In a recent earnings call, evoke (formerly known as the company before rebranding) reported a 38% increase in revenue and a 41% growth in adjusted EBITDA for 2023, largely attributed to the acquisition of William Hill. Despite these gains, the company experienced an 8% pro forma revenue decline due to regulatory and compliance challenges.
CEO Per Widerström and CFO Sean Wilkins discussed the company's commitment to sustainable growth, improved profit margins, and reduced financial leverage. evoke anticipates revenues of £420 million to £430 million in Q1 2024, with adjusted EBITDA expected to be around £340 million for the year. The company also highlighted the importance of AI and automation in enhancing efficiency and customer experiences, focusing on core markets in the UK, Italy, Spain, and Denmark.
Key Takeaways
- evoke reported a 38% revenue growth and a 41% adjusted EBITDA increase for 2023, driven by William Hill's acquisition.
- On a pro forma basis, revenues declined by 8%, influenced by regulatory and compliance headwinds.
- The company forecasts Q1 2024 revenues between £420 million and £430 million, with adjusted EBITDA around £340 million for the year.
- evoke has a strong focus on AI and automation to improve efficiency and customer experiences.
- The company plans to concentrate on core markets while optimizing cash flow in other regions.
Company Outlook
- evoke expects to return to year-on-year growth in Q2 2024.
- The company is confident in its value creation plan, aiming for profitable and sustainable revenue growth.
- Investments in data, AI, and automation are anticipated to drive better average revenue per user (ARPU) and improved conversion rates.
Bearish Highlights
- The company's net cash decreased by £48 million over the year.
- Exceptional costs of £65 million were incurred, primarily for synergies and restructuring charges.
- evoke ended the year with a net debt of £1.717 billion.
- Regulatory and compliance issues contributed to the revenue decline on a pro forma basis.
Bullish Highlights
- evoke absorbed external shocks and has a strong foundation for future growth.
- The company is saving £30 million in overhead costs, which will be reinvested in growth, especially in the UK market.
- evoke is confident in its legal operations in Austria and does not anticipate any short-term cash impact from legal settlements there.
Misses
- evoke did not provide a breakdown of revenue growth between the UK and international markets.
- The company's performance in the first quarter of 2024 was down mid-single digits.
Q&A Highlights
- Management discussed the importance of customer value propositions and lifecycle management.
- The CEO emphasized the company's six strategic initiatives to drive operational excellence.
- evoke plans to prioritize efforts in its core markets while maximizing cash flow in other markets.
evoke's earnings call showcased a company at a pivotal moment, leveraging strategic acquisitions and focusing on technological advancements to secure its position in the competitive betting and gaming industry. With a clear strategy aimed at growth, efficiency, and market focus, evoke appears poised to navigate the challenges ahead and capitalize on the opportunities presented by its core markets and innovative approaches to customer engagement.
InvestingPro Insights
evoke's recent earnings call highlighted significant growth and strategic initiatives that are shaping the company's future. To provide additional context, let's consider some key metrics and insights from InvestingPro that could be of interest to investors:
InvestingPro Data:
- Market Cap (Adjusted): 509.22M USD
- Revenue Growth (last twelve months as of Q4 2023): 38.11%
- Gross Profit Margin (last twelve months as of Q4 2023): 66.68%
These figures underscore evoke's solid revenue growth and efficiency in generating profit from its sales, which aligns with the company's focus on sustainable growth and improved profit margins mentioned during the earnings call. The robust gross profit margin is particularly noteworthy, as it indicates the company's ability to control costs relative to its revenue.
InvestingPro Tips:
- Net income is expected to grow this year
- Analysts predict the company will be profitable this year
Given the company's strong revenue and gross profit figures, these InvestingPro Tips suggest a positive outlook for evoke's profitability in the current year. Investors may find reassurance in the expectation of net income growth and the consensus among analysts that evoke will turn profitable within the year.
For investors looking to delve deeper into evoke's financial health and future prospects, there are additional InvestingPro Tips available. By visiting https://www.investing.com/pro/EIHDF, you can access a comprehensive list of insights. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable information to inform your investment decisions.
Full transcript - 888 Holdings Plc (EIHDF) Q4 2023:
Per Widerström: So good morning, everyone and thanks for joining us today for our 2023 full year results. I am Per Widerström and I joined as CEO of this great business in October last year. And today, it gives me huge pleasure to tell you about the significant progress we have made since then, and how excited I am about our value creation plan for the coming years. We have the agenda for this morning's presentation on Slide 2 here. And today, it's really about the future. Our obsession and commitment to value creation and as a result, that is where we're going to focus our time today. So after a quick introduction from me, Sean will give a short overview of our 2023 results. And this will give the context of why this is such a critical and exciting time for the Group and why we are acting decisively and with pace and so we reach our full potential. I would then outline our new strategy for success and provide some details about our value creation plan. This is our promise to our shareholders and explains what, how, and where we will deliver value in the coming years. Sean will then outline the financial aspects of our plan before we open up to take questions. And for the Q&A session, I'm pleased to say that Sean and I will be joined by Vaughan Lewis, our Chief Strategy Officer. So let's turn to Slide 3. So I wanted to start by saying this is the beginning of a new chapter in the history of this business. We are resetting the business and embarking on a transformation journey to unlock our full potential. I mean we still possess the same great attributes you already know about. We operate in fantastic markets and enjoy leading position in growing total addressable market, with high advising barriers to entry. We have the key ingredients for success. I mean namely robust proprietary technology and some of the strongest betting and gaming brands in the world. However, it was my incoming belief that this business was not performing anywhere near the level it could and should. That's the reason why I took this job. We have a fantastic opportunity ahead of us but we must make bold changes to ensure we reach our potential. Before and after I started, I took the time to visit nearly all of our offices and met with many colleagues across various departments. It was clear that there was a burning hunger for change, particular in terms of our ways of working, we offer to unclear roles and responsibilities. It was also clear to me that we needed to strengthen our group executive team with first-class people, who knew and who know what world-class look like and have deep understanding how to get there. There was also a clear message from all the colleagues about the need to become a one company with a clear united strategy, mission and vision. Our new strategy and value creation plan is all about defining what success look like and how to get there. We are taking these key ingredients of success and building a robust execution plan based on key value creation drivers. We now have the right team in place and are building the capabilities to maximize the opportunities that these foundations give us. This is a new plan. It will be delivered by a new team, obsessed about value creation and we will have a new corporate identity and name. So let's turn to Slide 4. I would like to outline some of the immediate actions I have taken to set us on the right path. I set an ambitious 