Feb 10, 2021
Martin Carlesund
Thank you very much. Good morning, everyone.
Welcome to the presentation of Evolution year-end report for 2020. My name is Martin Carlesund, and I'm the CEO of Evolution.
With me, I also have our CFO, Jacob Kaplan. As always, I will start by giving some comments on our performance for the quarter.
I will then hand over to Jacob for a closer look at our financials, and after that round off the presentation with an outlook for 2021. And then we're happy to take questions.
Next slide, please. I'm pleased to present the highlights of Evolution for the full year 2020.
It's been a fantastic year for us despite operational challenges that the pandemic have caused. Our strong result comes from the combination of our innovative product portfolio, global demand as a result of these products and innovations and our constant pursuit of cost efficiency.
Recently, we released the first ever Live Casino version of Craps to our online platform, and it has been very well received in Europe, but it is primarily, of course, aimed to strengthen our portfolio on the North American market. Crazy Time, which were released this summer, and which is 1 of our strongest releases ever, is an example of successful 2020 additions in the Game Show category.
Our Game Shows are becoming increasingly popular and, in fact, new categories of sales also outside what is usually defined as online casino. We invented the Game Show category and added that to online casinos to increase the entertainment factor and enable new playgroups.
And now, after a few years, I'm very pleased to see that the traction they have now. In December 2020, we broadened our product offer and expanded in the new vertical through the acquisition of NetEnt.
The acquisition brings together some of the online casino industry's most renowned brands into a single powerhouse, fueling our ambition to become the world-leading provider of online casino. I want to point out that the 2020 year-end results also include €19.4 million nonrecurring restructuring costs.
The acquisition of NetEnt was completed on December 1, and, consequently, is included in the P&L from that day. I will later in this presentation get back to some more details regarding NetEnt.
And I should also mention that the Board proposed a dividend of €0.68 per share, equivalent to 51% of the net profit 2020. All in all, we round off 2020 with strong financial result and continue to 2021 with a strong momentum, which makes us well staged to further strengthen our market share and continue to widen the gap with competitors.
Next slide, please. Now let's look at the fourth quarter and focus on the results adjusted for nonrecurring restructuring costs.
We continue to see worldwide strong demand for Evolution Live and a revenue increase of 51% for the quarter compared to the same period 2019. We see growth in Slots of 5% if we look at the whole quarter and compare it to the NetEnt reported figures for Q4 2019.
EBITDA adjusted for nonrecurring costs was 65% -- EBITDA margin for the adjusted for nonrecurring costs, sorry for that, was 65.1% and amounts to €115.6 million, which is an increase of 107% compared to last year. The contribution from NetEnt to this figure was €9.2 million.
I'm particularly pleased with the positive strong momentum in player numbers and engagement level for our product, which continues to drive high-volume increase in our network and how this, together with our cost efficiency, has paid off in our strong results also for this quarter. All in all, I would like to sum this as nothing but a fantastic achievement by all Evolution's team numbers.
Next slide, please. Let's look a bit closer on the acquisition of NetEnt and how we see that contributing to the company short and long term.
Next slide, please. Our long-term ambition is to become the world-leading provider of online casino.
The addition of NetEnt and RedTiger add the second vertical and 2 great brands, which together with Evolution's stronghold in Live Casino, takes the group a significant step forward towards this ambition. As a group, we are committed to creating the best gaming experience for every player in both Live and Slots as well as the mash up between the 2 verticals.
In recent years, Evolution has redefined Live Casino by creating the Game Show segment, which combines the Live products with RNG element. I'm excited to explore what can be done now that we add Slots.
We see strong revenue synergies as well as cost synergies and is ahead of our plans on delivery. With acquisition, we've taken a net even stronger position on the North American market, but we also see positive effects of the strengthening our position on other markets.
By targeting the market with a broad portfolio comprising best of each vertical as well as the ultimate mix of the 2, we'll be in an even stronger position to capitalize on opportunities and the market growth. Next slide, please.
Following the completion of the acquisition, it was a priority for us to ensure a fast integration. We were well prepared and restructuring activities started immediately upon close.
It might be seen abruptly even brutal, but I strongly believe in building 1 company and move fast towards the future instead of getting stuck in a long-term integration project that often never ends and have vague deliverables. We're in a fast moving industry that at the moment are on the edge of changing from land-based to online.
It's an exciting time, but we need to work hard to deliver to earn our position in this market. And we need to do that as 1 company with multiple brands.
So act like 1 team relentlessly put forward towards the future is important, and therefore, this restructure needed to be fast. Cost synergies initiatives have been implemented that will result in approximately €40 million, which is €10 million more than previously communicated.
