Evolution AB (publ) (EVGGF) Q2 2023 Earnings Call Transcript

Evolution AB (publ) (OTCPK:EVGGF) Q2 2023 Results Conference Call July 21, 2023 3:00 AM ET

Company Participants

Martin Carlesund - Chief Executive Officer

Jacob Kaplan - Chief Financial Officer

Conference Call Participants

Martin Arnell - DNB Markets

Ed Young - Morgan Stanley

Oscar Ronnkvist - ABG

Monique Pollard - Citi

Kiranjot Grewal - Bank of America

James Clark - Barclays

Estelle Weingrod - JPMorgan

Martin Carlesund

Good morning. Welcome, everyone, to the Presentation of Evolution's Report for the Second Quarter of 2023. My name is Martin Carlesund. I'm the CEO of Evolution. With me, I have our CFO, Jacob Kaplan.

I will start with some comments on our performance in the quarter, where after I will hand over to Jacob for a closer look at our financials. After that, I will round off the presentation with an outlook for the rest of the year, and then we're happy to take all of your questions. Okay. Let's begin, operator. Next slide, please.

Operationally, it has always been a quarter with high tempo, and we have taken steps forward in several areas. Everything we do does not show its effects immediately, but I feel that we, in many areas, achieved our goal of improving a little bit every day. I want to mention some of the operational highlights in the quarter as we continue to see strong worldwide demand for our products.

Evolution operations truly spanned the world today and during the quarter, we have launched our first studio in Argentina, and Colombia will be the next location to launch a new studio for Evolution. The aim is to go Live in Colombia with a new studio already planned in 2023. But as always, we have aggressive time lines and high ambitions.

So, I will get back to you with more details as we move forward. Development in LatAm is fast, even its numbers not yet are significant, and it's a region that we'll continue to develop over many years. The launch of Funky Time in mid-May has been one of the most successful launches of all time for Evolution. Funky Time now has more players than Crazy Time had at a similar point in time of this launch.

Games like Funky Time truly differentiates Evolution from our competitors, and many of our players play the first ever Evolution game round on Funky Time and after that move on to play also other of our games. The development of Funky Time involved the collaboration of over 100 individuals and stand up over a year in time.

We will continue to push the boundaries of game development, never afraid to try new solutions, sometimes fail, but always with the goal of creating the most flawless exciting experience of players. And I can already now promise you an even larger and more exciting game show 2024 that we already started to work on. We will launch over 100 games in some countries.

Our reschedule for Live, but also RNG is tilted towards the second half of the year. So we're now about to enter a very active period for game launches. Looking at the RNG releases, they are about on the same level, first half 2022 as 2023, and the small increase in volume in 2023 is in the end of Q2 having very limited effects on financials.

The progress that we have seen operationally in RNG during the first half is very good, and I look forward to the second half. Even so, we by now know the road to good growth in RNG is not a straight line. Expansion of our offering in North America continued step by step, rolling out new products, new features in more states and to more customers.

During the quarter, we have launched Red Tiger timed Jackpots in New Jersey, which was an instant success. Jackpots were launched previously in Michigan and Connecticut, and they have been a strong performer for operators. I expect Pennsylvania and West Virginia to launch them any day now as well. We also have added our dedicated studios for several customers.

In May, we launched Craps in Michigan. Craps is now available in three U.S. states with Connecticut to follow later this year. The focus to bring all of our fantastic products to each state continues and just recently, we launched Lightning Dice in New Jersey. Lightning Dice is a new game type, never seen before in U.S. and in U.S. studio.

The width of our product portfolio is unmatched in North American market, and there are many more games to come. These were just some examples of what we've been doing -- what's been going on during the quarter. You will see the financial effects of much of this in the quarters to come.

Operator, next slide, please. After a strong first quarter, I'm satisfied to report yet another financially a solid quarter. Let's look at the financials. Revenues in the quarter increased by 28.2% to €441 million. For the first six months, the growth amounted to close to 30%. EBITDA in the quarter increased by 30.8% to €311.7 million, corresponding to a margin of 70.7%.

For the first half of the year, we reached a margin of 70.3%, which is in the upper part of our 68% to 71% guidance for the full year 2023. The strong margin is the result of high demand of our products, good growth in combination with a strict cost control and high focus on continuously increasing efficiency in our operations.

