Catena Media PLC

STO:CTM

Earnings Call Transcript

[Operator]

Hello, and welcome to Catena Media Q1 2020 Call. [Operator Instructions] Today, I am pleased to present CEO, Per Hellberg; and CFO, Peter Messner. Please go ahead with your meeting.

[Per Hellberg, Chief Executive Officer]

Thank you, and good morning, and welcome to Catena Media's Q1 2020 Presentation. Next slide, please. The presenters today is myself, but also our new group CFO, Peter Messner, who will introduce himself a bit later when he go through the financial update of the company. Next slide, please. The agenda for today is like always, we'll start with the quarterly highlights, followed by a business update, then Peter takes over the run of financials and then I'll come back and talk a bit about the strategy and outlook, especially the outlook now once we have April already concluded in the second quarter and can give us better insights about how we foresee the COVID impact going forward. Next slide, please. This time, I'm happy to inform that the quarterly highlights are in a positive manner. For those of you who followed us for quite some while, you know that for the past 12 months we've been doing a lot of restructuring work in the business due to a business that actually went negative because of previously informed issues. We have now been able to turn that around. And I think it's important to mention that even before the COVID started, we could see a month-to-month positive growth trend starting from last autumn. So we were able to join this COVID pandemic situation in a positive trend, which we after that built on, which I will go through now in the quarter highlights and business update. So next slide, please. If we start from a quarter-on-quarter perspective, we can see that the last quarters, we have been coming up from the second quarter 2019 and been rather stable. Now I think it's important to remember that, obviously, Q1 traditionally tends to be a bit slower than Q4. I think especially for a company like Catena Media where we have a lot of income from the U.S. market, where typically sports starts to decline from mid-Q1 approximately after Super Bowl. We can normally see a quite big decline compared with the fourth quarter and especially third quarter. To maintain that in the same level or actually even growing, we are very satisfied with, especially considering the COVID pandemic going on. I think that not only have we managed to increase the revenues, but also that we dramatically managed to improve the profitability. Here is a good sign of the strategic issues we have addressed, and that the cost efficiency and cost reduction project in the company is working well. Please, I remind -- and remember that according to our strategy, we are also focusing on investing for the future in new markets and especially in the U.S. That is included in these improved profit numbers. So everything is proceeding according to plan. Next slide, please. If you look at the quarterly highlights, we can see a 2% growth compared with last year. And as you're all aware, we have completely changed of COVID, coming in basically from 10th of March, we could see a decline in some business areas, but also, we worked very hard to change that, which I come back to. Also, as mentioned, a 10% growth in organic is also proof about the adapted strategy where we were supposed to focus on organic growth rather than acquisition and paid media. So we have been -- not increasing pay media, but what we have done is to dramatically improve the traffic inflow and efficiency in our products to make sure that we can grow by our own engine, so to speak. This is also, I think, very important to mention that the numbers we did in March -- sorry, in Q1 was all-time high in terms of surge revenue, meaning the revenue that we generate all by ourself, which is the majority of our reported income. So we're very pleased with that. In terms of profitability, we increased by 15%, and it's a combination, of course, of the growth, but especially that we're far more cost-efficient [ than ] today. That together has led to increased margin of 5% points from 43% up to 48%. Next slide, please. When it comes to the business update, there's a couple of things I would like to go through, so if you kind of switch to the next page. We decided to divide this slide into 2 areas. One, of course, is regarding the COVID-19 impact, and the other thing is general business and operational highlights. If you look at the COVID-19 impact first, the operational measures we took, we took them very early. Obviously, some people maybe thought that we think too early, but we did a lot of actions to secure technology in the company like bandwidth and make sure that systems are possible work that even if you're not at site. We took decision to bring home staff from abroad, business travels very quickly and we early adapted to work-from-home structure. But what we also applied here was a setup that allow us to do this for a long time. Being unsure how long this will go, we're actually in a mode now we continue this pretty much for a year or so ahead if required. And the interesting thing here, what we invest a lot in is also how we communicate and how we update staff to keep productivity and engagement high. And I'm happy to inform actually that in the company, ever since we start measuring