Catena Media plc (CTM) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Catena Media's Q1 Interim Report. I'm Michael Daly, and I'm joined today by Peter Messner, and we'll go through our presentation with you and then take Q&A at the end. Today, we'll go through the Q1 highlights and then the financials, and we'll talk about the outlook for our [ Global World ] acquisition picture, and then we'll do Q&A. Q1 was a record-breaking quarter for Catena Media, all-time high revenue. This is our sixth quarter of revenue growth and our ninth quarter of EBITDA growth. Our revenues reached an all-time high of EUR 45.2 million. That's 11% annual year-over-year quarterly growth. Revenue in North America grew 32% in the period, and our NDCs also grew significantly in the period. We saw outside of North America, we saw double-digit growth in Japan, even though it was impacted by a weaker yen, which is impacting player activity there. Organic growth was down for the period due to some headwinds in European markets, the exceptionally strong quarter last year by Michigan and Virginia launching and the effect of Lineups and i15, which is according to plan, we acquired these assets last year for their positioning in new states. So the fact that they are over weighted in New York for this quarter makes sense. And we are very happy with the contribution of those teams. Those products become part of the organic picture for the rest of the year, starting in May for Lineups and September for i15 Media. Adjusted EBITDA, as I said, also hit a record for the ninth consecutive quarter. EBITDA was EUR 25.6 million adjusted, 2% growth. So it was slightly less than the revenue growth, but that's because we are discontinuing to do our significant investment plan that we were doing last year. Even with that, you should note that our margins are exceptionally high at 57% for the quarter. This is above even our target, which is why we spent Q1 doing significant investment. Operating cash flow remains strong as well. EBITDA by comparables removed was -- the comparable was EUR 0.4 million, adjusted to 8% to EUR 25.2 million with a margin of 56%. Solid financial positioning puts us in for good financial growth for the future, allowing us to continue to use capital in flexible ways, which can include additional M&A, share buybacks that we've been doing, which Peter will comment on as well as other opportunities. I'll now turn it over to Peter for those financial discussions.