For Live Casino, we grew revenue with 33.5% compared to Q2 last year, summarized into total revenue of €371.8 million. We have already -- we have, as I already mentioned, made great operative progress during the second quarter in RNG, and revenue amount to €69.3 million, corresponding to growth of 5.8% in reported numbers.

RNG revenue is stable Q1 to Q2, but compared to the pro forma RNG revenue of Q2, it's negative 4.0%. Even if not considering the better product outlook for the second half as well as the operative progress of the second quarter, we can do better financially in RNG. his quarter, we delivered the best margin ever in the history of Evolution, and we see very good potential and look forward to continue delivering in the second half of 2023.

Next slide, please. As we grow our business, we also expand the headcount. At the end of the period, we were 17,500 Evolutioners working hard to delight players every day. Expanding our studio capacity means that we need a high recruiting base. Increase in stock year-on-year amounted to 2,150 employees, corresponding to an increase of 14%. The increase in headcount is much lower than previous quarters, and we're focusing to increase the expansion in the remaining part of the year. And we currently see a very high demand that we need to put in.

Next slide, please. The game round index shows the development of the whole Evolution network game includes all games. I stated it before, but I will do it again, the game round is what it sounds like one round on the game. Even so, I again want to reiterate that one round of Roulette, one hand of Baccarat or one spin of a Slot all count as one game round.

Also important to note that there are differences between games since one hand of Blackjack takes longer time than one spin of a Slot as well as that each game round of a Blackjack typically carries a higher bet compared to Slot spin. And as a result, all game rounds are not equal in balance.

In the chart, the index values of game rounds from Live and RNG are weighted according to revenue contribution. This is such a joint index that includes all games based on equal revenue contribution. With this backdrop, we need to notice that we -- that the true activity and entertainment per player comes from the game round and the healthy increase of 56% we see in Q2 2023 is very good. I'm very pleased with the client activity increase in Evolution network.

The high growth in game rounds versus revenue partly reflects the volume of new players from new regions coming in with low bet sets. Over time, this will develop regardless of bet sets, as it's very positive that players want fair game and find them into us. That's the room for us to be a successful company over time.

Next slide, please. In 2023, we launched more than 100 new games. And I think it's fair to say it will be very exciting second half of the year since the majority of the games will be launched in H2. During the second quarter, we have released 24 RNG games, which is six more than in Q1, but many of those releases happened towards the end of Q2, and we will see a ramp-up of release in the second half of 2023.

In Live, just two games have been released in the first six months, and our road map for the second half of the year is nothing but fantastic. We have always been the one to push boundaries, to push the realm of the possible when it comes to the iGaming industry. Evolution offers an unparalleled portfolio of unique games, setting the pace for the whole industry with a new groundbreaking releases.

Evolution already has the widest, most diversed Live Casino offerings and the widest range of variants available. And that we're committed to maintain our leadership position in the industry that continues to develop rapidly. In the second half of the year, we're around dealing a wide range of product innovations across all types of games with something for everyone.

The general trend of games has clearly been towards high volatility that you can find in our XXXtreme family of games, but there's also -- but we also have to cater for those players that want the lower volatility games as well in the coming Prosperity Tree Baccarat and Gold Vault Roulette.

I will mention a few of the games that will come during the coming months. The Lightning family of games, made famous in 2018 by the launch of Lightning Roulette, then followed by Lightning Baccarat, Lightning Dice, Lightning Blackjack, have all proven to be successful for players worldwide. And the latest addition to the Lightning family will be Lightning Lotto.

To my knowledge, the first ever pure lottery style game as a casino game. I expect nothing less than out of the gate success for Lightning Lotto. As with the Lightning family, we're also developing several spinoffs from Crazy Time.

The first game Crazy Time gave birth to Crazy Coin Flip. The next spinoff is coming later this year, and it is called [Gradoor] Roulette. Both these games are based on popular bonus rounds found in Crazy Time.

One of the most popular '80s computerized console games was a Video Poker, you probably all have seen it in casino somewhere. It will soon be introduced as an ultimate fusion of nostalgia and modern gaming with our Live version of a Video Poker. There are many great variations of Baccarat, Squeeze, Control Squeeze, Lightning Baccarat, Golden Wealth, Peek and Red Envelope Baccarat.

And in September, it's time we get another fantastic version for Prosperity Tree Baccarat. So have a great Baccarat offering is to offer everything a Baccarat player could ask for, and that means more than just one Baccarat.

Gold Vault Roulette will also be released in the second half, which is an updated version of our most useful game, Gold Bar Roulette. With the majority of our plans releasing in 2023, ahead of us, we're entering an exciting period for Evolution.

