Evoke plc

Hi everyone. Good morning, and welcome to our 2021 Annual Results.

And I'm happy to be here with Yariv Dafna, now is in our London office. And we'll start with the agenda on Slide 3.

I will walk through some of the highlights of the year, and then I'll hand over to Yariv to go over the financials. And then I'll walk through some of the really, really exciting strategic process that we did over the course of 2021 and coming up.

And then we'll open up for some questions. But before we go into the presentation, I just wanted to address something unpleasant that you all saw in the news last week that came from the UK GC, and relates to the sanctions that we've got as a company.

This is something that I would say, it's something that we're not proud of as a company. I think it's not a happy moment for us in the history of the 888 because we do see ourselves as a responsible operator that takes customers safety, adhering to regulations, and meeting the highest standards extremely seriously.

And we completely recognize that there were some clear issues in our policies and our procedures at the time that didn't work properly, and we deeply regret those. It happened to us.

But when we recognized it, we immediately took quite significant and severe actions to fix all of them, as fast as we could. We also learned a lot as an organization, of what went wrong, and we made a lot of effort to fixing the processes and our procedures.

This as we know, is something that's evolving. And we recognize that there's a change for an ongoing effort, and we simply can't keep our eyes off of this domain.

I am personally committed to continue investing in this ongoing effort, and doing whatever it takes, to bring us back to the highest standards of the industry, which is a natural place for us and a place that we can be proud of again. So going back to the presentation and going into our full-year results, which was a really positive picture of a business that's in a really good shape and a good position.

So it's great to be able to report another set of record results for us as a group, with revenues up in the year, 15% to $980 million, in line with the mid-teens growth that we guided in the half-year results. Just to put this into context, it's 75% higher than what we managed to achieve in 2019.

So over the course of the last two years, we have truly managed to transform the scale of our business. As well as a stronger organic growth that we had in 2021, we were really busy on the strategic expansion and strategic front.

In the U.S., we signed the landmark deal with Sports Illustrated and launched the first market there. In September, we announced a transformational acquisition of William Hill, a deal that we were all working on for a long period, and the company was very, very happy to sign it in September.

In December, we announced the sale of our bigger business, which will enable us to focus and increase our investments in the fantastic growth opportunities that we have ahead of us. But I'll talk about -- a lot about all of these and developments, and our refined long-term strategy.

But, first, I want to hand over to Yariv to walk us through the financials from 2021.

Thanks, Itai. Good morning, everyone, and thank you for joining us on this virtual presentation.

I'm delighted to be presenting today another set of strong results. Starting with Slide 6, you can see the financial highlights for 2021.

I will expand further on the struggle behind the 2021 performance over the next few slides, but few highlights here. Revenue was up 15% to $980 million led by strong growth in our B2C business.

Adjusted EBITDA increased by 6% to $165 million. The EBITDA margin was down slightly to 17% as we continue to increase investment in our U.S.

B2C expansion. If we exclude the U.S.

losses, the EBITDA margin is fairly stable versus last year. Cash generation was solid and the balance sheet remains strong.

Free cash flow was $103 million compared to adjusted EBITDA of $165 million, despite more than $20 million of exceptional items that impacted the working capital. These basically leave us with a net cash position of $175 million.

This excludes player balances, but includes PSP balances, which are now included in the net cash to align with other in the industry. Last point.

Considering the plan to raise equity as part of the William Hill transaction, the board has decided not to declare a final dividend for 2021 beyond the interim dividend that was declared after the -- our half year result. The dividend policy, however, remain unchanged.

Let's move to Slide 7. You can see our quarterly revenue built up over the last few years.

Since 2019, we have transformed the scale of this business with a focus on achieving growth in key regulated market through differentiated product, AI driven optimization, and increasing brand awareness. As you can see here, the growth trend accelerated during 2020, and we delivered another record year of revenue in 2021.

The strong growth over the last years have been driven by a higher customer activity. Monthly active customers in 2021 were 36% higher than the level of 2018.

And in recent months, we have been seeing encouraging trend at player activity. Slide 8.

One of our key goals is to get 888 into one of the leading regulated online betting and gaming businesses. We made further progress in 2021 with 17% growth in our regulated and taxed revenue, taking the mix to 74% of total revenue in 2021.

This process will continue this year, and with the new regulated market, such as Ontario and Netherlands, we expect already this year to cross the 80%. On the right-hand side, you can see how diversified the business is from geographic perspective.

