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Edited Transcript of BETCO.ST earnings conference call or presentation 24-Feb-21 9:00am GMT

·34 min read

Full Year 2020 Better Collective A/S Earnings Call Feb 24, 2021 (Thomson StreetEvents) -- Edited Transcript of Better Collective A/S earnings conference call or presentation Wednesday, February 24, 2021 at 9:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Flemming Pedersen Better Collective A/S - CFO & Executive VP * Jesper Søgaard Better Collective A/S - Co-Founder & CEO ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Better Collective Q4 2020 Presentation Conference Call. (Operator Instructions) I would like to advise you that this conference is being recorded today on Wednesday, the 24th of February 2021. I would now like to hand the conference over to your speaker today, Jesper Søgaard. Please go ahead, sir. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [2] -------------------------------------------------------------------------------- Thank you, and welcome to Better Collective's webcast presentation in connection with the Q4 and full year report covering the period January 1, 2020, to December 31, 2020, which we released today. My name is Jesper Søgaard. I'm the Co-Founder and CEO of the company. And with me today are CFO, Flemming Pedersen; and Head of IR; Christina Thomsen. Thank you for joining in today. I'm very excited to be sharing our Q4 report with you. Strong performance in Q4 marks the ending of an unusual year of unprecedented halt in sports and general insecurity as the pandemic affected societies worldwide. Our business is true and resilient and is back on track with record-high performance in Q4. I'm very proud of the way we have been steering and managing the business during these difficult times. Now let's get going. Please turn to Page 2, where we display our disclaimer regarding any forward-looking statements in this presentation. I ask you to please pay attention to this. Please turn to Page 3. The agenda for today's presentation is structured so that we start off with a brief introduction into our new segment reporting, which came into effect from Q4. After the introduction, we take a look at the business highlights for Q4, which will be followed by a thorough walk through the financials for the quarter and the full year. Hereafter, we'll share our thoughts on the future strategy and introduce our new financial targets for 2021. Last but not least, we'll take a look at some more general business updates. As always, we end the presentation with the Q&A session. Please turn to Page 4. Before we continue the presentation, I would like to draw your attention to the changing business model following the acquisition of The Atemi Group back in October 2020. With the significantly different business models for customer acquisition, we have introduced segment reporting. The Publishing segment includes organic traffic in our existing business without pay per click, or PPC as it's called. The Paid Media segment includes The Atemi Group and our existing PPC activities in Better Collective. This means that from Q4 2020 and onwards, we will operate 2 different business models regarding customer acquisition with different earnings profiles. The segments Publishing and Paid Media will be measured and disclosed separately for revenue, cost and earnings, as shown in the table on the slide. The table is a note to the accounts that can be found in the Q4 report. Please turn to Page 5. COVID-19 had a significant impact from the last part of Q1 as the pandemic set a halt on major sports events, and thereby, also online sports betting. Q2 was a period that was most affected until some of the major sports in Europe resumed in June. In Q3, sports calendars were still affected with amended and reduced German performance. Therefore, I'm happy to announce that Q4 has been largely back on track, showing strong performance. Let me give a snapshot overview of the financial and business highlights of Q4. Please turn to Page 6. Looking at the financial highlights, the year ended with strong performance that also continued into the new year. Our business has proven resilient and is back on track with record-high performance in Q4. In this quarter, we showed strong performance with high growth, record earnings and a satisfying NDC development. Revenue increased by 88%, of which 32% was organic growth. And revenue doubled from Q3 2020. Our operational earnings increased by 92% to EUR 14 million. Cash flow from operations before special items was EUR 10 million, an increase of 35%. We continue to deliver a satisfying number of new depositing customers and of increased value due to geography and receiving operators, adding to our bank of players and laying the foundation for continued revenue growth. In Q4, we sent more than 153,000 NDCs to our partners, which equates a growth of 30% compared to the number of NDCs in the same period the year before. The amount of NDCs sent to our customers this year has naturally been affected by the headwinds COVID-19 caused. Yet, this steep upward curve towards the end of the year proves that we are back on track, thanks to an outstanding effort from our dedicated employees. And of course, also the fact that we added The Atemi Group to our business. Flemming will revert with more information into the financial performance, both to give a bit more insight into the moving parts of our business and to share some in-depth insights into the underlying performance of the business. Please turn to Page 7. Now let's turn to the business highlights