And as I said earlier in this presentation, we're already working on the road map for 2024 and creating the most advanced and large game show ever seen in the history of iGaming. Exciting times ahead, and as you know, only the paranoid survives, but maybe most important of all, innovation and end user satisfaction is the core of Evolution.

Next slide, please. This slide shows the breakdown of our revenue by geographic region. We have a true global demand for our products, which is also reflected in the spread of revenues in all geographic regions. Europe reported a relatively strong growth of 15% in the quarter compared to last year.

Europe has grown nicely double digits in the past four quarters after several years of quite low growth. We know that there is a lot of development left in Europe for online casino, even though the product and market is well established and it's in some ways the most mature one. In Asia, we saw continued good growth with amounted to 48% year-on-year.

We still see rapid growth in Asia, but the growth rate in percentage terms has come down a bit as the base that has become larger. Even so, the potential in Asia remains huge with several billion people -- with the several billion people population, it's clearly the largest region. North America is also growing year-on-year with about 20% in Q2.

We see good potential for growth in the current states, both from an increase of share of Live, simply put a portion of Live on the online casino revenue and growth of the market in each state as new players familiarizes themselves with online gaming. We're working hard to launch new games, and it takes more time than we want, but the end goal is firm. We want all North American players to have access to all our fantastic games.

Over time, we will also see more states regulate even if that course also have been a bit slow during the last year, we expect it to pick up going forward. LatAm currently makes up for 7% of our total revenue in the quarter, and we believe it is a region with great potential and good momentum.

We have initiated construction of additional state-of-the-art studios in Latin America to cover the demand we see in the market, and we have already launched a new studio in Argentina. Remains the other region, which is mainly consist of Africa, that's primarily 3% of the group revenue and it's a future growth opportunity for us. Share of revenues from regulated markets amounted to 40% in Q2, which is on the same level as it has been for a number of quarters now.

With that, I'll hand over to Jacob for a closer look at the financials. Next slide.

Jacob Kaplan

Thank you, Martin, and good morning to all of you listening. We'll now move on to a couple of slides with comments on our financial development in the period. I will start on Slide number 8. Revenues amount to €441.1 million in the quarter. That's made up of €371.8 million related to Live Casino and €69.3 million from our RNG games.

Our Live Casino product has year-on-year growth of 33.5%, an increase of over €93 million from the same quarter last year, an almost €12 million increase from the first quarter this year. It makes up 84% of our group revenue in the quarter. The Live Casino business continues to perform well in the quarter, even though we see that we're behind on table delivery in Europe, for instance, something we're working hard to come up to speed with at the moment.

As Martin mentioned, we have a busy period in front of us with many Live Game releases. Today, we have a wide offering in Live Casino with a portfolio of over 70 games across two brands. Of course, as the portfolio grows, the relative impact of Game number 71 is less than that of Game number 20 in relative terms.

But still, the new games are very important as they often serve as an entry point for players in exploring the rest of the portfolio. So continuing to add to the portfolio with new games serving all types of players will be one of several growth drivers in the coming years.

Moving on to RNG. RNG revenue amounted to €69.3 million in the quarter, as mentioned. This is on level with the previous quarter, but it's a 4% decline compared to the €72.2 million in pro forma revenue in Q2 of last year. So pro forma meaning we include NoLimit City also in the second quarter of last year. It came into the group from the third quarter.

As you can see in the table below the chart, RNG revenues have more or less varied between €72 million and €68 million per quarter during the past year. So while very profitable and stable revenue streams, we're far from our growth ambitions in RNG. As Martin pointed out, during this quarter, many things have developed in the right direction. So, we're definitely not standing still operationally, even though the revenue is relatively flat.

Still, I think the comment I made last quarter is still valid when I said that I don't see a quick turnaround for RNG growth in Q2 or Q3. So that means real progress towards our goal of double-digit growth is towards the end of this year and onwards, of course. EBITDA for the quarter amounted to €311.7 million, giving us an EBITDA margin of 70.7% in the quarter.

It's well within our guidance of 68% to 71% for the full year set at the beginning of this year. It's the highest margin we have ever achieved in the quarter, and it's the result of high awareness costs throughout the organization.

Our teams throughout the Company put resources where they make a difference and can support our growth. This has enabled us to offset some of the cost increase that affects also us as inflation is at significant levels in many markets. Even the recent data showed some decline in inflation levels, we're still talking about 5% to 10% price increases in most markets.

