Earnings call: Kindred reports solid Q1 performance, focus on regulated markets

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Earnings call: Kindred reports solid Q1 performance, focus on regulated markets
Credit: © Reuters.

In the first quarter of 2024, Kindred Group (KIND-SDB.ST) delivered a steady performance marked by significant growth in locally regulated markets and a rise in underlying EBITDA. Despite the strategic exit from North American markets, locally regulated gross winnings revenue soared to a record 84% of the group's total revenue. Underlying EBITDA increased by 20% to nearly £60 million, benefiting from cost reduction initiatives.

The company sustained its revenue at just under £308 million, with a slight increase in constant currency terms. Active customer numbers rose by 3%, and net cash reached £48.3 million. Kindred also reiterated its full-year guidance, expecting a busy summer with major sports events, and shared insights on regulatory challenges and operational efficiencies during the earnings call.

Key Takeaways

  • Locally regulated markets, including the Netherlands, the UK, and Romania, drove Kindred's Q1 growth.
  • Underlying EBITDA increased by 20% to nearly £60 million, aided by cost reduction initiatives.
  • Total Q1 revenue was stable at just under £308 million, a 3% increase in constant currency.
  • Active customer base grew to nearly 1.7 million, a 3% rise.
  • North American operations are set to close by the end of Q2 2024.
  • Kindred maintains full-year guidance of £250 million despite regulatory uncertainties.

Company Outlook

  • Kindred plans to focus on operational expenditure (OpEx) reduction while investing in core markets for growth.
  • The company anticipates a busy summer with events like the Euros, Olympics, and Copa America, expecting to drive top-line growth.
  • Full-year OpEx is expected to remain below £245 million, with potential for slightly higher quarterly levels due to cost timing.

Bearish Highlights

  • The company's exit from North America impacted revenues, with a decline noted in nonlocally regulated markets.
  • Regulatory proposals in the Netherlands, such as deposit limits and a potential high-risk gambling ban, introduce uncertainty.

Bullish Highlights

  • Kindred's strong position in the Netherlands is underscored by a higher contribution margin than the group average.
  • Growth across all categories, especially sports betting, which accounts for about 30% of revenue.

Misses

  • No significant misses were reported in the earnings call.

Q&A highlights

  • The company is not concerned about the impact of stake limits and affordability measures on their business.
  • Kindred has strict measures in place to prevent access from unauthorized jurisdictions like California.
  • The upcoming publication and implementation of a white paper and interim code in the UK are expected to level the playing field.

Kindred Group remains focused on strengthening its performance in locally regulated markets while navigating the regulatory challenges ahead. With a robust customer base and strategic initiatives in place, the company looks forward to capitalizing on the upcoming summer's major sports events and maintaining its growth trajectory.

Full transcript - None (KNDGF) Q1 2024:

