Evolution AB (publ) (EVO) Earnings Call Transcript & Summary

Good morning. Welcome, everyone, to the presentation of Evolution's Second Quarter of 2024. My name is Martin Carlesund, and I'm the CEO of Evolution. With me, I have our CFO, Jacob Kaplan. I will start with some comments on our performance in the quarter, whereafter I will hand over to Jacob for a closer look at our financials as usual. After that, I will round off the presentation with an outlook for the remainder of transport then we'll open up the call for questions. Before we move on, I would like to highlight that the picture that you see on this slide, which is from the actual rooftop bonus round where lightning strikes from the skies in our latest largest ever game show Lightning Storm. The beautiful picture and I just wanted to highlight that. Next slide, please. The past quarter has been a period of high activity within Evolution, maintaining the high page from the past 2 quarters and as you also see from the slide, the momentum of activities continuing into Q3. During the past 9 months, we have heavily increased our delivery capacity. And right now, we are in the middle of bringing our products to new markets that are about to regulate or have recently regulated. Such as Czech Republic, Brazil and Philippines. Long-term regulation of market is positive and one of the key drivers for growth in our industry. During the quarter, we have further expanded our offering in the U.S. by launching our live casino games in Delaware and also added some of our most successful games in several additional states. More is yet to come in that category. Another step in further strengthening our presence and assessing in the U.S. market took place after the end of the period, through Evolution entered into an agreement to acquire Galaxy Gaming, and I will come back to that on a later slide. Online casino games exist to generate excitement and entertainment for players. A large part of that excitement comes from the fact that we -- we as players can win and win really big, on one single step. This past quarter, [indiscernible] out over EUR 35 million to over 5,000 players, the biggest payout ever in an online casino in one single game. Events like this brings excitement to the games and resonates with players. Long term, the margin of the game levels out, but short term, a big day of like that affect our revenue share negatively. Well, we have a truly great [indiscernible] , and I actually think it out challenge 2023. The enrollment is also 2024 a bit tilted towards the second half of the year, and we will, during 2025, work towards releasing more games earlier. This week, we have the early adopters release of the biggest game show, as already mentioned, in the history of our online Casino, Lightning Storm. That's the biggest launch of evolution and nothing but perfection is enough for this game. And I'm very excited about how this game will be received by our end users. I also look forward to the wide release of 2 players in a few weeks. Further, I want to comment on the 2 items that took place off the period. One is the announcement of the capital allocation framework set by the Board of Directors. It further clarifies our priorities when it comes to how we invest and distribute cash generated in our business. We have a strong track record of returns to shareholders during the past 10 years since our IPO. The new framework is no deviation to the way we have acted in the past, but provides further clarity going forward. In the light of that framework, the second part is that the Board also decided on a repurchase of shares to the amount of EUR 400 million. All in accordance with the new framework and our earlier actions. It shows the strength of our business as well as the strength of our balance sheet, together with cash flow. On the basis of this evolution, we can maintain an ambitious agenda for growth, while without limiting our investments in the business while also returning significant capital to shareholders, both through dividend as well as buyback. Before going to the next more regular slide, I want to show you something from our day-to-day work at Evolution and what a comment that Czech Republic is regulating really meet. So let's have a look at the next slide. [indiscernible] a little from our formal slides and share something from our work. This is some pictures from the emerging Czech studio that we are about to launch in August. These pictures are basically [indiscernible] and you can imagine this is a hectic time in [indiscernible] right now. Setting up a new studio is exciting and brings many parts of the company together, building crews, operations setup, recruitment, training, the [indiscernible] percentage coming on, et cetera, et cetera, almost every part of the company is involved in some way. We are in a great feeling in proud. And the bottom of that, you see what will be the canteen and break area. Top left is the studio floor in development. And to the right in the slide, is our office area and administration and at the bottom right, the first group of game persons are going through our academy -- in a temporary academy. We're now in the final amount of preparations before going live. The Czech studio will be a relatively small part of the matter initially, but we are happy to enter and a new regulated market. And I want to show something from [indiscernible] building a studio. This is what's creating a flawless entertaining world-class playing experience to players looks like. And this is what gets us really excited in Evolution. Next slide, please. When it comes to financial highlights, we do see a bit of a slower quarter in terms of top line, which also affects the margin. And even though the quarter show solid results and is affected by a large [indiscernible] payout, it's not fully reflecting the operational performance. However, when looking further into 2024, we see a market that provides us with excellent opportunities and good momentum as well as a company really well prepared to that journey. Revenue amount to EUR 508 million corresponding to year-on-year revenue growth of 15%. Revenue growth at constant currency is estimated to 19% for the quarter. EBITDA margin is 68% in the second quarter. As mentioned earlier, we have added very rapid expansion in the past 9 months, and it's natural that is followed by a [indiscernible] consolidation, which we see in this quarter, where margins are much lower. We maintained the guidance for the full year of EBITDA margin in the range of 69% to 71%. For our Life segment, revenues amounted to EUR 438 million for the quarter, corresponding to year-on-year growth of 18%. R&D revenues number at EUR 70.3 million, corresponding to a growth of 1.5% year-on-year. We continue to make incremental improvements to our R&D business, adding new games as well as new functional [indiscernible]. During the quarter, we have already mentioned -- as already mentioned, we are affected by the large first time payer. Even though the short-term effect results, it's important to remember that payouts like this also increased demand for the game, paving the way for more players in the future. That's said, most regions are showing a bit of slower development in the quarter. Nothing outside the usual cycles within sector, but like I said, the results on regions are not quite we would like to see them. Overall, I'm pleased with the progress we have made in several of our initiatives throughout the quarter [indiscernible]. If we need to choose between margins and increased market share, we will also offer top line growth and market share. I look forward to the rest of the year. We have a fantastic game release coming up, and we continue to