Altogether, I would say our cost situation is much improved compared to the second half of last year. As we have seen during the past two years, our margins do vary both down and up between the quarters, and we maintained the guidance for this year of 68% to 71%.

Operator, let's move to the next slide, please. This shows our P&L in some more detail. I will walk you through it from the top. In the three-month period, April to June, Live revenue of almost €372 million and RNG just over €69 million, adding up to a total revenue of €441 million. It's a 28% growth year compared to last year.

There's no pro forma adjustments in the 2022 figures here, so that includes the acquired growth of NoLimit City. Adjusting for that, we would have 26% growth for the total group year-on-year in the second quarter. For the first six months of this year, growth is 30% compared to the same period last year.

Moving down to expenses, personnel expenses amounted to €87.5 million, an increase of 28% compared to the same period last year. We continue to expand in most of our teams, even though headcounts increase in the latest quarter was much lower than in previous quarters.

Depreciation amounts to €30.2 million. That includes just over €11 million in amortization of intangibles related to the acquisitions made. Continuing down, other operating expenses, that includes several cost items such as consumable equipment, communication costs, consultants and also royalty fees.

The line amounts to €41.9 million in the quarter. It's up 12% compared to the same period of 2022. This is a cost line that is a little lumpy for us. And in Q2, it's actually lower than in Q1. Main reason for that recent decline is that, one, we had ICE in Q1, which is a big marketing event for us and some spending around that; and we have also gradually reduced consulting spend during the year.

Summing up, total operating expenses amounted to €160 million for the period, an increase of 23% compared to the reported figures for the same period last year. And for the first six months of the year, total expenses are €317.6 million, which is an increase of 28% compared to last year. Operating profit is at €281 million in the quarter.

Moving down, financial items amounted to €1.5 million in the quarter. This includes interest rate income, but also includes a negative accounting charge as every quarter for interest on our right-of-use assets.

And there's also FX difference related to intra-group transactions and the revaluation of bank balance between foreign currency that's included here, so a number of items moving there. Tax is at almost €19 million in the quarter. It's a tax rate of 6.7%. For the six-month period, tax rate is 6.8%, so still slightly lower than 2022.

I expect around 7% this year. So, we'll probably see a slightly higher tax during -- tax rate during the second half. These items bring us to a profit for the three-month period of €264 million and equals earnings per share of €1.20 per share for the quarter after dilution and €2.36 for the first six months. It's an increase of 29% compared to the first half of 2022.

With that, operator, let's go to the next slide. Before I hand back to you, Martin, we'll look at cash flow and financial position. Starting with the chart to the left, where we show capital expenditure, the gray part of the bars, as usual, investment in tangible assets, which is mainly our studio build projects. In the quarter, CapEx in tangible assets is almost €10.6 million, continue to invest in current studios and also add new locations, as was mentioned earlier.

The blue part of the bars, its investment in intangible assets, and that's related to development of new games and features to the platform, slightly up in the quarter to just over €12 million. In total, CapEx year-to-date is €45 million, so a notch-off the pace of our guidance of €120 million for the full year.

The CapEx amount can vary a little with the milestones in projects, but I would say we have not quite managed to invest as fast as we thought in the beginning of the year. We will likely increase CapEx spend during the second half. Let's see if we reach €120 million for the full year. I would say that make the synergy stretch target right now. In the middle of the slide, we show operating cash flow.

We have continued very good cash generation in the past period. While we don't break it down that way in the slide, the addition of the RNG business during 2021 and 2022 clearly contributes here. In the quarter, operating cash flow amounts to €211 million. Operating cash flow in relation to EBITDA on a rolling 12-month basis is still on a good level at around 78%. Just far right in the slide, a quick look at the balance sheet, maintain very strong financial position, €541 million is our cash position at the end of June.

During the period, €426 million has been paid as dividend, so that has come out already. And out of the €541 million on balance today, roughly €258 million is, I could say, earmarked for next year's dividend in line with our policy of 50% dividend payouts. That was the end of my prepared comments.

I hand back to you, Martin, for some closing words, and then we'll take questions. Over to you.

Martin Carlesund

Thank you, Jacob. A few words to conclude this report presentation before we open for questions. Towards the end of 2022, we could see that the cost was increasing. And now we see the effects of the work that we put down to come to a good cost control and good margin. You need to believe in what you do and you need to take action.

