Better Collective A/S (BETCO) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Better Collective First Quarter 2022 Presentation Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jesper Sogaard. Please go ahead.

Thank you, and good morning, everyone, and welcome to Better Collective's webcast presentation hosted in connection with the release of our Q1 report covering the period from January 1st to March 31st, 2022. My name is Jesper Sogaard. I'm the Co-Founder and CEO of Better Collective. And today, I'm joined by our CFO, Flemming Pedersen. Before we dive into the first quarter, I would like to thank Better Collective's business associates, operators, users, shareholders and other partners that altogether make up a very strong network of expertise. Most importantly, I would also like to thank every single employee at Better Collective for his or her dedicated effort. It is, in particular, thanks to you that we have had a record start to the new year. This is also why Flemming and I are excited to be sharing our Q1 report. The first quarter of 2022 marks a record in revenue of EUR 67 million. Impressively, the Q1 revenue and earnings roughly landed on the same as the revenue and earnings for the full year of 2019. With that said, thank you for tuning in and for showing an interest in Better Collective. Now let's get going with the webcast presentation. Please turn to Page 2 where we display our disclaimer regarding any forward-looking statements in this presentation. I ask you to please pay attention to this. Please turn to Page 3. The agenda for today's presentation is structured as follows. Firstly, I'll run through our overall Q1 business highlights. Thereafter, Flemming will walk you through the financial performance of Q1, while he will also dive into some of our most important KPIs. Before passing the word back to me, Flemming will also briefly address our updated 2022 financial targets. Thereafter, I'll be doing a business review focusing on our strategy for 2022, our most recent acquisitions and other relevant updates. Before concluding the webcast, I'll present the key takeaways for Q1, and afterwards, we open up for the Q&A session. Please turn to Page 4. We got off to a flying start this year with significant growth across business areas, and group revenue and EBITDA landed on record highs. The activity was very intense with our U.S. business, LatAm markets and media partnerships driving strong performance. So all in all, an exciting start to 2022, and we have a very positive view on our business for the remainder of the year. Please turn to Page 5. We ended the quarter with a record revenue of EUR 67 million, equating a 74% growth compared to Q1 last year. Our operational earnings increased by 75% to EUR 23 million, whereas cash flow from operations was EUR 13 million, a decrease of 18%. The cash flow in Q1 was impacted by the record high revenue in the quarter, which drove an increase in receivables that was then paid in April. The number of new depositing customers delivered to our partners continued its strong growth trend, which we have been experiencing since the end of 2020. Q1 delivered more than 360,000 new depositing customers, which is double the number recorded in Q1 last year. Flemming will revert with more information on the finances, including some insights into the underlying performance of the business. Please turn to Page 6. Looking at the business performance, I would like to highlight some of the more significant developments in Q1. The green dots represents what particularly excited me during the quarter. Q1 was a strong quarter with high sports activity, and the quarterly group revenue was all-time high, which was driven both by a record number of NDCs as well as all-time high gross gaming and revenue share accounts. I believe it's fair to say that our U.S. business delivered a slam-dunk performance following the 2 big sports events, Super Bowl and March Madness, which generated high sports activity and U.S. revenue accounted for more than EUR 31 million in Q1. Our U.S. business continues to be a strong growth driver, and in Q1, it was further driven by the opening of New York State and our newly signed media partnership with the New York Post. In addition to the high growth in the U.S., I was happy to see strong growth in LatAm in our media partnerships and the Paid Media segment. However, March performance was lower than expected due to a low sports win margin across the industry, affecting revenue share income though the absolute income from revenue share grew both compared to Q1 last year and to the previous quarter due to strong NDC performance in recent quarters. On March 23rd, we acquired the assets of Canada Sports Betting, which allowed for a strong entry into the Canadian market just before the largest province of Ontario launched online sports betting. We have experienced significant growth over the past 4 years with 27 acquisitions. To manage this and the expected future growth, we decided to expand our group management team in Q1 and promoted 7 of our talented managers to take part in not just their line of business but also the group management and strategy planning. On the exact day, we released our Q4 2021 report, Russia invaded Ukraine. In the months that have now passed, the geopolitical situation has changed. As indicated by the yellow dot, the Russian invasion of Ukraine has caused us to suspend business activities related to the Russian market, which was predominantly advertising activities. The impact on our business is limited at an estimated full year effect on revenue and earnings of approximately EUR 1 million to EUR 2 million. It's important for me to stress that Better Collective fully supports the sanctions and the signal from corporations in suspending activities. Looking at events after the close of the quarter, April revenue reached EUR 19 million, which was in line with our expectations. On April 19th, we made our second largest acquisition to date through the acquisition of FUTBIN and related domains, constituting world-leading e-sports media brands within e-soccer. I'll revert with more information on the acquisition later in this presentation. Please turn to Page 7, where I'll pass the word on to Flemming.