of the quarter. On October 1, we acquired The Atemi Group for EUR 44 million. Atemi is one of the world's largest company specialized within lead generation for iGaming through Paid Media and Social Media advertising. This acquisition is a very important step for us to reach our strategic target of becoming the leading sports betting aggregator in the world. Better Collective was awarded Affiliate of the Year at the EGR North America Awards 2020 and also received the award for Commitment to Compliance by an affiliate company at the VIXIO GamblingCompliance Global Regulatory Awards 2020 for the second year in a row. Receiving both of these awards made me very proud. In 2 separate transactions for a combined price just above EUR 1 million, we, on November 2, acquired the platform, Zagranie.com, which is a Polish sports betting media brand; and Irishracing.com, which is a leading horseracing platform in Ireland. These 2 small acquisitions fit well into our existing platform of sports media brands. Just after the quarter, we exercised the option to acquire a further 70% of the shares in Mindway AI for a total price of EUR 2.3 million, bringing the ownership to 90%. Mindway AI specializes in software solutions based on artificial intelligence and neuroscience for identifying, preventing and intervening in at-risk and problem gambling. The fact that we are now majority owners of Mindway underpins our focus on that betting shall be fun and entertaining, and then -- and that any problem gaming shall be detected as early as possible and taken care of. We are very proud that we have played a role in bringing Mindway's products from academic research into commercial products that are now being sold to operators around the world. I can also happily reveal that January revenue reached EUR 13 million, a growth of 78% versus 2019, of which 16% was organic growth. The organic growth was recorded despite a strong comparison towards January 2019. It was partly driven by the U.S. business, where total revenue doubled and where revenue from the affiliate business from sports betting and casino exceeded their growth of 200%. We have obtained significant positions in the U.S. market, not least in the newly opened states, Michigan and Virginia. Touching on regulatory issues. Germany implemented an interim regime to government gambling from October 2020. In this connection, unlicensed operators needed to withdraw from the market. Seven years ago, we decided to only work with operators, which we knew would be part of a regulated German market. Therefore, our performance in the German market was strong in Q4, and we expect this to continue during the interim regime. A more permanent regulation is expected to be implemented from July 2021. We believe that the value of the German market will remain at least the same for Better Collective and continue to be an attractive market for us. In summary, we have shown strong performance, and I'm very satisfied with the Q4 performance and the start of 2021. We have really been taking new big steps in building our business while we, at the same time, have showed solid financial performance despite a year of strong headwind. Now please turn to Page 8, where I will pass on the word to Flemming, who will go into more details about our financial performance. -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [3] -------------------------------------------------------------------------------- Thanks, Jesper. Let's look at the financials for Q4, starting on the next page, Page 9. Zooming in on Q4, total revenue was EUR 37 million, which was an 88% growth compared to the same period last year. The organic revenue growth was 32%. Q4 was back on track with strong growth in underlying KPIs, which I will revert to in a minute. Strong performance was recorded in both Publishing and Paid Media. In Paid Media, we already, in Q4, accelerated the partial transition from CPA to revenue share. This comes at a short-term cost on both top line and earnings. However, for selected operators, we are very confident that this will have a very positive return during the customer lifetime. Revenue share accounted for 48% of the revenue and 53% of player-related revenue, with 38% coming from CPA, 5% from subscription sales and 9% (sic) [19%] from other income. The addition of Atemi Group as of October 1 has increased the CPA element of the revenue stream from 13% in Q3 to 38% in Q4. Revenue for the full year was EUR 91.2 million, with an implied growth of 35%. We saw high number of NDCs with more than 153,000 in the quarter, a growth of 30%. For the full year, NDCs exceeded 437,000, similar level to 2019. This means that despite the cancellation and postponement of major sports events due to the COVID-19 pandemic, NDC performance was maintained. Please turn to Page 10. Operational earnings in Q4 on EBITDA level increased 92% to EUR 13.7 million. The group EBITDA margin was 37%. And zooming in on the segments, the EBITDA margin was very high at 52% in Publishing and 13% in Paid Media. In Q4, significant costs were added in Paid Media to shift business model towards revenue share and new market openings, including the U.S., which dampens earnings short term. The high margin in Publishing is a result of high revenue growth while still maintaining a cost level that is below Q1 2020, following the cost reduction program that we initiated on the back of the COVID-19 closedowns. We have gradually increased cost in Publishing again, however, at a controlled pace. The full year EBITDA margin remained above the financial target of 40%, even with the