For the second half of the year, we're equipped with fantastic product pipeline with games that will both attract first-time players as well as appeal to advanced players, have a solid setup and progress of our RNG development and releases. We talked and feel excited about the new games and our opportunities.

We're already working on our road map for 2024, which will be the best one ever. We want to be better every day and further strengthen our market leadership by continuous focus on the best games experience. Investments for the future will continue in form of new studios and in constant innovation of new products.

As the leading innovator in the industry of online casino, together with a record number of new products released every year, we will continue to relentlessly increase the gap to our competitors. Evolution has a great speed forward, and I can promise you that we will continue to push boundaries as paranoid as ever and also for the coming period. I look forward to an exciting second half. Thank you all for listening, and we'll speak in a couple of months again.

Now let's move to questions, please. Next slide, last slide.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Martin Arnell from DNB Markets. Please go ahead.

Martin Arnell

So I just want to ask the first question on capacity. If you compare the demand to how you're reporting revenue growth and if there's a lag or -- I mean I noticed that you mentioned that you were behind on table delivery in Europe. If you could also elaborate why that is and how you're fixing it?

Martin Carlesund

We're currently undersupplying, a little bit in Europe, yes. So, we're undersupplying in Europe. It's -- we're a large company with 17,500 persons. It's always a challenge to grow at the pace that we're. And it can be a little bit like that from time to time, but we're undersupplying. So, that's the situation right now.

Martin Arnell

And how are you fixing this delivery in Europe? Is that a quick fix or...

Martin Carlesund

Quick is always relative to the perspective of the question. I would say that it's always something that we need to work on. And now, we're in an expansion phase in the second half, we will do all we can to continue to increase the speed of expansion.

Martin Arnell

Okay. And when we're speaking about growth, the catalyst that you mentioned for the second half, do you expect that to be enough to sort of stabilize the growth levels in the second half? Or do you expect continued deceleration?

Martin Carlesund

We don't guide on the growth. So right now, the focus is that we have a fantastic pipeline of games. It's still a little bit towards the end. The RNG, as I've stated a couple of times already, within operationally very good in the first half. We're not satisfied with the minus 4% pro forma, but on the other hand, it's a plus 5% operationally. So right now, focus on expansion in Europe and the releasing of games.

Martin Arnell

Okay. And North America, the 20% growth rate, I guess you were hoping for more than that. And I'm thinking, what do you think about the time line for new game launches there? And when do you expect to launch the first Game Show in New Jersey, U.S.?

Martin Carlesund

We're working on new game launches and Game Show launches also in the U.S., and we look forward to do that rather sooner than later. We have a 35% growth year-on-year, first half versus last year. That is quite good on a non -- with the stable market. We also have the 15% growth in Europe for the most mature market, which shows you a little bit where we are in comparison to timing, I mean, the most mature market's growth difference and we have 35% increase. Then how that plays out quarter-over-quarter, I would be a bit careful with the judgment of that.

Martin Arnell

Okay. And my final question is. There's been a lot of activities in the market by competitors lately. One of your competitors announced the launch of Game Show in New Jersey, for example. And what's your view on all the activities around you?

Martin Carlesund

My view on competition is that it's good to have competition. It makes you run faster. I have -- then I would say, as I've stated many times, the level of competition has been more or less the same over quite some years. So things will happen in different markets in different ways, but....

Operator

Thank you. Your next question comes from Ed Young from Morgan Stanley. Please go ahead.

Ed Young

My first question is on North America, if that's okay. I appreciate you said that things can be lumpy quarter-to-quarter and you're sort of remain focus there. You put in some new games in Q2. But I wondered if you could talk a little bit more about what's driven this sequential quarter-on-quarter decline. Is that within Live? Is that RNG impact? Did you have a particularly high number of dedicated tables delivered in Q1? I'm not quite sure how to think about it or perhaps you could give us some color on what's driven that North America in Q2?

Martin Carlesund

The Q1 was a strong quarter. You have the March Madness and a lot of things, and it sells out very well for us. And I would say that I will focus on the year-on-year growth for the first half of the 35% or the 20% growth on the quarter in itself versus the quarter before. So, I'm quite satisfied, but we could always do better. We could always have launched a little bit fast. We could have about a couple of games out fast and could have benefited a little bit better. So there are things that we can do, which makes it better.

Ed Young

Just to follow up on that, is -- by product, was there Live going or an RNG declining? Or was there any product mix in that? Or is it fairly even across both?