Thank you, Jesper. As mentioned, I'm Flemming Pedersen, CFO of Better Collective, and it's my pleasure to go through Better Collective's Q1 financials with you. So please follow me to Page 8. Starting with a look on the quarterly revenue that ended at EUR 67.4 million, which is a 74% growth compared to the same period last year. The organic revenue growth was 44%, and the revenue split was 72% from Publishing and 28% from Paid Media. With this overview, please turn to Page 9, where looking at the operational earnings or EBITDA, Q1 was a new record with operational earnings of EUR 23 million or an increase of 75%. The EBITDA margin was 34%, with 42% in Publishing and 15% in Paid Media. When comparing to the business to last year, I want to highlight that we acquired Action Network in May 2021. However, Action Network was just turning profitable, you can say, around the time of acquisition. The total cost base has increased EUR 18.6 million, up to EUR 44.3 million in Q1, of course, partly related to the added cost base in Action Network, but also reflecting the significant business growth and continued investments in our assets. In Q1 last year, we still saw a lowered cost base due to the cost-saving program we completed and implemented during the COVID lockdowns. Better Collective has tax presence in countries where we are incorporated and basically where we -- where our business has -- where we have business activities. Income tax for Q1 amounted to EUR 4.3 million, and the effective tax rate was 23.8%. Earnings per share increased 43% to EUR 0.25 per share compared to EUR 0.18 per share in the same quarter last year. Please turn to Page 10. If we zoom in on the business segments, revenue from -- in our Publishing business grew 103% of which 53% was organic growth, up to EUR 48.4 million. The Publishing business accounted for 72% of the group's revenue in Q1 and 89% of operational earnings. We continue to see very strong performance from this business area that also includes media partnerships, amongst others with the Daily Telegraph and the New York Post. The strong performance was despite a very low sports win margin as mentioned earlier and something I will come back to later. Our Paid Media business saw strong performance with solid business -- solid increase in revenue and earnings. Revenue in Paid Media was EUR 19 million in Q1 and the organic growth was 26%. As explained in previous webcasts, Paid Media business, we have transitioned from -- switching NDCs from pure CPA to partly also to revenue share contracts or hybrid models. However, since the latter part of Q4 and continuing into this Q1, we have seen really strong performance in both growth -- revenue growth and earnings. The development looks promising for the year ahead, not least because of successful expansion into the U.S. Q1 ended with an EBITDA of EUR 2.9 million and an EBITDA margin of 15%. Paid Media delivered 28% of the group's revenue in Q1 and 12% of the operational earnings. Turning to the business split per geography. The U.S. business delivered strong performance, as Jesper mentioned. Last year's acquisition of Action Network has been a true success for us and has cemented our strong position in the U.S. market. Revenue in the U.S. business was EUR 31 million, which is more than 5x the revenue in Q1 last year in the U.S. As mentioned, our media partnerships continue to deliver very strong performance also in the U.S. What also encourages us here is the fact that we continue to see growth in the states that regulated early on, which underpins that the U.S. market is in an early stage of development. The U.S. business recorded a 42% EBITDA margin for Q1. Lastly, revenue in the rest of world markets was EUR 36.4 million with implied 10% revenue growth. Most of the rest of world markets is revenue on -- based on revenue share contracts. And the before mentioned low sports win margins has effect here. The EBITDA margin of 28% decreased from 33% last year, where we also still had the mentioned effect of the cost-saving programs following the COVID lockdowns. So please turn to Page 11. Allow me quickly to dive into some of the underlying performance drivers. Looking at income from revenue share, this accounted for 30% of the total revenue with 59% coming from CPA, 6% from subscription sales and 5% from other income. Revenue share income was again affected by lower-than-expected sports win margin within certain geographies, partners and sports. However, absolute revenue was significantly improved due to the strong NDC performance, in particular, the past year. This development in absolute revenue share income despite the headwinds from the low sports win margin really excites us as it is a strong indicator for future recurring revenue. Turning our attention to new depositing customers for Q1. We exceeded 360,000 NDCs where of 230,000 were on revenue share contracts. We are very pleased to see this development continue from previous quarters. In our U.S. business, we have signed the first revenue share contract with U.S. -- contracts with U.S. partners, and we may expect more to come. The market has started as primarily a CPA market as most of you will know. We prefer working on the long term with our partners and if we can secure recurring revenue streams, we want to invest together with our partners for the future. Please turn to Page 12. As usual, to further illustrate the development in our revenue share accounts, we share the index development in our 2 