This effect will happen during the first half of 2021, about 6 to 9 months earlier compared to the pre-deal announcement. Moving forward, our focus will be on developing the new company without losing speed on any vertical.
Through our shared emphasis on product innovation and, ultimately experience and by utilizing combined knowhow from the new organization, we are able to speed up our market penetration and increase the gap to competition even further. We will continue to strengthen our strong position in Live and at the same time expand our Slots business into new markets.
Next slide, please. Let's now move to some more details for Live -- Evolution Live only.
Next slide, please. In 2020, we launched a record number of 12 new games.
This includes several new releases in our award-winning Game Show category on the new system casino traffic such as Craps Live. Craps Live is, of course, very interesting as we focus specifically on the U.S.A.
and is set up to go live during 2021. All in all and as the result show, it was a strong product here for Evolution.
Now look at -- let's look at the future enrollment for 2021. We will continue to expand our range of emerging and engaging Game Shows utilizing the newest technology and Live Casino innovation to field an even broader spectrum of players.
In addition, we will continue to build the success of our First Person range, and we are also working on new games and features to support continuing growth in the Asian market, retain the contract for this region and its players. The demand for our classic games, such as Roulette and Blackjack and Baccarat, remains high, and we also continue to develop variants and unique twists to these game favorites.
Now with NetEnt as part of Evolution, we will blend NetEnt player favorite into the world of Live Casinos to create a new wave of games that provide players with just more truly unique entertainment experiences. Needless to say, I'm very excited about the coming game launches for 2021 for both Evolution Live and Slots.
Next slide, please. As you know by now, bet spots is a good indicator for the activity in our network.
The positive trend with a strong increase of bet spots have -- that we have seen all through 2020 continued and accelerated in the fourth quarter. The number of bet spots from end users amounted to 15.3 billion compared to 7 billion in the same period last year, which is a growth by 115%.
Historically, the bet spots have increased at a steady rate. But in the second quarter 2020, we experienced a strong increase in volume, which have been continued throughout the year.
This is partly a result of many new players introduced to Live due to the pandemic, even some land-based and other players. Meanwhile, another explanation and reason is the impact for our increasing range of Game Show style game that generate a high volume of smaller bets.
Crazy Time was launched last summer, achieved a phenomenal success and became an instant player favorite peaking at record levels of concurrent players. The Game Show vertical is an important part of our offering since we have found completely new players group and increased our market with these new games.
We, of course, need to note that the pandemic has a positive impact on the activity in our network, but we also need to note that it's very challenging to operate during the pandemic. We are simply not operating at full capacity.
And especially in U.S., we have had challenges. In the end of Q2 and Q3, I stated that the effect of the pandemic was neutral or slightly positive for Evolution Live, and that is still a valid statement.
Next slide, please. In addition to our product development, we continue to invest in the future in forming new studios.
We have been delayed by the pandemic both in expansion in 2020. But with addition of newer space getting regulated at very high demand in Europe, we now need to work hard to increase capacity.
We opened our second U.S. state, Pennsylvania, in late 2020.
And during 2021, we will expand into Michigan with a new state of art studio. Following the acquisition of NetEnt, we expect our U.S.
footprint to grow at higher speed. NetEnt has held a leading position in New Jersey, which was the first U.S.
state to regulate since 2015. NetEnt games has also went live on the first day of regulation in Pennsylvania in 2019, West Virginia in 2020 and in Michigan in 2021.
During this quarter, we also went live with a midsized English-speaking studio in Lithuania. To meet the high demand in primarily Europe and Asia, we are also currently evaluating additional options for new studios in Europe during the year.
Next slide, please. Now let's move to a few slides on the whole group of Evolution.
So next slide, please. Due to the pandemic and the relating restrictions, we opened fewer tables than planned during 2020 and fewer than demanded.
As a consequence, the headcount was -- were lower in the second and third quarter than in the third quarter. We are now expanding in all locations.
And the end of the fourth quarter, we reached 8,700 employees. Our teams work with an ungraspable number of different things on the databases.
There are a lot of hard work behind each and every number that I present to you. Our Evolution team ensure that we stay on 1 step ahead in product innovation and never lose sight of quality or reliability.
They are the ones to ensure that we pay attention to the small and sometimes actually big details. Evolution is managing, but most of all, we are people company.
In start, our focus has been to recruit the best talent in each market, and that remains ever as relevant today. We continue to see a high demand for tables, and we'll continue to grow with our customers.