Martin Carlesund

We don't comment directly on different brands in different markets or different products in different markets. I would say that the situation is blended.

Ed Young

Okay. The second one is on costs. Obviously, a very good drop in other operating costs in Q2. You mentioned ICE there, Jacob. Is that a right way to think about it that costs could be lumpy and perhaps to Q1 other costs were a bit high and this is more sort of a normal rate that it will grow or more is there some exceptional reductions in Q2 and Q1 was more right base around? I'm just trying to think about how we model that going forward.

Jacob Kaplan

Yes, it is a little lumpy. So it's a hard one to kind of forecast quarter-to-quarter. But I would say maybe the starting point would be somewhere in between Q1 and Q2 when you think about the rest of the year. So there are -- every quarter, there are a number of things that sort of move in that category. So it's a bit -- over time, of course, it will increase as we grow, then it's not fixed at this level by any means.

But the difference between Q1 and Q2 is one, you can say, yes, we have some extra marketing spend in Q1, which we have every year, but that's one item. And then, we have reduced consultant spend in this quarter as we've tightened things up a little bit. So, yes, but I would sort of -- if you think about the rest of the year, maybe the starting point would be somewhere in between Q1, Q2.

Ed Young

Understood. And then final question, just on capital allocation, you continue to build the cash pile despite -- I know you've got -- you're already saving for next year's dividend, and it sounds like you're sort of covering that, but you'll continue to build a cash pile as the Company produces cash. Is there a level at which despite your wish this to be an entirely equity, not debt funded business that it seems becomes inefficient and you would think about returns, sort of extra return to shareholders or providing the market with some sort of capital allocation framework, will you can make clear your kind of philosophy on that?

Martin Carlesund

As the management of the Company and as the CEO, we love to have a lot of money in the Company. And the capital allocation, of course, goes to the Board decision and the dividend policy is currently what it is. But in the long run, of course, we can't have as much cash as possible in the Company. So there will, of course, be time to take decisions regarding that. That is, however, a bit early right now. Half of the cash is the dividend, probably the half of -- the other half is to working capital on that in the quarter, but it's still there. We don't need to take any decision on that yet.

Operator

Thank you. Your next question comes from Oscar Ronnkvist from ABG. Please go ahead.

Oscar Ronnkvist

So, the first one is just on the quarter-on-quarter growth. I know you like to look at the longer term or the year-over-year numbers. But just in terms of any sort of headwinds that we maybe could have experienced, I'm thinking about currency, for example, also a bit seasonality, and we have also seen a lot of operators reporting pretty good sports book margins, which could weigh on the activity in casino I support. Because I noticed that the game round index is up 8% sequentially and the top line is up 3%. So any color on that would be very helpful.

Martin Carlesund

I can start, and then I'll hand over for the currency effect to Jacob. I think that we can -- I already stated that earlier that we're part of the world. The world is in a quite challenging situation right now. And we can't sort of quantify any effects of inflation or anything. And when we took a high ambition and we started working with cost already in June last year and that you see effects from now.

Even so, of course, I believe that we're all affected by inflation and salary and everything else. So that could be there. I think that also the tilting of the product releases towards the end of the year is important to remember when you look at the quarters. Then when it comes to currency, I can ask Jacob, who can give some color on that.

Jacob Kaplan

Yes. We stated in the report that compared to the same quarter last year, there is about €2.5 million effect on EBITDA, some headwinds that if we would have the same currencies as last year, we would actually have a little bit higher EBITDA this year. It might be a little bit headwind also from Q1, but it's not -- yes, it's nothing super significant that we sort of put a lot of focus on. So it's more, yes -- I think Martin, you covered some of the other things between the quarters.

Oscar Ronnkvist

All right. Perfect. Just the next one, I want to follow up on the competition side. We've also seen like Las Vegas Sands maybe entering the Live Dealer space according to some news. And also, we've seen Rhode Island launching, and then we saw Bally's partnering up with Stakelogic, and we haven't seen a press release from you.

And thirdly, we have seen the Finnish State, one of the operator, Bake House choosing Playtech. So I just wondered if you could give some color on that. Is that just sort of coincidences? Or is there anything that you could maybe expand on the competition side?

Martin Carlesund

I would -- first, I would say, Rhode Island isn't regulated yet. So, we're in the pre -- before anything has happened, so that may be the first just factor reaction to that. When it comes to the completion, I don't see it as much different from where it's been before. We have to accept the fact that we're a large player.