Nils Anden: Good morning, everyone, and welcome to Kindred's Interim Report for the First Quarter of 2024. I am here today with Patrick Kortman, our CFO. And we are coming live from Stockholm. Let's kick into it. We have a fairly standard outline today for the report. Some business highlights and then an overview of the performance in Q1, product segment update, regional update and then an update on our North American exits update on Relax and KSP and sustainability. Then I will hand over to Patrick for the financial update for the first quarter and then come back with a summary, and we will, of course, as normal, have a Q&A session at the end. So, reflecting a little bit on the first quarter in 2024. It was a very solid quarter. Strong performance across, especially our locally regulated markets, primarily driven by very strong growth in Netherlands, the U.K. and Romania. We're also very pleased to report that we have an all-time high in locally regulated gross winnings revenue, both in absolute terms and also as a percentage of group GWR, which came in at 84% in the first quarter. We're also very pleased that we have managed to increase our underlying EBITDA by 20%, reaching almost £60 million for the first quarter. This is a testament to the cost reduction initiatives that were launched in the fall of 2023. I -- our strategic growth projects and the North American exit is moving forward according to plan, and we're very pleased with the development so far. If we look at a little bit more in terms of the actual results for the first quarter, our revenue came in at just shy of £308 million. This was flat in reported currencies, but a 3% increase in constant currency. When we look at the locally regulated revenue, they came in at just shy of £250 million, which was a 5% growth across these markets, excluding North America, and an 8% growth in constant currency, and again, primarily driven by NL, U.K. and Romania. The underlying EBITDA, as mentioned, came in at £59.3 million, which was a 20% increase compared to the Q1 of 2023. This is really an effect of the cost control focus in the company combined with the cost reduction measures that were started towards the tail end of 2023. The underlying EBITDA margin increased 3 percentage points to 19%, which would have been 20%, excluding North America, which is, of course, in line with what we have previously communicated that we will see an uptick in our underlying EBITDA margin going forward. Free cash flow came in at £23.7 million, which was a decrease compared to last year, primarily affected by changes in net working capital. Active customers came in just shy of £1.7 million, which was a growth of 3% compared to last year. And net cash at the end of the quarter was at £48.3 million, and we see that we are continuing to build up the cash position. As we have previously communicated, we do not have a plan to do a dividend this year given the situation with the bid announced by FDJ on the company. If we look at the business a little bit more in detail for the first quarter of the year. As mentioned, the locally regulated gross winnings revenue came in at an all-time high, both in absolute terms and share of gross winnings revenue, and we now stand at 84% of locally regulated revenue as part of the group. And -- on the right-hand graph here, as mentioned, we can see that our scalability continues to improve. And even though we see an ever-increasing betting duty, we are able to absorb this and we will see a continued EBITDA -- underlying EBITDA margin increase -- if we look at the active numbers, we are seeing a pretty decent growth. This was 3% up compared to Q1 2023. This would have been 4%, excluding North America, as we continue to exit North America. We see activity dropping in that territory as one could imagine. The increase in number of actives in casino was very positive with 6%, while sports betting activity remained relatively stable. This increase is predominantly driven by the market mix. We know that U.K. and Netherlands are the leaders in growth for our markets, and they have a higher share of casino revenues compared to the group average. The ARPU for the first quarter decreased by approximately 3% versus Q1 2023. But as we have mentioned in the past, the way that we look at this business is that we really want to drive the active growth and have a fairly stable development on our ARPU over time. If we look at the product segment, the sports betting segment decreased by 3%. This was primarily driven by lower turnover compared to last year. This was, of course, influenced by the fact that we had roughly 9% fewer top European Football League fixtures in Q1 this year compared to Q1 last year, given there was an international break. And in Q1 last year, the World Cup had just ended. In terms of casino and games, as mentioned, we saw a gross winning increase by 3% on the back of increased activity and strong performance, especially in Netherlands and the U.K. This is driven by a very strong selection of product offering within the segment and a continued focus on rolling out exclusive games through Relax. Poker and other products decreased by 8% as both Poker and Bingo saw a slightly lower gross winnings level compared to last year. The sports betting margin for the quarter after free bets came in at 10.3%. This is slightly higher than our long-term average and slightly higher than last year. As mentioned, we do see a slightly increasing trend over time. For us, it is due to a changing market mix where there are some markets that have an inherently higher margin given customer behaviors or regulation, for example, France and Netherlands. But we also see a continued trend of higher share of multiple bets that do offer a support for an upward trajectory over time on the underlying sports betting margin. If we look at the regions, -- we can clearly see that Western Europe was the main growth driver in Q1. This was driven by continued strength in Netherlands and the U.K., and it could have been even higher. However, we saw below average sports betting margin in France. That softened the overall performance for this region. Netherlands grew by 24% in local currency, and U.K. continued to perform really well, the growth rate of 20%, which we are, of course, very pleased with since these are our two largest markets. In the Nordics, a bit of a different tale. We saw a decrease of 15% with unsatisfactory performance, we would say, notably in Sweden. However, we also like to mention that we had a weaker sports betting margin than the group average in the quarter for the Nordic markets. And this, of course, had a material adverse impact. Just mentioning Sweden and what we discussed previously around ARPU and actives, we're still very pleased to see that the actives in Sweden actually increased with 5% in Q1 compared to Q1 last year, which is, of course, a testament to the work and what we deem as a strategy going forward. In terms of Central Eastern and Southern Europe, gross winnings revenue declined by 8%. However, Romania continues to grow really healthily, but we do see an impact across some of our dot-com markets, -- and also the fact that we have had less focus on markets like Italy and Estonia over the last year, which is, of course, impacting our growth trajectory in those markets. In other, gross winning revenue decreased 22% driven, of course, by a significant drop in North America since we are slowly but surely exiting the North American markets. And as mentioned later in the report, have already exited three states as of today. So perfect segue. The closure of our North American operations remains on track, and we are expecting to be operationally exited by the end of Q2 2024 as previously communicated. We've also seen the impact now of the fact that we have been able to scale back investments following the exit announcement in November. In Q1, though, we reached a gross winnings revenue of almost £6 million, but that then had representing a decrease of 25% in constant currency. But as you can see on the marketing line, we are now able to drastically reduce the investments in North America, which also meant that the underlying EBITDA loss came in at only £1 million for the first quarter in 2024. Relax is continuing to show good development and good performance. We had a revenue growth of 6% to £13 million in Q1. The sequential decrease that you can see here is partly due to seasonality. Q4 is the strongest quarter for casino generally, but also that the dream drop jackpot timing impacted the overall revenue. If they fall too early, we don't build the same level of engagement and excitement around the jackpots. In terms of gross contribution, the Q1 came in at £10.5 million, which was slightly up from the same period last year and underlying EBITDA contribution of just shy of £5 million, representing a 36% margin of the total revenues for Relax. We have also seen a slight increase in cost as the team in Relax is building for the support for the continued growth for the business. And we also want to call out that we had three exclusive game launches for Kindred in the quarter, which we are, of course, as I mentioned earlier, continuing to scale up throughout this year and next year. So KSP, the picture on the screen is actually the first bet that was placed with KSP, which was a multiple. Unfortunately, the customer did not win that first bet, but it is a true representation of the first bet that was made by a customer on the KSP platform. As mentioned, we launched it in our first test market during Q1, and we have seen significant progress during this first couple of months live in production. We have selected customers playing on the platform, and we have been very pleased with the performance to date, which also means that we will accelerate the rollout to some of our smaller nonstrategic markets already pre the euros to ensure that we get the necessary volume and number of customers through the platform to be able to test really well and gather customer feedback on the product. The project remains firmly on track with both performance targets and metrics ahead of schedule as we stand today. In terms of the next phase, we have, of course, a multitude of ongoing features and functionalities that are being developed for further brands and for further markets once we start looking at rolling out into some of the bigger markets post the euros and early next year. In terms of our journey towards zero, we reported a share of gross winnings revenue from high-risk players at 3.2% in Q1, but also very pleasing to see that improvement effect after intervention came in at 87.1%, which is, in our opinion, a very high figure. We will, of course, continue to work very diligently on this. And if you extrapolate where we are today. We continue to see a downward trajectory over time. I also want to highlight the Sustainable Gambling Conference that we ran in London this spring, which was a really great occasion for people across the industry and stakeholders around the industry, everything from regulators, operators, treatment centers and lived experience to participate and discuss how we joined [indiscernible] as an industry and stakeholders around the industry can continue to support not only our ambition, but also how the industry works with this in a diligent fashion. With that, I'm going to hand over to Patrick to run through the financials for the first quarter.