Therefore, expecting the number of employees to grow fast as the pandemic allows during 2021. Next slide, please.
This slide shows the breakdown of revenue by geographic region, and it's an evidence that the demand and growth is truly global. The Nordics is a stable region, even if our smallest, contributing with about 6% of the total revenue.
During 2020, the growth was moderate up until the fourth quarter where we saw stronger development. You can see the same break of negative trend for the U.K.
in the fourth quarter. The year-on-year comparison shows a growth of 15%.
The Rest of Europe continues to develop well and constitute about 46% of revenues. The growth rate year-on-year amounts to 28%.
As we have seen during the past year, Asia and North America have grown very fast, with the year-on-year growth amounted to 137% and 91%, respectively. We see good potential in both these markets and expect continued high-growth rate going forward, particularly as we are small actor in Asia and with the recent regulatory movement in U.S.
and the coming Michigan studio. Other, including South America and Africa and remaining part of the world, shows good growth of 68%.
In the long term, we see that the South American market is promising. During the quarter, Evolution was the first supplier to launch Live Casino games in the newly regulated Colombian market.
Revenues from regulated markets showed a growth of 52% and constitute 36% of revenues. Increase in the share of revenue from regulated markets is partly due to the growth in U.S.
and Nordic as well as that we have operated more dedicated tables in the quarter. A large part of our table fees are in the regulated market category.
And due to more tables in operation, those fees are high in Q4, and it also increased as a percent of share of revenue from regulated markets in the quarter. I will now pass over to Jacob, who will take you through the financial details.
Next slide, please.
Jacob Kaplan
Thank you, Martin, and good morning to all of you listening. Now for a couple of slides with a closer look at our financial development during the period.
I'm on Slide #14. This slide shows the group's performance adjusted for the nonrecurring restructuring costs of €19.4 million.
Revenue amounts to €177.7 million in the fourth quarter. That includes €17.8 million from the acquired NetEnt business.
NetEnt, as mentioned a few times, now is included with 1 month in the fourth quarter P&L, so from 1st December. Our Live Casino business has developed really well in the quarter.
Revenue from Live Casino is about €160 million in the quarter. That's comparable to previous quarters in this chart.
And as you can see, a €20 million or 14% increase from the third quarter of this -- of 2020 and compared to Q4 2019 a growth rate of 51%. The strong performance is seen across all products.
As Martin mentioned, both our traditional table games as well as new game releases from 2020, including Crazy Time that was launched earlier this year, contributed. And in this quarter, the new game release is the Live Craps game, which has found an audience also outside of its, let's say, home market of the U.S.
where it will be launched later this year. The second wave of the pandemic that we've seen in most countries during the end of last year has given a tailwind to all online activity, including online casino.
However, as you see in the blue bars in the chart, we had a very good growth coming -- also coming into 2020. So the current growth rate is definitely not only related to the pandemic.
Something we do see is that many new players have found our games earlier this year are staying in the network and that's positive and contributes to growth. The Slots business also finished the year with increased volumes in December.
Looking pro forma for the full fourth quarter and comparing to the same year 2019, we estimate growth at about 5%. Our ambitions for growth are higher.
And as Martin mentioned earlier, we feel good about the product development and the growth prospects going forward, maybe especially during the second half of the year when we will see some results of our joint product development. But we entered 2021 with mid- single-digit growth in this area.
The Slots business will make up about 20%, 25% of group revenue as we come into 2021. In Q1 and going forward, we will report Live and RNG revenues separately.
So you will be able to follow this development going forward. EBITDA for the quarter amounts to €115.6 million.
Again, this exclude the €19.4 million in restructuring costs taken in the fourth quarter. EBITDA margin is 65.1% in the fourth quarter.
This is the highest level we achieved for a single quarter. Our guidance for full year 2021 is that we aim to reach the fourth quarter level also for the full year 2021.
So aiming at about 65% for full year 2021 EBITDA margin. There are several balancing factors affecting margin.
One, the ad business right now with slightly lower margins coming into the year, but we will have cost savings through the synergies as the year progresses, which should support margin. Two, as we've stated before, we will prioritize growth over margin.
And hopefully, we will be able to open more tables and also expand more rapidly in, for example, the U.S. than what we have been able to do during the second half of 2020.
We are right now somewhat boosted on the margin side from the special circumstances that have come with the pandemic, high volume but with fewer available tables. You see that in the slide that the margin -- actually you see they jumped up to a level from second quarter.
So as the pandemic hopefully lingers off, we should be able to expand faster. This could pressure margins down in the short term.
