B3 SA Brasil Bolsa Balcao
BOVESPA:B3SA3
B3 SA Brasil Bolsa Balcao
B3 SA Brasil Bolsa Balcao, often referred to simply as B3, represents the financial heart of Brazil's bustling economy. Established through the merger of BM&FBOVESPA and CETIP in 2017, B3 stands as one of the largest financial market infrastructure companies in the world. With its headquarters situated in São Paulo, B3 operates as the principal stock exchange in Brazil, facilitating an essential space where equities, commodities, and currencies converge. The company has woven a complex web of financial services that encompass trading, clearing, settlement, and registration of securities, thereby ensuring the seamless operation of Brazil's capital markets. This integration smooths out financial flows across Latin America's largest economy, making B3 indispensable to its continued growth and stability.
The business model of B3 is rich and multifaceted. Primarily, the company generates revenue through transaction fees levied on trades executed within its platform, a model that naturally scales with market activity. In addition to these fees, B3 profits from listing fees paid by companies that choose to go public on its exchange. The firm also provides technological solutions, and it's known for its sophisticated infrastructure that supports risk management and compliance services. These services not only bolster investor confidence but also provide a steady stream of income. Further diversifying its revenue streams, B3 offers data dissemination services which cater to the growing demand for real-time information in an increasingly digital financial world. Overall, B3 operates as a pivotal entity that not only sustains but also enhances the financial ecosystem of Brazil.
Earnings Calls
In an impressive Q4 2024, OPAP's performance soared, driven by significant sports betting gains from the EURO '24 tournament and exceptional jackpot rollovers in the Joker game. Online revenue accounted for 32% of total sales, showcasing robust growth. Though OPAP exceeded its revenue guidance by nearly €100 million, it now anticipates low single-digit revenue growth for 2025. Online channels are projected to experience double-digit growth, while retail may weaken. The company plans a €1 per share dividend, with strong cash flow supporting this commitment despite high operational costs.
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Ladies and gentlemen, thank you for standing by. I am Gailey, your Chorus Call operator. Welcome, and thank you for joining the OPAP S.A conference call and live webcast question-and-answer session to discuss the fourth quarter 2024 financial results. Please note the video presentation has been distributed and is also available on the OPAP Investor Relations website. [Operator Instructions]. The conference is being recorded.
At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP S.A. Mr. Karas, you may now proceed.
Thank you very, very much. Good evening or good morning to everyone, and welcome to our Q4 2024 results conference call. In the last quarter, we have recorded exceptional performance driven mainly by the Giga Jackpot in Joker, the strong performance in sports betting and the growing popularity of our iGaming proposition. Actually, overall, our online segment performed strongly and grew further, contributing robust 32% of the group's revenues, setting a new record, which underscores the digital focus of our strategy. Hopefully, you have reviewed and enjoy the results recorded video. We shared with you earlier today. So we will jump directly to our Q&A session. Gailey, over to you.
[Operator Instructions]. The first question is from the line of Stamatios Draziotis with EuroBank Equities.
Three questions actually, if I may, please. And perhaps we could address them one at a time to ensure clarity on each point. So firstly, I would just like to start with your '24 top line performance, which obviously eclipsed the upper end of the guidance by nearly EUR 100 million. So the question, I guess, here is what worked so much better than your expectations at the start of the year and to what extent there were nonrecurring pockets of growth, if I may say so. So be it the euro enthusiasm about the jackpot, for example, or jackpot rollovers for Joker, which you referred to. So to what extent this you feel create a tough comp base for '25 and thus explain the guidance for low single-digit growth in this year? So that's the first question.
Thank you very much for your question. Even though you almost answered yourself, I will still elaborate a little bit. So first of all, when it comes to the guidance itself, as always, the management and the IR team follow a realistic approach to forming our outlook as we have hopefully well evidenced by the track record of our guidance falling within quite a narrow range provided in the previous years. So the provided outlook that we are discussing now the 2024 versus the actuals was -- luckily had a happy ending, but certainly throughout the year was also challenged at times.