important KPIs, sports wagering and sports win margin. As can be seen, sports wagering or the betting volume spikes, which reflects high activity, also as a result of the many NDCs that have been sent in recent quarters. On the other hand, the sports win margin was at a historical low point in Q1. Currently, our non-U.S. business is the most sensitive to fluctuations in the sports win margin as these markets operate the vast majority -- markets operate the vast majority of our revenue share accounts. As mentioned, the lower margin -- sports win margin is affected by our own, you can say, high deliveries of NDCs by sports results favorable to players, but also from marketing offers by operators in highly competitive markets, and we have also, in recent quarters, seen increased compliance measures by certain operators in select markets, in particular, in the U.K. We do expect the sports win margin to increase in the coming quarters. That said, our focus remains on sending as many valuable players as possible in order to maximize the absolute recurring revenue, and we stay focused on this long-term value of the customers in each market. Please turn to Page 13. Looking at the cash flow and balance sheet, the Q1 operating cash flow before special items was EUR 13 million or a decrease of 18%. As Jesper already mentioned in the financial highlights, the cash flow was temporarily impacted on net working capital due to higher revenue in the quarter. And in the month of April, we saw a significant inflow of cash as customers paid off their debts. Payments related to acquisitions included deferred payments from the acquisition of Action Network and the last payment for the 2020 acquisition of Atemi. Acquisition of Canada Sports Betting reduced cash with EUR 16.4 million. During the quarter, we also secured additional bank financing of EUR 100 million, and by the end of the quarter, capital reserves stood at EUR 118 million, consisting of cash of EUR 31 million and unused bank credit facilities of EUR 87 million. Net debt to EBITDA ended at 2.01. We believe that Better Collective now has a significant business scale with a large operational cash flow that we believe will allow us to continue to access attractive funding opportunities for potential future acquisitions. Please turn to Page 14. Before turning the word back to Jesper, please allow me quickly to guide you through our updated financial targets for 2022. In connection with the acquisition of Canada Sports Betting and FUTBIN, respectively, we updated our financial targets for the full year with regards to operational earnings to approximately EUR 85 million from originally EUR 75 million. In the Q1 report, we update our organic growth target to 20% to 30%, up from previously 15% to 25% based on the strong business performance that we have seen in Q1 and of course, expectations to the remainder of the year. We will continue to invest in our business; however, we remain focused on absolute earnings and, of course, the earning margins as well. This means that we release growth investments booked as cost, as always, as we see the success in our business materialize. The updated financial targets reflect addition of approximately 8 months of operational income from the acquired assets and generally a strong business performance in the first month of the year. The financial target relating to debt leverage remain unchanged below 3.0. When reviewing the new financial targets, we have included a more conservative view on the sports win margins as in line with the trend that we have seen during the past 9 months, and we have removed revenue related to the Russian market, as mentioned earlier. Furthermore, the financial targets do not include new potential acquisitions. If we exclude new acquisitions, the debt leverage will be expected to be below 1 by the end of the year. The financial targets are based upon assumption that the U.S. market will remain mainly a CPA market for the rest of the year. However, as mentioned, we do experience more operators being open to work fully or partly on revenue share, which we prefer, pending deal terms, of course. If we are successful in reaching attractive revenue share agreements in the U.S., this may impact revenue and earnings short term. We have already changed the revenue share with the 2 U.S. operators, which we have absorbed in the updated forecast. However, as mentioned in our annual report, if we make more and larger changes towards revenue share agreements, we'll communicate this when we do it and the financial targets may be adjusted. In conclusion, the new expectations to the remainder of the year include very strong business performance that is able to absorb lower sports win margin expectations and reduced revenue from the Russian market and transfer of the first U.S. operators from CPA to revenue share. When reviewing the full year forecast, I would also like to comment on the expected seasonality going forward. With the increased weight of the U.S. business and the addition of FUTBIN, we expect the seasonality for the group revenue to change going forward. Approximately half of FUTBINs annual revenue, we'll expect it to be in Q4. And for the U.S. business, the months from September to March, we'll expect it to be the strongest. That means that Q4, followed by Q1, we'll see more seasonal effect compared to previously, both with respect to revenue and earnings. That was it from me, and please turn to Page 15 and the word back to Jesper.