enjoy strong momentum, and we are well positioned to deliver a strong second half of this year. Next slide, please. Last night, we entered into an agreement to acquire Galaxy Gaming. Galaxy is a premier provider of table games and side bets, both for online as well as land-based casinos. Games like 21+3, Lucky Ladies, and Perfect Pairs are all in their capital. We have known the company for many years and are already today license engaged from Galaxy as others -- other main online B2B providers do as well. They have an experienced and very skilled team in place, mainly placed out of Las Vegas and our intention is for Galaxy to continue to operate as an independent company and business also on Evolution's on chip. By joining the 2 companies, we accelerate and solidify our presence in the U.S. market with Galaxy is licensed in 28 out of 29 possible states. On top of that, Galaxy hold a number of private licenses. Through Galaxy, we gain a relationship with regulators and regulated states that are not yet open for online and fast track all future licensing at the same time as the evolution as a group will have 2 independent group license. Galaxy holds over 130 licenses worldwide. Galaxy will further strengthen our game portfolio and secure access to fantastic characters, our players are accustomed to already today. There are also games in the portfolio where we see an opportunity to create new online games. I see the acquisition of Galaxy's, an important staffing creating foundation for future growth in the North American market, but also in other parts of the world, where we now, with our directors, can expand their other existing brands further. Our cash offer values Galaxy to an enterprise value of EUR 124 million. The offer is supported by the Board of Directors. Open Galaxy and naturally subject to closing conditions, we expect the transaction to close in about 12 to 15 months. Again, very excited about this combination, looking forward to it. Next slide, please. I'm pleased to say that the challenges we experienced in 2023 in terms of recruitment and [indiscernible] capacity have been addressed, and our recruitment phase remains high in the quarter. We have [indiscernible] new evolutioners from Q2 last year, constituting a port of a very rapid expansion. I would like to remind all of you that expansion and recruitment comes together with cost and time-wise costs before revenues. We continue to make great progress in our studio development and all according to plan. Next slide, please. The game round index shows the development of the whole Evolution network and includes all games. It can be seen as a general indicator of activity in our network. I'm very pleased to see that the activity increased during the quarter, maintaining the healthy pace presented in the first quarter. Increased activity could not have taken place without all efforts and increase of table capacity as well as ensuring a high delivery out of our studios. Playing game round does not always correspond to revenue, which we see in this quarter, with the game rounds grow faster than revenues. Also, larger wins on the game get publicity and often attracts many players, however, with smaller bets. For the long term, this trend is very positive. The fact that the players are curious and wish to test our games will bear fruit further down the line, even though it does not always drive revenue in the short term. Next slide please, we're now in month 6 into what we call the product leap years of 2024 and 2025. Our ambition is just as high as always, striving towards bringing unique player experiences and list excitements to new levels. Let me first mention a few of the games that we have been launched in the quarter or about to be lost. We've already mentioned Lightning Storm in Q1 as it was planned to release by the end of H1 first half. The Lightning franchise is one of the strongest brands of our portfolio and Lightning Storm is our most ambitious game show ever and the newest, most reliant and extravagant number of our lighting family. Lightning Storm masterfully combines instant payout, bonus games infused with experimental twist and a sizable multipliers to deliver unique gaming earning. And although very slightly delayed, we will settle for nothing about perfection for this game as it's one of the biggest releases today. This game is truly spectacular. And at their promise, it is something that the market has never seen before. To further our Lightning family, we have added 2 million installments, adding land inversions to our popular games, Dragon Tiger and Sic Bo. Lightning Dragon Tiger is a classific Asian card game with striking multi clients, setting a sophisticated studio and features dramatic effect, [indiscernible] like the Sic Bo adds an extra excitement to the traditional dice game well-known by players. Another thrilling game that we have already released is the latest generation online live slot game combination, game show, features with a simple and easy to play slot game. Volume rate was very well received by end user. And with this unique combination of different player experience, it also attracts many new players, and it's part of a whole new type of genre, appealing to even more people. It's a combination of live and slots, which we have been talking about for quite some time. On the R&D side, we have released 26 [indiscernible] in the quarter, all very good games with the defined trading mark of quality and innovation of all for individual RMG brands, Nolimit City, Red Tiger, NetEnt and Big Time Gaming. We are game changers and game creators through our innovation, not only do we offer unique player experience and state of the art game, but we're also transforming in the industry. And with our R&D and investments in studios and mentality of never settling will constantly defend and expand our market-leading position. I'm very happy with the outcome of game roadmap 2024. Next slide, please. While looking at our product, it suits to global audience with a global and ever increasing demand. All our regions are growing year-on-year. Europe had a steady growth trend around 10% in last year or so and continues to outweigh coming in at 9% growth compared to Q2 last year. Demand in the region remains high and with the additional student capacity added in 2024, we see good potential of expanding even further. Asia is still our fastest-growing market. And for the quarter, a quarter growth of 22% year-on-year. It's a small increase from the previous quarter than in Q1. However, Q1 was a relatively big step in Q4, and quarterly variations are to be expected. Given the size population and online stats of the market, we consider a region with great potential. In North America, we continue to make steady progress with a growth of 8% year-on-year. Our line offering is growing in line with the overall market. However, we are losing market shares in RNG offering compared to last year. I believe that we are improving our new offering. In the quarter, we started introducing our Nolimit City lineup, and we have made a number of improvements to our organization that I expect to bear fruit later in the year. LATAM is reporting healthy growth for the quarter coming in at 17%, even as Brazil continues to be a bit of in the waiting [indiscernible] regulation instead nothing. Other region consisting mainly of Africa has a nice increase in the quarter. Again, development can be lumpy, as you've seen in [indiscernible] last year, we were flat for a few quarters before growing after these past 2 quarters. The share of revenue from regulated markets continue to be stable at just under 4%. With that, I will hand over to Jacob for a closer look at our financial. Please, next slide.