100-day plan when I began my role and this instills a real sense of urgency for me and business. I wanted to move at high pace and with boldness. We have quickly established an almost entire new group executive team with outstanding skills and track record and this to ensure we can successfully drive execution for value creation. In a short time, we have totally reset our operating model. This new operating model will set us up for success with the removal of duplication and efficient ways of working. We now have the right spans and layers of control with clear accountability to drive value creation. It will also deliver around £30 million of cost savings. We initiated a strategic review of the US B2C business and I look forward to update you on the outcome of this as soon as we can. The plan here is to free up tech and marketing resources to invest at high returns consistent with our value creation plan and the strategic focus to be sustainable market-leading positions. We have taken decisive action on the destination product and tech platform and road map to get there including bring an exceptional talent to support this transition. All of this has been underpinned by the creation of our strategy. With a clear strategic framework and market consideration that drives our focus on sustainable profitable growth and these combined to underpin our value creation plan. So turning to slide 5. I mean this gives a snapshot of my new top-class executive team. Many businesses have an attractive strategy, but success is driven by execution. And this is the team who will be executing delivering this plan. Most of the team have significant industry experience, but crucially whether in the industry or not I mean this team has a very strong track record of creating value executing change and delivering success. So for example you will hear from Sean shortly. He's someone who has spent over 17 years as CFO across public and private equity companies. He has a proven experience of delivering value creation including highly leveraged companies. And Ian and Rik on the Product and Tech front are at the top of the game having made a significant lasting impact on the success that Paddy Power, SkyBet and the wider flatter group have enjoyed in recent years. Mark Kemp and Stephen Sheridan are the most recent joiners having just started this month. Mark brings a wealth of experience from the industry knows the UK market inside-out having worked at the top of Ladbrokes (LON:LCL), Ladbrokes Coral, Tote, BoyleSports and DAZN BET. And Stephen adds huge Norwegian capability from outside the industry having delivered value creation across highly regulated multination multiproduct businesses. He brings an excellent track record of delivering our process improvement, automation, AI and management of large diverse operational teams. But beyond the executive team we have also strengthened the core capabilities of the wider leadership team bringing world-class experience in areas like in talent automation, AI, martech [ph] and customer life cycle management. It is a new team for a new business. We are sometimes called 888, sometimes 888, William Hill, sometimes just William Hill. I mean these are great customer-facing brands, but we need a corporate brand that brings together everything we do and speaks to our combined brand power and shared values. We need a new company name that is memorable, translatable of our ambitions, and helps us tell the value creation story for our shareholders, our colleagues, and one that stands out from our competitors. On slide 6, we have our proposed name, a new corporate identity. evoke marks a start with a new era, a new direction, a new sense of purpose. As evoke, we have come together to go further and faster to make life more interesting, to evoke delight in our customers with world-class betting and gaming experiences. Our new name is a clear signal of our new direction. We are embracing the strengths of our past by building on this for a much brighter future. I am incredibly excited for the future and I have no doubt it will be a positive one. So, turning to Slide 7, an introduction to our new strategy. As evoke we know what success looks like. We know how to outperform the competition and win in the market. We are clear on what we focus the business and resources on and what we are not going to focus on. Our clear vision and mission unites the company and means we will focus on driving sustainable profitable growth and building market-leading position. I will return to expand on this. But before that, I'd like to hand over to Sean to run through the financials for 2023 and how the changes in the finance function are setting us up for future success. So, Sean?
Sean Wilkins: Thanks Per and good morning everyone. I'm Sean Wilkins, the CFO and I'm delighted to have joined this business in February. This is a hugely exciting time for the group as we embark on a plan to deliver material value creation. Before we talk about the future, I'd like to spend a few minutes running through the financial results in 2023, which start on Slide 9. On a reported basis, we saw a 38% revenue growth and 41% adjusted EBITDA growth, driven by the acquisition of William Hill in the middle of 2022. In the appendix to this presentation, there are some more slides on reported results including details of the exceptional items and adjustments, being mainly the purchase price allocation, amortization, and integration costs. I believe it's more representative to look at the results on a pro forma basis including William Hill in both periods. On that basis, revenues were down 8% impacted by regulatory and compliance headwinds and adjusted EBITDA was about flat with those pressures offsetting some of the positive gains from synergies. On the right-hand side here we see -- we show the main items in the bridge between 2022 actuals to pro forma results and then 2023 actual results. Retail revenues of £16 million higher, primarily reflecting the benefit of the CapEx spend in the last two years, which has included a completely new [indiscernible] system and over 3,000 new proprietary SSBTs going into our shops this year to both replace legacy ones and increase density. U.K. Online revenues of £59 million lower, reflecting both the impact of the player mix shift towards lower spending customers and the short-term top line hit from the removal of lower return marketing spend. International revenues are £96 million lower, mainly reflecting the impact of regulatory and compliance changes, but also the refined focus of marketing in sustainable markets. On the bottom, you can see that the same bridge for adjusted EBITDA with similar drivers to revenue as I've just described. The notable difference being UK Online where despite the £60 million drop in revenue EBITDA was up £40 million, reflecting strong synergy delivery and that shift in marketing approach I discussed. You'll also note corporate costs are up £14 million, but it's worth noting this is not a real increase in costs as such and more harmonization of accounting with a decrease in the capitalization rate meaning more expenses to the P&L. On slide 10, we presented the revenue and adjusted EBITDA by segment on a pro forma basis. I've just talked through the drivers, so I won't repeat myself but you can see overall UK pro forma revenues were down 3% in 2023, reflecting good trends in retail being more than offset by the structural changes in our online business, I talked about. For our international business, revenues were down 16% but we ended the year with a smaller but higher-quality business. Over the last two years, the business has absorbed an incredible amount of change with regulatory, gaming tax and safer gambling changes impacting EBITDA. We are under no illusions that this financial performance has been disappointing and means that at the end of 2023 our financial leverage of 5.6 times was above where we want it to be. While the financial performance has been difficult, it means the business has already absorbed a lot of external shocks and has a higher quality base to build from. Our value creation plan builds on this history and will establish a foundation for profitable growth. Crucially, the growth potential ahead of us, I know that our leverage position will soon be seen as a positive with its impact enhancing the