We have, let's call it, solid market share. And many of the operators are dependent on us. And we need to treat them in an absolute best possible with the highest respect and we need to see that they are happy with us, but it's also natural that they have different suppliers. And I don't see a big difference in that.

Oscar Ronnkvist

All right. Can we expect you to launch Rhode Island Studio, assuming it will be regulated? Or how should we think about that?

Martin Carlesund

Whenever a state regulates in U.S., we would be having the ambition to be first to market.

Oscar Ronnkvist

Great. I just have one more, and that would be the comment on Europe demand exceeding capacity at the moment. So just to get a sense of the dynamics there, is it like branded tables or like Blackjack tables? Or in what sort of terms are you not meeting the demand at the moment?

Martin Carlesund

I won't go into exact details of where that's a little bit to the -- I wouldn't want to disclose that. In general, we're undersupplying the market right now. So, we need to expand that.

Operator

Thank you. Your next question comes from Monique Pollard from Citi. Please go ahead.

Monique Pollard

My first question was just on RNG. Obviously, you made the point about a lot of operational improvements that you've made in the RNG segment. As you know, obviously, the double-digit ambition is a sort of a longer-term ambition, but we should see some improvement in the second half. Just wondering if you can give us a little bit more color on the type of operational improvements that you've made?

Martin Carlesund

Yes, I can give you a little bit more color, of course. We made a complete reorganization in the delivery of new slots. We engaged a number of new responsible areas. We've got better games. The releases come out now in the way it should. And I'm happy with the releases to -- and I'm confident with the release that comes out in the second half. There's quite big changes in the RNG setup within Evolution.

Monique Pollard

And I guess -- so because, I guess, when we just look at it sequentially, it looks like, obviously, Q2, there were quite few more RNG games, 24 versus the 18 in the 1Q. But your point is that a lot of those games in the 2Q were released towards the end of the quarter. So have they been performing in line with expectations as we get into July then?

Martin Carlesund

We have released a little bit towards the end of the quarter. I'm a person that is never really happy. So, I think that we can always do better.

Monique Pollard

Understood. And then just a final question, sorry to come back to it one more time, but North America, I guess the way I was thinking about it is in the first quarter, when I look at just the overall North America iGaming growth, you were clearly taking significant share in that market. You were growing meaningfully faster than the overall market. Whereas in the second quarter, growth was more in line with the market. Just trying to understand, obviously, you have your plans and you think things can be improved there. But should we expect going forward, as we're modeling that market, you to grow in line with the market there or slightly better than the market?

Martin Carlesund

The ambition from us is, of course, to take market share and to increase our footprint in the market. And I think that if you look at the first half, we have taken market share from the market in total. And our ambition is, of course, to continue that. That can be a bit up and down over the quarters. Quarters are depending on hold and what's happening in the Company in general. And we're not really satisfied with Q2, and we need to do better in Q3 and Q4 and onwards. But our ambition is firm for -- to take market share.

Operator

Thank you. Your next question comes from Kiranjot Grewal from Bank of America. Please go ahead.

Kiranjot Grewal

Just a couple from me. Firstly, on RNG, why do you think you're struggling to grow this segment? I mean, initially, you bought NetEnt which had acquired fast-growing Red Tiger then you've added BTG and NoLimit City as well. I mean, even if we consider no -- even if we consider NetEnt to perhaps be sort of growing, should the mix of growth not have improved through the following acquisitions? Is there something fundamental in there that's not making it work?

Martin Carlesund

I think that, no, there's nothing fundamentally. I think that we're where we're with RNG. We're in a bit -- we're slightly late, as I stated before, with the turnaround. And we have the ambition to double-digit growth. We have corrected a lot of things now in the platform, the OSS and everything, and we can do a lot of things better. We're not happy with the Q2 in a way that, of course, we could have done other things. But fundamentally, yes, we need to continue on the road where we're.

Kiranjot Grewal

I mean related to that, I remember -- I was thinking a lot about One Stop Shop a while ago. I mean, how is that progressing? Has that helped? Or do you think once the -- now that you've revamped RNG, that will help?

Martin Carlesund

It has helped, and it's on its way. And we're on a very good progression with it, yes.

Kiranjot Grewal

Okay. Just the last one for me. And I know we touched on it in one of the earlier questions. But the cash pile, in the past, you've said you have a priority to keeping sufficient cash on the book, one; second, then you think about M&A; and then third, you think about cash return to shareholders. It looks like there's a lot of cash already there. You've done M&A in the past. Are you considering more given RNG has not really gone the way you wanted? Would you sort of broaden your outlook into different areas?