consolidation of the Atemi Group for the full quarter. That presents lower margins than the Publishing business. The operational earnings for the full year before special items increased 34% to EUR 36.7 million. For Q4, the effective tax rate was 23% against 25% in Q4 2019. Earnings per share increased by 143% to EUR 0.18 per share. This is a result of the solid performance, including value-adding acquisitions that have been financed at low cost. Please turn to Page 11. Moving on to the cash flow and balance sheet. In Q4, operating cash flow before special items was EUR 10 million, an increase of 35%, resulting in a cash conversion of 71%. And for the full year, the cash conversion rate was 99%. At the end of Q4, capital reserves were EUR 43 million. For the full year, cash flow from operations before special items was EUR 38 million, which equates to an increase of 44% year-on-year. Acquisitions and other investments reduced cash flow with EUR 68 million, of which EUR 33 million was in Q4. Following the acquisition of the Atemi Group, the debt leverage is 1.66, still being low, also considering that this is based upon historical earnings. We believe that we have further room to expand the bank financing facilities in connection with potential future M&A transactions. Please turn to Page 12. Coming back to revenue and growth, let's take a look at some of our internal key performance indicators, i.e., sports wagering, which is the growth in underlying betting volume in our revenue share accounts, where we also have added back historical numbers from the acquired companies over time and indexed them all back to 100 starting in 2013. The numbers are derived from accounts that represent approximately 50% of all revenue share earnings. As can be seen from the graph, the underlying betting volume in these revenue share-based accounts increased significantly over time with a steep growth in recent quarters. We mainly attribute this to the many NDCs that we have sent in recent years, 2018 throughout '19 and also here in the recent quarter. The COVID effect is notable in Q2. And in Q3, we saw record-high performance in terms of sport wagering again in our -- in these accounts. In Q4, we see the continuation of the upgoing curve landing at index of 506 for the quarter, which is very encouraging as this is a strong indicator for the increase of value in the player databases that we have built over the years. Please turn to Page 13. In addition to the betting volume, we are looking at the average sports win margin on revenue share accounts, i.e., the percentage that is paid out on the volume. We have used the same indexing as in the graph shown before, and what can be seen is that the margins fluctuate over the quarters and that Q4 was at index 88 -- 89.9. Past average index was -- Q3 was almost record low at 75. The average index number here is 88.2 over the period shown. The volatility in sports win margin is something we view as being transient, but it can, of course, affect short-term financial performance up or downwards. Please turn to Page 14. As a continuation of the KPIs just shown and with our more widespread geographical reach, we have, in connection with this full year report, decided to share some insights into the distribution of the underlying sports wagering in the revenue share accounts. As can be seen from the graph, the Americas continue to be an increasingly more important part of our business. As mentioned, we are seeing strong momentum in the U.S. And in recent years, we have also seen strong growth in South America. Looking ahead, we expect the Americas to grow significantly with expected upcoming regulation in more U.S. states, Brazil and Canada. Please turn to Page 15. For the full year 2020, we landed in line with our financial targets, and I will come back -- that I will come back to on the next slide. Despite the halt in sports and by way of our cost-saving program, our growth rates were kept intact, and you can -- as you can tell from these graphs. We managed to have sold the newly acquired Atemi Group and still meet our earnings target of more than 40% EBITDA margin. This combined makes us very satisfied with this year's performance. Looking at the last 3 years revenue development, Better Collection has grown revenue with an annual average of 50%. And growth rates in operational earnings and cash flow have followed while we still have allowed room for investments in brand-building, products and new market openings. Please turn to Page 16. Looking at our short and medium financial targets, which were decided upon by the Board of Directors in connection with our IPO in 2018, this year 2020 that we are reporting marks the last year in the range of the financial targets, which are average target set over the 3-year period. Since 2017, we have acquired businesses and assets for around EUR 250 million. The financing of this has been approximately EUR 100 million from issuing new equity, EUR 80 million in operational cash flows and the rest from bank facilities. For 2020, in isolation, the organic growth target came in a bit below. The compounded annual growth rate for revenue in the period was 50%, of which 14% was annual growth. Please turn to Page 17, and the word back to Jesper. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [4] -------------------------------------------------------------------------------- Thanks, Flemming. Continuing along the same lines, I'll present our financial targets for 2021. Please turn to Page 18. With the expiration of the targets shown on the previous slide and with the new segment reporting, the Board of Directors have decided on the following targets for the financial year 2021. The revenue targets are based on continued high growth with an implied growth rate of more than 80% and revenue exceeding EUR 160 million in 2021. While M&A remains a key focus for Better Collective, potential new M&A transactions are not included and served as an additional growth driver. The earnings target maintains the focus on high earnings with an implied combined margin of more than 30% and an EBITDA exceeding EUR 50 million in 2021. It is a reflection on continued high earnings margin in the Publishing segment as seen throughout 2018 to 2020 and lower margins in the Paid Media segment combined with further investment in Paid Media in the short term. After 2021, we expect the earnings margin in Paid Media to increase. Note the change from EBITA in recent financial targets to EBITDA. The debt leverage target allows for an increased financing capacity compared to previous years in alignment with the continued M&A focus. M&A continues to shape our business performance and is a key strategic objective as we strive to become the leading sports betting aggregator in the world. Please turn to Page 19. The new targets can be summarized as shown on this slide comparing with the previous years. Please turn to Page 20. Now let's look at some general business updates, where we have decided to focus on our products, our recent M&A transactions and the emerging U.S. business. Please turn to Page 21. I'll start with an overview of some of our products and their reach. Our products cover more than 30 languages and attract millions of users worldwide. As the illustration depicts, we have international brands with a global reach and a regional brand with a more local reach. This means that our regional brands are tailored according to specific regions, countries and their respective regulations, specific sports, betting behaviors, user needs and languages. Our flagship brand, bettingexpert and HLTV, are aimed at worldwide audience. The recently acquired Bet Compare currently has a strong U.K. presence, but over time, the site will be rolled out to a wider international audience. Our U.S. sites include Vegas Insider, Scores and Odds, and RotoGrinders that all have a federal reach. We believe that Vegas Insider has a long-term potential to become the home of U.S. sports bettors. And in the coming years, we'll continue to invest in quality content for our users. I'll get back to our U.S. business in a few minutes. Other regional brands are here exemplified by some of the strong European household names such as the Greek Betarades, the German Wettbasis and the Danish SpilXperten, each tailored to their respective region and languages. As always, we remain focused on building strong brands, mainly within sports betting that are informative and entertaining for our users as we want to be the go-to place when it comes to finding and sharing information related to sports and betting. Please turn to Page 22. Our M&A strategy was the cornerstone of our decision to IPO Better Collective in 2018. And during 2020, we completed acquisitions of approximately EUR 80 million. I'll briefly recap the 2 larger acquisitions as they are both strategically important for our growth trajectory. In March 2020, we welcomed HLTV.org to the Better Collective group, adding esports to our portfolio just prior to the lockdown of sports. HLTV.org is the world's largest community site within Counter-Strike Global Offensive, CS:GO. Traffic to the HLTV website has increased significantly in the past year, not least during the lockdown of regular sports, and the overall interest in esports betting is still growing. HLTV is a very strong media with global reach in an emerging sport that is the largest of the esports when it comes to betting. In October 2020, we completed the acquisition of the Atemi Group, which is one of the world's largest company specialized within lead generation for iGaming through Paid Medium and Social Media advertising. During Q4, we have successfully integrated the acquired Paid Media business, which has brought Better Collective in the absolute leading position when it comes to premium customer acquisition for the online operators. However, it is noteworthy that the earning margin within Paid Media typically is lower than within organic traffic due to the direct payments to the company's provided platforms for online advertising. At the time of acquisition, the outlook for 2020 implied earnings margin in Atemi was around 20%. Given the plans for expansion of the Paid Media business to new markets, including the U.S. and a gradual change of business model towards revenue share, investments will affect the earnings margin short term, resulting in an expected earnings margin of above 10%. And focus will be on absolute growth and long-term value creation. We expect to continue being acquisitive as a very important part of our strategy. There are so many interesting companies that we can see will fit well into the Better Collective group. And with 20 acquisitions completed, we believe we have the right setup for acquiring and integrating companies. Our M&A pipeline is larger than ever, and we also see the opportunity to acquire larger companies than before. Now let's turn our attention to the U.S. market. Please turn to Page 23. Taking a look at our U.S. business. Our key brands include the federal website, Vegas Insider, Scores and Odds, RotoGrinders. We also operate a number of state-focused websites. We believe that Vegas Insider has long-term potential to become the home of U.S. sports bettors. And in coming years, we'll continue to invest in quality content for our users. 