Thank you, Martin, and good morning to all of you listening. Revenue in the second quarter of this year amounts to EUR 508.4 million for a growth rate of 15.3%, compared to the same quarter of 2023. Revenue in the quarter is made up of EUR 438 million from our live casino games and EUR 70.3 million from the R&D gains. In the comparison to Q2, 2023, there's a negative effect from changes in currency rates estimated to about 3.5%. Live growth in revenue in the quarter of EUR 438.1 million gives us a growth rate of almost 18% year-on-year. Compared to the previous quarter, Q1 2024, the increase is about EUR 7 million. Increase in revenue from 1 quarter to the next can vary a bit. We saw a big step up in Live revenue in Q1 compared to Q4, as Martin mentioned. But Q1 to Q2 is a smaller increase compared to [indiscernible]. As earlier mentioned, we are negatively expected in Q2 by large wins on some of the games. Also, sports book margins in some regions have favored operators in this quarter, which tend to be negative for casino. So there are some factors to point that, but there are also things within our control, we can improve and simply perform better. Overall, activity levels and payer numbers have been good in the network. There are some great product launches coming up, as you saw. So we feel good about the rest of the year. But Q2 does come in a little lower on license in revenue than at least what I expected 3 months ago. R&D revenue amounts to EUR 70.3 million. That's 1.5% growth year-on-year and also slightly increase from the previous quarter. We continue to have a good release tempo for games and will gradually during the year, add more functionality to OSS, like live spins, spin gifts and also our AI software commander. I'm pleased to see the trend of incremental improvement on revenue from the previous quarter continuing within R&D even though it's not by these steps. And while it will not always be a straight line development quarter-to-quarter, we can do more in the RNG vertical going forward. EBITDA in the quarter totaled EUR 345.8 million and EBITDA margin of 68%. As mentioned already at the end of 2023, we are in a period of heavy expansion during this first half of the year, and that has an effect on margin. For the first 6 months of the year, margin is 68.5%. For the full year, we maintained our guidance of EBITDA margin in the range of 69% to 71%. I'll move on to the next slide. This has a closer look at our profit and loss statement. We'll start with revenues. The 3-month period April to June, Live and RNG revenues increased 18% and 1.5%, respectively, compared to the same period in 2023, fully organic growth in both of those verticals. A little bit further to the right in the table, we compare the first half of '24 to the first half of 2023. And growth for the 6-month period is almost 19% for Live casino and just over 1% for RNG. We just covered comments on revenue development in the most recent quarter on the previous slide, so I'll continue down to expenses. Personnel expenses amount to EUR 111.4 million in the first quarter, an increase of 27% compared to the same period last year. We have added almost 4,000 head count since Q2 last year. So it's quite a big expansion for us. This increases personnel costs, but also affects other functions in the company with increasing costs. We will continue to increase staff during the rest of the year as we open new studios in Latin America and expand also elsewhere. Depreciation amounted to EUR 34.6 million. That includes EUR 11.5 million in amortization of intangibles related to acquisitions made. It's relatively fell compared to the previous quarter this year and up 15% compared to the same period 2023. The next slide, other operating expenses. This includes a number of items, such as the consumable equipment, communication costs, consultants, royalties, [indiscernible] amounts to EUR 51.2 million in the quarter. This is a line item that is a bit lumpy, it's EUR 2.3 million, as you say, from Q1 this year and up at EUR 9.3 million or 22% compared to the same period 2023. Summing up, total operating expenses totaled EUR 197.3 million for the period. That's an increase of 23.6% compared to same quarter last year. Operating profit sums up to EUR 311 million in the quarter. And moving down, financial items, EUR 6.8 million. This includes interest rate income and the revaluation of bank balances, but there's also a charge for the IFRS 16 lease cost, that's included there. Tax in the quarter is at EUR 48.8 million. That is a tax rate of 15.3%. As we've previously