Martin Carlesund

I could comment that there is -- right now, we have our hands full to work with RNG that we have, and we're very happy with the brands that we have acquired. And don't forget that it's highly accretive to margin, and it's contributing a lot to Evolution as it is right now. And that's where we're with RNG, and that when it comes to the pipeline, yes.

Jacob Kaplan

Yes. No, there's no -- I would say it's the same answer on capital allocations as actually through the past years. And if you look back, I mean, there has been buyback a little bit more than beginning of '22. There was a buyback, €300 million. So -- and M&A is a little bit sarcastic.

It's our growth strategy, it's organic. And then there can be opportunities for M&A that can support that. And we could be here next year and no M&A, and that would be fine or there could also be opportunities during the coming year that we think are right. So, the components are the same, there's a dividend policy to begin with, 50%. We think that we should be in a cash position.

But of course, the cash pile does not need to sort of be endless and has seen in the past where those buybacks and M&A have happened. So, I would say the components are the same as they've been before.

Operator

Thank you. Your next question comes from James Clark from Barclays. Please go ahead.

James Clark

Just on your EBITDA margin guide of 68% to 71% for the full year, which you're reiterating today. Your first half was 70.3%. So I guess, would you be comfortable for the consensus towards the sort of top half of that because that's the 69.3% at the moment? Or will the game launches and sort of investment that you have in for the second half pull that back to sort of middle of the range and you're happy with that consensus today?

Jacob Kaplan

I understand the question, but I guess we've given the range and we're not sort of giving a range within the range. So we're keeping it there then, like you say, I mean, we're not definitely in this little bit -- we're not -- we're far from that far, but we're not in the bottom end of the range. I mean, so we don't see -- maybe that -- we're not looking to 68% margin in the third quarter. So, a little bit as the year goes on, as you say, you can kind of narrow it down. But we haven't made any change to the guidance. So, there's no -- nothing additional to say there or anything.

James Clark

Okay. And then a sort of related question is that the staff, employee -- so the employee counts growth in the second quarter was 14%, revenue is growing at 28%. There is a dislocation there. I apology, but you did actually mention this earlier and I missed it then. Should the staff growth pick up again in the second half to get -- to grow a little bit faster, I guess, as you add the Live gaming studio in Colombia?

Jacob Kaplan

Yes. I think that's not maybe only with Colombia. But as we say, I mean, we're a little bit undersupplying the market in several regions, as mentioned, Europe, and that's a lot connected with the headcount growth. So, we hope that we can increase a little bit more on headcount during the second half of the year. So that's right.

James Clark

Okay. And on the Colombian studio, is that a Q3 or Q4 rollout that we should expect?

Jacob Kaplan

Yes. Colombia.

Martin Carlesund

It's a very aggressive time. As I said, it's like get back to that and you got more of us as wishful and good ambition. If anything, it will be very, very late then......

James Clark

And then a final one is just on RNG to come back on. You're happy with how things are going behind the scenes. You've got a very exciting road map in the second half. Is that an exciting road map enough to deliver double-digit, do you think? Or do you wait for longer because you need the 2024 road map that you said is going to be the best ever. Just can you help us with some color on that?

Jacob Kaplan

As I said that, I mean -- I don't see the same statement as maybe we said already to begin with. It will take some time. So, no -- it's not double digit in Q3. I mean, let me clear this, we think towards the end of this year, some direction towards that, and it will take into next year as well before we're fully there.

Operator

Thank you. Your next question comes from Estelle Weingrod from JPMorgan. Please go ahead.

Estelle Weingrod

Just one for me on the new studios. On top of LatAm, could we expect one new studio in Europe in the second half of the year? Or is it also more like a 2024 story? You mentioned earlier in the call, there has been some delays. What were you referring to? Could you elaborate a little bit on this? Is that staff shortages related or something?

Martin Carlesund

We're at full speed on that, and we're really pushing forward to add a new studio in Europe also this year, but...

Operator

Thank you. There are no further questions at this time. I'll now hand back to Mr. Carlesund for any closing remarks.

Martin Carlesund

Okay. Thank you, everyone, for listening. Pleasure to be here, pleasure to answer your questions. See you soon in a couple of months. Bye.

Jacob Kaplan

Bye-bye.