Thank you very much, Michael, and welcome to our first quarter earnings call. So that first quarter had another quarter of revenue uplift, EUR 45.2 million, that's a new all-time high, 11% growth compared to last year and also a 42% increase versus the previous quarter, the fourth quarter of '21, fueled really by the strong launches in both New York and the smaller Louisiana. Search revenue is the majority or almost the entirety of our total group revenue and grew 14% compared to last year and 44% versus the previous quarter. Paid revenue then was 43% below last year's level, but still on par with the previous quarters, and that is reflecting our strong focus on the organic search. Our new depositing customers, one of the key operational performance indicators, increased by 9% year-on-year and 27% versus the previous quarter. And that is particularly driven by the sports segment, of course, and the launches in the aforementioned U.S. states. Taking a look at the segmentation. It was a dominant quarter for sports. The sport segment was the biggest segment for the first time with 56% of total group revenue. And that is, of course, the result of the expansion in North America and the launches that I mentioned before. From a sourcing perspective, the revenue from our CPA, cost per acquisition, increased its share to 67%, which is, likewise, the result of our state launches in North America. At the same time, also impacted a bit by weaker sports betting margins that we have seen with European operators that affected our revenue share in Europe. As it stands today, the CPA model that we have in North America really outshines the revenue share based model and Michael will talk about this in the outlook section briefly as well. Our investments into the long-term growth is really an investment into the future. So the total cost in the first quarter, excluding items that affect the comparability, was roughly EUR 20 million, at EUR 19.6 million. That's an increase of 25% versus last year and sequentially 4% versus the fourth quarter of 2021. The direct cost increased in line with our increased revenue from influenza partnerships, particularly in North America and also certain direct advertising that we do on a global basis. The personnel expenses increased by 29% year-on-year and 12% versus the previous quarter due to the continued and strong investment in North America in readiness really for future market launches. The company's average number of employees during the first quarter increased by 16% year-on-year, while in North America, it grew by 56% and the average payroll cost in North America is higher than group average. Other operating expenses increased by 18%, and that's primarily the result of the growth in North America and again, the U.S. state launches that we have seen. The cost ratio, which is all costs as a percentage of revenue is expected to fluctuate quarterly due to the revenue seasonality then. And particularly in the second quarter is expected to be likely the lowest quarter of that year, and that will impact the adjusted EBITDA and the margin naturally. Taking a look at our segments. Casino, for the first time, is not the biggest, but the second biggest segment and represented this time, 42% of total group revenue and 39% of group's adjusted EBITDA. Revenue in North America normalized after that lifting that we have seen from a COVID-19 perspective, but also the impact that, in particular, the Michigan launch in the first quarter last year had and Michigan back then regulated both casino and sports betting. Japan had a very solid quarter with double-digit growth. However, we have seen a weakening yen, as Michael mentioned previously before that started to impact revenues at the end of the quarter because it is impacting the deposits of Japanese players that are then converted into either euro or the U.S. dollar. The German and Dutch markets continued to develop slowly post their regulation. The German regulation was kicking in on the 1st of July and the Netherlands in October. We've seen now the first German operator casino license has been granted during the month of May, and that operator is expected to go live in June. And of course, everybody in the German market is hopeful for further licenses to be granted. As mentioned on the previous slide, growth investments in North America, they are also relate to casino segments. Other than in the sport segment where we generally have a pretty good and a clearer view on upcoming U.S. states to regulate and Michael will talk about that in the outlook section again. The development of online casino is a bit slower. But nevertheless, the opportunities are massive there. Ontario now in April, launched both sports betting and casino and likely the most exciting nearer-term prospects for online casino is going to be New York. With that, we take a look at sports. Sports really was dominated by New York now in the first quarter. Sports was the biggest segment, represented 56% of total group revenue and 60% of adjusted EBITDA. The revenue that was contributed by our North American operations more than doubled year-on-year. And of course, not only following New York and Louisiana, but also the strong contributions from last year's 2 North American acquisitions that we did, Lineups and i15 Media. And as they still do not have their anniversaries, Lineups was acquired in May and the i15 Media assets in September, they do not contribute to organic growth as of now. In Europe, operators experienced somewhat lower sports betting margins, affecting them in turn our revenue share and also certain post-COVID effects overall in the segment in Europe. In Germany, we have, however, seen that operators are, again, increasing their investments into sports betting and that is a very good sign. Latin America shows continued very favorable trends for our industry, I would say, and there's positive regulatory tools happening in Brazil as we speak. And again, growth investments also shown in the sports EBITDA, of course. Finally, our smallest segment, financial trading, 2% of total group revenue faced quite some challenging market conditions due to the macroeconomic environment, increased risk and investor caution of the war in the Ukraine and also rising interest rates and inflation. So that will impact the trading behavior. The segment's dominant market is the German market, and that's held quite firm despite those conditions. And the segment is focusing increasingly on newer markets like in Africa, in Nigeria or South Africa, but also in Southeast Asia with Malaysia and we even saw a launch of operations in our segment in Singapore. When we look back at historic patterns of market volatility, those would suggest that when market sentiment improves, the investing activity, of course, will rebound as well. And that is what we should look for. The cash conversion of 52%. So Catena Media business has a very strong cash generation, historically always has had. And for the full last year, 2021, that cash conversion was [ 107% ]. Now in the first quarter, that conversion was 52%. Operating cash flow ended at EUR 13 million and was down as compared to the last year. And the result of that is the increase in revenues and also the increase in trade receivables due to the strong performance that we've seen in New York and Louisiana, and they are slightly different payment terms that we see with operators there. So they simply affected the balance of our trade receivables. The cash flow that was used in investing activities included EUR 1.6 million related to small acquisitions of websites and domains and EUR 1.4 million in capitalized development of intangible assets. And cash flow used in financing activities included our resumption of the share buyback program that amounted to EUR 5.8 million and repayments of bank term loan of EUR 2.1 million and interest payments of EUR 2.3 million. At the end of the period, the cash equivalents balance was at EUR 26.7 million. And finally, our strong balance sheet. We had total assets of roughly EUR 376 million. Total equity was almost EUR 243 million, including our hybrid capital securities. The amounts that are committed on acquisition relates to EUR 26.2 million, and that is in relation to the Lineups and the i15 Media assets acquisitions from last year. Out of that, some out of the EUR 26.2 million, EUR 21.6 million or $24.1 million are due within the next 12 months from the end of March, that is. Our borrowings are the corporate bonds, the bank term loan and the revolving credit facility amounting in total to EUR 82.1 million, out of which EUR 8.3 million are already committed to be repaid within 12 months. That relates to the bank term loan. And other liabilities finally are EUR 24.5 million, and they include tax liabilities, lease liabilities and trade and other payables. The net interest-bearing liabilities amounted to EUR 57 million, resulting in a leverage ratio of 0.81. And at the end of March, the company had EUR 33.8 million outstanding warrants in relation to the issue of our hybrid capital securities in the summer 2 years ago. And these warrants can still be exercised during one of the exercise windows following our interim reports, up until and including the second quarter report in 2024. And with that, I hand back to Michael going through an outlook.