Patrick Kortman: Thank you, Nils, and good morning, everybody. So I will on the next couple of slides run through the financial highlights of the quarter. The total revenues reached $307.7 million in the first quarter. That was slightly ahead of the revenues posted last year in Q1 in constant currency and 3% ahead in -- or in reported currency and 3% ahead in constant currency. We are starting to see effect of the ongoing exit from North America. And if you would exclude North America for numbers, we actually saw a 4% increase in constant currency. We had a solid growth actually in our locally regulated markets and growing by 4% in reported currency. This was, however, largely offset by a 16% decline in revenues from nonlocally regulated markets. And as Nils discussed earlier, we had a solid growth in revenues from Relax with to be contribution to the overall revenue mix growing by £1 million year-over-year. The cost optimization work and the cost reduction work is now starting to yield results. And as you can see on this slide, we have had improvements on all our metrics. If we start from the left-hand side, on the cost of sales, where we continue to see efficiency improvements. This is really driven by improved terms with our game supplier and payment suppliers. It's driven also by improved marketing market mix and also increasing importance of Relax. So overall a 70 basis points improvement in the cost of sales metrics year-over-year. Marketing costs, also that one where we see a 70 basis points improvement compared to Q1 last year. On the marketing side, we saw a €2 million decrease in marketing spend year-over-year. However, this is sort of driven by a reduction in marketing spend in North America where we -- where the marketing spend declined £3 million, which, of course, means that we have a slightly above £1 million increase in marketing spend in the other markets. In salaries and other OpEx, we are seeing a clear efficiency improvement now on the back of the cost reduction program that we initiated in Q3 last year. With both salaries and other OpEx declining as a percentage of revenues, but also in absolute terms. Since Q3, when we announced the cost reduction program, we have now a net headcount reduction of approximately £200 million, and we see a clear reduction also in other OpEx. We had -- we have communicated a target to be below £245 million in total OpEx for the year, and we reiterate that target. And the strong focus on costs and reducing costs is now starting to impact also our EBITDA numbers, as can be seen on this slide, with increased scalability, we managed to reach the highest underlying EBITDA level since Q3 in 2021 with a 20% increase year-over-year. The £59.3 million in underlying EBITDA represents an underlying EBITDA margin of 19%. And if you exclude North America, the underlying EBITDA would have reached £60.3 million with a margin of 20%. And this is clearly now going in the right direction of -- towards our financial targets, and we also reiterate our full year guidance of £250 million. With the strengthening of the sterling pound against our main currencies. We saw a negative revenue impact of approximately 3%. And in absolute terms, this means a negative impact of £8.6 million on the revenue line. While we have a positive effect on the other hand, then on cost of sales and OpEx, that was, however, not large enough to offset the reduced or the impact on the revenues. And thereby, we had also a negative impact on the underlying EBITDA of £1.6 million from FX movements. We have seen a solid start to Q2. And of course, this is a very short period of time, only 21 days, and it's been driven to some degree by strong sports betting margins. For these first 21 days, we had an average daily revenue of £3.48 million, which is a 6% increase compared to the daily average revenue for the full quarter Q2 '23. And in constant currency, this would have been 8%. As mentioned earlier, the exit from North America is starting to have a larger impact on the comparative numbers. And excluding North America, the increase was 8% in reported currency and 9% in constant currency. The sports betting margin above period was 11.3%. That's actually the same sports betting margin as we reported for the full Q2 2023, and of course, slightly above the long-term average of 9.8%. Again, a good start to the quarter, but also reminding that this is for only 21 days. So with that, I will hand over to Nils for a summary of the quarter, and then we will open up for the Q&A.