many years ago, we never have had that high engagement in the company and efficiency as we have today, which is a result of great team effort and a lot of hard work. So very pleased with that. Sports, negatively impacted, of course, with leagues shutting down. But here, we had an opportunity as well because we have a quite big geographical distribution of our business. So as you know, not all sports events went down at the same time. So we can work around the globe actually through our great operation -- operator partners. We were able to promote what was actually up and running still. We also worked very closely with them to focus on driving traffic to their casino sites. But also the booming quarter, which has increased a lot during the pandemic because people sit at home and they find that as an interesting activity to do. In terms of reductions in revenue, typically, we see about half of our total spot revenues is lost because of this, which is a lot, of course, but far better than we originally thought it will be, so quite happy about what we maintain to do together with our operators that we work with. U.S. is almost no revenue, I'd say, but bear in mind that we actually forecasted very little revenue in this time of year in U.S. because we're out of sport events. The only sport event actually in March that will proceed was the March Madness in basketball, but that was canceled. Hence, we lost the revenue from there as well. But it was heavily compensated by casino, and casino has been strong in every single market we've seen. The trend we started back in second half last year has continued with month-on-month improvement. But add to that also the impact of sport shutting down and people being at home, and especially in U.S. where a lot of the land-based casinos has been shut and people have focused then on online casino or social casino for which both we drive a lead generation for. Cost savings were made possible because of this, obviously, not traveling, no events, et cetera, it made it possible to save cost. But also in sports, for example, we don't need to produce the same amount of content if sports aren't up and running. And we don't need to invest in pay-per-click media if those search words won't be able to translate into revenue. On top of that, our long-term cost-saving initiatives had together make sure that we can improve margin. Now if we then look at the general actions we're taking. As I mentioned, all-time high in search revenues, which we're extremely happy about and continue to look positive for the future. I talked about the cost efficiency already. Investment in U.S. is still going on. We are continuing our plan to invest in states we foresee going now between 12 and 18 months ahead to make sure we get good position in there. We also launched in new languages and planned launch for several other products and launch existing products also into new markets. All this is funded by our own P&L. And we actually managed to carve out those investments through cost-efficiency projects and still being able to improve the margin as we just showed here in the numbers. The Sports segment, restructuring is underway under the head of our new sports Vice President, Chris Welch. That project started in the middle of January, and we already see a lot of positive momentum from out of that, and the team is working extremely hard to turn things around, which already started. There's been a lot of talks about the major Google update out there. I understand that it's talked about, but this is business as usual for us. They always tend to update. Sometimes, they're small. Sometimes, they're large. And in total, for the group, we don't see any material negative impact. And where we see a decline, we have already taken the actions to go back to normal, which typically takes some weeks. But all in all, we don't see a negative result coming out of this. The refinance program, as informed, has been concluded, and we are just having the final couple of general meetings to conclude that and I'm also happy to inform that we have done a lot of restructuring in our management team. So kindly change page, please. So we have a quite new team here. What have happened is that people have departed, but also people have joined. And the first one to join in a new position was Chris Welch, who started in January, head of our Sports operations. Chris joins with a wealth of iGaming experience from many roles in key brands across the world. And he is in charge of the business turnaround to sports, but also in the consolidation work to get with other departments to come up with a stronger joint force towards the iGaming market. Then we have Hamish Brown joining as VP for Casino. He started in February. Hamish has over 20 years of experience from iGaming and in various position and has already now started to make changes and build on an already good trend we have in casino. After that, Peter Messner joined, who will introduce himself very shortly. And I also decided to include Michael Daly, Head of the North American Business, Vice President; and also Nikola Teofilovic, who is our Head of AskGamblers as Vice President, being promoted from April. This team is now fully in place and working very hard together with myself; Fiona, in charge of HR; and Nigel Frith in charge of financial services. Next page, please. Peter?