returns on equity that we deliver in the coming years. Turning to slide 11 and our cash flow. Net cash excluding customer balances dropped by £48 million in the year. Our adjusted EBITDA was £308 million, and this generated £165 million of underlying cash after reflecting tax net working capital CapEx and rent. During the year, we incurred approximately £65 million of exceptional costs, which were primarily cost to achieve synergies or restructuring charges, together with the payment of the legacy regulatory settlement in the UK for William Hill of £19 million and the £3 million settlement for the Gibraltar regulator, related to the Middle East issues last year. We then had £172 million of interest payments and while this was partially offset by £42 million of non-core asset sales, the net impact was a reduction in the cash position of £48 million. Our debt position moved a little due to ForEx movements and this meant that we ended the year with net debt of £1.717 billion, slightly lower than at the start of the year. Turning to slide 12 and to cover current trading. The first quarter of 2024 still has some of the headwind impacts from the regulatory and compliance measures, I just talked through as we only fully lapped these during February. We expect revenues to be around £420 million to £430 million for the first quarter, broadly flat sequentially and down mid-single-digit relative to the first quarter of 2023. Within this, gaming should be slightly up year-over-year, which is good considering dot-com timing headwind, I just mentioned. The drag is coming from the betting side and this reflects a tough comparative in terms of win margins as well as significant investment into our Chilton offer, which drove over 750,000 actives up around 66% on the prior year. This investment together with the increased marketing will support growth through the remainder of the year, and we expect to return to year-on-year growth in Q2 2024 onwards. We are seeing strong trends in actives and player days and have turned the corner on revenue. With our new team and plans in place we are well placed to accelerate from here. In early January, we outlined that we expected adjusted EBITDA for the year to be around the £340 million level. I am pleased to say that, with what we have seen so far in Q1 I remain comfortable with that expectation. Turning to slide 13. And just before I hand back to Per to walk you through the details of the operational and strategic elements of the new plan. I'd like to outline my key focus areas for the finance function, and how we are setting up for success. Firstly, we are driving and embedding a cultural shift in the business. This is all about a shift in mindset to deliver value creation. I have quickly restructured the finance team set a structure that will support greater rigor of our plans, and provide greater support to our decision makers to drive high returns. Secondly, resource allocation is fundamental to creating value. Our strategic review of B2C in the US is a clear example of how we are improving our resource allocation and making quick decisions to drive superior returns. We will only spend money where we are seeing sustainable profitable returns and investing in line with our strategy. We will scale this quickly in an agile manner, protecting the downside with rapid actions to manage profitability and where we see excess returns and performance, we will scale up to drive higher profitability. Thirdly, I am obsessed with operating leverage. This is a business that fundamentally has high operating leverage. We can service more customers and deliver more revenue from our scalable operations. Operating leverage doesn't just happen, and I see it as one of my fundamental roles to ensure that the finance team is driving this. This is about ensuring we deliver efficient growth. I'll now hand back to Per to provide some more details on our exciting value creation plan.
Per Widerström: Thank you so much, Sean. And so let's go to slide 15. And I'd like to outline our commitment to shareholders to create value. So firstly, we will drive profitable and sustainable revenue growth. And we are not here to take market share for the sake of it. I mean, we are not here to build an empire. This is all about driving sustainable high profits, but it's also a commitment to grow. We cannot and will not shrink our way to success. Secondly, we will drive improved profit margins. The plan I'm outlining today, will deliver a bigger business, but also more profitable business. This is about expanding our capabilities leading the industry in intelligent automation and as Sean said an obsessive focus on operating leverage. Thirdly, we will de-leverage through a highly disciplined capital allocation. We will grow the business generating materially improved cash generation and enabling rapid deleverage. Our capital structure with elevated leverage means deleveraging magnifies the return on equity. Turning to slide 16. This is how we stride on the page. This is our strategic framework and explains what success look like and how to get there. This is our guiding light for what to do, but also what not to do, ultimately with a laser focus on value creation delivery. We have a clear vision and a mission with clearly set goals. This is what success looks like for evoke and we have a clear strategy translated into our value creation plan. I am along with other executive team members absolutely committed to this plan. And we look forward to telling you about our progress against this plan. I joined this business because I love betting and gaming. Betting for me adds further excitement to sports events. For others, it's about having fun, discovering a new slot machine or playing poker against a friend. For others, it's about relaxation, some quiet me-time to relax and enjoy. For all of us, this is about making life more interesting. And this is what we will do as a business make life more interesting for our customers. And we will do this by delighting our players with world-class betting and gaming experiences. So what do we mean by world-class betting and gaming experiences? I mean this is delivering our customer value propositions. So while we have a wide range of amazing brands, they will all deliver these key elements and raise the standards. So we will be easier to use than the competition. We will live our brand values across all interactions whether it is our adverse, our promotions, our customer service or our products. We will offer personalized values using data insights to deliver the right products, at the right time, at the right point of sale and at the right price. We are moving towards a world of infinite personalization. And we will be famous for doing the right thing for our customers, no misleading offers, no confusion, just clear trustworthy interactions. And to deliver this for our customers, we will invest to build three clear competitive advantages. And these are the key enablers that will ensure we win in our markets. So these are firstly, operational excellence driven by data insights and talent automation. This allows us to build scalability to drive operating leverage and show consistent execution and deliver high-quality outcomes for our customers and unlock new opportunities for efficiency. Secondly, a winning culture. Our success is driven by our people and we are committed to fostering a culture that empowers our colleagues to unleash their full potential and contribute to our collective success. And thirdly, ensure we have leading distinct brands and products. I mean we have an amazing head start with three strong brands, but we will build on this by ensuring our distinct brands and products are tuned into our customer needs, offering personalized value with sustainability embedded into every offering. In order to drive incremental value, we have initiated six strategic initiatives that will help instigate operational excellence into everything we do and build a foundation that is scalable and ready for step change value creation. We are also crystal clear on where we are focused to deliver the best returns in our resources. And I will touch on our strategic initiatives and market focus in more detail shortly. Let's turn to Slide 17. Our strategic framework provides the guiding raise for our value creation plan. Over the last few months, we