The UK remains the biggest market with 40% of revenue, and Italy now makes up 12% of our revenue after growing 37% in 2021. The rest of EMEA was down from 38% to 34%, following regulatory changes in Germany and Netherlands, and weakness in the Nordics.

But with this market, we're also seeing some strong performance from growth markets, such as Romania and Ireland. The Americas, including the U.S., made up 13% of our revenue.

Following the receipt of the license, we are excited about the launching on a locally regulated basis in Ontario in the coming weeks. Together with our plan to launch in three or four additional states in the U.S.

during the course of this year, we expect to see further growth of the American business. Turning to Slide 9, I will walk you through how we convert our revenue into adjusted EBITDA.

Our gross profit represents the revenue less variable costs such as gaming duty, royalty, and rev share for third party, which is mainly contact provider and payment cost. We paid a $184 million in gaming duties, reflecting our growth in regulated markets, that we were able to offset most of the increase with efficiency in our other direct costs.

As a result, the gross margin was broadly stable at 66%. Marketing.

Marketing is the biggest investment we make as a company. We invested in 2021 $307 million in marketing using our big data and marketing expertise to drive efficient and effective customer acquisition across our brands and market.

Our marketing ratio increased by a little over 3%, which partially reflected our increased investment in the U.S. with the launch of SI Sportsbook in September.

Our operating cost increased by only 3%, reflecting our embedded operating leverage and our scalable proprietary technology. These all end up with adjusted EBITDA margin was a little under 17%, with scale benefit from our growth being offset by our increased investment in the U.S.

and other strategic marketing to drive long-term growth. Slide 10, few words about our cash generation.

During the period, we converted about 75% of our adjusted EBITDA into free cash flow, excluding one-off item. The networking capital movement of minus $25 million includes more than $20 million of one-off item principally related to transaction costs and FX losses.

CapEx was $31 million, and after reflecting tax payment, we generated free cash flow of $103 million. Now, moving to Slide 11 to discuss current trading and outlook.

First thing, I will touch on current trading. We have started 2022 with improved momentum.

And as you can see from the chart, trend of active customer and revenue started to improve from October. Average daily revenue in January and February are up by mid-single digit relative to Q4 2021.

While this represented double-digit decline year-on-year, this will be growing quarter after three declining quarters and it will be fully reflecting the impact of all regulatory and compliance headwinds that we have previously discussed, and also in line with our expectation. 2022 has several growth drivers, such as Germany, the launch of Ontario that we plan for April, the additional states launch in the U.S.

and the plant re-launch of the Netherlands. With these new launches, our continued product development and customer focus in our key markets, we are confident that we are on track to achieve our 2022 target.

In terms of any additional and more formal guidance for the year ahead, we will probably be able to update on these only when we released our Q1 trading update. I will now hand over to Itai to tell you a bit more about our strategic priority, key achievements, and growth plans.

Thanks, Yariv. Turning to Slide 13.

I thought it would be useful to start with providing you an outline of our refined growth strategy, as we have a clear framework to deliver sustainable, long-term growth, built around these three areas: 1. our market focus.

It means that we ensure our investments are in our resources. We invested in the resources in the markets with the most attractive opportunities, where we can deliver superior returns.

2. reinforcing our sustainable, competitive advantages.

These are the three core pillars that act as enablers and really drive market share gains. All of this is underpinned by our continued investment in talented people in the group.

3. we will go supporting our growth with further strategically and financially attractive M&A.

We've targeted M&A that enables us to benefit from our scale's advantages. I will now walk through each one of these in more detail and cover how in 2021 was a huge year for us in terms of the progress we're delivering against these elements of our strategy.

Turning to Slide 14. And this is -- these are what we call our market archetypes.

So we have three core markets. We have the UK, Italy, and Spain.

These make up 59% of our revenues, and we saw revenue growing in them by 18% in 2021. And these -- as we continue to grow or hold share in those markets.

This was despite marketing restrictions across both Italy and Spain. And this strong performance really shows the power of our brands, our product, and our customer experience, and demonstrates the value of the continued investments in these areas.

Next is what we call our growth markets. These are a well-defined group of regulated or regulating high-priority growth opportunities for us, where the market conditions are right for strong structural growth.

And our capabilities in those markets give us strong confidence in our ability to outcompete the market in those areas. These markets represent 21% of our total revenues, but they grew by 26% in the year.