communicated, our tax rate increases 2024 as the Pillar Two regime comes into effect. Still not fully clear exactly how the Pillar Two top-up tax will be handled. We continue to follow the development during the year and accrue tax to our best knowledge. We will want to achieve a tax-efficient structure of our operations as long as that makes business [indiscernible] . I'll move on to the next slide for a look at cash flow and financial position. Starting from the left. We have capital expenditure. As mentioned a few times, we are in a heavy expansion phase this year and that's reflected also here in our CapEx level, which is up compared to last year. We've estimated EUR 120 million in CapEx this year. And for the first half of the year, we are slightly ahead of that pace. In Q2, CapEx in tangible assets, that's the gray part of the bar in the chart to the left totals EUR 16.1 million. It includes both expansion in existing studios as well as several new projects, new studio projects that are coming up. The blue part of the bar represents investments in intangible assets, that's development of new games and features on the platform. CapEx in intangible assets totaled EUR 16.4 million in the quarter. So total CapEx in the quarter, EUR 32.5 million and for the first 6 months, EUR 69 million, so slightly have the pace. The estimate of EUR 170 million for the full year I would say still looks like a good estimate for me. Moving on to the chart on the middle of the slide. This shows cash flow in the period. With the operating cash flow after investments of EUR 280 million, the cash conversion, operating cash flow in relation to EBITDA is on a very good level, well over 80% for the rolling 12-month period. The last time spoke last quarter, we mentioned an increase in accounts receivable in that quarter. That is down to normal levels in this quarter, and the overall cash flow is very strong. Moving on to the right-hand side of the slide. That's a summary of our balance sheet at the end of the period. We are -- remain in a strong debt-free financial position. At the end of the period, cash balance was EUR 689 million. During the quarter, we have paid a dividend for 2023 amounting to EUR 564 million. I'll go to the next slide, and then I'll comment on the capital allocation framework that's been communicated and also the buyback that's been initiated. So as Martin mentioned at the top, the Board has communicated a capital allocation framework. The framework clarifies our thinking around capital allocation without boxing in the Board to act programmatically without consideration of the company's long-term strategic objectives. In summary, the framework is the following: We need to be in a net cash position over time. Still, we reserve an ability to use short-term leverage for unique opportunities that would add to value to shareholders. The #1 use of capital will be to invest in our organic growth, Studio staff gains development. We have a highly profitable business -- profitable business in a market-leading position with a world-class product and industry with secular growth trends, to continue that development will be the #1 priority and the main use of capital. We have a dividend policy in place since the IPO in 2015, it stays 50% payout on net profit, and that policy will remain. In addition, we continuously evaluate M&A opportunities that can support our long-term vision, but there's not a set amount of capital allocated to M&A and possible M&A should be on value in housing terms. Without the right opportunities, there will be no M&A, and that's perfectly fine also. And last historically, we've had free cash flow remaining after the items I just described. And the new framework states that 100% of this excess cash will be returned to shareholders. Generally, this will be through a repurchase of shares or if more value enhancing, it can also be through an extra dividend. So that's a quick summary of the framework. It's very much in line with our actions in the past. Still, I think it adds clarity to how we plan to allocate capital going forward. As the graph to the right in the slide shows capital returns to shareholders have been substantial during the past 10 years. In fact, returns through dividend and buybacks have been consistent, and they total well over 10x IPO value. With this capital location framework as a backdrop, the Board has also decided to initiate a buyback of EUR 400 million also announced today. All right. That was the end of my prepared comments. I'll hand back to you, Martin, for some closing words.