Thank you, Peter. So let's talk about April. April, the first month of our second quarter. Our second quarter is typically a slower quarter for us. We've had some COVID spikes in the last few years, but Q2, particularly as Peter noted, with sports becoming dominant in our revenues right now, and that particularly coming out of North America. This is Q2 until September of Q3 is a slower sports season in North America. That said, we saw revenue growth of 3% globally or 7%, excluding Germany, as Germany was still in H1 last year, still a gray market. Revenues in North America grew 46% year-on-year in April. Again, a slow month for sport, but shows our strength in casino there. We saw a weakness in yen and Japan is impacting revenues there a bit in April. Revenues players play in currency other than yen in Japan, so it's converted at point of player playing, so their value of play dollar is decreased. So that has had some impact on Japan, along with our ability to hire there, quite frankly, in terms of our ability to grow faster has been limited. We hope with the COVID restrictions starting to ease now in Japan, which it looks like they are going to allow travel in and out of the country, which means more people being able to be fed into that market to hire. We expect to see strong growth from Japan through the rest of the year. But in April, it was weekly a little bit weaker than we would have liked. Ontario. Ontario was the big talk of all of us in Q1. It was -- for us, we view it as an unspectacular launch. Ontario is legalized. It was originally supposed to be in Q1, they pushed into Q2, which is an odd against sports calendar season for North America. We expect Ontario will grow over the next few months as with casino, as casino becomes a growing story. As operators launch, some did not launch on day 1. Some were launched, but not an affiliation deals with us day 1 as we've got -- came to terms that were all sides favorable. And the operators were having KYC, know your customer issues as well as importantly, market restrictions -- marketing restrictions did have an impact on affiliates and operators. Bonus words not being able to be used in advertisement, which, over time, become less important as it becomes more of an education of the market bias as an affiliate. But in those early days, those bonus words are what draw attention of new players. So the initial launch was underwhelming in some ways in terms of the day 1. We expect that to grow. We still believe Ontario to be a very important market for us going forward. And we've done it well with an organic growth story there. So it's been reasonable and it's marginally within what we would expect going forward. So -- we are looking forward to Ontario growing. Europe, Germany, as Peter mentioned, casino licenses starting to be issued finally. So Germany has been still a drag year-over-year for us because in H1 last year, it was unregulated. This year, it is going to have some licenses issued starting -- it looks like in May, some license -- at least 1 license is issued for casino and launched them shortly thereafter. So we are very positive on that. That sort of regulatory environment also impacted us in Ontario. Ontario being a slow start, but we also, with our global products, had to pull back on the rest of Canada because Canada is now no longer a gray market. It is a white province in Ontario and the rest is at least from our legal interpretation is black. So we and a number of operators no longer market into the rest of Canada. That had a near-term detrimental effect on some of our products, but we expect the legal market in Ontario to overwhelm that in the very short term. But impacts in April when those things were in flux. The good thing on Ontario versus Germany is from day 1, operator licenses were issued in the new regulated environment. North America, we are growing and we are geared for growth. As Peter mentioned, CPA is a dominant model still in North America. We are big believers in CPA. I know there's questions all the time around should you be on rev share there? Perhaps at some point, not that point is not today. We are seeing increasing CPA rates. New York had some of the highest CPA rates or the higher CPA rates we've seen to date. High bonus costs from the operators in this marketing frenzy that is going on means that, that's a negative impact on rev share. So in rev share deals, many of those would be minus bonus costs and minus marketing spend, so we would be in a negative world similar to some of the operators. CPA allows us to multiple selling of players, a nascent market. We know in Europe that players have probably 5 accounts and play on 3 in sports markets. In the U.S., it's very nascent. So many of these players are still looking for the right home for an operator. Yes, we want to bring value to our operators by not continually reselling them. But if the player is ready to move, we want to be able to take advantage of that. And the best way to do that is with CPA because if we're in rev share, they're only on one wallet, regardless of how many operators they're splitting that across. We are getting a CPA for each time we deliver that player to someone over the next few years. CPA gives us the potential to take that money on the front end and invest it into our future growth. Our organic growth story fueled through our own development and not through any additional fundraising or other types of activities. They feel like marketing conditions are likely to remain favorable even with the reduced marketing spend. Another thing that has become concerning to investors at large. So as you see marketing spend decrease from the operators in full, so all of them individually will decrease. There is still a lot of marketing going on in North America. As an affiliate, we need a certain level of that to be valid, so that the players -- potential players are at least aware of the market. From