Within this group, there is a sizable evolving opportunity around three interesting markets, Germany, Netherlands, and Ontario, Canada. Independent analysts estimate, these three markets offer a potential combined market size of over $10 billion.

And during 2021, we launched 888 sports in Germany on a local license, powered by our in-house sportsbook platform. I'm pleased also to announce that we received our license in Ontario earlier this month, and we are in the process of applying for a license in the Netherlands, and we aim to invest heavily in these markets in order to build 888 into a top-tier brand in all of them.

I will cover the U.S. developments in the next slide, but the last basically long-term opportunity, which includes further growth markets, emerging growth markets such as Latin America and Africa, which we aim to address through a combination of M&A or local partnerships, and where we have strong active pipelines of opportunities.

Finally, the global scalability of our platform in our business means that we can generate high incremental returns from a long tail of other markets, serving customers from over a 100 jurisdictions, on a remote basis. We call these our optimization markets, and the focus is on efficient cash generation there.

Revenue from these markets was flat in 2021, reflecting our strategy to focus our investments in other markets, where we see more growth opportunities. Moving to Slide 15.

So the USA, it's a really huge opportunity for our business and for the industry. Revenue in the year was up 6%, but we made great progress in creating a platform for profitable long-term growth in the market with most of the required assets are already now in place.

So first of all, is the technology. We launched the SI Sportsbook in Colorado over our in-house sportsbook platform and we are placed with the launch from a technical perspective.

Owning all of our technology gives us a low unit cost of production, as well as enabling us to differentiate our products and our experience in the market. Brand is the second one.

So Sports Illustrated is a household name brand in the U.S. market.

And its owners and our partners, the ABG Group, continue to make huge progress, such as growing the digital user foot print from $30 million, just a year ago when we signed the deal with them to over $50 million by the end of 2021. As SI builds out its brand, we are working on deepening the integration between SI, Sports Illustrated website, content website, and Sports Illustrated Sportsbook.

And we have some really exciting plans for 2022, including integration of the relevant content into our app. Operational expertise is the next one.

We believe that combining this strong brand with our 25 years of experience in successfully operating a gaming and betting business, can create a unique customer experience, and enable us to carve out a sizable and loyal player base in the U.S. market for SI Sportsbook.

This operational expertise has been delivering the same product and content leadership, world-class marketing, and customer excellence in the U.S., that has underpinned our 25 years of successful operations in the rest of the world. Growing market access deals.

So we have secured further market access deals, and we're now planning to launch three to four additional B2C markets with SI this year, starting with Virginia, almost imminently in Q2. In the medium term, we expect to be in around 12 to 15 states, attractive states for us in the U.S.

We also launched poker B2B with WSOP in Pennsylvania in the middle of last year. And we're now ready to launch in Michigan subject to approval, which will bring us to be live in five out of the six States in the U.S.

that offer online poker. Now, on the next few slides I'll cover our three pillars of competitive advantages that will drive market share growth in all of our markets, including the U.S.

So moving to Slide 16. The first of these three pillars is our core product and content leadership plan.

Our products are designed around the six product principles that we've mentioned in the past. Safety, usability, content-rich, entertainment, innovation, and scalability.

During the year, we made further strong progress on each one of these core pillars of our products. We migrated most of our Sportsbook volumes onto our in-house platform, and have just recently completed the Spain migration as well, giving us full control of the customer experience and allowing us to produce a really differentiated and innovative experience.

These successful migrations give us confidence going into the future, as tech integrations can be more dominant and might come with William Hill. On the casino side, we rolled out more quality content, and further developed our AI-based recommendation engine.

These smart algorithms ensure, that customers are seeing these games that are most relevant for them, out of our portfolio of 3,000 games. Think about Netflix or Spotify when you imagine the 888casino app and the games that it offers to its consumers.

Our in-house studio Section8, is a really key asset for us. It makes up around 5% of our content by volume of the games.

But in terms of the revenue, these are nearly 15%. In other words, these are disproportionately popular and profitable games in our portfolio.

We rolled out lots of cool, successful new games here in 2021, including Mad Max Fury Road, and Millionaire Genie Megaways. I'm really excited about the future, and I'm also happy to share with you, that we have confirmed our plans to double our investment in the development of in-house games in the very near future.

Turning to Slide 17. The second of our core competitive advantages is our world-class marketing and brands.