Thank you, Jacob.

Thank you.

Last slide for questions and a few closing words from me. Going forward heavy expansion and investment right now, expansion in our studio operations, expansion in our games portfolio, expansion in new markets like Philippines, Czech Republic and Brazil. It's a very exciting time. To be able to push this growth agenda, while at the same time, distributing significant capital back to owners is a sign of the strength of our business and market position. It's a sign of the strength of evolution. As those of you who have followed us for some time now, we are always excited about our product roadmap and the next game. We have been working on Lightning Storm for a long time, and [indiscernible], it's some of our best work yet. [indiscernible] on so many things that we have learned from previous games are very much [indiscernible] into place in the coming months. In terms of new live games, there is more to come later in the year and also on the RNG exciting things like that. At the same time, the role model of 2025 is taking shape and that looks amazing with an ambition level higher than ever. I really look forward to the rest of 2024, and I can't wait to start 2025. With that, we open up for questions.

[Operator Instructions] The next question comes from Oscar Ronklist from ABG Sundal Collier. Please go ahead.

Thank you. Good morning, Martin. So first, just on the top line, so a little bit of lower growth than I expected and I think consensus as well. Least according to my numbers, Asia was the slow part in the quarter. So could you just talk us through a little bit what happened or if it was like completely in line with your expectations, the 1% sequential growth, you have high activity in [indiscernible] good sequential game around growth? And also on the H2 outlook, you sound a little bit optimistic. Do you expect an acceleration from there? Have you had any indications from the start of Q3? And does this have anything to the [indiscernible] Studio impact to do?

Quite big question. But I would say like this. I mean, high activity in the quarter. We're pushing forward expanding, I'm really happy with the outcome of that. We are -- we think that we could have delivered more when it comes to revenue. Exactly the reasons behind that, there's a magnitude of that, the market is what it is. But I think that we could have done a little better. Yes. We look forward to the rest of the year. Actually, for all regions, there's an exciting time. So I think that we look forward to being a little bit better [indiscernible] in all the regions.

Perfect. And the [indiscernible] Studio disruption impact. Does this have anything to do on the revenue side in your view?

No, that happened. First of all, it's not material in any way. I can take the opportunity to just mentioned, but when the strike started as you referred to in [indiscernible], it was stated that it was 5,000 [indiscernible] strike. That's completely lie, it was 500. So that's -- and it's not materially [indiscernible] and it's still not affecting us materially and it happened after the quarter.

Perfect. And then just wanted to get sense of the Galaxy Gaming, if you could elaborate a little bit on the license potential synergies there. You talked about fast-tracking licensing. So how are you going to sort of utilize or exploit potential synergies in Galaxy -- or should we just see this as a financial bolt-on?

We have had a relation for many, many years with the Galaxy. They are supplying to us and they're also applying to others. And it's a very good acquisition where we can use these games and side bets that they have, and we can expand that out a little bit to other markets. That's positive. On top of that, we -- they have [indiscernible] totally in the world, but they are licensed 28 out of 29 states where the last state is on the progress. So we get a relation and we come into [indiscernible] get license in all states, which is sort of fast tracking the -- when those states go into online, and we already have a relation [indiscernible] that's also positive.