there, they start their searches. They do Google, TikTok, et cetera, search, they find us through the organic channels and then we bring them on to the operators to finish that journey. That marketing spend will stay at levels that still help us at as affiliate and probably help us more because of the under percentage of affiliation in North America compared to other markets. And I think some of this has demonstrated the value of CPA and the continued strength of CPA through some of the numbers we show here on growth year-over-year on Super Bowl. So Super Bowl since 2020 has met a consolidated average growth rate of 11% of new players signing up in states that were there in 2020 and then in 2021 and 2022, minus the new states coming along, of 11% growth in those states. So we are still bringing new players to the market every year. And same thing with if you just look at last year's to 2021, it's a 54%. So it is solid double-digit growth in actual states that we have been in for a number of years on CPA. So there is a sustainable business in CPA and a strong business, we would argue at this point for the near-term future. And that near-term future may still be a number of years. Let's talk about a number of years in North America. There's a number of actions on the ballot. We are seeing where California has on the ballot legalization of online sports betting. Now I'm not a gambler. But if we were, I'm not sure I'd gamble in favor of that making it the first time, but that sort of activity is very favorable for us as an industry. It is being talked about. It is being moved forward. The ball moves forward until eventually, it gets across the line. So California is the largest state in North America, it's, I think, the fifth largest economy in the world or something like that. So it is a very significant market when it does come. We are well positioned there have been for years for both sports and casino. Ohio and Maryland, are launching. There are about 14 million people about the size of Ontario, a little bigger than Michigan when you combine the 2 together. And so they're on track to launch sometime later this year, maybe early next year if they slide. But that's another -- those are past and regulation is in going into effect. So it's just a matter of time now. There are still many more states to go large states, Texas, Florida. Total projected online consolidated average growth rate from Eilers & Krejcik is 33% through 2026. And then beyond that, there's still growth potential. That's Sports. Sports, as you see, we're at about 115 million total addressable population in North America for sports today. We are only at about EUR 44 million for addressable for casino and casino is a very strong business for us there, even with that much smaller population addressable. We see great things ahead in North America and I look forward to the continuing talk of this golden story for years to come. Let's talk about the rest of the world. As I've said before, and we've talked about on earnings calls, we are making significant investment into ourselves, things we didn't do for a few years to improve our brand architecture and our technical capabilities. This is positioning us for the long run. This is a marathon, not a sprint. Catena Media sees it that way. We look at revenue top line, we look at adjusted EBITDA bottom line and how we grow, and we invest smartly, but we want both those numbers to be improving. We see robust revenue growth ahead in Japan. I talked about some of the nearer-term things from the weaker yen and some hiring impacts, but we expect solid double-digit growth there and that to continue for the rest of the year and foreseeable future. Europe is showing some positive signs in Germany with that first casino license now finally granted not yet started. But the way to operate approval is still expected in the short term there and in the Dutch market to have impact. We're seeing positive trends in the U.K. and the Italian markets as COVID again is sort of normalizing. We're seeing some good indications. The U.K., we had the Cheltenham festival of horse racing. It was positive for us in activity. And again, because we're on rev share there, the operator's margins were impactful to the rev share, and that's going to be the balance in rev share versus CPA. Rev share does not always guarantee a better position than CPA. Latin America and Africa, developing there, investing. I'm very happy with the progress being made in Brazil. Again, not sure when they're going to get exactly across the line in terms of regulating everything for sports and/or casino, but it is moving, and we are moving there as well. Finishing with some takeaways before we go to questions. It's a very strong Q1 performance. North America, the main driver, very happy with the teams around the world on our performance in this record-breaking quarter. Successful market opening in New York and Louisiana, New York now becoming immediately the largest market in North America, which, again, there are other big states still to come. Acceleration of growth investment in globally, particularly in North America, hiring, therefore, those future states, building our infrastructure for that same-store same-state growth year-over-year. Continuing strong cash generation allows us lots of financial flexibility, M&A, buybacks, as we've been doing, et cetera. We see our targets remain the same. We see significant growth in North America, still with revenues to exceed EUR 100 million in 2022, provided the current market estimates and launch time tables of states hold firm. But we are very confident in the rest of the year. We expect, again, with the heavier weighting in North America and the sports, we expect that Q3 and Q4 will be the heavier waiting for the year, but we expect a strong end to the year after a very strong start. I think I'll open it up for questions now. Peter, would you join me?