So 888 is a world-renowned gaming brand and the only true online casino brand -- only true global online casino brand, supported by our world-class marketing capabilities. Our performance marketing teams are experts in using real-time data to optimize activity across our marketing channels, enabling us to react in real-time to changing market conditions and deliver superior return on our marketing dollar investments.

In order to build on our position as a leading global brand, I'm delighted to tell you about our new master brand strategy called Made to Play. This single 888 brand strategy is a new approach for us.

And it will unify all of our sub-brands, 888casino, 888sports and 888poker under a single consistent and strong brand position. Having been one of the very first online casinos and coming up to our 25th anniversary, our brand awareness, trust, and credibility is really significant.

We believe that our Made to Play plan really unites behind the strong brand message. But rather than just telling you about this, let's have a quick look at a teaser of our master brand campaign that's coming up soon.

. Hope you enjoyed that as much as I did, and saw the huge amount of excitement and fun you can get on the different 888 brands.

So moving on to Slide 19. Our third source of competitive advantage, is our customer excellence philosophy.

I will outline a few of the developments that we had here in this area. So one of our key focuses is building out a really deep understanding of our customers in the key segments,.

The more we know about our customers expectations are, the more we can develop the best products and offers to keep the customers happy and safe, and keep them returning to us. As you can see in the chart, our customer satisfaction score has been rising consistently over the last years.

This reflects the growing focus we are placing on making sure we deliver increasingly quick, efficient, customer service, using our technology and team to identify customer pain points early, and resolve them, or stop them happening in the first place. Safer gaming is a key part of our customer excellence plan.

It is an area that we believe we can, and we should score highly with our customers on. During the year, we fully rolled out our Control Centre in the UK and have started in other markets.

Meaning now, that around 40% of our global customers ' base have access to this cutting-edge safer gaming interface. We have seen very positive response to this, and are continuing to roll it out across further markets.

We also continue to enhance our Observer tool. This is an AI platform that assesses all players in real-time, and creates risk scores and flags, that identify where there could be risk or potential harm.

Where we see this development developing, we then step in and intervene to reduce the risks of customers. During 2021, the Observer tool prompted almost 1.3 million customer interactions, including automated system responses to player activity.

Turning to Slide 20. The third foundation of our growth strategy is value-creation plan through value-enhancing M&A.

And during 2021, we made huge progress in this area. Firstly, we announced a transformational acquisition of William Hill, which will almost triple the size of our business.

This fits perfectly within our strategy, by reinforcing our leadership position in the core markets, strengthening our position in our growth markets, and introducing a few additional markets to focus on. In addition, William Hill is the UK's leading Sportsbook brand.

And this asset, along with the really strong challenger brand, Mr Green, will support our sustainable competitive advantages. The William Hill business have strong complementary products and technology, great customer focus, and the team of talented people that will come with that business.

This will enable us to further reinforce our product leadership plan, and improve our customer experience even further. We look forward to telling you more about the William Hill acquisition in the coming month, as we move towards completion.

Alongside this landmark acquisition, it also has been a year of activity with other areas, the launch of our long-term strategic partnership with Sports Illustrated in the U.S., and the announcements of our Bingo business, which will allow us to increase our focus in our core growth opportunities. We also continue to assess a range of different M&A and partnership opportunities worldwide as we continue to build our position as a global leader in the online gaming and betting space.

We are particularly focused on strategic investments in emerging and attractive markets, which will have excellent long-term growth potential for the group. Moving to Slide 21.

I'm really pleased to outline our refreshed ESG framework called Made for the Future. As we continue to grow as a business and focus on our long-term goal to be a global online betting and gaming leader, we are putting more and more focus in long-term sustainability.

We are launching a refreshed ESG framework built around three pillars, and over the course of the year, we will develop and announce robust targets for each one of these pillars. So the first pillar is Made to Play Safely, reflecting our commitment to prevent harm through safer gaming.

Our goal is to normalize the use of our safer gaming tools. Over 40% of our active customers in Q4 '21 had limits in place and we are working to increase this by both encouraging players to place limits themselves, and increasing the number of customer limits that we are proactively putting in place for them.

Our second pillar is Made to Play Together, reflecting our commitment to ensure an inclusive, vibrant, and supportive workplace. Our people are the foundation of everything that we do in 888, and creating a positive work environment where people can be the most innovative, creative, and productive is critical for our future.

The third pillar is made greener. The urgency and importance of the climate crisis requires all of us to take part.