And then for example, when we were communicating the Q1 result in the second quarter, we certainly were feeling both sticking to that forecast and hoping that with all the efforts that we had in our mind to put into it, we will be able to deliver. But what I'm going to say throughout each and every quarter of the year, the feelings about the forecast are certainly evolving and we always do our best to forecast as accurate as possible. Now to -- I think the merit of your question is what exactly has influenced the most. You have mentioned some of the reasons. What is certainly important to note is the exceptional sports betting performance certainly boosted by the EURO '24 tournament, but also notably with favorable results for us as OPAP when it comes to payout.
We certainly noted a very high Joker performance, aided by very high Jackpot rollovers just to put it into perspective for you last time, we have seen such a giga jackpot was back in 2009. So as you can imagine, this is certainly not something you can very accurately predict. Last but not least, as I mentioned in my intro, online casino certainly has very strong performance, and that has exceeded our expectations at the dynamics of this vertical as well.
Overall, it resulted in our performance of our 2024 guidance. But let's also remember that in Q4, we have indicated that we will be looking to cross the upper range of our guidance as well. And finally, we got even better than expected at the time. So I think that's just a completely honest and transparent background of the forecasting versus actuals.
Great. And if I if I could follow up on your response. So I guess, the outlook for -- and I'm moving to channels now. So the outlook for online is probably very strong and probably you feel comfortable projecting double-digit growth I imagine for this channel, which means that this will be offset by maybe weaker retail due to what we talked about, basically Joker and the euro, I guess, affecting sports betting, thus leading to the low single-digit growth at group level. Is this sort of your rationale and I guess, also leading to a lower margin year-on-year exactly due to the -- partly due to the channel mix. Is this a fair point to make?
Listen, when it comes to 2025 outlook and online specifically. We have certainly seen a very strong performance of online in 2024 that has exceeded our expectations in terms of year-over-year growth. Because when you compare it to the year-over-year ago, they had been we have observed back in 2023 you will understand what I'm talking about. Now while that certainly makes us excited about the momentum we have in online, we also need to be a little bit cautious because sports betting margin, sustainability, sports betting growth sustainability is a question about how far this can go in terms of engaging customers in especially how much the customers are ready to spend that will, at some point, be a saturation. So while we have a good momentum in both sports betting and the iCasino verticals and will elaborate lottery later, we cannot just draw straight lines when it comes to trends. So what exactly we will be observing remains to be seen. But if you wish to hear a number, that certainly, I believe, still represent the opportunity represented is still more, I would say, a rather low double-digit single digit. So that online was certainly perform stronger than retail as such.
Got it. And second question is with regards to your shareholder remuneration policy. So let me just make an assumption for the sake of the discussion. So if low single-digit revenue growth were to translate into low single-digit growth in terms of bottom line. Would it be fair to assume that this would filter through to a similar increase in the dividend? And how do potential future buybacks fit in within this logic?
Okay. I will take that question. Our dividend remains as it was in the past. So we are committed for dividend distributions that exceed net profits with a minimum of EUR 1 dividend per share. we may consider some additional special dividends on other basis. In terms of the buyback, we -- we just completed the medium-size buyback program of EUR 150 million, which we always mentioned was complementary to paying the maximum possible dividend. So we believe for 2025, the outlook for the dividend and given what you said and the guidance which we provided for the GGR and EBITDA, it should be at similar levels as the one which we paid out in 2024.
Okay. Got it. And last question is actually on online. I'm not sure of the extent to which you can answer the question, but I will try. So I'm basically a bit perplexed by the strategic move of your parent company, which recently got a majority stake in one of your online competitors. In -- what was the rationale behind this move to the best of your knowledge? And I mean the way you view this, what strategic implication does this carry for OPAP, given the common ownership yet continued competitive positioning of the two companies?
Thank you very much. As you correctly said, this is a strategical move of our parent company. And as such, we will certainly abstain from commenting on the purpose. The Novibet company operates with its own license. We are in a competitive environment, and there is no plan on changing anything on that setup to our awareness. That's all I can tell you right now.
The next question is from the line of Pointon Russell with Edison Group.