But on the other hand, our scalability should mean that the growth in top line also supports growth in margins. So some of this, some of that, all in all, we think the 65% level is the reasonable expectation right now for 2021.
We'll, of course, come back to this as the year goes on. Operator, let's go to the next slide, please.
This slide shows our P&L in a bit more detail and as reported. Meaning it includes the nonrecurring items excluded on the previous slide.
Walking through the items from the top, again, with the revenue of €177 million, a 68% increase year-on-year, including the 1-month of the NetEnt business. For the full year, revenues are just over €560 million and growth is 53%.
Organic growth is just under 49% for the full year. This is a quarter with several moving parts, especially on the cost side.
So we'll try to sort them out for you here. Operator, let's go to the next slide.
So this zooms in a bit on the cost here. Going forward, we will not report NetEnt as a separate business unit.
We will report revenue separately, as I mentioned earlier, but operations will be fully integrated, which Martin also stated early on here. That we're working hard to kind of create 1 company.
However, trying to sort out the business here in Q4 so that we all have a common starting point. So let's walk through this.
The reported operating expenses amount to €92.8 million. You will recognize that number from the previous slide, whereof €38.6 million is personnel expenses.
NetEnt adds about €33.4 million here in Q4, making the comparable underlying increase about 6% from the same period last year for the rest of the group. Depreciation includes €2.9 million related to amortization from the deal and about €1 million from the underlying NetEnt business, making depreciations for the online Evolution business €7.6 million.
That's also an increase of 6% compared to fourth quarter of 2019. And then in other operating expenses, that's reported at €42.8 million in the quarter.
This includes the restructuring costs that we mentioned earlier of €19.4 million and so an underlying increase of €1.3 million in the quarter. So those are the main items affecting comparability between the fourth quarter and the same period last year.
I'll repeat what we said before. We will run Evolution as 1 business.
So we'll probably never see such a neat and tidy slide again as operations are integrated continuously and the lines get blurred. But this gives an explanation of what has happened in the fourth quarter.
All right. Operator, let's go to the next slide, please, and that takes us back to the full P&L.
So if I continue down from operating profit, financial items, just over €800,000 in the quarter, bringing us to profit before tax of 84 point -- 84 -- just around €84 million. Tax rate is 4.1% in the quarter, slightly lower than normal as for the full year 4.7%.
Profit for the period, €80.6 million, which then includes the nonrecurring items as mentioned earlier. Earnings per share, €0.41 per share in the fourth quarter and €1.51 per share for the full year 2020.
That's an 84% increase compared to 2019. That completes the P&L.
Operator, let's look at the next slide, please. Before I hand back to Martin, a look at cash flow and financial position.
Starting to the left in the slide, the chart shows the development of capital expenditure. The gray bars that represent investments in tangible assets, mainly our studio constructions.
It's just over €6 million in the quarter. And the blue part of the bar is intangible -- investment in intangible assets, and that's related to development of new games and features to the platforms.
It's €4.7 million related to -- CapEx related to intangible assets in the quarter, so slightly up from previously this year. Total CapEx for the full year is almost €37 million.
This follows our guidance for 2020. It's up from about €30 million in 2019.
And as -- again, as Martin said earlier here, we will continue to invest in new studios and products. So we're expecting a continued increase in CapEx for 2021.
However, in relation to revenue, I think, we'll see that trend continue down as revenues increase, even confident. In the middle of the slide, we look at operating cash flow.
Cash conversion slightly lower in the quarter but still not a good level at nearly 80%. And then far right in the slide, look at the balance sheet, Here, there are some changes from the previous quarter.
The increase in noncurrent assets is related to mainly the goodwill and other intangible assets from the acquisition. And on the equity and liabilities side, you can see the equity increases with the new share issue that's also taking place in the quarter.
During the quarter, we have repaid the debt that came with the NetEnt acquisition but still maintain €220 million in cash. The Board has proposed a dividend of about €145 million, that's €0.68 per share.
It's the same payout ratio as last year, 51% of net profit for the year and also in line with our dividend policy of 50% payout. I'll stop there.
That was the end of my prepared remarks. I'll hand back to you, Martin.
Martin Carlesund
Thank you very much. Let's move on to the outlook slide for 2021, and a few comments from me.
I'm very pleased to conclude a strong quarter and an overall very successful year for Evolution, which has included many important achievements, both in terms of financial results, product launches and addition of a second vertical and 2 strong brands to the group. We've entered 2021 with a good momentum and equipped with extended product portfolio and talent following the completion of NetEnt acquisition.