And by the end of 2021, I am really pleased to announce our commitment to net-zero carbon emission by 2035. All of this is supported by our robust corporate governance framework, including oversight of these critical areas from the new ESG committee in the board that was set in 2021.

Moving to the last slide, slide 21, and to conclude, 2021 was a really great year for 888. Both from a financial perspective, but it was also a truly transformational year, both operationally and strategically for the business, as we continue to make significant progress against our plans to become a global online betting and gaming leader.

As we look into 2022, we have started the year well, and we're really looking forward to completing the deal with the William Hill acquisition, and further reinforcing our long-term growth plans, including our expansion into the U.S. With that, I'll be very happy to take your questions.

Thank you.

Hello. And thank you very much for taking my questions.

I've got three, if that's okay. One on William Hill and two in the U.S.

First one William Hill, you said that the brand was taking share at the time of the acquisition. I just wonder if you could comment in general terms does that continues, how is the development of William Hill business being generally over the last quarter, I guess with your current trading better or worse if we included William Hill performer.

On the U.S., first of all, on World Series of Poker, you said you'd be in five of the six states that have Poker soon. Hopefully, obviously recently there was news that GT Poker was chosen as their partner in Ontario.

Is there any comment you can make on that and should we take that as a signal over time that the age take relationship with World Series of Poker lend deal transition to date to take brands, including in the U.S. states, you're currently in overtime?

Or do you think that will continue for a long time? And then finally, on SI, you mentioned there the huge growth and unique visitors.

And how excited you are about the growth of that assets. Does that change your view on investment at all?

So if you believe even more strongly in the brand, should we take that to mean that you'll invest more behind it or should we take it to me in the opposite? In the sense that you can get an even higher portion of very attractive across all costs of acquisition.

Thanks.

Okay. Thanks, Ed.

I'll answer those questions. So first of all, William Hill performance is something that we can't comment on at the moment.

We shared the numbers that were public at the time, and I can't comment further on William Hill's performance at the moment. So sorry, I can't share more information about that.

On U.S. and WSOP.

So our deal and commitment with Caesars is ongoing and we're developing into more and more. It's like I said, we're just about to launch in Michigan.

We will have the highest footfall in terms of the poker in the U.S. out of all operators.

The deal that they announced with GGPoker in Ontario is a separate territorial deal, we have an exclusivity with them in the U.S. Canada, although it's close to the U.S, but it's not the same country.

We're also, by the way, planning. -- we're launching 888 in the U.S.

and not SI in the U.S, so those deals are done separately. So from that perspective, there's nothing to read into that deal apart from that we're continuing to support WSOP, and we also have ambitions for 888 poker brand in the U.S.

market. But our first and most focus at the moment from the 888 B2C perspective is SI and getting off the ground in further markets, and developing all of these assets that are coming with this brand, like the media exposure that I mentioned, the growth of media exposure.

So SI as a sport's destination has significantly grown its presence and that's through the very successful digitalization that the group that owns the brand has done in the last couple of years, and it's growing on an ongoing basis. In order to effectively monetize that, we need to do a lot of work with them, and that's exactly in our plans in 2022.

Things like the integration of content that I mentioned, creating clear customer flows between the two and leveraging on all the other great assets that's Sports Illustrated has in the U.S. end market if it's the events that they have in the market.

If it's further partnerships that they're doing, like with ticket sales, so there'sSI tickets that launched recently, which is tickets for sporting events that's also an area that we're looking to partner with and many more initiatives that the ACE -- the Sports Illustrated brand is doing in the U.S. We need to leverage all of those.

Tighten up the integration between the two assets and be able to monetize it better and effectively reduce the CPAs in the market and increase the loyalty through all of these unique experiences and the assets that we can offer to our SI Sportsbook customers in the U.S. through this partnership.

Okay. Thank you very much.

Thank you.

Morning, guys. Just two questions from me.

Firstly, on dividends, how quickly post the completion should we expect to see dividends return? And then just also on the U.S.

in terms of losses for 2020 or for 2022, given there's kind of four launches plan this year, should we be expecting a material step-up on FY '21? Thanks.

So I will take this question, David. So with regard to the dividend, the decision of the Board right now is to suspend the dividend for 2021, the final one.

We thought it makes no sense to distribute now, dividend to the shareholder, and then coming after and ask money as part of the equity that is raised that we plan for the William Hill transaction. There is no change to the dividend policy that we have in place.