2020 has been a challenging year, however. Our U.S. business has been steadily growing. Looking at U.S. affiliate revenue, the year-on-year growth for January has been more than 200%. Within affiliation, we see the most growth in sports betting, whereas Daily Fantasy Sports shows a lower but stable growth. As with most other markets, the U.S. has been significantly impacted by the pandemic. Conversely, the pandemic seems to have led to a shift in the readiness to regulate online betting and gambling in a number of states with a view to increase tax revenues to restore the economy. Most recently, we have seen 3 larger states go live: Illinois, Michigan and Virginia as well as Tennessee. We are cautiously expecting that 2021 will be filled with sports activities and high levels of betting activity, and we believe that we are well positioned to take our part of a global market that is getting back on the growth track. Please turn to Page 24. We remain highly dedicated to taking part in the emerging U.S. market, where more and more states are opening for online gambling, either just sports betting or, in some states, also online casino games. As of now, we have many strong U.S. brands, and the recent Atemi acquisition is expected to power Paid Media efforts and growing the U.S. business. The market expectations for 2021 is a year-on-year growth in online sports betting of 80%, which we are well positioned to take part in. Please turn to Page 25. I'll finalize this presentation by highlighting the key takeaways for Q4. Q4 delivered strong performance, and I'm particularly happy to report strong growth in the U.S. affiliation business. We have boosted the Paid Media segment significantly, and we'll continue to invest in this type of traffic acquisition. We look forward to 2021 with several big sports events, including the Euro 2020. And we continue our M&A strategy with a pipeline as strong as ever. I would like to express my sincere thanks to all Better Collective employees and stakeholders for their continued performance and flexibility in this extraordinary environment. The past year has really demonstrated the strong team spirit and dedication in Better Collective. This concludes our webcast presentation for Q4 2020, and we'll now pass the word back to the operator and open for questions from the audience. Thanks for listening in. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) There are no questions from the telephone lines at the moment. Please continue. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [2] -------------------------------------------------------------------------------- Okay. We have some questions online. A question from [Lars Rasmussen]. There's a lot of mergers, takeovers in the betting branch, and Better Collective is taking part in this. If it knocks on your door and it is a CEO from a big American casino company, do you let him in? Or do you say, sorry, I have no time and interest in a meeting? I think it's a fairly hypothetical question with such a casino. But I think in general, we take any M&A dialogue that is inbound, whether it's relevant is then something we deem afterwards. But in general, we take any dialogue related to M&A. And the next question comes from Erik Lindholm-Rojestal. Looking at your 2021 guidance, you guide for a margin for Publishing above 40%, and this was 48% in 2020. Is there any reason to why the margin should decline in Publishing in 2021? Or how should we view this guidance for Publishing? -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [3] -------------------------------------------------------------------------------- Flemming Pedersen here. I think I'll answer that. We guide above 40%, and it's, of course, correct that the performance was higher in 2020. Going back to in time, we decided to reduce costs significantly during Q2, as some will recall, as a response to the halt of sports. Coming back with high revenue performance, that actually led to a higher margin than the 40%. We cannot rule out that we will maintain this level, but we have gradually increased the cost base again, still being lower than before the COVID-19. But we want to have the room to still invest in our product platforms, the tech setup that we have, et cetera. So that's why we stick to the guidance above 40%. But -- and of course, no, we'll not rule out that it can be higher than exactly 40%. So that's what lies within that guidance. We have a follow-up question also from Erik Lindholm. I'll read the question. For Paid Media, you guide a margin above 10% and in Q4, this was 13%. Would you say this 13% level is indicative for the performing coming quarters or can it go even lower than this? The guidance that we give is that we want to stay above 10%, allowing room for investing in a shift or partial shift, I should say, from CPA to revenue share and also invest in new market openings where it takes some time before new campaigns are launched until they are profitable. So we are staying above 10%. But really, it is a deliberate choice from our side to these investments. And when we took over the Atemi Group, it was running at approximately 20%. We could easily go there again, but have decided to take these investments in order to secure long-term value. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [4] -------------------------------------------------------------------------------- And Jesper here, just to elaborate a bit more on that. Due to the in-depth knowledge and very skilled BI team and insights that we have into player values across markets, across operators, we have taken quite drastic steps here. As an example, with some operators, we're actually comfortable taking the full cost of acquiring customer and working solely on revenue share with an operator. And that is quite unusual in Paid Media activities, bearing the full cost and then sort of over the lifetime, we will get the return, but that we are comfortable with in certain cases. Next question coming from [Matthias Jorcek]. Do you have any plans for Netherlands? Yes, we do. It's a very exciting market that is regulating this year in the second half of the year. We already have an interesting asset there, which we are not monetizing, but preparing for the market. It is, in general, a market where we have done internally a feasibility study, and it's high on our priority list. So a market that we keep a very close eye on. And then another question from Erik Lindholm. Looking at your U.S. business, here, you obviously had very strong growth in affiliation in January. Can you say something on what percentage of revenues the U.S. stands for now? And how much of this is affiliation? -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [5] -------------------------------------------------------------------------------- Flemming here. Unfortunately, we cannot answer this question as we're not publishing these numbers. So we cannot go deeper into that. The majority of the acquisitions that we had -- or the first acquisition we did was within Daily Fantasy Sport, whereas the later acquisition was in, I would say, Vegas Insider, Scores and Odds, more directed towards affiliation. So affiliation is -- has come from the smaller part and now is growing fast with the new market openings. But sorry, we cannot go deeper into the details. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [6] -------------------------------------------------------------------------------- And another question from Erik Lindholm. So yes, you said that the M&A pipeline is stronger than ever. Can you talk a bit what sort of M&A opportunities you are seeing out there? And do you feel like you could do more M&A already now in the short term? Regarding M&A, it's very much up to timing. So how the pipeline progresses, it can be very hard to predict. But with the statement of the strongest pipeline ever and also larger targets in that pipeline, I can say that we, of course, expect an eventful 2021 on that part. But it's just impossible to predict the timing of such. It's really a focus area of ours. So yes, it's important. And another question, and please excuse my pronunciation if I get it wrong, from [Maximillano Mattisio]. What levels of organic growth are you expecting beyond 2021? What's your current expected geographic revenue split? I can just say sort of a high level on organic growth. We look, of course, when we look further years out, we look at the underlying growth in the market and sort of have an ambition of at least being in line with that. But we haven't guided specifically on that, but we are in a growing market. And obviously, our business should reflect that. -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [7] -------------------------------------------------------------------------------- I think during our presentation today, we sort of lifted a bit some of the performance in sports rating we are seeing in our revenue share accounts. And that sort of is a bit of a predictor also for what to expect where we saw that -- can see that the Americas is a growing area with increased regulation in the U.S., obviously, with more states, bringing online gaming into a regulated market. We see strong performance in South America. We expect Brazil to regulate in a very large market. And also most recently, Canada is also discussing regulation. So that should prove for also strong organic growth for online betting in the years to come. And of course, we are positioned to take part of that. We also mentioned just in the question before countries like the Netherlands where we, today, have 0 revenue because it's nonregulated, and that is a market that we expect to regulate this year. Clearly, a very interesting market with high GDP and the large population. I hope that sort of came around the question. Next question is from [Simon Plunkett]. The question reads, very impressive development in U.S. Can you develop a bit of -- can you talk a bit about CPA revenue share contracts in the U.S.? And also, can you say something about CPA levels in the new states? Is it similar levels as New Jersey and Pennsylvania? -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [8] -------------------------------------------------------------------------------- Yes, I can answer that. So it's -- the majority of revenue in the U.S. is CPA-driven, and that goes for the entire market. We are operating on revenue share contracts also, but it's to a lesser extent. But that being said, it is a focus of ours. So as much as possible, we are deliberately trying to build that up. But we are coming from that market being almost solely a CPA market. So we see that as a longer-term development in the U.S. On the CPA levels, in general, we don't see big variations from state to state. We think the levels are attractive, especially comparing to European player values and CPAs. And then a question from Erik Lindholm. What sort of competition are you seeing for M&A right now? It's, of course, very different depending on the type of targets, so size and geography and so forth. So it's going to be a