Yes, absolutely. And maybe we ask the operator first for whoever is on the call while we can take a look at some questions at the same time that came in by the chat function. Operator?

[Operator Instructions] We have a question from the line of Mikael Laseen from Carnegie.

Yes, few questions. Starting off with a more detailed one, maybe on the revenue growth in Q1, you had 11% year-on-year and minus 9% organically. Can you disclose the FX effect in Q1 and also the M&A impact?

Not at this point. We have not decided to disclose that. There are certain effects in there. We talked about -- a little bit about Japan. That's, of course, a smaller market. There are always effects as the growth in North America has, of course, an impact on our U.S. dollar versus the euro. These are translational effects. To be clear, you always have transactional and translational effects. We do have a natural hedging when it comes to the U.S. dollar, given our cost base in North America, but also our revenues in North America both being denominated in the dollars. But we, of course, consider that going forward to disclose more details on that element. On the M&A, and we have that question, I think, coming through the chat as well. There, of course, has been quite a strong contribution from the recent acquisitions. Michael talked about that, that's the strategic rationale of having acquired both Lineups and the i15 Media assets to contribute to new state launches and New York was a very good example of that. There was a very good mix of all these 2 acquired assets or asset groups. i15 Media is a whole group of different websites and assets and our existing ones like the Play New York site. So that has been a mix. We haven't disclosed any details about how big that really has been. But of course, as you alluded to in your question that, of course, impacted the organic growth figure. As I mentioned on one slide, Lineups was acquired in May. So as of now, that contributes to our organic growth. And the i15 Media assets have been acquired in the beginning of September. So those will contribute to organic growth when the NFL season starts.

Yes. Okay. Another detailed question maybe. Just to check your revenue in the U.S., how much of the total group the U.S. added this quarter?

I think that we disclosed in the report, must have been, I think, 65%.

65%.

65%, yes.

Okay. Great. I missed that. And when it comes to the April or the start of Q2, April growing by 3% year-on-year. Can you explain again here why revenue growth is only 3% despite acquisitions and positive FX effects and also that established states in the U.S. seems to continue to grow in the casino side if you can sort of explain that?

Yes. And it is a difficult one a bit to understand. So yes, 3% growth, 46% growth in North America. That's the acquisitions. And again, those acquisitions are not as effective in a period of April when we don't have the sports calendar, particularly Lineups, which is a 100% sports product. i15 had more of a blend. But again, with North America being more focused on sport, that is where we saw that impact. Ontario, while we see future growth in Ontario, with it starting slightly slower in April for us, had a double-edged sword effect where the products that we were no longer using in Canada from the global market products that had an impact as well. So we overcame that with some revenue growth, the 3% revenue growth in the month, but it was still not as high as if Ontario were fully performing as we expected to, by the fall perhaps.

Okay. Good. And just a follow-up, can you say something about how the established states in the U.S. are growing and also the rest of the world, if we look at the more established countries, I'm now thinking about April now, just to get an understanding of the momentum.

April, we haven't broken that out fully yet. But April, we saw, again, North America, healthy growth. We saw in APAC, Asia Pacific, which is Japan at this point, a slowdown there, and that is impacted by our own ability to grow our team there, which has been a limiting factor on the opportunities that they have not been able to capitalize on yet. Again, with Japan starting to look like it's opening up COVID restrictions, their mindset is changing there, people starting to willing to change jobs. A number of the positions we have open are starting to fill, we started to fill them even in April, but they won't have an effect during that month. So I'm very positive on Japan starting to turn that corner back and go into really healthy growth again. Global brands, which is part of our European portfolio, but focused on the rest of world gray market products, as noted, did have the impact from Canada and one other country that we stopped affiliating in because of changes towards regulation, and we aim to be a white regulated affiliate and that is sometimes that has an impact in the nearer terms. Like I said, with Ontario, unlike Germany, Ontario, at least started with licenses day 1. So Canada is not completely closed down like Germany has been for us for a number of months. Speaking of Germany, EMEA, our European products outside of our global brands, taking away Germany did start to see -- or did see growth in the month, and we look forward to, as we get into the sports calendar for them, it's particularly World Cup in Q4, a good rest of year ahead. So I don't know, Peter, anything else to add on?