With regard to the U.S., the losses in the B2C were pretty much as expected, around $18 million in 2021. You can expect that this level of losses will increase in 2022, but I would say it will be single-digit of $1 million increase in the losses in the U.S.

And again, with our restriction to give guidance now, we cannot go into more details than this.

Perfect. That's great.

Thanks, Yariv.

Yeah, morning. A few from me.

Firstly on sports, particularly weak in the second half, down 40%. Can you break that down for us best, in terms of the impact of weaker sports margins, the impact of market withdrawals.

And also, if you saw any impact in terms of migration over to your sports book, was there any sort of churn resulting from that? Second question is just looking at the UK market again, weaker in the second half and again, you've alluded to tougher responsible gaming measures.

Can you walk us through the degree to which that decline was self-inflicted? And lastly, just on your investment in Studios.

You're talking about doubling investments from what to what, and how many people do you currently employ in the studio business and where do you see that going to? Thank you.

Maybe I will start on the Sport on the financial matter, and then Itai can add more. So the Sport in the second half was indeed affected by decrease in volume, as well as lower margin, as well as the withdrawal from the Netherlands.

All these were affecting our Sports business in the second half versus the first half. We don't see anything related to the migration to our platform, but I will let Itai comment more on the Sports side before we go to the UK.

We see now a negative impact from migration. However, a year of migration is obviously first and foremost focused on having a smooth transition of players from one platform to the next.

In this year we also launched sports into the U.S. market for the first time.

So we launched SI Sportsbook over the new platform in Colorado, so that had -- that required us to adapt our platform to the U.S., let's say, localize it in terms of the way it's presented in terms of the offering. So there's a lot of investments in that.

And migration. Again, the main focus was smooth migration.

No negative impact. And moving forward, we're looking to invest further in the sports platform in terms of more, I would say, customer experience, features and things that enhance the engagement of customers with our sports book.

We're overall very pleased with the platform that we have. We're very pleased with the key principles that brought us -- that led us to make these decisions become autonomous in our sports betting, which is the ability to control the technology, to control the products, to link strongly between trading and marketing, which is something that you can do, and pricing with your own platform.

So all of these are working very well. It's still a young platform, and we have many plans ahead of us to enhance it further.

And we definitely see sports as a critical growth area for us as a group, because we're growing from a relatively small market share base to what I would call a mid-term market share base, that's our ambition in our core market.

Okay. So now with regards to the --

Do you see any material shift in customer churn?

No, we don't.

Okay. Thank you.

Simon, with regard to the UK, so UK, indeed, was lower in the second half versus the first half, but this is related also to what's happened to the market. We were indicating about 20% decline in the second half versus the first half.

And if you look at the data from the UK GC, we were actually exactly on this number. So the all the market went down 20%.

We consider that to be the going back to normality in terms of the split between retail and online, and all the lockdown and COVID impact were actually gone in the second half of the year. In our case, it's also all the regulatory change that we did.

We announced about a year ago an impact of 70 million to 100 million. We mentioned at that time about 30 million related to Germany.

Substantially all the remaining were related to the UK. We did a lot of changes on our platform of responsible gaming.

We started this already in Q4 2020, but we really completed everything in the mid-year. So in a way, the second half represent already the new set of rules on our compliance platform.

And therefore, you can see that as something that is the level that will take us into 2022.

I'll just address the --

Did you see further incremental costs in '22?

No, we don't see any further impact of the regulatory change on 2022 compared to the level that we saw in the second half of the year, and most specifically on Q4.

Right.

I'll just address -- Simon, your last question regarding Section8, which is what we call our internal game studio. So this has been over the years a very, I would say, strong asset for us.

A bit of a hidden gem in our portfolio. The games are performing really well against all of the top studios in the industry.

So they're competing heads to heads in 888casino, they're not getting a real preferential treatment. But they are performing against the best games in the industry, and hitting the top ten and top 20 list on our rankings on a regular basis.

Therefore, we decided to increase our investment there, in order to increase the share of wallet and hard games, which is obviously both from a financial perspective more effective for us, but also from a customer experience and uniqueness that we can offer. These are gains that can be found only on the 888 platform, and the customers like them, enjoy them, and come back to them.

And therefore, we see also this is a potential to increase the engagement and the uniqueness of our platform. In terms of investments, I won't go into specific details, but I will say, we have over -- about the resources, but we have over 120 games that were developed by Section8 over the years.