Nils Anden: Thank you, Patrick. So just wrapping up here, we would say that the Q1 in 2024 was a solid start to what we call a transformational year, both in terms of where the business is heading, but also the fact that we have a bid on the company from FTJ. Just summing up the main points from Q1. What we're most pleased about is, of course, that we had an all-time high in locally regulated markets, both in terms of absolute numbers and a share of gross winnings revenue. This was due to a continued growth of 5% in the locally regulated markets. In terms of the underlying EBITDA, we're very pleased to, as Patrick mentioned, have the highest underlying EBITDA for quarter since 2021, which was driven by the cost reduction initiatives and the constant control of costs that we have across the business. We also, as Patrick mentioned, reiterate the guidance for 2024 of £250 million. In terms of the strategic projects, they are moving forward according to plan. The KSP has been successfully operational, and we will continue to onboard customers during Q2. We are also very pleased to say that we have just launched Otto Casino in Sweden, which is our first pay-and-play brand, which really plugs a gap in our product portfolio in Sweden. Relax also continues to show strong performance with 6% total revenue growth, and we're very confident in our ability to continue to drive scalable growth for Relax. In terms of forward-looking, we have, I would say, a very solid underlying business operation at the moment. We're performing well as a company, and we have our eyes set on a very busy summer. We have the Euros, of course. We also have the Olympics in Paris, and we have Copa the America. We have had a strong start to Q2, and we continue to have a very firm focus on growth as a company moving forward. With that, I'm more than happy to open up for questions from the call.

