at certain markets like that, but we look at the regions where Nordics is a region for us. For the last year, of course, when we went into regulation, all the companies did have a marketing and so did Betsson, and that was quite expensive. I don't want to really speak out about when becoming profitable in Sweden, but investments that we do, like in the SHL, is really important for us and how we position ourselves in the market in relation to sports, where we have a very strong position.

[Lars-Ola Hellstrom]

But wouldn't it be rational to make an acquisition just to gain the volume faster?

[Pontus Lindwall, CEO & President]

That could be rational. Then again, if there was something which we could acquire today at a very cheap price which fulfilled all those expectations, we would probably do it. So -- and maybe that possibility will turn out, and then we will, of course, act on it. But, yes.

[Lars-Ola Hellstrom]

And also a follow-up on Netherlands, how should we see it until the market goes live in mid-2021? As you are not allowed to do any marketing, you can only do CRM and SEO. So should we see a gradual decline quarter-on-quarter throughout that period? When I've been speaking to a lot of private operators, smaller ones, they are targeting the marketing now because had -- don't have the ambition to apply for a license. They just want to get in, take the cash flow until the market regulates. So what do you think is a reasonable trajectory until the market regulates?

[Pontus Lindwall, CEO & President]

It's hard to say. Of course, we do not expect any growth from that market until the market regulates. On the other hand, we have strong brands. We get some new clients to our brands, even though we don't market. But -- and we have loyal clients. We have been there for a long time. The clients that we have at the sites are loyal, and we do a lot on the CRM side to keep them happy. But I don't think we can expect any growth there. And it's hard to tell if it's going to decrease or not.

[Lars-Ola Hellstrom]

And a final question here for me. It's about the personnel and other external costs, maybe Martin can answer this. The level we saw now in Q4, it was a pretty step up. Is that the level going forward? I know you have some tech initiatives and product initiatives. Is this the going rate going forward in 2020?

[Pontus Lindwall, CEO & President]

It's a little bit higher costs, but I think we have to be fair and say it's not a dramatic increase. We have taken on some more people which work on investments for the future. And I think that's one of the best investments we can do in this situation. So I'm not worried about that cost increase myself. I think it's one of the best initiatives we have done.

[Martin Arnell, Analyst]

Martin Arnell here with DNB Markets again. Just a follow-up on [indiscernible] the investments that these new people are working on, is that B2B Sportsbook or?

[Pontus Lindwall, CEO & President]

There are several things there. That is one part of it. Another part is that we are doing even more enhancements to our platform and our product, including both the Sportsbook, but the platform in general, including everything. So as you all know, Betsson's vision is to have the best customer experience in the industry. I think we are not there, even though we are really good. And I know the power of having the best products. So now we are focusing a lot to really enhance our products in all different matters.

[Martin Arnell, Analyst]

Can you say anything about timing on when we should expect to see the results of these investments?

[Pontus Lindwall, CEO & President]

It's a gradual output. We work with a 2- to 3-year horizon. But you will definitely see several enhancements during this year.

[Martin Arnell, Analyst]

On the Sportsbook B2B, you have signed 1 partner. How -- what's the capacity in that? How quickly could you onboard more new customers?

[Pontus Lindwall, CEO & President]

We can take on more customers. If we had 10 customers today, we would have a little bit of an issue to handle that at the same time. But this is one thing that we are working on to increase the ability to deliver more B2B solutions faster. We have, of course, we have capacity to do more than 1 this year. But we are working and investing in increasing that capacity even more, and we have requests.

[Martin Arnell, Analyst]

And when will this new client be live with your Sportsbook?

[Pontus Lindwall, CEO & President]

I don't want to promise any date for that.

[Martin Arnell, Analyst]

Okay. But it's first half or second half of the year?

[Pontus Lindwall, CEO & President]

We are aiming for first half.

[Martin Arnell, Analyst]

On the U.S., do you have any U.S. ambitions in the plan for the coming 1- to 3-year period?

[Pontus Lindwall, CEO & President]

We have ambitions, and we -- of course, U.S. is going to become one of the largest markets in the world, if not the largest. So we are looking into that, and we have done that actively ever since the market started to open up. We have not found any possibilities that really suits our risk appetite. But when we find that, we are open to look into that market. So it's not that we have shut the door to that market at all.

[Martin Arnell, Analyst]

Okay. And on the -- your latest acquisition, it was a small acquisition in Brazil, can you explain that investment case? And what expectations you have on that acquisition?

[Pontus Lindwall, CEO & President]

Yes. You are referring to Suaposta, which is a horse racing site licensed in Brazil, and we see -- we believe that there will be sports betting regulation. Visibility is not 100%. So we don't know when, but there are initiatives working to legalize sports betting. And we believe that when that happens, we will be well positioned in that market because we are already in place. We have an organization, have a little bit of a customer base, and we can grow with that as a platform. So it's a very strategic acquisition. Not much of revenues as of today, but a good foothold in a potentially very big market.

[Martin Arnell, Analyst]

Okay. And then a final question on the cash flow. You released a slight working capital in 2019. Is that something we should expect also for this year?

[Pontus Lindwall, CEO & President]

I'll leave this one to Martin.

[Martin Arnell, Analyst]

Or should we have a negative effect from working capital going forward?

[Martin Öhman, Chief Financial Officer]

That is really hard to predict. I mean if you look backwards, you see that the effects from working capital is fluctuating. So I would not dare myself giving an estimate of that going forward.