The plan -- and in the last year, and there were about 14 or 15, something like that. That's more or less the yearly capacity that we had in the last few years.

So we've decided to grow that quite significantly and we expect the output of the studio to be in line with the investment that we're putting. So somewhere between, you know, we will see 25 to 30 games a year through Section 8.

And obviously if this continues to show the great results that it does, we can, and plan, to invest in this further. This is a really, really strategic and important asset for us as a group.

Great. Thank you.

Hi, morning. If I -- morning, guys.

Just a couple of left for me, please. You mentioned in your release, that you have flowed certain products take limits in the UK.

Can you just be precise in terms of what they actually are? On the second question, on the U.S., several of your competitors have guided to revenues in the U.S.

in 2022. You did 22 million last year, could you give some guidance what you think will be this year, given all the new launches you are doing?

And also, the subsequent question on the U.S., will 22 -- do you expect 2022 to be your peak year of losses? Thank you.

Okay. So with regard to the limit in the UK, I don't think we can go into the details now for what are the limit.

And also there are significant set of rules, which altogether provide responsible gaming framework. So what I can say that there are few significant reductions in all this threshold.

In the announcement of the GC, they were talking about 40,000 until we do sort of fund check. This is -- was cut by half and many, many other were cut significantly.

So that with regard to the limit in the UK. With regard to the U.S.

So in terms of the revenue, I cannot comment. Again, we cannot provide guidance.

But we definitely expect to see growth coming in the U.S. this year considering the additional states that we will be launching this year, plus some support coming from the -- what already launched, Colorado and other market in the U.S.

In terms of the losses, I think your assumption about 2022 becoming the peak for the losses probably makes sense. However, I would not assume a significant reduction in the losses in 2023, but it's definitely after that it's reasonable to assume that we will start to see decline in the level of losses that we're generating in the U.S.

Thanks very much.

Morning, guys. Just two questions from me.

Firstly, just on the numbers I see you've identified some FX losses in the P&L, and they sort of move from having been in the cost of sales lines. So can you just elaborate on that, please?

And then secondly, just related to new market opportunities. And I know you say, I wondered if you could give a little bit more detail on the opportunities if you see there.

I will take the FX and then leave Itai to discuss about the additional markets. So FX until 2022, financial all the FX impact on the business we're part of the financial cost this year.

With discussion with our OD towards the decision was that part of the FX impact needs to be embedded into the cost of sale. And this is what we did this year in order to present like-for-like EBITDA, we obviously adjusted EBITDA to remove these FX charges.

In general, the FX charges, as we are a dollar company reporting. So we are mainly exposed to on the change in the pound versus the dollar in our business.

With regard to other market itai, I hand over to you.

Thanks, Mark. So yes, the other markets, I think, the three really -- so the ones that we've been successful in in the last few years, which we mentioned are obviously our core markets that kept growing.

We had a few emerging growth opportunities in Europe that we focused on in the last years. Markets like Romania, Portugal, Sweden, and some other smaller markets.

But I think there are three very significant opportunities for us and for the industry, which are Germany, Netherlands, and Ontario, which represents more or less half of the value of the Canadian markets. Again, like I mentioned before, the three of these together, represent total addressable market of around estimations of analysts is around $10 billion.

So putting that into context, that's bigger than the UK, and arguably some of the biggest markets globally. In these markets, we already have experience, we have brand presence, we have teams working on them, we have marketing material, we have everything that it takes to make those significant part of our portfolio of growth countries.

And now that marketing is opening there, and enabling us to work under local regulations, we see this as the most significant global opportunity alongside the U.S. And we're planning to launch in all of them, obviously subjective to regulatory approvals.

In Germany, we launched Sports. We are in the process of getting gaming licenses in Germany.

We have been active in the market in Germany for the last 20 years. We know it very well.

Ontario, Canada, we've also been there since day one of the company, and Netherlands is a market that we were in. We had a really nice piece of business there that closed down for a period and we're working on getting a license and relaunching there during the summer.

So we really see this as medium to long term growth potential for the group that we're starting to focus as these markets open up for us.

Okay. Thank you.

Okay. So thank you everyone for joining us today.

As you heard, 2021 was a fantastic year for 888. And entering into 2022, we're starting with a strong -- with a positive momentum.

And we're really excited about the long-term growth plans ahead of us, as you heard, there are many of them including William Hill, further markets, U.S., and more opportunity. And we look forward to updating you on all of these again very soon.

So thank you very much again for joining us.