Operator: [Operator Instructions] The next question comes from Oscar Ronnkvist from ABG Sundal Collier.

Oscar Ronnkvist: So just the first one would be on the Netherlands or actually both of my questions will be on the Netherlands. So first of all, just the expected deposit limits, if you have any comments? And also -- so that you reiterated your £250 million guidance, which you, I think, initially communicated during Q3 or in connection with the Q3 report, which was actually before it was sort of announced from the KSA. So I just wondered, if anything has happened in terms of your expectations -- and if you're still -- I mean, are you expecting a minor impact from the deposit limits? Or are you not expecting it at all in the guidance?

Nils Anden: The latest from the KSA, which came last week is that they are delaying the implementations of some of the measures that were proposed just before Christmas last year. We are still awaiting the kind of the full confirmation, both in terms of the time lines for these implementations. But also, I think, more importantly, from our perspective, the details how these are to be implemented. So I think from our perspective, it's too early to say yet what the potential impact will be. And because it's ultimately down to the details of the legislation, but of course, also in terms of the timings of when these measures will be implemented. So from our perspective, a little bit too early to go out and comment on it as of yet.

Oscar Ronnkvist: Got it. So just -- I mean, to clarify, it's not really sort of incorporated in the £250 million guidance. So it could be -- if you were to see an effect from it, it could be on the negative side in that sort of sense. And if it wasn't implemented, it was -- it would be sort of neutral to your guidance. Is that how to read it?

Patrick Kortman: Yes. It all depends on how, when and if -- and that's not what we can comment on this data. We don't know what it will look like in a potential future scenario. But always with our budgeting and guidance is, we, of course, take hit for certain unknowns in the business.

Oscar Ronnkvist: Got it. The next one, I don't know if -- I saw that FDJ commented on it, but just on the Netherlands, the proposal from the parliament also I think it was voted through the motion, 10 and motion 14 with one of them being a proposed high-risk gambling ban in the Netherlands, which -- I mean, these are my words, but I don't know it may affect slot machines and maybe some types of live casino games. So do you have any comments on sort of your expectations on that and potential implications on the bid?

Nils Anden: So I think it's fair to say that we follow this closely as well. First of all, it's a motion. So it's ultimately up to the government. -- what they want to do with it. There are a range of motions introduced in the Netherlands on an ongoing basis, I think, almost 5,000 a year. Our reading on it is, of course, we have to see what the government decides to do with this motion. I think some comfort that we take on it is that, one, the Ministry had objections to this motion and three out of the four parties that will most likely form the new government in Netherlands voted against this motion. I think holistically, if you take a step back, I think the main ambition of the gambling reform in the Netherlands was to drive channelization, of course, increased tax revenues but also ensure that there is a good level of player protection in the market. I think this motion goes pretty much directly against those main objectives of the gambling reform. But we will have to wait and see what the government says on this, but too early for us to say at this stage, I would say.