Thanks, Flemming. In the following, I will walk you through a small business review for Q1 2022. Please turn to Page 16. The sports betting and iGaming industry continues to show a shift towards online gaming compared to the traditional land-based operations, and this creates a strong underlying market growth. In order to strengthen our position as a digital sports media group, we'll work with the following strategic focus areas for this year: consolidate our leading position as an online sports media in the U.S. market through already strong brands and a wide collaboration with operators as new states open for online sports betting, grow media partnerships to cover more markets and keep refining the business model and offering to partner media, strengthen paid media position by reaching the necessary scale through the development of new traffic channels and entering new markets, enhance the e-sport position by growing organically and through acquisitions, expand the market footprint by acquisitions and by creating strong positions in new markets as they regulate, stronger group and organization to drive and support the growth ambitions by being an attractive employer for talented employees. Generally speaking, we see it in the sports betting and online sports betting and iGaming market as a highly attractive growth market due to several megatrends that are shaping and developing our business. Please turn to Page 17. E-sports is maturing and attracting more and more people globally, also professional athletes. With the professionalization of e-sports, Better Collective has a defined strategy to include e-sports in our media portfolio, wherever possible and meaningful. We see a lot of synergistic effects with the other parts of our business, and some of our customers already have offerings within e-sports. This is why we just, after the close of the quarter, expanded our e-sports portfolio and made our second largest acquisition by acquiring FUTBIN and related assets for a total price of up to EUR 105 million. Considering our aforementioned strategic focus areas for this year, the acquisition of FUTBIN has allowed us to expand our market footprint and strengthen our position in the e-sports field. The acquisition of FUTBIN is an important milestone in our vision to own and operate leading global e-sports media and communities with content that enriches the game experience for fans and followers of the dominating e-sports titles. FUTBIN is an addition to our already well-established e-sports portfolio where HLTV has played a major role for our entry into this space. We expect to create significant synergies across our e-sports portfolio by developing products and services from a joint infrastructure. Offering best-in-class user engagement, we see possibilities to effectively scale our brands to reach an even larger audience attractive to global consumer and retail brands. The e-sports market has been booming in recent years, and ReportLinker forecasts the e-sports market to continue growing with ads and sponsorships representing the largest share of revenue. There's been an increase in online betting and e-sports, especially during the COVID lockdowns. However, betting is not the primary revenue driver in our e-sports business. Please turn to Page 18. Allow me to quickly explain why we see FUTBIN as a perfect fit and how the brand will strengthen our e-sports position. Prior to acquiring FUTBIN, HLTV has been our biggest brand within e-sports. HLTV is the leading community for CS:GO, Counterstrike and conduct world ranking based on its algorithm and functions as a community site with new statistics and matches. What unites FUTBIN and HLTV is that each brand attracts massive audiences and in each of their way, they enrich the user's experience within e-sports. FUTBIN is not a traditional e-sports brand with pro teams and big tournaments. Instead, FUTBIN is the world-leading FIFA domain, providing insight into FIFA Ultimate Team or FUT, while it's also a vital tool for improving many FUT players' performance. Currently, FUTBIN resembles more that of a media with revenues mainly driven by ads and subscription sales. During the last 12 months, FUTBIN and related assets generated EUR 13 million in revenues from advertising and subscriptions. And based on synergies and learnings from HLTV, we expect a significant lift in future revenues. Today, we reached a combined 100 million monthly visits and 2 billion monthly page views from FUTBIN and HLTV and our other e-sports assets, which gives us a leading position in the e-sports market. However, we'll continue to look for additional growth, [ rendering ] unique access to the e-sports audience. This is a key segment for retail and consumer brands in their global positioning. Increased scale allows for optimized revenue streams to improve partnerships. Now please turn to Page 19. As mentioned, FUTBIN is the world's leading brand related to the e-soccer game, FIFA, Together with its associated domains, the platforms provide a