That's helpful. And another one, if I may, on the start here in Q2. Can you remind us how Q2 last year developed in terms of revenue performance per month, just to understand the base effect that we -- so we're not missing anything here when we look at April, May and June.

Again, it's hard... It's hard to give the guidance with that effect because it's unclear whether this year will follow really the same trend. We had an opening in Ontario, as you know, it was a fairly low start, I think, with a handful of operators that has increased since then, nothing drafting is about to enter the Ontario market. So it's going to change definitely as compared to how the situation has been last year. Last year, it was -- it was not a clear trend, I would say. It was definitely not that just going into one direction. It has seen some volatility and there can be some volatility in here during this quarter. It's not clear at that point in time how the market is going to behave.

The last few years, Q2 has been an oddity, on and off. COVID effects in 2020, in particular, spiked it up to one of our highest quarters for that year, I believe. Last year, again, an interesting quarter. Again, we were back in and out of COVID, so casino and et cetera. It's a very hard comparable to this year. This year, we are much more on a normalized calendar, I would say, with North American sports being quiet. I'm expecting that the Q3, Q4 are the stronger quarters for us than a Q2 in this year.

And our next question comes from the line of Oscar Ronnkvist from ABG.

Just a follow-up on the previous question there on the April revenues and the dynamics of the Q2 development. So you're looking at comparable quarters here, could you remind us of like the European championship last year, how much would that impact the comparable growth looking year-over-year for the rest of the quarter?

I don't know that I have a percentage exact number. But obviously, it is impactful. That is a healthy sporting event in the calendar that this year is going to be different. So yes, I would say that you'd have to factor that in as part of what to expect in Q2 without it versus one with it because we are more stronger in casino than sport in Europe, it is still an impactful part of our business. But offset perhaps by later in the quarter by Germany starting to do some developments there.

All right. All right. And as you say, like draftings coming to Ontario should all else equal be quite good for your CPA revenues, I guess. But I don't know if you could give any comments, but I mean compared to the 3% in April, would you expect that the growth will exceed 3%? Or would you rather think that it will be below 3% for the full quarter?

And we're not giving that guidance yet. We don't have enough visibility. There is also macroeconomics at play that we are not 100% sure how to forecast in terms of the impact of fuel prices in Europe, in particular, how does that impact players and wallet? How does that affect the U.S.? Maybe it's the same. Maybe it's actually an inverse effect because players aren't driving to land-based casinos and are instead going to the online ones where they can or online sports betting because of fuel price increase. So there's a lot of factors that are beyond Catena Media in the quarter that make it hard to, again, make it comparable to last year and say, this is exactly how it would work if it was last year. So I expect there's going to be some challenges in there in Q2. I think we're positioning the teams, right? I see good work from the products. So I do expect that we continue throughout the year with a healthy growth.

Okay. Understood. Next one, in the Q4 report or in the Q4 conference call, I remember that you were quite confident of so-called exceeding USD 100 million in North American revenues. And I just note that in this report, you said that it will be expected revenue of the USD 100 million instead of exceeding. So just a wording there, do you see any changes to outlook?

No real changes to outlook at this point. There is more risk in some of the states, I mentioned, Ohio and Maryland, which were projected where you need to be in this year, and there's now some discussions that they could be later in the year or fall out of the year, and that will have an impact on the total USD. Obviously, Ontario starting slower has impact too, but we are standing by the guidance of greater than USD 100 million at this point based on the visibility we have.

Okay. Got it. And then in terms of rest of world, would you say that you're confident of achieving positive growth? Or would you say that that's also, I mean, highly uncertain at this point?

Achieving what? I missed what you were asking.

So in rest of world, would you say that you're confident of the growth being positive for the full year? Or can we expect some uncertainty there?

No, I feel positive about that at this point. Absolutely, again, weighted more to the end of the year in some of this, but because we have World Cup in Q4, for example, which is impactful for most of the rest of our organization outside of North America, it impacts most of Europe, Asia, et cetera, it can have impacts from that -- well, Japan less for us because it's casino, but it's a world sport, Latin America, Europe. So I am expecting, yes, that to be positive for the entire company for the year.

All right. So positive growth for the entire company, not in rest of world?

Yes. For -- expecting growth in all parts of the organization is our target.

All parts, okay. Yes, understood.