Oscar Ronnkvist: Perfect. I just came up with one follow-up question on the Netherlands. So can you say anything, I think on the Capital Markets Day, you showed us some slides on the contribution margin for each country where I think the Netherlands wasn't really included. So just looking at the tax rate of around 30%, and I mean the maybe lower marketing spend as a percentage of sales. I mean, in rough terms, could you maybe elaborate a little bit on the sort of contribution margins that you have in the Netherlands?

Nils Anden: Yes. We haven't shared that number specifically, but it's fair to say that Netherlands has a higher contribution margin than the group average today. And this has to do with the strong growth that we have seen in Netherlands at the same time as there are restrictions on marketing in the country, which, of course, means that we get the high leverage on the marketing spend in the Netherlands.

Operator: The next question comes from Martin Arnell from DNB Markets.

Martin Arnell: So my first question is on the OpEx trend, which looks amazing in this quarter is down quite a bit also from last year, and I know you've been working with initiatives, but you've done that for quite a while now. When we're entering the football euros and in the months before, how do you expect -- will you keep the strict OpEx focus that you have now?

Patrick Kortman: Yes. The short question is, yes, this is not really related to the football or the euros. It's kind of a more-broader initiative. We have, of course, when it comes to the marketing side, we will invest behind our core markets and the growth in them. £60.6 million in OpEx for the quarter, which is down significantly compared to last year when it was about £67 million. I think it's fair to remember also that last year in Q1, there was a one-off cost of around £3 million burning the Q1 OpEx levels. So the kind of drop it looks a little bit more dramatic than it actually is. Going forward, as I said earlier during the call here, we still expect to be below £245 million. But when you look at the coming quarters, there are certain costs that are, by nature, more a question of timing when that will come. And we might have a slightly higher quarterly level in the OpEx side over the coming quarters than we had now in Q1 due to this.

Martin Arnell: Okay. And can you say anything? What do you expect in terms of top line growth in the coming quarters around this big event, assuming normal sports margins.

Nils Anden: Assuming normal sports margin, that's the main part of that, right? I think we have a very busy summer that will definitely drive top line growth. I think we should also remember that now in Q2, for example, there's a fairly extensive period where there's very quiet sports calendar. But we will continue to see growth for the business, but we haven't communicated an exact number for the year, but fair to say that this is a busier year than last year for sure in terms of the sports calendar.

Martin Arnell: Okay. And my final question, just a follow-up on the Proposal in the Netherlands about the potential ban on high-risk products where they could include slots. I know it's a proposal that it could take forever until we know exactly what's going to come out with this. But could you just share some color on your discussions you've had with FDJ after this proposal? And remind us what the end about it.

Nils Anden: Yes, absolutely. I think the reading is similar to us in the sense that there's two questions here. One, will this go through? I mean, it's ultimately up to the government to decide what they do with this motion. Secondly, we know that there are -- a majority of the governmental parties, the parties that will most likely form the government that voted against this. So putting a likelihood on this is, of course, very difficult. And then in terms of their perspective, I don't want to put words in their mouth, but they, of course, have a long-term perspective on Kindred as a business. And if this comes through, there might be some effects on a short to midterm, but our position in Netherlands is so strong that I think they're very confident on our long-term outlook in the Netherlands, irrespective of this.

Operator: The next question comes from Simon Davies from Deutsche Bank (ETR: DBKGn ).

Simon Davies: Three quick ones from me, please. Firstly, U.K. was very strong performance. Obviously, we've got the implementation of the white paper to look forward to some stage in the second half of the year. Do you think that you fully implemented the measures that you expect to see come through there in terms of affordability checks and state limits? Or could there be some incremental pain to be felt? Secondly, in the Netherlands, strong performance there, can you give us a rough split between -- in terms of the breakdown of sports versus casino and the growth rates that you're seeing in those two categories. And lastly, can you just talk through the phasing of start-up costs from the Kindred Sports platform during the course of 2024?