have built a really powerful multiyear plan with clarity about what our success look like, where we refocus, how we will operate and how each component will create value. This chart shows this concept in graphical form in terms of how we would drive success and the focus of driving incremental value on top of the business as usual run rates. I should point out that this is illustrative and conceptual not actual forecast. We know this is a highly competitive industry with significant pressures from regulatory changes, taxes and cost inflation. If we had done nothing and continuing the old BAU mode, business as usual mode, we believe that profits will have steadily declined over time. We have rapidly built a plan to address this and deliver robust growth. We have six strategic initiatives across the business and these are global initiatives that drive improved operations through operational excellence and create a step change in future profitability. These SIs as we call them are managed by the sector team and include the best people across the business. As we implement these, we will deliver significant improvements in our capabilities. And once fully effective, this SIs will be transferred to BAU. This will dramatically enhance our BAU capabilities and also free up capacity for future SIs and future step change in the value creation. This is a model and approach that I have employed multiple times in the past both in executive roles and as a share. It is a model that works and a model that drives value. It is a model that will deliver a step change in our capabilities and our profitability. So turning to Slide 18. I'd like to provide a few additional details about our four strategic initiatives that will instigate operational excellence. Customer value propositions; we have a portfolio of world-class brands, the envy of many in the industry. These are some of the strongest brands in any category in terms of brand awareness. But all of these brands have somewhat lost their way with inconsistent usage that undermines their power. Our customer value propositions or the CVPs will provide complete clarity about our brands, who they are for, what good looks like for the customer, and how we will deliver these brands consistently across all touch points with our customers. It is our customer promise. So what? Yeah, I mean improved brand clarity we deliver improved cost per acquisition as we're able to focus on the right customers in the right markets and will provide improved lifetime value as we improve loyalty and share of wallet. Customer life cycle management. I mean, we are mapping out every stage of the customer life cycle from awareness through to becoming a loyal brand advocate. We want every customer to recommend our brands to their friends. And we will do this by using a talent automation to provide a better experience to our customers. We will provide the right offering with the right product at the right price at the right time. We are moving towards a world of infinite personalization. These with our customers benefiting from safe and personalized betting and gaming experiences. So what? Providing personalized world-class betting and gaming experiences will reduce churn and grow share of wallet, growing our revenues and driving margin. Winning organization. Fundamental to our plan is the quality of our people. We have totally reset operating model of the business, ensuring it is both fit for purpose and future proof. We are building leading capabilities in cutting-edge areas like AI automation and customer life cycle management. We will make evoke the most exciting place in the industry for the best talent to grow the carriers. So what? I mean this SI is fundamental to delivering operating leverage. We will have greater productivity and pace at lower cost, ensuring we are driving strong profitable growth. ESG. So driving profits in itself is not enough. We must make this business future proof. We must increase the sustainability of the business to ensure we maximize the value creation opportunity. Our ESG plans are being embedded across the business and are fundamental to the way we think about the future. So what? I mean the business has suffered in the past from less sustainable earnings. We will continue to increase the quality and sustainability of our earnings by embedding ESG in everything we do. Turning to slide 19. I'd like to spend a couple of minutes on our step change SIs. These are the strategic initiatives that provide a real step change in our capabilities and future profitability. The first one's our product and tech foundations. We have quickly determined our destination platform based upon the value creation opportunity, using the best components from both 888 and William Hill. So what? I mean this future platform will provide greater productivity, enhance our competitive capabilities and ultimately drive significant cost savings. This SI will drive higher revenue at lower cost. The second one is our Operations 2.0 initiative. This is about building data, AI and automation foundations that make the future-proof business. This will deliver fundamentally different way of operating and support improved personalization for our customers and a step change in our capabilities to deliver better experiences. So what? We aim to be the leading operator in the sector for AI and automation, which will drive a step change in our efficiency and profit margins. Turning to slide 20 and this is about where we will focus our efforts. Our capabilities allow us to invest almost anywhere in the world, but we know that we must be selective with our time and our shareholders' money, deploying investments where we will generate a strong return and where we generate sustainable market-leading positions. Having reviewed our market-focused approach, we have redefined our market archetypes to fall under two key categories, core markets and optimized markets. This simplified approach enables increased focus and investment in our core markets, while maximizing cash from all markets. We will remain laser focused on our four core markets, the UK, Italy, Spain and Denmark, which already generate about 85% of our total revenue and nearly 80% of our online revenue and where we have established strong positions. These are all large attractive markets with high rising barriers to entry through regulation and established brands. And this slide shows the online market size for these markets. It's also worth calling out there is a long runway of growth to come from online migration, particularly in Italy and Spain, where only about 20% to 30% of gambling is currently online. In all other markets, our optimized category, we will prioritize cash flow generation and value maximization through leveraging our enhanced capabilities and scale. We expect to have more core markets in the future. But in order to become a core market we need to see a route to sustainable, profitable, market-leading positions. We will add more markets through a combination of expansion of our capabilities as well as high-impact capital-light partnerships or M&A. In our other markets these will generate high cash returns leveraging our scalable platform. Turning to Slide 21 and a few notes on execution. As I touched on earlier, you can have the best strategy in the world but it's meaningless, until you can execute effectively. Since joining I have already instilled a step change in focus on execution and value creation through our ongoing regular performance reviews as well as setting up, what I call a One Company Program Management Office. This is a small group of experienced professionals head up by Vaughan Lewis through his role as Chief Strategy Officer. They provide the governance of the strategic initiatives and support delivery and execution ensuring everyone is aligned and we are making the most effective decisions. Outside of the strategic initiatives, I'm also obsessed with business as usual run rates and the underlying customer-centric key value drivers, deliver against agreed plans and ensuring accountability across my sector team to execute on what we said we would. We are aiming for world-class and that is a constantly moving target. So our relentless focus on driving successful execution will not stop. I will now pass back to Sean to tell you what this all means for our financials.