[Lars-Ola Hellstrom]

It's Lars-Ola Hellstrom from Pareto Securities, again. Just to follow-up on -- there are really good things in the report on the Sportsbook and the gross turnover growth of 15% is really, really impressive. So is it mostly related to the CEECA region? Or have you seen it in the Nordics and the Western Europe as well?

[Pontus Lindwall, CEO & President]

We've seen it -- it's mostly to the CEECA region because that's where we have a very strong foothold in sports betting. On the Nordic brands, I think you can say that the fact that the Sportsbook has been good, has helped us to patch the general fall in the Nordics. So even though it's not the growth, it has held up very well. And we see strong activity in the Nordics in our Sportsbook. It's a product which is really appreciated in the Nordics.

[Lars-Ola Hellstrom]

And another market which I expect is performing really strong for you is Italy. When we review the tax figures, it has to be Italy, I guess. So what's the reason behind your still performing strong in Italy?

[Pontus Lindwall, CEO & President]

We have a very good Italian team, very strong, very knowledgeable. We have a good position in that market. We are one of the few -- so far, we have been operating only Casino, now we have added Sportsbook to that. But we have a very strong position on that market space because there -- it's quite competitive, but we are a little bit unique in that market. Then of course, it has become more challenging with the marketing since the marketing ban. But the Italian team has managed to come up with several ideas on how to communicate to the market by other means. And the fact that we have invested previously quite strongly and create a good brand, it's helped -- it helps going forward.

[Stefan Gauffin, Analyst]

Stefan Gauffin at DNB Markets. I know you're keen on M&A. First of all, can you say a little bit on what you're looking for in terms of which geographies or which different products you're looking at? And secondly, given valuation, are you also considering doing share buybacks as an alternative to M&A as a benchmark?

[Pontus Lindwall, CEO & President]

Okay. To start off with what kind of acquisition we are looking at? We are looking at a broad spectra, everything from strategical acquisitions like the one we did in Brazil -- and we can do other ones like that to get into a market, something like that. And we are also looking at other kinds of acquisitions because we have quite a strong and efficient organization. We can consume revenues from other companies and put it into our organization without taking on a lot of cost, and by doing that, we can release great synergies. We look at those cases as well and everything in between. So we look broadly when we look at acquisitions, but of course, they have different effects to us. Strategic acquisition will show in the P&L later on if everything turns out well, whereas other bolt-on acquisitions show up earlier in the P&L. In terms of share buybacks, this is, of course, something that we have discussed. But we see a lot of value-creational opportunities in M&A as well. So we have to compare these 2 and evaluate. Any more questions?

[Martin Öhman, Chief Financial Officer]

We have one question from the web from [ Robert Gustafsson ]. Can you elaborate a bit on how you will use your B2B offer with the Sportsbook? Does the solution opportunities involve a full-service solution where you can also help potential American and other clients with marketing services, given your experience in entering new markets?

[Pontus Lindwall, CEO & President]

Yes. The first agreement that we have signed is a full-service agreement, which means it's the technology, but it's also the operation with odds compiling and running risk and everything in the Sportsbook. Of course, looking into the U.S., there are not that many suppliers of great products over there. Our product is, today, not adopted for the U.S. market in terms of user interface. But apart from that, we have everything in place. So this is, of course, a possibility for us. It will be a possibility in the future. Okay. Any more questions? One from the phone.

[Operator]

[Operator Instructions] Our first question from the phone comes from Mikael Laséen of Carnegie.

[Mikael Laséen]

Yes, a quick one here on Q1 trading. You mentioned that you have a favorable Sportsbook margin. Have you said anything about approximately where that margin sort of started? Is it well above the rolling average? Or I guess a lot better than Q4 a bit?

[Pontus Lindwall, CEO & President]

It's over the rolling average, but we haven't mentioned the figure. But I mean, in this business and in this industry and over such a time, it doesn't happen that you kind of go well above the average, really, it's quite a stable operation, but it's a little bit better than the long -- than the rolling average.

[Mikael Laséen]

Okay. And in growth term, so far what we have seen in 2020, does that mean that revenue will be better than in Q4? I think that you mentioned that it's up more than 6% quarter-on-quarter, but maybe I didn't get that right.

[Pontus Lindwall, CEO & President]

No. I mentioned that it's up 6% compared to the same quarter last year, but it's up 11% quarter-on-quarter. So it's even more so. But yes, we've been starting off well, but we measure less than half the quarter. It's more than half the quarter to go. And I will not here today comment on if we will beat this or that figure, but I can conclude that we are so far performing well.

[Mikael Laséen]

Okay, got it. And just one final for me. Other external costs increased, and you have discussed this a bit. So going forward, what -- do you expect this level to continue? And I mean the development work and so on that you are doing. Or if it's also some sort of seasonality effect in Q4, that is a bit more than a normal quarter?

[Pontus Lindwall, CEO & President]

The initiative that we have started with investing in product changes and also to explore new markets and taking investment into finding new growth opportunities, they will continue for the time being. And as I said, I want to add to that, I think that is one of the best investments we can do for the time being. So I'm not at all concerned about that. It's the other way around. I'm happy to see that's happening.

[Operator]

Thank you. And there are no further questions from the phones at this time.

[Pontus Lindwall, CEO & President]

Okay. And further questions here? If not, so thank you all for visiting this conference, and see you in 3 months' time. Thank you.