Perfect. Last one, maybe to Jacob. Just on the buybacks going forward. Do you have any sort of sense of what's the sufficient cash position that you need to have or want to have that we should -- when we should model the buybacks going forward?

This is not a set number, but like I said, this new framework is very much in line with how we've acted in the past. And as you see, we've not built multibillion euro cash position. So I think that gives you some idea going forward. But it's not a set number to put in there.

The next question comes from Martin Arnell from DNB Markets.

This is Martin here. My first question is on the -- you mentioned the sports margins here. I think this is interesting. How much did that impact? Was it more than usual when it's volatility? And also did that have anything to do with your postponement of Lightning Storm?

I said, no, it's no relation to Lightning Storm and it's, of course, one that's hard to quantify. I wouldn't sort of put too much into it. It's just -- like we said, I mean, there are some outside factors that we can point to that might be a little bit sort of again starting this quarter, but there's also things that we could do. And like Martin said, I think we would have liked to a little bit more was also our expectations. So I wouldn't sort of blame it all on the sports margins. That's the wrong conclusion.

And maybe your comment on -- yes. Okay. And based on your comments on pipeline and factors in Q2, could you confirm that you expect higher growth in next quarter? And or at least stabilizing? And also can you comment on the U.S. market? What are you doing to improve there, I guess, that you were expecting higher growth than you are now like 3 months ago?

We don't guide on the quarters. So we don't do that, but we have -- we maintain our margin guiding and we are -- we look forward to the rest of the year. There's a lot of things that we are doing to -- when it comes to the U.S. We are launching new games. We added new fantastic games for Live, as you know, and launched those ones. We are under the right staff in the right place. So we are in a moving situation there and doing a lot of things that we expect to have as I wrote an effect later in the year.

And do you expect the effect from that to be seen already in Q3?

I don't want to quantify what happens quarter-by-quarter. I will stay on that, it will have an affect during this year, yes.

Okay. Final question on capital allocation. Basically, you're talking about distributing all of your free cash flow here, excluding bolt-ons, but you also want to have net cash. So the question is sort of how would you define excess cash here or the Board? Can you talk a little bit about that Jacob perhaps?

Net cash position is a little bit fluent that as we grow, that the demand for that might increased as we need to do investments in others. But for us, the capital allocation policy, it's more framing up what we have already done. We have shifted out 10x IPO value during the last period, and we have not had a lot of cash resting in the company. Over time, it's always coming out. And right now, you can see the capital allocation policy to frame that up a bit, and also then giving a little bit stringent to the time frame of that shifting out. And then on top of that, you see that we are then repurchasing shares of EUR 400 million according to that policy.

The next question comes from Ed Young from MS.

My first question was on the Crazy Time payout that you mentioned in your written remarks, Martin. You've always been very reticent to talk about this too much, but it obviously was a big number. Could you help us understand how we should think about that payout, particularly in terms of were Crazy Time or game shows payout to players? Was that above normal levels during the quarter? Or could you perhaps sort of talk a little bit about how you think about the way players typically recycle winnings?

Payout of EUR 35 million in one single game round is the largest one everyone I have seen and the statistical chance of that happening is, of course, quite low. So that affects the quarter. And once earlier, don't remember exactly one, we had a payout of EUR 25 million and I think that we mentioned that as well at that time. So this is -- it will happen more and more as we grow, but it affects us. Exactly the effects of it, it's very hard to judge because it drives also revenue to new gaming and so on, but it's substantial. Not substantial, it's a large payout.

Okay. And then secondly, on North America, the growth is the most of your region, so it's below market growth rates. Can you help us understand why there's that gap between the market growth rate and where evolution is growing. Do you expect them to converge over time to expect to outgrow the market over time? What is it you need to given the middle there to do that?

We are -- we came in -- we were strong on slots because early move by NetEnt, and we acquired them. So we have a strong position in slots from the beginning. Live is doing great. We're doing good there. We're growing maybe even -- we're doing good in Live, but we are losing market shares in slots as the number of actors are increasing quite significantly, and new games are coming. It's been hard to defend our position. So that's the whole story. And now we are launching more games and we continue to see our share of line is increasing in the United States and we are optimistic about the future, but that's the story.

Okay. So should we expect North America growth to improve as RNG mix is down over time? Is that a fair assumption?

The statement I do is that we have had a really intense quarter. We're doing a lot of good things and operationally we see that. And we are not satisfied with the growth as we see it right now.

The next question comes from Monique Pollard from Citi.