While integration is well underway, and we already can see the result of fast action in this area, 2021 will continue to be about how we can leverage the joint knowledge, the experience and ambition of our new company and product it through new thrilling player experiences. As always, cost efficiencies will remain as important and our efforts to restructure the cost base to reach an increased effectiveness will continue, and we expect to sustain margin level from Q4 in 2021.
The events of of this year have highlighted the potential in online casino product. Although, the land-based vertical still stands for the majority of the total casino market, we are excited to play a role in the digitalization of the industry as more and more players experience online casino through our games.
The rate at which land base will convert online over the years to come remains unpredictable. However, we have our growth runway in place to capitalize on the development.
2020 has been an unexpected, partly very difficult year but also fantastic. Our teams have worked hard to keep the business running through the effects of the pandemic, and I want to take this opportunity to once again highlight the thousands of individuals that the solution is built of and who, together with the management, made these figures and products present today possible.
Evolution's core is based on a sheer desire to win and to collectively constantly push ourselves to the next level, make Evolution better every single day. Thank you for listening.
Now let's move to the last slide and your questions. Thank you.
Operator
[Operator Instructions] Our first question comes from the line of Martin Arnell from DNB.
Martin Arnell
So just on -- firstly, on the new studios. You're launching in Michigan soon on the lag part, I guess.
Can you tell us more on the timing for that? And what restricts you from just having 1 or 2 rooms open in Michigan so far?
Martin Carlesund
We have commented the timing that it would be 2021. And we will, of course, do it as soon as possible.
We want to open a state-of-the-art studio in Michigan. It needs to be the size so that we can support the market, and it will open gradually as soon as possible.
Martin Arnell
Okay. And how has the NetEnt launch been received there in Michigan so far?
Martin Carlesund
Good. We're pleased with the launch in Michigan.
Martin Arnell
Okay. And looking at your dedicated tables capacity now compared with 3 months ago or even 9 months ago, I guess it's not really where you expected it, and I hoped it were going to be.
But can you give us some flavor on sort of how much capacity you're up with as a percent of your total?
Martin Carlesund
I would split it into 2 answers for that. We are actually what we should be or even a little bit better, coming out of the year a little bit better even than what we planned.
But then on the other hand, of course, this would have been -- normally would have been much further. So when we went into the pandemic, and we have to close tables and make this structure, we took down the capacity.
But from that point, we are where we should be. Coming into 2021, I, of course, hope that the pandemic, as everyone else, that it comes to an end and that we can fully expand and recruit them big because we are under supplying at the moment.
We have a higher demand than what we supply.
Martin Arnell
And how does it work when you're selling these dedicated table to new customers? Can you sell sort of future capacity now?
Or are you restricted in those kind of discussions?
Martin Carlesund
That works like in any other business. We -- you can, of course, sell, but you have to also be careful not selling what you can't deliver.
So we can sell that right now. There's no limitation for that.
Martin Arnell
Okay. Great.
And on NetEnt, the synergy scenarios, what have you learned there? I mean, what's really changed because it's quite a dramatic change of -- and raise of the synergies and also the timing for the synergies.
So I'm just interested to hear what's changed?
Martin Carlesund
When you go into a deal of this size and make an acquisition of this size, when you make the pre-deal announcement, you don't really know. So as you go in to the company and see what you can do, of course, you get more substantial information.
And right now, we feel confident that we can deliver the €40 million, and it will be 6 to 9 months earlier than what we predicted before. We were well prepared to have done an integration and -- of NetEnt, which is rapid.
And even as I said earlier, maybe even look brutal, but we want to move fast into 1 company, and we want to build one strong unit with everyone and every knowledge. So that shows also in the figures and the reason for the earlier delivery of the €40 million.
Martin Arnell
Where do you think you can have your RNG growth looking further out? Do you think you can be above 10% in RNG?
Martin Carlesund
We don't guide on the growth of RNG. But of course, as before, we see the -- on the €30 million level, we see the synergies on revenue higher than the synergy on cost.
And there's both geography -- geographical growth that we see. And of course, there's great potential for RNG in the U.S.
as it continues to regulate. But we also see that we can do these new products and continue to sort of develop and innovate on our casino with both live as well as slots and the combination in the same.
Martin Arnell
Okay. And on your margin target for 2021, does that include more aggressive expansion in the second half of the year when hopefully the pandemic has lingered off, as you mentioned?
Martin Carlesund
It's not -- I wouldn't say there's any specific assumptions on that. Like the moving parts are just a bit like we said.
I mean, If we can expand a bit faster, we will always go for that. That can -- in a quarter, that can lead to a little bit higher cost in the quarter, which might pressure margin.