very broad answer so -- in some cases, there's quite a lot of competition. And in others, it's an exclusive dialogue. So it varies depending on the type and size of the tuck. And another question from [Simon Plunkett]. Can you say something about the regulatory environment for you in Germany? As we also mentioned in the speak that we decided several years ago to focus on operators where we knew they had a long-term view on the German market also in terms of a regulated German market. So we have actually seen growth year-on-year in the German market for Q4 and feel that we are in a very strong position in Germany. So our sort of outlook for Germany is very positive. The full regulation will come into place in July. How that's sort of short-term affecting? We obviously don't know for sure, but we are not too concerned about it. We feel that we have a very strong position, which we'll -- where we will benefit a lot from the big increase in demand from new operators entering this highly attractive regulated market. In general, of course, it goes without saying that Germany is a large market, but it's also a very attractive player values that we see in the German market. So all in all, it's a market where we are really bullish for the future. And then a question from [Kelly Larsen]. How well positioned are your assets in Brazil relating to the upcoming regulation? Brazil is another market where we now, for some years, have been very active and focused. And we are in a strong position, we believe. It's also a market where M&A is something we consider, and we monitor the development and regulation closely. So it's a priority market for us, that we can say. And then next question also from Kelly Larsen . Could you elaborate on the trends you see in acquisition multiples? Again, it, of course, is different depending on whether we are looking at the U.S. targets or European targets. Size plays a pretty big role in that. On a general note, we don't feel that prices are going up a lot. In several cases, it's in line with what we have done historically. U.S. is with higher multiples than the European targets. There's no doubt about that. -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [9] -------------------------------------------------------------------------------- I think the next question reads from (inaudible). Can you please elaborate a bit more on the organic growth guided in Paid Media and Publishing? 20% and 25%, respectively, for 2021, whereas the implied growth rate is more than 80% for 2021, that exclude M&A. I should add that more than 80% is the total growth. The more than 80% include the already completed acquisitions that only had partial effect in 2020. So they will have full year effect on the total growth for 2021. And that is the acquisition of HLTV in March and also the Atemi Group that came into effect from October 1. So therefore, the total growth is so high, both a combination of the organic growth that is expected and also the full year effect of the already completed acquisitions. So when we say excluding M&A, it's excluding new M&A. I hope that is -- that clarifies. The next question comes from (inaudible). Could you please go into more detail and comment on the level of organic growth in Q4, which is very high and maybe the level of organic growth for Paid Media and Publishing? I can at least start with commenting on the organic growth in Q4. It was indeed very strong. It was, as Jesper also stated in his speak, across many markets. We saw very strong performance in the U.S. that continued into January. So far, we saw very strong performance in markets like Germany, and also South America was a driver. So in general, it was a very active sports quarter also with high activity in the underlying wagering. So yes, it was basically across the board with a few outliers, I mentioned in positive notion. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [10] -------------------------------------------------------------------------------- Yes. And then a slightly higher margin than -- like the historical average, which, of course, benefits us. But that being said, we just saw a very high activity from the existing betting customers as well as a good new intake of customers. And then it seems to be the final question from [Maximillano Mattisio]. Regarding M&A, as better collective growth, M&A targets should follow the same trajectory. How are you positioned on executing on larger M&A deals? I think we are well positioned. We have a strong balance sheet. We have access to capital on attractive terms. So we definitely feel that we are in a strong position and also would be able to execute larger M&A than we have done historically. That was the last question. -------------------------------------------------------------------------------- Flemming Pedersen, Better Collective A/S - CFO & Executive VP [11] -------------------------------------------------------------------------------- Yes. I think we -- that was the last question. And just from our side, at least a few participants have experienced some issues with the sound. So just apologize for that. I hope you managed to get something out of the presentation, anyway. And if not, then you're always welcome to contact us directly. Thanks. -------------------------------------------------------------------------------- Jesper Søgaard, Better Collective A/S - Co-Founder & CEO [12] -------------------------------------------------------------------------------- Yes. So thank you very much for dialing in and listening, and thanks a lot for the questions. Have a great day. Bye.