Couple of questions. First of all, on the sports betting growth, are you able to disentangle how much of a benefit that favorable revenue for you as a result of the results? Because I mean coming into the year, you would have known about your EURO24 and obviously, the Champions League structure has led to more games. So I'm just interested in what is the -- if you take out the favorable lots for you, how much better revenue was.
The second one, a couple of questions on costs. In your statements, you referred to salary adjustments to retain and attract talent, which put a bit of a cost pressure. Are there certain parts of the -- the employee base where there's greater pressure than others. I don't know if it's tech or marketing, that kind of thing. And going back to the margin guidance, which is a bit lower, and I appreciate there may be some games in there. Where are the specific cost pressures, please? Because if you look at in 2024, excluding the increase in sponsorship, your advertising actually grew at a slightly lower rate than the overall GGR. It's only marginal, but it was slightly below. So are you getting more efficient at advertising?
Thank you very much for the questions. We'll try to answer them, hopefully understanding all of them correctly. Maybe for the future, if the audience would be so kind and asked the questions separately, that will be easier to follow and answer. We will cover all of them, don't worry. So starting with the first one, which was about the specific quantification of the official results, that's obviously not something we are able to quantify in exact numbers because everything is connected.
That's more an overall observation that it helps us but there are much more influencing factors than only the payout itself and there is activity of players, how attractive is the calendar, how much the favorable themes of the local customers are playing or not playing within, et cetera, et cetera. So that -- I'm sorry, but I cannot tell you a specific number on that, but certainly, the positive payout positive for us was one of the contributing factors to the GGR performance that we have observed in the sports betting.
But maybe to give you a color about some of the other influencing factors in sports betting overall as OPAP, we have attracted significant new incremental amount of players to both online and retail. And that number, obviously, because of the size of our retail being predominantly driven by the retail part accounts for hundreds of thousands of new players in playing sports betting with OPAP. And that has been one of the important contributors to the overall annual success of sports betting. So I hope that -- handing over to Pavel for the second question.
Yes. The second and third question, I think the first one was related to the salaries. Now as far as payroll expenses that is concerned, the current levels, they reflect increased headcount. We also have variable-based compensation. So in a year of a good performance that plays some role. And also, we do adjust the salaries because the market is very competitive. As you know, Greece is doing well, not only but many companies across all sectors are doing well. So really to retain and attract talent, we need to be relevant in the job market. And as you asked about which party group are of organization, well, it's no surprise. It's mainly technology and -- but not only that, all the parts of company like digital market, XCR and customer proposition, all of that are important parts of our business where we need to remain relevant in the top-market.
Now your question about the guidance and cost pressure. Obviously, we had the high inflation in previous years, which now somewhat stabilized. We are doing our best to keep the cost control well under the control will sort of contained. But in terms of the marketing costs, where you asked, definitely, the asset prices are going up in terms of the sponsorship. There is a lot of competition in the market. So definitely, there is a increase in costs, not only in the sponsorship. But generally, media costs go up very, very significantly because of high demand. So we are trying our best basically to keep it under control.
The next question is from the line of Nekrasov Maksim with Citi.
I have a couple of questions. First, let's start with probably traditional question at this point. So last year, you obtained several licenses, including the EuroJackpot and Cyprus license. So is there any update on the upcoming instant lotteries and more importantly, the core off-line betting and numerical lotteries licenses. Any updates?
Thank you very much for the usual question, and we have almost usual answer that when it comes to Hellenic lottery license, we are in the discussion with the state representatives. These discussions have been now influenced by the recent reshuffling government. And as you -- if you follow Greece have noticed, we have a new Minister of Finance appointed. We expect continuity of the conversations in the next weeks that the discussions will continue. It remains to be seen how it will influence the whole process, but we don't have any at this moment an indication that there should be any negative influence.
As such, we expect that we will continue to work and hopefully successfully the are clearly declared ambition to extend these licenses. The same commitment we have to the extension of the big licenses. I'm sorry, just to be correct with the terminology. When it comes to lending goes license, this is not a license that can be extended. We are working towards being awarded with the license starting May, May next year following the relevant process with the government bodies. When it comes to big licenses, that's something where indeed extension is for a discussion. And that discussion, we hope will be able to initiate soon. But at the same time, it's 2025. So it's a bit early, but even here, we have indicated our interest to talk.
