Betsson (Stockholm:BETS B) Q1 2026 Earnings Call

0:00 Thank you very much. Hello, everyone, and welcome to Betsson's presentation of the Q1 report for 2026. I'm Pontus Lindwal, President and CEO of Betsson. With me today is also our CFO, Martin Ehrmann. Hi, everyone. In Q1, we saw continued good customer activity in our B2C business, with active customers up 11% year over year at all new time all time high levels. Group revenue amounted to $285,000,000, and EBIT was EUR 34,000,000 in the quarter. The EBIT margin was 11.9% for the period. Revenue for the B2C operations was increased by 15% year on year and reached a new record level.

0:49 Growth was particularly strong in Latin America, primarily driven by positive performance in Peru. Western Europe also delivered double digit growth, with Italy as the main driver, where we continue to gain market share in both sports betting and casino. Overall, our B2C business continues to grow and contributes significantly to the group's earnings. In parallel, we keep on investing in several B2C markets where we have not yet reached profitability, which reduces operating income by approximately 10,000,000 to €15,000,000 per quarter. We continue to believe that these markets have the potential to become profitable, while we closely monitor and evaluate their development and future prospects.

1:36 Revenue in the B2B operations decreased to million 50 driven by lower revenue from one customer. However, activity for these customers has stabilized since early December. Over the medium term, we are confident that we can increase our B2B revenue with both existing and new partners. Casino revenue declined by 4%, while Sportsbook revenue was up 1% year over year. The Sportsbook margin was 8.4%, slightly higher than in the first quarter last year. Our balance sheet is as strong as ever. We ended the quarter with a net cash position of EUR 165,000,000. In March, we entered into an agreement to acquire Rhino Entertainment Group's B2C business, including a license in Canada, as well as some technology assets for our B2B business.

2:34 The transaction is in line with our strategy to create long term value through investments in both existing and new B2C markets and through further developing our B2B offering. The acquisition is expected to deliver economies of scale, improved profitability and enhanced growth opportunities in both business areas. The total purchase price amounts to €64,500,000 and will be financed with existing cash. In 2025, the acquired assets, both B2C and B2B, generated an estimated €13,700,000 of EBITDA on a pro form a basis. Completion of the deal is expected in Q2 or Q3 this year, subject to regulatory approvals.

3:27 Betsson's engagement in sports continued in the first quarter. We entered into a multi year sponsorship with Davis Cup, the classical annual international team competition in tennis. This partnership further strengthens Betsson's extensive global sponsorship portfolio across elite sports. Betsson is currently the main sponsor of football clubs Inter Milan, Club Bruges and Boca Juniors. Now we look forward to following the national Davis Cup teams closely across our different regions. In Italy, a new campaign for Betsson Sport was unveiled in the quarter. The 2026 campaign introduces a new TV commercial and sees Roberto Baggio and Fabio Canavero join Francesco Totti as ambassadors for the brand.

4:17 Francesco Totti is the former captain of Roma and two thousand and six World Cup winner with Italy, and he's being joined by Roberto Baggio, winner of Valon d'Or and one of Italy's most recognized footballers, and Fabio Canavero, the former Italy captain and two thousand and six World Cup winner. Betsson is also announced as the title sponsor of Betsson Summer Proof Paddle twenty twenty six, one of the major sporting events of the summer in Argentina. Betsson's tech platform is a player account management system that makes up the core of the customer offering and user experience.

5:02 The platform manages customer payments, customer data, as well as the games offered to players. During the quarter, the implementation of a new proprietary front end framework continued, which has been built for increased flexibility and performance, and which strengthens the user experience by enabling faster and more efficient rollout of new features and updates going forward. Betsson also runs a proprietary sportsbook, and during the quarter, several enhancements to the customer experience were introduced, such as expanded bet builder functionality, AR powered match previews and enriched live stats. These enhancements position our sportsbook strongly ahead of peak events such as the upcoming FIFA World Cup.

5:50 Mobile adoption has remained a key focus, supported by a new app for Incabet in Peru, as well as expanded native app capabilities in other markets designed to drive customer acquisition and retention. A number of new suppliers of slots, casino games, were launched in various markets during the quarter. During the first quarter, Betsson participated in the sustainable gaming zone at ICE Gaming Trade Fair in Barcelona. Betsson sponsored the event for the fourth consecutive year, where all proceeds go to organizations working for safer gaming, and Betsson also participated in several panels to discuss responsible gaming and sustainability.