[Operator Instructions]

And while we are waiting, maybe I can just raise some of the questions on the share buybacks. So what we presented in the report were obviously, because it's the first quarter report, the amount of share buybacks, the shares that we bought back and the amount in relation to the first quarter, you find in the report, however, also in the section on significant events after the period, what we have been buying back since the beginning of 1st of April until roughly mid of April when we ended the close period and when we stopped or paused the share buybacks? Are there any further share buybacks that has to be resolved by the Annual General Meeting that is going to take place next week on Monday. The current mandate ends at the AGM next week and a new mandate has to be granted to the company in order to continue. Right now, there is no plan until AGM next Monday to buy back more shares. What is the company doing with the shares? We have not canceled any shares. We have long-term incentive programs where these shares can be used. They can, of course, in theory, also be used for future M&A that is dependent on the share price and whether that makes sense in the future or not or they are going to be canceled. But there is no further plan right now as to what -- one of these options are going to happen in what kind of time frame. Another set of questions that we have received is in regards to North America and the prospects on the one hand side for legalizing online casino in New York and on the other hand, for California. And if such ballot decisions would be favorable when we or the state could be up and running. Michael, maybe on New York, how reasonable is that that online casino is going to open within the short period of time?

In this year, I don't believe it happens. I believe that's already passed the point where it could. I think it's more on the docket for next year in terms of becoming a viable option. Does that mean absolutely next year? No. Do we know it's going to happen? It's being moved forward that ball is moving forward, yes. So looking very positive on that because that is actually many years ahead of where I would have put that activity after sports launch. But we know -- we believe that after sports launch in a state, the state recognizes that their tax collection, because sports is a low-margin business compared to casino, is not as high as those states that have sport and casino. New York recognized that very quickly and has already started to take action. That actually probably didn't cross the line this year, but there's next year or the year after, where that becomes positive. Same thing in California. California, for those that don't know, California is a state with many interests in the gambling space. There's Native American tribes, which have many casinos there. There are publicly owned -- they're card rooms as they're called, which are other entities that have gambling rights within partnering parts of the states, there's a lottery. There are many players at play in wanting an interest in California or in some cases, to dominate or control it. So I'm not sure it gets across with this measure of the ballot. I think there's going to be lots of marketing activity pro and against, but it is coming at some point. And that may again not be this year, maybe next year, there's another election in 2 years, it could be a ballot again. So it will come. The pessimists probably when it comes to how fast some states move. And if I look back at many of the pessimistic statements, many of us have thought about North America, it has moved faster than that. I think some of where we quote Eilers & Krejcik, a few years ago, some of the states that they had on the 2028 or beyond or 2026 and beyond are already launched. So it is a very unpredictable marketplace. That is why Catena is investing and being everywhere in North America to be ready for the eventuality that all states will launch. Let's see what else we have in here, Peter.

Yes, I think there's a follow-up question from Mikael Laseen from Carnegie. Mikael?

Do you hear me?

Yes.

Okay. Good. Just 2 questions on the cash flow and the operating cost development. First of all, the cash flow was held back by working capital increase of EUR 12 million. Can you explain this increase? And if you have seen a decline somewhere in Q2?

No, I haven't seen a decline in Q2. I consider that, well, not necessarily as a short-term impact. So what I mentioned on the slide on the cash flow and the impact on the operating cash flow, in particular are the trade receivables. We had a strong start in New York and having new agreements with operators in New York also meant that we slightly agreed to different payment terms. So that has simply been affecting the comparison. So that cash is collected. It's just collected at a slightly slower pace or over a longer period of time. What you also see in that chart on the cash flow, maybe I'll just switch back to that one very briefly, is you had an effect, a little effect from Q4 into Q1. If you take a look at how the situation looked like last year from Q3 into Q4, you had quite some operating cash flow in Q4 in comparison to Q3, but quite a lot of collection still in Q4, which then of course impacted the collection in Q1. There was less collection in Q1 in relation to Q4 because that was already collected. So the bottom line here is, there is a change in the net working capital by having an increased balance on the receivables. Now as we go into Q2, from a North American and New York perspective, that is going to be a lower season anyway because NFL is over since the Super Bowl. So that will naturally flatten out. There's no other effect on the net working capital as such.

Yes. But you should get part of that back in Q2.

Yes.

Maybe not yet, but during Q2.

Yes.

Okay. And when it comes to intangible [indiscernible] how we should think about that for 2022?

I haven't understood that fully.

Intangible assets.

Intangible assets. So we have, on the intangible assets, primarily, of course, an acquisition of intangible assets in relation to capitalized development. That is exactly what we said in terms of internal investment into future growth. That is preparation and continuous development of features of products of product innovations. The run rate that you would have seen now is a run rate that you can expect going forward. We, of course, may adjust that depending on how, let's say, different launches in North America would further develop and whether we have to change certain decisions, but there are no other material changes to that.