[Peter Messner, Group Chief Financial Officer]

Thank you very much, Per, and good morning from my end as well. Next page, please. Just a very quick introduction. You have seen the management team -- the executive management team being now fully in place. I have the pleasure, and I'm indeed very excited having joined the company now at the beginning of April. Most recently, I worked in Modern Times Group, MTG, where we built up, in the last 5 to 6 years, the digital transformation, the digital entertainment part that is, in its essence of e-sports and online gaming, today's MTG after the split with Nordic Entertainment Group in the first quarter of last year. Prior to that, I have been working in the iGaming industry for a total of approximately 8 years. That started at an operator called bwin, in the B2C area, very operational on product and portfolio level intensively and increasingly more on strategic levels about capital allocation, business analysis and really going into the finance areas, where in the B2B area of the subsidiary at that point in time, Ongame, I took over that part and the corporate development when we sold Ongame as a consequence of the merger between Bwin and Party Gaming in 2012 to the market. I'm extremely humbled to take over from Erik. Erik has been the interim Group CFO during the past quarters, and he did a tremendous job in forming and transforming the finance function. So a big thank you to him. Now we can switch to the next slide. So starting with our revenue development, and as Per already indicated, we have shown now in the first quarter a very positive trend both in comparison to the previous quarter, Q4 2019, but in particular, also to the quarter of the same period last year, Q1 2019, shown in a year-over-year growth of 2% and on a quarterly basis of 1%. Outstanding is the all-time high as part of the overall revenues. As Per indicated, we, of course, had a switch also strategically from paid revenue to search revenue. And particularly, also in the first quarter, we, of course, had a much stronger focus on the search revenues. So the all-time high of EUR 23.9 million shows the very right direction in terms of our development. The new depositing customers, one of our KPIs, shows a very positive trend now as well after the situation around the middle of last year. So that goes totally into a very positive future with a quarter-over-quarter growth of 6%.Next slide, please. So from the growth into the segment performance, as we previously already have shown, our 3 reporting segments are Casino, Sports and the Financial Services. There is not a huge change in comparison to the previous quarter where you already have seen an increase from the Casino segment as compared to the Sports segment. In a year-over-year comparison, you see that Casino contributed 61% of total revenues. And last year, that was 53%. Sports contributed 1/3 of the revenues. Last year, that was higher at 41%. And the Financial Services have been stable at a 6% revenue contribution. The EBITDA margin is particularly pleasing in Casino of 60%, Sports were 31% and Financial Services were 24%, resulting in an overall adjusted EBITDA margin of 48%, which was the aforementioned increase that Per was talking about. The alternative way of taking a look at our revenue streams is through what kind of agreements we received those revenues. This is the revenue share, which is a deal setup where we, over a longer period of time, received revenues from the new depositing customers that we generate for our customers. That is stable at 44%. The cost per acquisition is at 39%. Likewise, a stable contribution share as compared to the previous year. Fixed fees contributed 15%, a slight increase to the previous year and to subscriptions which are almost entirely dedicated to the financial services, contributed 2% in comparison to the 4% that we had last year. We can switch to the next slide. So the cost of development, you see on the chart that, of course, in line with the tremendous growth that we had in previous years, the cost base and the cost base here is the direct costs, the personnel expenses and the other operating expenses, of course, developed in line with the business development. In the previous quarters, however, we were able to maintain that on a fairly stable level. And of course, that was in line with the revenue development during that period of time. Now in the first quarter, also due to the savings measures that we -- not only in this quarter, but previously already started in terms of long-term restructuring, we ended up at a cost ratio of 52% in terms of the revenues. Previous periods, we have been 57%, both in the previous quarter, but also in the corresponding quarter of last year. The main changes in that cost base contributing to the higher EBITDA in the very end is the savings and direct costs. And Per already indicated that the reduction in paid revenues is, of course, a result of less spending in the corresponding direct cost, the pay-per-click cost. And that was a result primarily out of the Sports segment now in the first quarter. Personnel expenses increased in the year-over-year comparison, and that is mainly due to the ramp-up and the investments that we have been doing and continuously will do in the United States as a growth market. And other