6:35 More details about Betsson's sustainability framework and reporting can be found in the new sustainability report, which was recently published as part of the annual report for 2025. This is the first sustainability report according to the EU directive on sustainability reporting called CSRD. At Club Bruges Champions League match in Madrid, Betsson chose to highlight the club's long standing message, No Heart, No Glory. This initiative aimed to encourage blood and plasma donations in Flanders in Belgium. And now I'll hand over to Martin for a closer look at the financials. Thanks, Pantus. The first quarter was a quarter with more or less maintained revenue level but decreased operating income year on year. In today's presentation, we will give you more details of the numbers released earlier in April.

7:32 But before we go into the details of the financial numbers, we start with a few KPIs. Customer deposits in all gaming solutions are down by 40% compared to the same period last year, but number of active customers increased by 6%. The gross turnover in Sportbook across all bets and gaming solutions was down 21% compared to the same period last year and amounts to approximately €1,500,000,000. Sportbook margin was 8.4%, which is higher than the 8.0% margin in the first quarter last year, but below the two year rolling average margin of 8.7%. Sportbook revenue slightly increased by 1% compared to last year and amounted to 80,000,000. The casino turnover is down 17% year on year and casino revenue decreased by 4%.

8:23 Casino revenue represented 72% of the group's total revenue in the quarter and sports books up 27%. Reported revenue for the quarter amounted to EUR $285,000,000, decrease of 3% year on year, but four percent organic growth. Revenue from local and regulated markets increased by 20% compared to last year and now constitutes 73% of total revenue compared to 59% last year. Revenue from the B2C business has grown by 15% or €31,000,000 year on year, whilst the B2B business shows declining revenue year on year by 43% or by €39,000,000, explained by decreased revenue from one of the group's b to b customers.

9:13 Revenue from the b to b business corresponds to 18% of total revenue and b to c revenue to 82%. Splitting revenue by region, we see growth compared to previous year in all regions except for the Nordics and the Central And Eastern Europe and Central Asia region, the Zika region, which both are down compared to last year. In the Nordic region, revenue decreased both compared to the corresponding period last year and to the previous quarter. The decline is primarily driven by reduced activity in the casino products. Both Denmark and Sweden reported lower revenue during the quarter, which is the outcome of an active decision to focus marketing activities where we see the best return on investments.

9:58 The Nordic region represented 11% of the group's total revenue in the first quarter. Revenue from Western Europe increased by 10% year on year or by EUR6 million and reported the highest revenue ever for the region in a single quarter. As Pontus said, the Italian market reported all time high revenue in the first quarter, reaching new record levels in both deposits and turnover. The growth compared to the corresponding period last year is mainly driven by the casino product. The Sportbook product continued to show strong growth with increased revenue both year on year and compared to the previous quarter, but the Sportbook revenue is still relatively smaller than the casino revenue in Italy. France reported increased revenue, both compared to the corresponding period last year and compared to the previous quarter.

10:48 Revenue from Belgium decreased compared to the corresponding period last year and previous quarter, explained by decreased sport book revenue. The Western Europe region represented 21% of total revenue in the quarter. Revenue from the Sika region decreased by 22% or by €27,000,000 Revenue was negatively impacted in the first quarter by lower license revenue for system deliveries in the region, with a decline primarily driven by the casino products. The B2C segment in the region continued to perform well. Croatia, Greece, Georgia, Poland, Lithuania and Latvia all reported increased revenue compared with the corresponding period last year.

11:35 The growth in Croatia and Greece was driven by the casino product, whilst the growth in Poland and Georgia was driven by the sport book product. The Sika region represented 34% of the group's total revenue. Revenue in the Latin America region increased by 19,000,000 or by 21 compared to the same period last year and also increased compared to the previous quarter. Peru and Colombia reported increased revenue in the quarter, and the growth was driven by solid performance across both the casino product and the sport book product, with underlying growth in both player deposits and turnover in both markets. Argentina reported in line with the corresponding period last year and the previous quarter. The reported revenue was significantly impacted by negative currency effects in the quarter. In local currency, Argentina continued to report strong growth across both casino and sport book.

12:31 The Latin America region represented 33% of the group's total revenue in the first quarter. Explaining the development in operating income, this picture breaks down the different components in the profit and loss statement to display the impact of the different line items. Revenue is slightly down year on year, impacting gross profits. However, revenue from locally regulated markets has increased, and following that, gaming taxes by some €8,000,000. Increased cost of services providers provided is, apart from gaming taxes, also explained by higher payment provider fees following increased B2C revenue and higher costs related to regulatory licenses. Gross profit is also impacted by the change in revenue mix between B2C and B2B in the quarter, where we in this quarter see a step down in the B2B revenue as a percentage of total revenue.