Sean Wilkins: Thanks, Per. Turning to Slide 23. I talked earlier about how we will drive growth while becoming more efficient. This slide provides an overview of how our strategic initiatives enable us to do that. On revenue, stronger brands through our clear customer value propositions enhanced personalization through customer life cycle management and improved products through products and technology will drive stronger revenue growth. We are building capabilities to drive profitable growth and win in our chosen markets. On direct costs, these are our costs that are driven by revenue, being costs like duties, payment processor fees and content fees. While most of this is outside of our control, being driven by regulation and tax rates, our disciplined approach to finance will ensure that we are driving cost efficiencies across our external costs and some of our tech integrations will save money over time. Marketing. We are really clear about where we will compete and how we will compete. Our enhanced brands through our customer value proposition stream will support a significant improvement in our marketing efficiency, speaking to the right customers in the right market at the right time and delivering for our customers through our customer life cycle management and product and tech initiatives. Overheads. Our product and tech Operations 2.0 and winning organization stream are fundamental to our plan to deliver improved operating leverage. Put simply, we will do more with less, a more efficient operating model, delivering greater output and supporting higher revenue at lower costs. Turning to slide 24 and what does this mean in terms of targets and value creation plan. We will deliver profitable and sustained revenue growth of 5% to 9% per year. Improving our efficiency and driving operating leverage will add around 100 basis points to EBITDA margins each year. And finally but importantly, this will deliver a rapid deleveraging with the target to be below 3.5 times by the end of 2026. With that, I'd like to hand back to Per for his closing remarks.
Per Widerström: Thanks Sean. So slide 26 summarizes what we have talked you through. Today marks a new start for our new One Company evoke. I'm really excited about the value creation plan that we're laying out, and I and the executive team are fully committed to this plan. We have a lot of work to do. It is a reset of the business, but we know exactly what success looks like and we have a clear strategy to get there. We have quickly built a high-quality team to deliver this plan with pace, urgency and boldness. Firstly, we will drive profitable and sustainable revenue growth. Secondly, we will improve our profitability and efficiency through driving operating leverage. And thirdly, we will be highly disciplined with our capital in showing that this profitable growth drives deleveraging of the business driving high return on equity. And this will be delivered with a laser focus on execution. With that, I'd like to hand over to the moderator for questions. We will begin with questions from the room, and we ask that you limit it to two questions nicely, please. For those online, you can submit your questions into the webcast and we'll get to those after. Thank you so much.
Q - Ivor Jones: Thank you. Good morning. Ivor Jones from Peel Hunt. You said deleveraging as a target. Does that primarily mean higher profit, or does it mean lower debt? And what I'm trying to get at is whether as you deliver more revenue, whether you then need to constantly reinvest the upside in driving the benefits you've talked about in 2026 and 2027? And can I ask the second one now or should…
Per Widerström: Yes.
Ivor Jones: On side 17, where you set out those components of the medium-term growth operating excellence and then the step change, can you talk about the assumption that you've made about regulatory changes within that, whether you see they're neutral from here or whether you've included some downside? And that upside that you're talking about in terms of operating excellence, you're talking about improving what evoke does, but you haven't really talked about your gaps against the competitors because to make progress presumably you need to take some share from somewhere. So, if you could talk about the where you see gaps at the moment that need improving? Thank you.
Sean Wilkins: Thanks Ivor. So, on deleveraging so year one 2024, we expect it to be driven by higher profit. Cash is pretty neutral, pretty flat, I expect it to be over 2024. In the outer years, 2025 and 2026, we get the double effect of good growth in EBITDA, but also a reduction in the net debt via cash generation. So, it accelerates the deleveraging over the period. On regulatory changes, the assumption is that the changes that we've recently seen from the right paper are fairly neutral for us. We were pretty conservative about how we anticipated those changes come into last year. And so as a result of that it's fairly neutral going forward.
Per Widerström: So, you mentioned this for the gap versus competition. We have a tremendous opportunity to improve across the board when it comes to our brands -- our strong brands. In particular, we see that we have a job to do as I mentioned in the presentation about how to be even more laser-focused and distinct to our customer branch we stand for. And that needs to follow through in everything we do across the customer interactions and there we have one gap to address. We also know we have more to do in the U.K. when it comes to retail. We have a tremendous opportunity when it comes to our retail channel. It's a hugely important part of our go-to-market strategy as part of omnichannel, but also in terms of the brand awareness it creates in terms of the high street. We see that we have opportunity here when it comes to, for example, our retail gaming proposition. So, it's absolutely clear that we do know what evoke will have to do across the customer brands, but also of course, that is also pegged towards what competition is doing because they won't obviously stand still.
Matt Copeland: Hi, Matt Copeland from Jefferies. Thank you very much for the presentation and for taking my questions. I've got two if I may please. Firstly, on 2024, I think Sean you mentioned that the first quarter was down about mid-single-digits and then to expect growth to return from the second quarter onwards. Can you possibly elaborate further at all on the phasing of that throughout the remainder of the year particularly if we think of tailwinds for example the euros coming later? And secondly AI sounds like it's deeply embedded in the group's priorities moving forwards and you talked a lot this morning about the opportunities you see here on the back end to improve efficiency. But wondering if you also see similar opportunities at all on the front end perhaps in the odd setting and trading platforms, particularly Per with regards to what you refer to as infinite personalization of betting types and preferences? Thank you.