But then at the same time, that should lead to higher top line and -- which in the end will support margin. So -- but we've given -- it's kind of a full year guidance.
We'll probably see it vary quarter-to-quarter. And as the year progresses, we'll be able to come back to it.
But that's kind of how we see it now as more of a high-level view.
Martin Arnell
Okay. And on your new games, the timing for the game launches, is that similar this year that you will start gradually from February and have gradual rollouts during the year?
Or how should we view the timing for new game?
Martin Carlesund
It will be the same procedure except for the fact that we don't do live.
Martin Arnell
Okay. And just my final question is on the start to 2021, is that driven by sort of good ARPU and volumes?
Martin Carlesund
We have great momentum coming into 2021, and it’s driven off a lot of different factors. But I’m very thrilled about the player numbers and the engagement levels.
Operator
And the next question comes from the line of Ed Young from Morgan Stanley.
Ed Young
The first one is on the revenue synergies you just mentioned. You've highlighted above €30 million of revenue synergies for the year.
The way that was in the presentation within the section on NetEnt, if you like. Can you talk about what you mean exactly by revenue synergies?
Is that extending NetEnt into new geographies? Is that including new kind of hybrid products?
Just trying to get an idea about how to frame the upside you've talked about 2021?
Martin Carlesund
Essentially both that and also more, but it's, of course, including what we could do as product innovations in between live and slots. But it's also what we can do with slots as they are right now because of the competence we have of the player base and the network we have.
But it's also, of course, how we can monetize the slots in our live environment as well as how we can monetize live in the slots environment, meaning how we will make it possible for players to seamlessly use both products as well as, of course, the geography where we see that we are stronger in some and NetEnt is stronger in others.
Ed Young
Okay. We'll keep our eyes on the lobby, I guess.
On the U.S. and I mean, the initial data of your Michigan slot launch looks, obviously, very positive.
But on the live side, can you tell us what scale you're at currently in terms of tables in the U.S. at the moment?
Or where you could get to this year? I'm trying to think how big can a U.S.
studio be? And also, how should we think about the level of game choice that these geos can provide at the scale.
And you mentioned Craps will go there in 2021. Clearly, they're quite small studios compared to some of your other studios.
So what other kind of games do you think is viable for the scale we're talking about? And in that context, there's obviously recent Wire Act news.
Can you give your thoughts on state level versus nationally scalable studios? How do you think the environment will shake out there?
Martin Carlesund
Okay. There's a couple of questions.
I would say like when it comes to the game suite for the players in the U.S., our ambition is that the U.S. player should have a full suite of games, meaning all of the beautiful games that we can give to them, given that the regulators on these market allows them.
So there are different regulations in different states, and that is sort of also limiting or enabling different games. So the U.S.
market, there is no limitation. From our side, we should give them the full suite of games.
Then when it comes to the table and how we will expand in both New Jersey, Pennsylvania and Michigan and potential economy states beyond that, we will expand during 2021 as much as the pandemic allows, as fast as we can. The only limitation for that expansion right now, I see, is the pandemic.
We are under supplying, we need to do more. So there -- it's very hard for me to answer because no one actually knows exactly how this will play out.
Now we're talking about third wave and so on. So there is difficult in stating anything about that.
And then there were a third thing. Remind me what was the...
Ed Young
Just on the Wire Act, obviously, there's a chance to potentially move towards more nationally scalable gaming.
Martin Carlesund
Sorry. The Wire Act now, the recent development is that it's been softened, as you know, meaning that, okay, potentially, you could take bet over state borders.
But we are providing Live Casino, and there's substantial amount of workplaces and employees in that. And it's a little bit up to the regulator to state if they want to have them inside the state or outside or somewhere else.
At the moment, the regulation and regulatory requirement for each state states that has to be inside the state. So that -- it has to be, even though the federal level would allow it, it has to be changed on a state level as it is right now.
And I have no knowledge or actually visibility that will happen. From our point of view, I don't view this to be in the studio in each state as a problem.
Even if we need to bid 43 studios the coming year, we will do that. The market is substantial.
We have scalability. We have scalability on the size of the states.
And even if we wouldn't have scalability in one or other state, we would supply live to those states.
Ed Young
Understood. And my final one is on geographic growth.
You ran through it earlier, but obviously that's a geographic mix on a reported basis. So it's a little hard to back out the growth rate.
I mean you mentioned Asia was very strong triple digits. I think it's 137%.
I mean that, obviously, includes a bit of contribution from NetEnt, maybe not a lot because it wasn't a big business for them. But that's still actually the lowest rate of the year, suggesting the acceleration you saw in the Live business came from a strengthening in other regions.