operating expenses show a saving of 3%. Likewise, as Per indicated, we have longer-term savings programs here. Plus there have been, of course, certain expenses around travel, entertainment, office-related expenses that have been lower during this quarter. Next slide, please. On the profit per quarter, just as a brief highlight, so the difference between our adjusted EBITDA and the reported EBITDA are exceptional items to the amount of EUR 0.5 million. The big part of that is related to restructuring the organizational costs in the first quarter, in line with what I just mentioned. Other than that, there has not been any extraordinary items, the interest payments have been in line with what you have seen in previous quarters. The gain of EUR 4.2 million in the fair market valuation relates to our existing senior unsecured bonds where you have seen swings on a quarterly basis, which is just due to the market price and fair market valuation of this bond. I will expect that to stabilize given our refinancing announcements, and I will come to the refinancing on a few slides as well. Next slide, please. The balance sheet, the statement of financial position is also in line with what you have seen previously. Our assets amount to a total of EUR 339.1 million. The main part of that is our intangible assets, the goodwill, the domains and websites and player databases and so forth. On the equity and liabilities sides, the main part of the liabilities is the borrowings, and that relates to our senior unsecured bonds of EUR 150 million as of now and also our revolving bank credit facility, which has been used to an extent of EUR 12.5 million, the same as previously reported. There was no change in that utilization. The amounts committed to acquisitions has further decreased, and that I will explain on the next slide. So next slide, please. So what you have seen in the previous quarters and what my predecessor, Erik, has been reporting on all the time has been the steady reduction of our asset purchase commitments that have been the result of previous acquisitions out of the heavy growth phase of the company in previous years. So as of now or as of the end of the first quarter, the remaining commitments have been EUR 7.1 million, of which, however, at the beginning of April, just after the reporting period, the main part, EUR 5.4 million, have been closed. So the remaining balance, as we speak, is roughly EUR 1.6 million, and that will be settled in the beginning of June. So after the second quarter, there will be no legacy asset purchase commitments remaining on the balance sheet, which is a very positive effect, of course, on our cash flow going forward. And we switch to the next slide. So talking about the cash. The cash and debt situation looked in the first quarter as follows: the net cash that has been generated from operating activities amounted to EUR 11.2 million. And you see very clearly in the chart on the left-hand side, this is the highest amount since the last quarter of 2018. So a very positive trend in terms of the net cash generation during the period. The cash conversion rate has been at 90%. And you also see there are quarterly and seasonal swings in that, and you should expect that also going forward. The balance of cash and cash equivalents amounted to EUR 19.3 million at the end of the period. And our net interest-bearing debt was at EUR 143.2 million, which led to a leverage which is exactly this step over the last 12 months adjusted EBITDA of 3.17, which is in line with our maintenance covenants. Next slide, please. So on the refinancing, and that goes, of course, exactly into the last point of the previous slides, the leverage. Our refinancing, as Per also mentioned before, is almost at conclusion. There's just the extraordinary general meeting on the 10th of June missing. We have a fully guaranteed rights issue, which, as previously reported and released, will consist of several units which consist of hybrid bonds and warrants. These hybrid bonds are treated as 100% equity under IFRS. And the warrants, as such, has the underlying -- the ordinary shares of underlying assets. With the issuance, we will receive new capital into the company, amounting to approximately EUR 63 million. And the main part of that new capital will be used as a partial repayment of the existing senior unsecured bonds amounting to EUR 49.5 million. That is roughly 1/3 of existing bond value of EUR 150 million and at the same time, we will extend the maturity of this existing senior unsecured bond by another year at the same terms when it comes to the interest rate. The consequence of that you see on the right-hand side in the graph. And that means that we are able to deleverage -- to decrease heavily our debt situation over the coming quarter from the 3.17x that we reported now with a partial repayment and some excess cash that we will have due to this transaction, to below 2x or 1.9x as we see that as of now. So we will end up at a net debt situation from a prognosis perspective of roughly EUR 85 million in the third quarter. And as mentioned, the leverage will decrease to 1.9x. As we previously announced, the long-term target for leverage is 1.75x, so very close to that already. And I'm very happy, very pleased with this refinancing situation being in place. Next slide, please.