Per Widerström: You take the first one?
Sean Wilkins: Well, so just to recap. Thanks Matt. Just to recap mid-single-digit negative for the first quarter, but flat quarter-on-quarter and gaming up. So, some green shoots in there. And just to review why that is we're lapping regulatory and compliance up to the middle of February. The issues that we've been talking about and the issues that we talked about last year. That's the first thing. The second thing is we invested hard in Cheltenham. So we had spectacular Cheltenham. We had 750,000 active customers significant growth year-on-year. And then the third thing is that we had tough comps. So March last year had really excellent margin. Just looking forward though Cheltenham will clearly pay back in year. So the investment that we made in revenue in the first quarter will come back to us over quarters' two, three and four. We've previously discussed the fact that we're saving £30 million in our overhead and we're plowing that back into growth in the UK. And then the third thing I'd say is just generically the VCP, the value creation plan is a profitable growth plan. That is what it's designed to do. Every aspect of it is about driving profitable growth. And it's for those reasons that I'm confident that we will get back to positive growth in Q2 three, four and why I'm sticking to the guidance of 5% to 9%.
Per Widerström: So about AI. I'm a huge, huge fan of AI used in the right way. And yes, as I outlined today, Operations 2.0 is all about in a right way to monetize and build the capability when it comes to data, in talent automation and AI. And I truly believe and we truly believe that this is a very important enabler for the business, for the future, any business in the society and to be a key enabler for value creation. We are investing in building core capability in terms of AI and tenant automation both in terms of bringing in world-class people from other sectors, actually know what world class look like. We have no time whatsoever to learn from scratch. We are bringing on board people that knows what world class like and build that foundation of AI and automation. When it comes to how we drive value, I mean actually today, we are using AI already today when it comes to the recommendation engines when it comes to casino content. But what we want to do is that in a strategic way to institutionalize AI and talent automation the way we operate, it's going to fundamentally change the operation and also how we're going to operate. When it comes to revenue generation perspective, I mean you were spot on. It is about how we can use AI in a responsible way that should be absolutely infinite in terms of personalization in the offering to the customer across any channel any moment. And with AI and on top of that you have the layer in tenant automation, we believe that is something that we will focus on and that is a massive opportunity for revenue generation. But also when it comes to cost efficiency, we see the opportunity and you see other sectors and also in this sector utilizing AI and Talent Automation when it comes to customer service, absolutely when it comes to trading and odds management. And looking throughout the whole value creation, there are tremendous opportunities to use AI and Talent Automation to move from manual operations to intelligent automation. So this is a step change in the way we see AI and operational excellence and we are already having people in that know what world class look like in other sectors.
Richard Stuber: Good morning. Richard Stuber from Numis. So a couple for me, please. First of all, the 5% to 9% revenue growth, could you explain sort of how you see it developing on a UK versus international over that period? And presumably, you expect UK to sort of to have a smaller share by that? And secondly, one for you, Per, when you're working at Fortuna, was there anything obvious that 888 should have been doing in your view, which is you can see classes easy win opportunities, so things which you implemented sort of immediately? And just by any general thoughts in terms of what you were doing at Fortuna, which you could apply here?
Per Widerström: Sean, the first one?
Sean Wilkins: Yeah. So we're not announcing at this stage and disaggregating the 5% to 9% growth, Richard, into UK and international. It's worth saying, though, this is not like 0% in the UK and all of the growth seen through international is reasonably evenly balanced. The answer to the last question, I set out the reasons that I'm expecting to see growth for the remainder of this year. And clearly, most of that was focused in on the -- most of the answer focused in on the UK, right? So the UK is an absolutely key focus to us. I mean, it's a significant chunk, well over 15% of our revenue. So we have to go and make that work.
Per Widerström: So, second question on for Fortuna. I was there for seven years. Fortuna is the leading regulated operator in Central Eastern Europe, when it comes to betting and gaming. I -- as I mentioned in the presentation that I've had the opportunity over the years, that's why I have a few gray hairs, over the years to adopt and to work with this model that you have seen today. It is a very clear view on the strategic framework and how that translates into value creation plan. No rocket science really, but that is a good, solid model that I have used for many years, all set Fortuna Entertainment Group. So what you have seen today in terms of concept, in terms of approach is what we did at Fortuna Entertainment Group, being very clear about what the success look like, be very clear about how to win customers, be very clear about how to win in the marketplace and how that then translates into a laser focus on the strategic initiatives to drive incremental value on top of the run rates. I had the privilege to work with fantastic people at Fortuna that over five years, we grow the underlying profitability five times over five years. If you look at now what we do here, and I'm very humbled because the challenge is different, but the sector and the business is very much the same. And if you look at the underlying strategic initiatives that we have now in terms of winning organization, operating model, the focus on insights and automated driven customer life cycle management. The focus on being absolutely clear about what our brand should stand for, we did that at Fortuna. And yes, it is a new company, new great people, but I have no doubt whatsoever with my new team, and the great support we have from the Board and the great people we have an organization that we will deliver this plan.
Unidentified Analyst: Thank you for taking my question. This is Shaun [ph] on from Acorn. My first one will be I'm seeing that you've simplified your market segmentation. Previously you have three segments and now you only have core and optimized. Can you explain more clearly what you're doing different -- or what you will be doing different with regard to the different segments? I see that you've moved them up to core. What's changed there now? And your plan going forward with this market? And for all other markets are you planning more exit on top of the US, which is under strategic review? Have you baked in more market exits into your revenue forecast going forward? And that's my first question. My second question will be your free cash flow. I think Sean just mentioned that 2024 will be of neutral cash flow. And then using your guidance on revenue growth and margin improvement in the medium-term will -- is that reasonable to based on -- base free cash flow estimation on those guidance because that's the incremental free cash flow will be driving deleveraging, but quite slowly in my opinion towards the 2026 and you are facing a significant maturity war in 2027? And what's your plan exactly going into the refinancing window? Are you comfortable with your current debt burdens or are you planning other measures? And my final question will be a small one is can you give an update on your regulatory -- the legal settlements the provisions for you in Austria and Germany. What's the expected cash outflow from there? Thank you.