Patrick Kortman: Do you want to take the last question first, and then I can take the other one.

Nils Anden: Yes. So on KSP and the start-up costs. So it's not that we would have had a significant increase in the costs over the couple of last quarters. Of course, we are recruiting some additional operational staff to four KSP, but most of the tech resources, et cetera, has been in place already for a good period of time.

Patrick Kortman: Do you want to take the Netherlands one.

Simon Davies: So should we start to see those costs begin to phase down as we get towards the end of the year?

Nils Anden: No, I don't expect those costs to phase down. This is still an ongoing project. We are still doing modification works as discussed, et cetera, and developing the product further. Then it's a question primarily of what kind of resources will be needed post a full rollout. And that we, of course, at this point in time, we haven't assumed at least that in the financial targets provided that we would have a significant reduction at least in resources. Yes. And the question about Netherlands, that was...

Patrick Kortman: Product split.

Nils Anden: The product split. So in the Netherlands, it's -- I'm shooting a little bit from the hip. But for the market overall, it's 70% or so is iGaming and then 30% roughly sports betting. Our split is broadly in line with the market, but maybe a little bit more skewed towards sports book than the overall market split.

Simon Davies: And are you seeing similar rates of growth in each category?

Nils Anden: Yes. We have seen a good development across the categories over the last couple of quarters.

Patrick Kortman: And then in terms of your first question, Simon, in terms of the white paper and the imminent interim code. We're very much looking forward to the publication and the implementation of these as we think that they will really provide a level playing field. We're not particularly concerned around the levels. We think they're good. When it comes to stake limits and affordability, you have to look at them in combination, strict affordability limits actually means that stake limits should be lowered. So, we don't have a reason to believe that, that will have a material impact on our business.

Operator: The next question comes from [indiscernible].

Unidentified Analyst: In your terms of conditions on your website, it states that the user is responsible in ensuring that the use of the services is legal. One Evolution, which is a gambling games provider, was accused in 2021, the response was that the operator is responsible in ensuring that the players are actually allowed to play. To test your systems, while I was on a visit in California in March 2024 last month, where sports betting is illegal, I deposited money and managed to place bets. What are your thoughts about some of your revenue in Q1 is from illegal markets? Also, do you have any technical implementations to limit illegal gambling because it sure seems you not.

Nils Anden: Well, first of all, it shouldn't be possible to create an account and deposit from California. So we would be keen to get more information on that. And yes, we have very strict measures in place to ensure that the jurisdictions when you're not allowed to play from, and we have an extensive black list of markets unless you gain the system by using VPNs or submitting false information, which will be eventually will pick up. We have very strict measures to ensure this. So that definitely surprises me, and I would be happy to get more information on that from you because that should not be possible in a normal scenario.

Unidentified Analyst: A follow-up question. I was actually in contact with your support regarding this matter. And they forwarded the situation to your legal department, I assume. And the response was actually for ring it back to the terms of conditions and saying it is the individual's responsibility to ensure that it is legal, and there was nothing in the response in, okay, we do have any technical implementations. And also, if there were any technical implementations, it seems strange that I were still able to deposit money and gamble because I have them on record, I have the pictures and everything. So -- how do you explain that?

Patrick Kortman: Yes, I think we need to come back to this offline. This is something that we need to look into.

Unidentified Analyst: More than happy to look into it.

Patrick Kortman: So I think with that, that was the last question. So for final remarks, Nils.

Nils Anden: Yes. So thank you again for attending the earnings call this morning. And we look forward to coming back to you in July with the Q2 results, and have a lovely day, everyone. Thank you.

Patrick Kortman: Thank you.

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