[Per Hellberg, Chief Executive Officer]

So thank you, Peter. It's time now to go through a bit of the outlook looking forward. So next slide, please. I'm happy to inform that the second quarter have started very positive for us. We can see a year-on-year growth in April in terms of revenue of 17%. But what is also very interesting here is actually growing month-on-month, [ healthily ], from March. And considering that we had April full of COVID impact and management growth, we are extremely pleased with that trend. Why is this happening? How was it possible? First of all, it was a good work of product mix, where we can handle both between Sports and Casino, of course. Also geographical mix, of course, we're having a good trends in U.S. but also in Asia, combined with Europe, makes it grow. This combination with the general traffic inflow increase considering the previous discussed strategic initiatives to improve that has also put together a very good trend. But then, of course, also a very good team effort by all employees to make this happen, working day and night to ensure it. Next slide, please. One thing that is also very important all the time when we talk about the future is, of course, how it's going in the U.S. considering the amount of business we have there. Currently, in U.S., we are now live in 7 states, and there are some more states coming. Core states like New Jersey and Pennsylvania performed very well in the first quarter. We could see that regardless of the COVID impact, which, of course, had a big impact on sports in general, as I mentioned earlier, very low amount of sports event add COVID to them, and the business is very, very low. But casinos strongly compensate that and more, both from the traditional casino states we have where we can do online business, but also in terms of the social casino, as we mentioned before. [indiscernible] also, which had a rebirth in that sense. The good thing in this case also is that we know that we would like to enter a lot of new states as they roll out. And our fear was that COVID-19 would have a negative impact on the regulatory framework and process in the U.S. But on the contrary, we actually see some very positive momentum there now with more states indicating to launch, which looks very good for the future. On May 1, Colorado went live with sports. And Tennessee is likely to go live in this summer, according to the regulatory body over there. Both are active in sports. Then we have a lot of additional states that are on the move. I will talk to them about the next slide about this -- for that. I'm happy to announce also that as of recently, we can see some new sports up and running already. Horse racing in U.S. has been around for a while. UFC started recently. And also, NASCAR had its first race a couple of days ago. Golf will start in June. Basket, July. And then, of course, NFL in the autumn, if everything goes as planned. So it's looking forward to be a very hectic and positive second half for us in those -- active in those markets. Next slide, please. As always, we provide our view on the rollout and what the status is. So I will not run through every detail here, but you can see that later part of 2020, there are a lot of indication that things are about to happen. And that's what I mentioned about that the regulatory framework is working very hard now to make sure the states coming up. Some will launch later than planned, some are will launch early. But if you take a look at those actually that are now planning to come onboard, it's a major increase of the population reach we will have once those go live. And this is to kind of sharpen us, many more we'll look at when we're starting to plan for ranking and timing for doing so in U.S. So in those states that we're talking about here, we have already initiated work to become very high-ranking sites once they finally go live. Next slide, please. So how do you look about 2020? Well, normally, we tend provide some quarterly kind of outlooks. But given the situation where a lot of changes happen, it's quite tough to do so. But given the start of April, and of course, internally, we have the visibility in May. Adding to that, the sports events now starting to open up. I told you about U.S. You also have all followed the news what's going on in the U.S. now -- sorry, in Europe now with Bundesliga starting and rest of the world. There will be an active summer and autumn in sports. We feel very positive about that, of course. Add to that the increased, what we see, penetration of casino players worldwide online, considering the COVID impact on this. So casino might eventually reduce a bit. I think we all can read that. But on the other hand, we believe that more players will be active out there. So we foresee a very good trend going forward for casino as well. These 2 together, with U.S. states also underway, believe that we can sustain a good trend of growth from now to the rest of the year. In order to also ensure good profitability, we're doing 2 things, as I said. We carve out -- announced of the existing legacy business and reinvested in others to make sure that we always are sure -- are on our toes for new revenues. On top of that, we have general cost improvement projects, and everything is now working as planned. Hence, we also foresee a nice, steady margin coming out from us unless we decide to invest even more in things we don't know of today. So in total, we're following our strategy as we applied, and it works -- seems to be working very well. In terms of our outlook for the year, given where we are today and the trends we see, we have no reason to break down from the target we announced earlier, and that is a double-digit profitable organic growth for the year, which maintained insight for our business. But of course, as time pass by, we will update you on [ both sides ], but it looks positive as of today. Next slide, please. So to summarize the key takeaways. In terms to everything I've been and we've been through in this presentation today, I will not run them through all. In general, summarized, we feel that we have a very positive momentum. We are working very hard to make sure that we capitalize as much as we possibly can based on that. Next slide, please. Let's summarize this presentation, and we'll now move into the Q&A. But before that, please bear in mind about the coming events you can see ahead of you. 10th of June, Extraordinary General Meeting for the final things to conduct about the refinancing. And then they have another one, following on the 24th of June, followed by the interim report on the 19th of August, and 19th November, we do the Q3 report. With that, I hand over for the Q&A.