Okay. Got it. And the same type of question actually about direct costs, other operating costs and personnel costs going forward. Do you expect an even higher increase in the coming quarters? Or is this the new level where you're -- you can operate on our -- [ and upgrade it? ]

I think on that one, so we have a plan where we're doing more investments to grow our European business and to improve the performance there, grow the North American predominance, grow Japan for further acceleration of that growth. I think we also have to look at the macroeconomic conditions of the world where inflation can impact players wallets and that impacts operators, that impacts rev shares. So we're evaluating what that means on our growth rates and how fast we do some of these investments for the rest of the year because there are things beyond just our own plan that impact that. So I do know that we have that full answer to release to the market yet on exactly what that's going to look like because, again, we don't know where inflation and some of these other things are going in the nearer term, but we're staying cognizant and aware of those and obviously, we want to keep us at a high-margin business that we are known for.

Yes. And in addition, as I lined out and likewise in the report, so what you have seen in increases in personnel expenses not in relation to running our existing business. That is really a lot of investment on the personnel, in particularly in North America, as you've seen, that headcount or the average number of employees in North America grew about 50%. Group average was 16%, 17%. So that is really an investment in preparation of the further state openings, as Michael discussed on the outlook section for North America, there is still so much in the pipeline that can happen to be well prepared. I think there was this question of when California opens, how fast can that be up and running, but part of that question is also how fast can we be up and running. Well, we are up and running in that respect and are well prepared because of exactly these kind of investments whenever these markets are then opening up.

The only thing I'll say to add to that is California, for those unaware, I'd expect whatever happens in California, there will be some lawsuits to follow because of all those interest groups there. So expect California will be a bumpy ride to the finish, but we are positioned in growing traffic and assets, et cetera, for the day when it does come.

And there are no further audio questions.

Let's see what else we have in here, Peter.

And maybe a bit about the contribution of i15 Media and Lineups, as I mentioned before to that question. We do not release that. But Michael, maybe you want to elaborate, particularly on the launch in New York, the strong positioning that we have through both Lineups and i15 Media, complementing, however, what we already had in our own asset portfolio pre-acquisition.

I think you said it pretty well there actually in the readout. Yes, i15 Media and Lineups, 2 very strong products in New York, multiple product brands at i15 Media and Lineups.com being the Lineups product. We saw significant contributions from them. On top of our Play New York site, which is organically grown and legalsportsreport.com, TheLines.com and all of the national brands and New York brands that we have organically grown over the last few years. It performed -- the acquisitions performed exactly as desired. They were strong in those states. They brought a lot of growth. Our teams have been supplementing those. Quite frankly, some of those things probably get blended back and forth on which exactly is it coming from this traffic because somebody goes to this site and that site and then they convert. So which one gets the credit. It's usually in which one that came off the link, but there's an interplay in there, which is very good for us. We have a very strong position in New York. And when New York is launched and will come down off that peak for the near term, it's got an NFL season ahead of it, which will be its first full NFL season. In all other states so far, that's been a very strong period as well. We expect lots of further developments from Lineups and i15 Media Group as well as our own organic products in addition to the other states that are still on that road map. So they performed very well, gives us confidence in our ability to do smart M&A and look forward to opportunities in the coming months and years for more of that. Macroeconomic conditions may mean especially companies that are in good cash positions like Catena, we may see buying opportunities in the coming months or quarters because of that change in market conditions and the dry up of investment capital for some of these guys who have good products, but may not be able to survive in the long term standalone. So I think it's a very interesting time. I think that interesting time probably leads into the last one is, we continue to look at our strategic positioning in the company and in the world. And we've mentioned that we're looking at where we should be listed and is there something in the North American future. We continue to investigate that and work through processes. Anything like that is not a 1-quarter activity. Those are multi-quarter. It is not an easy process even to decide to undertake it. We do things here at Catena, again, a little less flashy probably, but we like to make the right moves. So we like to make sure we know what we're doing before we start into it, so that we can maintain the value for investors for the long term. So still being looked at macroeconomic conditions also impact markets right now. So their timing is also something to be considered. But we are considering all the things and all the moves that we can make. Anything final, Peter, to close?

No, I think that's good.

I think that's good from all of us. We very much appreciate your attention and your interest in Catena Media, and we look forward to talking to you again in a few months about our next quarter. So thank you.

Thank you. Goodbye.