major player base with important insights into the game of FIFA. The main business model of the platforms are ad sales and more recently, the launch of the FUTBIN app, which has driven significant revenue growth with subscription services, which is still in its early stage but with a very promising outlook. Generally speaking, we are very impressed with the high growth profile of the technology behind FUTBIN and the other assets in this portfolio. Looking at FUTBINs history, the brand was launched with the aim to help FIFA players find the right player values in a fast and reliable manner, a mission which aligns well with Better Collective's. Since 2014, FUTBIN has evolved with many new features such as FUT player database, squad builder, calculator, squad analysis, market indexes, draft mode and more. The brand is recognized worldwide with the primary audience coming from the U.K., the U.S., Germany and Brazil, respectively. The acquisition of FUTBIN and related assets, undoubtedly harmonizes with, and is a clear testament to our ambition of creating a platform that reaches e-sports audiences across the world. Please turn to Page 20. With all what is going on in the North American market, I would also like to comment on the development here. The U.S. market is now our biggest single market. It is gradually reaching the same profitability as our European business, and we are currently live in 17 U.S. states. As already mentioned, our U.S. business delivered prime results in Q1, and U.S. revenue exceeded EUR 31 million in the quarter. In New York State, we are off to a great start, which was further accelerated by our media partnership with the New York Post. During Q1, some U.S. customers moved from CPA to revenue share, and as time progressed, more partners are expected to work fully or partly on revenue share, which we prefer, as it allows for a steady stream of recurring revenue also in our U.S. business. The transition is, of course, depending on the deal terms we can negotiate. However, we are willing to invest with our partners in the market expansion. With the acquisition of Canada Sports Betting, we made a strong entry into the Canadian market just before the largest province of Canada, Ontario, launched online sports betting on April 4th, 2022. I'm extremely happy to include Canada Sports Betting in our product portfolio, and we expect that the Canadian activities will generate revenue in excess of EUR 5 million in 2022. The province of Ontario with a population of approximately 15 million people and a GDP that will place them as the sixth largest state in the U.S. setting has already granted licenses to multiple commercial operators. We expect a number of other provinces throughout Canada to take steps to also regulate their online sports betting markets. North America is a particularly exciting market, especially when considering that the U.S. market barely existed around the same time as we completed the IPO of Better Collective. Now only 4 years later, the U.S. market is our biggest single market. Please turn to Page 21. Focusing on our 6 strategic focus areas. We implemented a new group management team in Q1. On this slide, you see the entire team. with Better Collective's fast-paced growth and expanding business, it became apparent to us last year that we needed a broader management structure to represent the company we are transforming into. And as we continue to grow the business, we also needed to develop a structure that is scalable. I'm happy to have welcomed 7 new members to our management team, and I'm certain that the new group management structure will provide the knowledge and empowerment needed to make Better Collective succeed and deliver on our strategic goals. Please turn to Page 22. We have now reached the end of our Q1 presentation. Please turn to the next page where I'll walk you through the key takeaways for the quarter. Firstly, Q1 was a record quarter with Q1 revenue of EUR 67 million and earnings of EUR 23 million. I have to say that I'm very proud of this development, and I would like to thank all the, now, more than 800 hard-working and talented employees in Better Collective. Our U.S. business delivered prime results following the 2 big sporting events, Super Bowl and March Madness as well as the regulatory developments, in particular, the opening of New York State. Likely, we'll not have many launches on the scale of New York in the near future, yet this is still a success story worth highlighting. We also acquired the assets of Canada Sports Betting, which allows for a strong entry into the Canadian market. Just after the close of the quarter, we expanded within e-sports by acquiring FUTBIN and related assets. With this exciting addition to the group, our e-sports portfolio now reaches 100 million monthly visits, and we have managed to further diversify our income stream. This concludes our webcast presentation. I'll now pass the word back to the operator and open for questions from the audience. Thank you for listening.