And you mentioned Nordics a little bit. Can you just give us some color on that?
And any other regions where you saw a strength quarter-on-quarter?
Martin Carlesund
I will have -- probably Jacob will have a comment as well. But we'll start with Asia growing very fast, and the contribution from NetEnt in those figures are insignificant.
That's the first statement I want to say. So right now, you don't need to think about it in that aspect.
We see a continuous strong demand, very strong demand in Asia. So we -- as we stated in the report, we see growth high rate -- high growth rate there going forward.
When it comes to the Nordic. Of course, there is a bigger area effect when it comes to the growth rates and NetEnt because NetEnt -- that's a big market for NetEnt.
But we see it -- we sort of turned the corner in the Nordic even so in Q4 in Live. So there were -- the pressure on the market is less, and we see growth just like we do in U.K., sort of turned the corner.
How long and what happens and the regulatory aspects of that, that we have to look into once we move further into 2021. Do you want to add something?
Jacob Kaplan
Not really. I think that we see a very high growth rate overall for the business, and it kind of comes through in all regions.
And a little more in some and a little less in others. But no, I don't know [indiscernible]
Martin Carlesund
Maybe what is really -- Europe is growing very nicely during Q4, that’s strong. I don’t know [indiscernible]
Operator
And the next question comes from the line of Oscar Erixon from Carnegie.
Oscar Erixon
So a couple of questions from me. First of all, I mean, interested to hear what type of reactions to the acquisition of NetEnt have you seen from customers and partners?
Any sort of negative reactions, positive, what potential, if any, do you see from renegotiating deals or combining the sort of offerings in -- I mean, not least the U.S.?
Martin Carlesund
I think that everyone is excited about what we can do for the players and how we can actually do new games, and now we've got another tool to do that and lots of talent and fantastic people inside NetEnt to build new great games, both in slots and live and in between. So I think that everyone is thrilled about that.
And I think that the industry, in general, needs to move on with innovation. So from that point, a positive feedback, I would say.
I want to state also added to that. I mean, we need to continue and earn the trust from every operator, and I think that we have an even greater possibility to do that now with these tools.
Oscar Erixon
Great. And I mean, it seems like you're quite close to launches of new games with a special focus on the Game Show vertical.
Is it possible to give any color on to the number of new launches that you expect? And also how you feel about them, anything that sort of sticks out?
And what's needed, you think, to take it to the next level for, I mean, this is very high level, I should say?
Martin Carlesund
We will, of course, make public announcements when we release the games. And now we're in a bit of a special year since it's no eyes, and we'll look into how we'll do it.
And the only statement, of course, that I made several times is that I'm very thrilled and excited about the road map for 2021. And we have, as always, high or even extreme ambitions when it comes to product development.
Oscar Erixon
Great. And also want to touch upon the strong performance in the Rest of Europe region.
And I mean the German market, in particular, which you commented on in Q3. What have you seen so far in Germany.
I suspect the small players that are not going for license given the tough regulatory measures are growing quite fast and capturing a lot of market share. Is that your sort of impression as well?
Martin Carlesund
As we stated in Q3, we have a 5% to 10% revenue from the German market. And due to regulation, we of course, have had a hit or a downgrade of the levels since then.
How exactly that splits between the place? We don't -- we have no real information on that.
Oscar Erixon
Got it. And just a final question from me.
What reasons do you have to expect that the growth you've seen this year, high engagement levels, high player numbers. What reasons do you have to expect that this is more of a structural shift that will benefit growth over time as the COVID-19 situation normalizes?
Any sort of data or input you have on that?
Martin Carlesund
I will start out with that and maybe some comments from Jacob. But in the world, the pandemic initiates the padding shift from sort of physical whatever to online, and that is not exclusive online gaming or online casinos, it's everywhere.
We don't know it. So we see that.
Now for us, we have 8,700 employees. We are affected also physically.
We're a physical company to a great extent, and it's very, very challenging to run. So when I come out like it's a slightly positive, maybe neutral, that's because it's hard to operate.
Now in the going forward, I think that many, many people, billions even on the earth today think about how to make business online, and that will affect and potentially increase the speed of moving from land base or physical, whatever to online. I don't know if you want to add something, Jacob?
Jacob Kaplan
No, yes. I mean we’ve – there is no way for us to sort of really quantify the – exactly what is the effect of the pandemic or not.
I think what we can – as we said before, I mean, we knew that we had very strong growth coming into this period. So that didn’t disappear overnight.