When it comes to our confidence, this is maybe also something I would like to mention when it comes to our confidence on securing the licenses going forward. with the experiences of last year, and that was the -- as you noticed, the Cyprus license as well as the award of the EuroJackpot license, we are very confident that our chances for success here are equally high.
That's very clear. Another question is on Joker and -- correct me if I'm wrong, but as I understand, there was a record -- one of the highest record in the third quarter, then also strong basically jackpot in the fourth quarter? And from the presentation, and I understand there's another record in January. So is it fair to say that there are somewhat structural improvements in this product? Or we should not extrapolate such success going forward?
Structural improvements are certainly there. However, the statistics is merciless, so I think it continues to be obviously a matter of luck as to when and what size of jackpots, we will continue to see. And indeed, now in first quarter, we have seen the biggest jackpot in Joker ever, but do we expect this to be repeated 5 times a year. Unfortunately, that would be difficult to work financially. So kind of yes and no. The actual changes of the game are favoring the faster growth of jackpot occurrence of mega jackpots of this kind is certainly not something that we can expect to happen on a regular basis.
Okay. That's very clear. And then final question, just to continue on buyback, right? So do you plan to cancel the existing treasury shares? I believe it's about 3%.
Yes. As we indicated, going forward, the reason to do the buyback was eventually to cancel the shares.
The next question is from the line of Tzioukalia Fani with Euroxx Securities.
One question again, sorry about the back and forth on the dividend. But -- could you please reiterate what is the target for dividend distributions for 2025? And when you refer to the target that as 2024, do you basically approach this on an absolute amount of distributions, including the share buyback or I mean -- or in the dividend, but I guess that's -- that's not the case. And if you are referring to the absolute amount, will be possible to have a breakdown on the dividend distribution and how much will be committed to the share buyback program?
Thank you. Basically, we are committed to distribute maximum possible dividend, which is pretty much all our net profit generated in a year which should be at a minimum EUR 1 per share. Now because the buyback really was not impacting this commitment. And in case we continue with the buyback also in 2025, we will make sure that it doesn't impact the maximum dividend distribution. That it's complementary and on top after the maximum dividend is paid. So because we have very good cash flow conversion and free cash flow generation, that's what enables us to do the buyback on top of the maximum dividend being paid.
The next question is from the line of Kourtesis Iakovos with Piraeus Securities.
Just to clarify one thing. As far as I understand, you plan to initiate the share buyback program for next year, this is the first thing. Second thing is that do you plan to enrich your current gaming portfolio with new features, if there is such a thing for 2025 to enhance gaming experience if you have any such plans.
At the moment, on the buyback, at the moment, there are no plans. We just completed the previous plan. And we are always cautiously taking into consideration our capital requirements. So as I said, we did have surplus cash on top of maximum cash that was paid, but we have to see what is the situation with capital requirements and with the licenses. And we may consider it going forward. definitely, we want to keep the flexibility. So current program ends in June 2025, we intend to bring this point to the upcoming Annual General Meeting we have the approval of shareholders to do the buyback. But at the moment, there are no fun plans that we would continue with the buyback.
Okay. And what about your gaming portfolio in new features for 2025 in any of the games.
We focus on evolving the experience is in the first place. So games are a core part of it, but it's more about everything that happens around it and what the experience the customers will enjoy. If your question is specifically what new games we will see. I believe the one worth noting is that we intend in the summertime to bring EuroJackpot also to online. But other than that, it's more on the side of experience like expanding the power spin with some new features and enhance gameplay and visual side of things, et cetera, et cetera.
[Operator Instructions]. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you.
Thank you, Gailey. Thank you to all of you very much for being with us today. Our IR team will be looking forward to answer any other questions you may have and dive deeper into your requires, as always. We will be looking forward to talk to you again in a couple of months upon the Q1 '25 results announcement. Thank you very much, and have a great rest of the day. Thank you, Gailey.
Thank you, Mr. Karas. Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.