[Operator Instructions] The first question comes from the line of Marlon Varnik from Nordea Markets.

Jesper and Flemming, can you hear me well?

Yes.

Perfect. So firstly, on the trading update here. I mean revenue is EUR [ 19 ] million for the month of April. Given that the seasonality is softer in the second half of the second quarter, how should we view the April number compared to expectations, for example, the month of June or May?

Yes. I think, first off, as we also write in the report, Marlon, the April revenue is in line with our expectations. So that's to be said, as also we mentioned, you can say, in general, in Q2, you can say, especially from June and onwards, we will see a sort of a dampening of the activities in sports throughout July also, which is pretty normal. And basically, yes, we have, you can say, as we state, in particular, this time that seasonality will be a bit more -- or be more predominant than in the past with the U.S. and now also FUTBIN that have really strong seasonality, both of them. I think you can say, April sort of is a standard month for Q2 to, sort of -- to hint to your question.

All right. Perfect. And for the quarter, I mean, the sports win margins seems to have been dampened here after the [indiscernible]. Can you quantify a bit more here of the effect you have seen and also how the second quarter has started here?

Yes. On the sports win margin, we -- as we commented on, we have seen sort of an average downward trend in the past 9 months. And we have also, you can say, of course, noticed, in particular in October and March, we have seen very poor, you can say, sports win margins from an operator point of view. In March, it was on a very low point, I think that was across the industry, mainly from, you can say, the major soccer leagues -- football leagues, Premier League, but also the Cheltenham Festival, the horse racing festival was really player friendly. Having said that, speaking more to the trend and then what we also commented on in our speak, is that, in particular, in the U.K., we have seen operators for some time, you can say, taking, you can say, stronger measures on compliance, including affordability checks and KYC documentation likely ahead of the expected measures from the U.K. Gambling Act review that is expected this year. So that is a trend we have seen. And also, I think some operators have confirmed externally. What we also have seen is the use of more retention bonuses, in particular, in the U.K. This comes in different shapes and forms, as you know, but also a trend. So I think this is -- we think it is a healthy measure. But of course, short term, it dampens, you can say, the margins when it takes such measures. We have been able to counteract that by sending, you can say, still very high volumes of customers on revenue share accounts. So that's why you can see that we actually increased our absolute income from revenue share despite this headwind, which really is encouraging in our view. So -- but these are at least some of the trends that we have been able to pick up.

Yes. And then do you have any comments to share here about the start of Q2 for April? Anything that stands out in terms of...

No, nothing in particular.

Yes. And on U.S., I mean, I can't find any comments on the U.S. revenue forecast, previously expected more than $100 million for 2022. Only in Q1, we saw EUR 31 million. Can you please update us here on your revenue expectations? And how should we view the above $100 million guidance for 2022?

Yes. The short version is we are still very comfortable with that, and it was mentioned in connection with the acquisition of Action Network and later confirmed. So this is indeed still our expectations, not least following the strong Q1.

Yes. And just lastly, I'm trying to break down the growth drivers in the quarter. I mean 74% total group year-over-year growth, 44% organic growth. You don't give the FX and M&A split? What's the FX and M&A growth contribution in the quarter? And, Flemming, I assume it's only -- or basically only Action Network here.

Yes, that is Action Network, that is the M&A effect. And, you can say, yes, so the delta between the total growth and the organic is clearly from that. The ForEx, you can say, it came a bit late. It's mostly the U.S. dollar that has gone up. And, you can say, basically, it is approximately 10% higher than, you can say, from where we -- even more 10%, 15% higher from where we acquired Action Network. So it's beginning to have an effect clearly. We cannot [ broken ] that down for you.

The next question comes from the line of Oscar Ronnkvist from ABG.

Just a question on the M&A going forward. Have you seen prices coming up, anything, [ just for that FUTBIN as ], probably maybe in the high range of the multiples you've paid in the recent years? So are we seeing a new normal or are you expecting lower M&A multiples going forward?

Well, I think, in general, the prices we see, I think, are not significantly different from what we have seen in the past. Typically, you'll see, if we look from a graphical perspective that U.S. tends to be higher multiples than what we would see in Europe. E-sport will also be a higher multiple compared to what you would call a traditional affiliate side. With regards to FUTBIN from an EBITDA also and taking into account that there was an asset purchase versus a share purchase when we acquired HLTV, it's actually at a lower multiple than when we acquired HLTV. So no, we're not seeing any differences in the pricing environment.