Per Widerström: In terms of the first question on the market segmentation I think that you'll be absolutely perfect to address that.
Vaughan Lewis: Sure. Thank you. So, yes, look the core markets are really all about driving sustainable profitable market-leading positions. So we're targeting podium positions with really strong brands that cut through and generate that flow of customers and sustainable revenues at really profitable levels. And that in-market scale really gives us those outsized returns. So you'll remember Denmark was a growth market. It's done extremely well as a market. We're about 10% market share there number three in that market. It's a really strong self-sustaining and powerful market. So that's being promoted to a core market. Those core markets are really the heart of the business. Those will be where we really drive success or around 85% of revenues. And like Per said earlier, we're on the lookout for more markets and more opportunities to bring countries into that core segment. Those optimized markets though will generate a lot of cash. They'll benefit from all of the increased capabilities that we're building. So much better foundations, clearer customer value propositions, better product and technology the automated customer life cycle management model. So we certainly wouldn't be standing still in those optimized markets. But what we're looking for is the right set of market conditions and the right set of capabilities for us to create the way to create more core markets. So if you think about the kind of the key requirements for success in any market you've got a license, you've got products and technology, you've got brands, you've got operations and the skills of how you actually operate the business and then you've got capital. Now we don't have to deploy all five of those in every market. We can be quite selective. We can use our brands in some market. We can use our technology on a B2B basis in some markets. We can use our licensing and operational skills. So we've got a lot of different ways of working. And we've shown already the ability to create value with alternative models with the Africa business for example. So we're really excited about the potential to create future core markets. But for now like Per said earlier, it's as much what we don't do is what we do and having that real focus on those four core markets and really winning in those markets is critical for the next few years.
Sean Wilkins: So on delevering just to remind ourselves of the forecast, we expect to see significant delevering in 2024, 2025 and 2026 and we expect to be under 3.5 times levered into -- at the end of 2026. You mentioned the liquidity -- well a maturity war in 2027. Actually the majority of our debt is 2028. So we still got a couple of years beyond the end of the value creation plan before we get that maturity war. And I've got no doubt that when we deliver this plan that the access to capital will be absolutely there. So it's not something that concerns me, but it is something that we plan for. In terms of the Austria provision, so the provision remains basically flat year-on-year. We are absolutely convinced and our legal advice that we are operating legally there. And we also don't expect any short-term cash impact from that. We think that will be in the quarter some time. As I say crucially we are convinced that we're operating in a legal manner.
Unidentified Analyst: Shaun Kelly [ph] from Panmure Gordon. If I look at slide, I think it's slide 19, you point to active CPA and LTV as possible areas of improvement. I was just wondering, firstly, what is the LTV to CPA ratio at the moment? How much do you think you can improve that looking at new customer acquisition? And is that mostly a combination of reducing the cost per acquisition? Or is that being able to get more out of every new customer you onboard? And so what really is driving that? Is it marketing efficiency and so on? That's sort of number one. And then if I can ask just very quickly, you've talked a lot about data and AI and so on. Obviously investing in those is typically quite expensive. I'm wondering what quantum of investment you're making and what we should expect to see that look like? Thank you.
Per Widerström: So if we start first with the strategic initiatives that we do have to drive value, if you look at those many areas, almost all areas focused on the customer. It is about the customer value proposition that needs to be much more to the point. It's also now how we are -- how effective we are in terms of the holding the hand of the customer throughout the customer journey conversions, and how in a responsible way or actually very precise, which offer at the right time at the right place. You can imagine now when we have more data, greater level of sophistication, we will be able in a responsible way to drive a better ARPU. Also when we are more distinct in terms of our brand proposition, even more focused when it comes to driving return on our market investments, it will help us through improved conversion as well to improve the CPA. Now, I haven't even talked about the product proposition. But if you overlay that as well, there is no doubt that both in terms of the cost efficiency, as well as the value per customer in a responsible way, we'll do better. When it comes to data, AI and automation, we are absolutely obsessed about driving value creation. And when we are investing into AI and automation, it will be to start with all focus on the use cases that lay at our hand. So, the reason for being for the new division we set up now is to set up the foundation for AI in talent automation, but the investments that we do, all tied towards use cases to drive in most cases in year payback. Anything you would like to...
Sean Wilkins: Yes, yes. So, I wouldn't think of these SIs as big J-curve investments that have got dividend in terms of cash flow, right? The point is that across our P&L, across bonusing marketing overhead, we have got significant pools of cost. And this plan is all about using those significant pools of cost in a much more efficient and effective way. So we're taking what we currently spend and we're just spending it a lot, lot better. On your first question, we're not talking about the details of the customer life cycle model.
Roberta Ciaccia: Hi, good morning, it's Roberta Ciaccia from Investec. I have two questions. The first one for Vaughan. You did mention before the market share in Denmark. Could you remind us also the market shares in the other core regions, please? And the second question more for Per. What do you think are the key risks to achieving your medium-term targets? That's all.
Vaughan Lewis: Sure. Thanks, Roberta. So, fairly straightforward one yes. So in UK and Spain, we're also around 10% share -- just fractionally and in Italy were approximately 5%. As you know, we're online only in Italy and focused on the casino market primarily. And there we have higher share. And I think still current we're the only online only brand that's been growing market share in Italy. So, a strong market for us significant in-country scale. And yes, we're positive about the future prospects there. I think just to add on the UK and all the questions on that and the growth profile, I think it's important to note, we have been growing share of active players. And what we've seen is a kind of huge remixing of the business in terms of the ARPU level. So we've gone from pretty much the top of the market for monthly ARPU to pretty much the bottom of the market. And that reflects all of that shift in the business and the shift in the policies and processes and player protections and the implementation of a lot of the elements of the white paper and the states reduction that we've put through already. And as we look forward, the confidence we have from that growth in active players. And in the UK, we're talking about kind of 1.2 million players a month and using the plans that we've got in terms of building much clearer brand propositions, the products that go with that the offers that are increasingly personalized and increasingly relevant for players that's why we're so confident about growth in the UK as well.