[Operator]

[Operator Instructions] Our first question is from Christian Hellman from Nordea.

[Christian Hellman, Director of Small and Mid Cap]

Just first, a question on the trading update and sort of how we should think about Q2. You said revenues are up 17% in April. Could you elaborate a bit, perhaps, on how Q2 developed last year? I'm thinking about the individual months, so we can sort of put this 17% in some sort of perspective. Was April last year strong or was it weak relative to the full quarter last year? Do you understand what I'm…

[Per Hellberg, Chief Executive Officer]

As you remember, second quarter last year was not a very good quarter for us. We had a couple issues happening. First, of course, it was the aftermath of the Swedish regulation. But then in the quarter, also, we had the changed regulations in U.K. where -- which hit us hard. And on top of that, of course, the legacy European casino assets that we had to rebuild because we're losing traffic. So all in all, second quarter was a very, very tough quarter for us, which at the end of the quarter was worse than the beginning. So that gives you an idea that if we are up quite nicely against the beginning of the quarter, it looks very positive for the last [ 3 quarters ] as well.

[Christian Hellman, Director of Small and Mid Cap]

That was exactly my question. Great. And then just final question on the U.S. I can't find anywhere in the report how much of the revenues of the group that you generated in the U.S. in the period. We noted for some quarters in the past.

[Per Hellberg, Chief Executive Officer]

Yes. Obviously, we have that. It's so many big swings. So it changed constantly depending on how this is playing and where this forges up, that's why we left it out because it's quite hard to build a trend line from it. But it's about 20%.

[Operator]

[Operator Instructions] Our next question is from Hjalmar Ahlberg from Kepler.

[Hjalmar Ahlberg, Equity Research Analyst]

Just a question on some key market and key geographies. I know you did not include the development of different markets because of uncertainty from COVID-19 and so on. But could you still give us some indication on -- if some market have had seen some big changes. I mean, in Europe, then, not U.S.? And if you can say anything on the trends there, if there's anything to say.

[Per Hellberg, Chief Executive Officer]