Perhaps if I may add, clearly, with FUTBIN as an example, we are also acquiring technology that is unique to be acquiring a strong brand. And nothing you can sort of compare to, you can say, classic affiliation domains, I would say. So there is a price element to consider as well.

Okay. Understood. Just a follow-up on FUTBIN because of its, I guess, highly dependent on the FIFA. So there are some rumors that it will be kind of a change in the FIFA game from 2023 and onwards, mainly what I've heard related to the name, but also could be some changes. What are your -- I mean, are you uncertain of how that will develop if it would be like major changes to FIFA Ultimate Team?

Well, we -- so yes, the name change is confirmed. But on the other hand, like, the game itself is expected to continue as it is currently under a new name. And I think we, therefore, don't expect any impacts to FUTBIN. On the contrary, since FUTBIN is such an important resource and a very, very strong community consisting of millions of millions of FIFA players, we actually view it as a very important part of sort of that transition. So it will be equally relevant also under a new name.

Okay, understood. More of the general theme here, so can you explain what caused the upgraded guidance? Is it any specific markets that you want to highlight, and if you just could repeat the Russian impact?

Yes. So the updated guidance, it's a mix of, you can say, strong performance in Q1. And as mentioned, in particular, in the U.S., in LatAm and in media partnerships, and we actually expect that to continue. As the previous speaker also asked too, there's also, you can say, a ForEx element to the U.S. dollar expected to be higher for the remainder of the year, so these 4 main drivers. I think the growth in our revenue share accounts that we have seen, you can say, in recent quarters also bodes for, you can say, us having a quite positive view on the remainder of the year. We have -- as mentioned, we have removed Russian revenue to the tune of EUR 1 million to EUR 2 million as we have stopped activities. And then we have absorbed, you can say, expectations to a lower sports win margin as we have tried to model the trend that we have seen. And lastly, we have also included the transition of the first U.S. operators contracts to rev share. So on that note, you can say, we expect -- we have maintained the earnings guidance, but with a, you can say, revenue or organic growth revenue [ under there ].

Okay. Got it. Just a final one on the Ontario launch. So would you say that it was a bit boosted by your strong relationship with bet365 or just looking in comparison to Catena Media, for example, who didn't seem to have a really strong start in Ontario? Do you think that you have had a strong start? Or what can you say about that market?

Yes. So as we communicated and like you know, we made an acquisition just prior to the launch of the market where we got a great asset, specifically for the Canadian market. And the development of that and also our existing business has been as expected in Canada. On the point of our relationship with bet365, it's always a great advantage to us whenever we enter a market together with bet365. So there's -- there could be an element of us performing well with them. But it is more or less across the business where things has developed as expected, maybe even slightly better than expected.

Okay. Got it. Just a final follow-up. The rev share or CPA split in Canada, is it more like the U.S. or is it more like Europe?

No, that I would put more in the bucket of the rest of the world where we see a fairly high amount of revenue share.

The next question comes from the line of [ Paolo Gibriani, ] Private Investor.

Can you hear me well?

Yes.

Yes. Basically, my question is regarding the sports win margin. What -- can you just tell me again what gives you the confidence that the sports win margin come -- shall bounce -- come back to the previous level going forward? And also if you could say a bit more in detail, elaborate a bit more in the guidance that you give for the organic revenue growth, which kind of assumption of sports win margin you made?

Thanks for the question. As mentioned, we have actually, in our forecast, we have lowered our expectations to sports win margin for the remainder of the year, though we do expect it to, you can say, increase from the low level of Q1. But we have taken a cautious measure for the remainder of the year. We do not give exact percentages on that because it's specific to, sort of, to Better Collective, what are margins that we are operating with in the Q. So it doesn't make sense really to mention a percentage. But we have operated with a lower one going forward and thereby also not expecting to come back immediately to previous averages. So that's the assumption.

Okay. And just as a follow-up on the rest of the world business unit then, the decrease of the profitability, what is it due in the Q1, which is the economic reason behind that?

Again, that is where you see the profound effect of the revenue share and the sports win margin because most of the revenue in that segment is on revenue share. And secondly, as we also alluded to in the speak, if you compare to last year, we had a, you can say, still effects from the cost saving program that we implemented during the COVID lockdowns. So we have actually increased our investments again.