13:28 Year on year, gross profit decreased by €24,000,000 compared to the same period last year and amounted to €164,000,000, which corresponds to a gross profit margin of 58% compared to 64% last year. Marketing spend increased by €1,000,000 compared to last year and corresponds to 16% of total B2C revenue and to some 21% when including affiliate marketing cost as well. Personnel expenses increased by some €3,000,000 compared to last year, explained by increased number of employees following geographical expansion, increased investments in product and technology development. Depreciation and amortization costs increased by 2,000,000 year on year as a result of increased capitalized development costs.

14:16 Other items are flat year on year, where increased capitalized development costs are contracting increased other external expenses. Operating income amounts to EUR 34,000,000, a decrease of 47% compared to last year. The EBIT margin was 11.9% compared to 21.9% last year. Operating cash flow amounts to €58,000,000 compared to €86,000,000 in the same period last year. The deviation year on year is mainly explained by lower operating income and increased taxes paid. Operating cash flow is also impacted by changes in working capital of EUR 17,000,000, mainly explained by decreased accounts receivable balances.

15:04 Cash flow from investing activities sums up to €15,000,000 and relates to investments in owned product and technology development. Cash flow from financing activities impacted the cash flow by 25,000,000 mainly driven by share buybacks of 20,000,000, but also impacted by dividend paid to non controlling interest of 2,000,000, loan to associated companies of 1,000,000 and lease payments of 2,000,000. Betsson has, as end of March, a net cash position of 165,000,000 Euro and an equity ratio of 66%. Pontus, back to you, take us through the trading updates. Thank you, Martin, for reading out all those figures. So let's look at how the second quarter has started.

15:52 The average daily revenue for the second quarter to date up to and including April 21 has been 3.7% higher than the average daily revenue of the full second quarter of twenty twenty five. During the period so far in April this year, the sportsbook margin has been higher than the historical average. Now a quick summary of the first quarter. We saw continued strong performance in B2C, but the B2B business declined. Regionally, growth was strong in Latin America and Western Europe, while the Sika region and The Nordics both declined. The share of locally regulated markets was the highest ever at 73% and drove higher gaming taxes.

16:45 Lower B2B revenue and higher gaming taxes impacted profitability in the quarter. In June, the FIFA World Cup will begin, which we expect to contribute to increased activity and customer intake. Our investments in recent years have strengthened our position and with a competitive offering, a strong brand and a proven strategy, we are well positioned to capitalize on opportunities in the global online gaming market. Thanks, everyone, for listening to the presentation. And now it's time for q and a. We welcome your questions. The next question comes from Georg Atling from Pareto Securities. Please go ahead.

17:46 Good morning, guys. I have a couple of questions. So starting with B2B. You say that this customer that you have seen the revenue stabilizing since December. Does that mean that we should expect B2B flat sequentially here in Q2? It's very hard to see how the rest of the quarter is going to develop, but what we have seen so far since December last year, it has stabilized. Okay. And you write in the report that B2C contributes significantly to profits. We've seen what's happened to profits, obviously, now that B2B has come down. So just a bit curious how we should read that significant contribution. Is it can you say anything more?

18:39 Is it more than half? A bit more detail there would be great. We're not in the position to give those figures out, but we can just reiterate that we have significant profits also from B2C, and as we mentioned in the report and during the presentation, we continue to invest in several B2C markets as well that looks promising for the future, but which comes with higher costs than revenues for the time being. Okay. In these growth markets that you currently lose money on the B2C side, have your strategy at all changed in regards to those investments considering how B2B has developed?

19:26 No, it has not, because we don't believe that it's the right thing to try to fix one thing with working on another thing. I mean, these are markets that we believe in long term, and all the markets that we have where we operate now profit with profits in the B2C, they have taken many, many years to build up. So that's how business is made, and we have to keep investing in the markets that we believe in. Okay. So is my interpretation correct, and then that if B2B continues to decline, you're not going to change the strategy to protect the margin in the short term?

20:17 I mean, this is something that we haven't really discussed, because it's not the situation that we are in front of right now. As we say, the B2B has stabilized, and we are looking towards getting also new clients onto the B2B side. So we are more preparing for that kind of scenario going forward. That's clear. I just have a final question on Rhino, if you share some more details here on their turnover, how much is that? How much is B2B versus B2C in that Performa EBITDA that you provided? That's we haven't published those figures, so that's not something that we can go into.

21:07 Okay. But will it be accretive or not to the margin on the group level? Yes, it will. Okay. That is clear. Thanks for taking my questions. Thank you. There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments. So there are no further questions. So thank you everyone for listening in and see you at the next presentation.

21:59 Bye bye. Bye bye.