Okay. In general, in Europe, if you break it down, and we need to take this by business segment, in general, in Europe is a quite similar reduction of sport impact as the leagues there went down more or less at the same time. So the typical average 50% down on sports revenue from the operators in Europe. And the total business [ online ] is about what we see. U.S. is a bit different, as I said, because if you compare with previous period, normally, the end of Q1 and beginning Q2 is extremely low. So if that halves by itself, it's hardly nothing left. When you look at casino in Europe, you have a very similar trend also there for most markets. We are -- we're seeing similar changes in our traffic to be positive in most markets. When it comes to U.S., extremely well because of the big population only involved in land-based casinos as well, but also the social casino, as I mentioned, which is -- works as a kind of thing you tend to do when you work from home, not involving real money in that sense. When it comes to Asia, obviously, Japan, where our predominantly business is casino, we know that Q4 normally in casino is a bit slow for us in Japan. But Q1 started off very well. That was also boosted by the situation for us the revenues there. So we're very pleased with that. These kind of trends where you see the average fall down compared with where you want to be about 50% for sports is where we see generic across the globe, but also very similar trends in -- for casino as well. So it's quite easy to project for us how we see that things will play in the future, but we should never take it easy because you never know what happens. But in general, it's been able to monitor so far quite easily.

[Hjalmar Ahlberg, Equity Research Analyst]

Okay. And then a question on -- I mean your depositing customers and old customers. Can you say anything -- do you have any insight on how many, I mean, this COVID-19 impact, if it's a lot of new customers coming in and playing? Or is it a lot of old customers that are playing more? Or are old customers starting to play again? Can you have -- do you have any insight on that?

[Per Hellberg, Chief Executive Officer]

It is a mix, of course. If you look at -- we have an increase of NDCs in the quarter, of course. And in April, we didn't see any change in that. Which is quite normal as, obviously, we have an increase of traffic to the size because of the situation and the sport people are registering and paying. So that trend we have. But if you look at the increase of new customers compared with the increase of revenues, you cannot entirely allocate it to NDCs. You also see that active base. It's also active in casino. But obviously, if sports goes down, you have a negative impact on the revenue share from sports.

[Hjalmar Ahlberg, Equity Research Analyst]

Got it. And a question on the cost trend. I mean, of course, you now cut cost a bit partly in Q1. Q2, I guess, cost will be lower again or at least on par with Q1 maybe. But then if, I mean, sports event comes back online again, costs will come up. But can you say anything on the trend in Q1 and Q2 and for the rest of year for operating costs?

[Per Hellberg, Chief Executive Officer]

I think it's a quite big experiment, to be honest. Because one thing is that we know what we can allocate back directly to run the products, as we should. We know how much content creation cost to run sports in a normal way. We've no other issues like that. During this time, also, we've done a lot of efforts, for example, in performance marketing-related activities, like B2C. We also change a lot. So actually, we invest less now, but we can have more margins coming out from it compared with previous years. So currently, we've been saving there because we don't even need to buy a lot for sports, but it might be so that the increase, if we can save part of a healthy margin from it, of course. And that may be [ because timing has moved ]. But in the overall, it will generate more bottom line, of course. When it comes to staff, we have a -- we have program now to work at what we have, but we're still recruiting some specialist jobs where we believe we can have generally uptick from that. But in general, the investments we take will not be greater than the revenue increase we see. So all in all, we believe we should be able to operate with a steady margin going forward being very much in control of our cost.

[Operator]

[Operator Instructions] And as there are further audio questions, I will hand the word over to Åsa for any web questions. Please go ahead.

[Åsa Hillsten, Head of IR & Corporate Communications]

Yes. Thank you. We've got one from [ Martin Lundqvist ] and it's to Per, I guess. So how many states will Catena Media be active in 2020 in the U.S.?

[Per Hellberg, Chief Executive Officer]

Well, we're currently active in 7, 6 online, but then also Iowa, that is land-based, so we're doing a trial there to actually drive leads for land-based operators as well as a first start-up when the states start to launch and then to shift towards -- for them to online later. We know that Tennessee is coming up. That will make it 8 states. And we will see whether Michigan or some other states coming. But at least 8 states for the second half, and hopefully some more, which we don't know about yet.

[Åsa Hillsten, Head of IR & Corporate Communications]

Perfect. Thank you. I have no more questions from the e-mail.

[Per Hellberg, Chief Executive Officer]

All right. Thank you. That will conclude from our side. Thank you very much for listening in, and see you soon on the next quarter report.

[Peter Messner, Group Chief Financial Officer]

Thank you very much.