Per Widerström: Yes, you also asked the key risks of the plan. I mean let's start with the plan. The – we are absolutely committed and confident in the delivery of the plan to start with. And as always, as a leader, there are plenty of opportunities risks that you need to deal with and we will. And the way we are in a very practical and agile way are dealing the execution dimension of our plan is as I mentioned, that we have put in place already back in November, a One Program Management Office, that will be absolutely obsessed about the delivery of the plan and the value. And of course in order to deliver the plan, we need leadership. We need the people. And of course, upfront we have ensured now we have a world-class team as my executive team. But also as I mentioned, we have brought on board some fantastic people also in the wider leadership team. There will always be risk and opportunities there. There are of course, external factors like tax regulation. I think when it comes to UK and white paper, I think we are very well positioned when it comes to our current position now and the competitive landscape. When it comes to the white paper, as you know, we already have the £5 stake limit on slots. We know very well how the customer behavior will evolve when we put those limits in place. We are taking very clear prudent measures since before, when it comes now to practice, play safety measures. So we are very well positioned. So yes, there are risks and opportunities but the starting point is that we have done this before. We are humble in terms of the work we have to do. But there's no doubt that we believe in a plan and we will in an agile way work on addressing both upsides and downsides.
Ivor Jones: Thank you. Ivor Jones, Peel Hunt. Are you planning to report performance against planned investors or will you just report financial performance? And I guess, tying up all these questions about costs and the balance sheet, could you go faster if you have more cash available to you? Are you constrained by the state of the balance sheet? Thank you.
Per Widerström: So let me first start on the strategy limitation. I look forward to come back each time to give you all an update how we're progressing on the plan. Hugely important. Hugely important for give us as a team to show how we are delivering and building credibility and trust, hugely important. And just to – on the capital constraints, we very much believe that we have the capital needed to have this value creation plan. We have also been very clear about that where we do see inefficiencies, we will act on those and that's also why we upfront addressed and acted on the cost optimization of £30 million in year. And how we are then reinvesting that into future growth in particular in the UK. Now Sean? Sean would like to add something.
Sean Wilkins: Just to say we won't give you a detailed P&L versus a planned P&L, but we absolutely will come back to these and tell you how we're progressing in terms of our plans. And in the short-term, the answer is no. We're reinvesting. We're saving and we're reinvesting. It's all about efficiency of the P&L, using the buckets of costs that are in there currently and just using them much better.
Operator: We have a few questions from the webcast. So our first question comes from David Brohan. He says are there any KPIs you can share on 888 Africa? And how does that fit into your medium-term view?
Per Widerström: So let me start and then Vaughan can chip in. We are very satisfied when it comes to 888 Africa's performance and the way we are partnering with that team. Only looking at Q1 2024, we see year-on-year growth four times. We see that 888 Africa over the time period of the valuation is an substantial material value creation enabler. Also what I think is important is that because we alluded to that in the presentation that we do see opportunities in our focus to drive value to see how we can monetize our assets even more and even better and that is what we're doing when it comes to 888 Africa when it comes to brand partnerships. And we learn every day working in Africa with this great team, how we can leverage our assets and that is a great learning that we will of course leverage and capitalize on our value creation plan. Vaughan would you like to add something?
Vaughan Lewis: I'll be careful not to say too much but -- so I think at the interim results, we told you about the illionth player celebration with the one millionth FTD [ph]. We're expecting the second one millionth -- two millionth next week. So the business continues to go from strength-to-strength in terms of volumes. We see a really good growth profile going forward both within the markets that we're in already and continuing to grow share. We're number three in one market already probably number two actually now and targeting podium positions in the markets that we're in and also expand into new markets across the course of the year and into next year. So, yeah, like Per said very strong revenue growth profile but really strong underlying dynamics driven by penetration of those markets really what we call hyper localization in those markets on the ground, really understanding the customers, really understanding the products that work and fitting the products and offers to those specific markets. So yeah lots more to come. I think we look forward to telling you more about that in the future at the right time.
Operator: Thank you. The next question from David is what is your updated view on brand strategy? Is there any difference to consider here between core and optimized markets? And are there any particular projects that you would call out that you were either better than peers, or where there are opportunities to improve?
Per Widerström: So let me start on the brand strategy. As I mentioned in the presentation that we have some absolute world-class customer brands now portfolio. But it's also clear that, we have an opportunity to be much more distinct, and clear about what each brand should stand for not least in terms of the position versus petition, but also in terms of each of our own brands versus each other. So here, obviously, we have the 888 and William Hill and Mr. Green brands. We are not talking about the massive radical re-branding and repositioning. But I'll talk about being more distinct and clear targeted towards the audience that -- and the target customer group that we going to have. When it comes to the product proposition, I think I mentioned that before that, we see opportunities in terms of the customer journey being even more frictionless across all the markets, in particular in the UK in line with the compliance measures and safety gambling measures that we have taken. So, that is one opportunity we have to improve. Clearly, also, as I mentioned when it comes to retail gaming proposition, there we have a tremendous opportunity to have further value being generated. Anything to add?
Operator: Great. Thank you. Any other questions, the team will answer afterwards. As we are coming up to the end of time, I will hand back over to management for closing remarks.
Per Widerström: So, I just like to thank everyone for today. It is today a very important day for Evoke, now One Company. I am delighted to have an exceptionally strong team to work with. I am delighted to have the strong support from the Board, even more so a great set of people across the whole company. We have outlined today an value creation plan that is based upon our new strategy is based upon the model and approach to value creation that I have the opportunity to have adopted over many years. So we are very clear about what success looks like, how to get there and how that translates into value creation. And myself and the executive team are hugely committed to this plan and to delivery, and I can't wait to have opportunity with my team to show how we progress on that plan. So with that, I would just like to thank you so much. Thank you.
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