And just to add, so the group cost will mainly also land in that segment.

The next question comes from the line of Marlon Varnik from Nordea Markets.

Just a follow-up question here. I mean you touched it briefly. The U.K. white paper expected to be out here in the U.K. short term, bet365 is a large customer for you. Can you please just share some color of the potential effects and maybe your expectations of the upcoming U.K. regulation here?

Well, it is -- we tend to take an approach that we'll wait and see what comes and then we'll sort of decide. But just sort of a bit of color, it will mostly, as we understand, relate to the online gaming aspects, in particular, online slot machines and sort of the levels of bet sizes for spins. There's also the part of affordability checks. And I think if you look at what the operators have been communicating, they are probably giving more color to their expectations. And to be honest, I think they are also closer to this as it will impact them more. I do expect that sports betting will have a lesser negative effect. But if you look at our revenue share accounts, there's obviously sort of cross products. So we also have sports betting players that are playing online slots and there we would also see an effect if something were to happen there.

Yes. Just lastly from my side here, on Brazil, expected to regulate sports betting in -- towards the end of the year. You seem to do pretty well in the Brazilian market currently. What's the growth drivers you see here in Brazilian market? And how are you positioning yourself ahead of the upcoming sports betting regulation expected to be towards the end of 2022?

I think in general, if we look broadly to LatAm, it's a market which is in its early phase. So there's this education happening of players. They are getting used to betting online, looking for relevant information and which bookmakers to bet with. So they're definitely high-growth markets. And we are, of course, keen to potentially acquire the right assets. We have also developed assets ourselves with a focus of being the leaders in these markets. And also from the media partnership angle, it's something where we are actively working with this. So it's a region where we have a sort of high conviction on a great future. So we are sort of -- from all aspects, trying to position us as well as possible.

There are no further questions over the phone.

Then we have a question online. I'll just read it out loud. Congratulations, excellent results. I have a question regarding the FUTBIN acquisition. What kind of growth rate are we expecting for FUTBIN in 2022, a growth rate in line with 2019 to 2021 CAGR of 55%? And what do we expect as synergies between FUTBIN and other brands such as Action Network like adapting FUTBIN products to other sports like NFL, et cetera? On the historical growth rates, they are correctly at the 55%. We've not guided on current growth rates. But what we have stated is that it's a growing asset and sort of at the full portfolio of sites, e-sports brand tend to be the high growth assets in our portfolio. On the synergy side, we believe there are some exciting opportunities between HLTV and FUTBIN in terms of the massive audience, which we have combined, which is opening up for potential new bigger advertising deals and campaigns that we can launch. We are also, obviously, considering all the different parts of our monetization. So there is a subscription element. We believe there's an opportunity to grow that even further down the road, there could also be affiliate opportunities. So we think there's still a lot to do in both growing the audience, but also monetizing it even better. If we take the next question. Can you expand a bit on the integration of FUTBIN? When will you return to former margins? The integration of FUTBIN, we have an earnout in place. So the founders of FUTBIN will continue executing on the site. At the same time, we are integrating the business into Better Collective and, again, sort of utilizing synergies and teams from HLTV with the aim of, in the earnout period, completely to take over the business and manage it ourselves. As to the margins, I think it's quite important to look at the difference between our Publishing business and our Paid business because there is a significant difference in margins there. So when we're talking about sort of or looking at margins prior to the acquisition of the Atemi Group, the group margin was higher at that point in time. It's now lower, and that is simply due to the Paid business having lower margins. So we tend to look at the segments individually from a margin perspective. And in the Publishing business, the margin should be sort of more or less in line with the historical margin of Better Collective, which is also as currently. And the final question. Congratulation on great Q1 results. Can you estimate the volume and size of acquisitions in 2022?

If I understand the question correctly, we have acquired 2 companies this year for approximately priced up to EUR 125 million. And if we sort of get -- estimate the revenue effect, what we have brought in, we have last 12 months mentioned for FUTBIN and an estimate for Canada Sports Betting, it will be to the tune of, say, EUR 20 million. I hope that answered the question.

And that was the last question online. So with that, we will conclude our Q1 conference. And thank you very much for listening in and also thank you for the questions.

That concludes our conference for today. Thank you for participating. You may all disconnect. Have a nice day.