And at the same time, it’s also reasonable to see that. More or less, all online activity has got a little bit of a tailwind from the people spending more time online basically.
So there’s something there. I guess we won’t truly know until it resides.
But like Martin said, I mean, no doubt about it, we would be – if we could make the pandemic go away, that would be better for us. We would be able to take stand more.
And in – again, it’s back to that. We’re really trying to grow as much as possible, of course, with the best margin we can do.
But if there’s a trade-off, we will go for growth. So you’re talking of that in some time.
Operator
And your next question comes from the line of Kiranjot Grewal from Bank of America.
Kiranjot Grewal
My question is especially on the U.S. You've talked about North America demand being exceptionally high.
So maybe if we could get more color on that. I think most of us are following the B2C guys that are investing heavily in marketing in the U.S.
So what degree is the high demand being driven by a higher-than-anticipated demand for maybe primary tables? And maybe a comment on what you're seeing in terms of the U.S.
end customer trends. Is that actually better than anticipated as well?
Martin Carlesund
I think that what we call share of Live is still on the low side the U.S., there's potential to grow inside the market. The industry market will be stable.
It would -- there's a dimension to grow there. Why?
Because Live product is kind of a new product to the U.S. audience.
So that is one level of growing. Then as online is coming, it's growing in itself, of course, taking them, people slowly getting accustomed instead of going to land base casino than to pay online.
And that is also growing. And the trustworthiness is also then growing with us being there and people know it and they are willing to sort of play with our product as a trust business.
The demand is built up not only by customer wanting dedicated tables. The demand that we see right now is built up out of the market is simply slowly maturing and getting more focused.
I would sort of look at it that way.
Kiranjot Grewal
No, okay. That's very clear.
And in terms of U.S. studio expansion, you know Michigan being woke up at the moment.
But New Jersey and Pennsylvania are the extensions for those already in the work? I know there's some restrictions, I believe, around the New Jersey studio.
Is there actually potential to expand that this year or not?
Martin Carlesund
The expansion in Pennsylvania is already on its way -- underway. And we're expanding as fast as we can also in Atlantic City in New Jersey.
And we're building -- we're expanding already before building in Michigan, so sort of taking on larger studio premise already from staff.
Kiranjot Grewal
Perfect. And then the last question around competition in the U.S.
I mean, so far, you've been the big player. Are you seeing anyone out or any other players that you haven't dealt with before in that market, in the U.S.
market versus European?
Martin Carlesund
We're still alone on the U.S. market, but we should expect competition.
I mean, it's not -- it's a huge market, online casino and Live will become huge and we should expect competition. I'm not afraid of that.
We have the best product. We should increase that competition.
But there will be competition like it is in Europe, that anything else would be unlikely.
Kiranjot Grewal
To finish up just on Asia. Is your -- are you seeing -- is Asia momentum going to continue?
I think that was the last comment, given it's being driven by market share capture? Is that still the case?
Or are you worried about any COVID lapping that?
Martin Carlesund
We see a great momentum and growth in Asia, and we expect it to continue to grow on a higher rate.
Operator
[Operator Instructions] Our next question comes from the line of Lars-Ola Hellstrom from Pareto.
Lars-Ola Hellstrom
It's actually, it's [indiscernible] today. I moved over to the buy-side.
I have a few questions. First, on the cost synergies, going into 2021, on what run rate are we now?
NetEnt was close to have been saving €15 million. And you, at acquisitions, had additional €15 million, now €10 million.
So right now, where are we? And the €40 million on cost saving, will that be achieved going into the second half of 2021?
Jacob Kaplan
Yes, that's what we're seeing now. That -- we would see this kick in gradually during the first half of the year, it's kind of the plan right now.
So I would say we will -- the full effect will be -- sort of comes from the start of the third quarter, I guess. So some of that -- we haven't broken out exactly to what extent what's in it -- some, of course, I could say, some of these savings are -- were initiated also pre-deal.
So that's ongoing. So we -- some of that we see already.
But it will be -- the initiatives that we've done now in December -- from December will start having effect some already now and then sort of gradually during the first 2 quarters here.
Lars-Ola Hellstrom
Okay. You usually provide something at the fourth quarter report where every year, you said something about operated tables.
Can you give us a hint where you are in terms of operated tables?
Jacob Kaplan
Yes. I think you're right.
There -- we will provide that number more -- we know -- I'd say we are back to the levels we were pre-pandemic, even a little higher than that. So a little over 700 is kind of a rough number.
But we will include it in the annual report that's normal and -- so more or less what we've done -- I mean, I think like Martin said, I mean, there's a number tends to stay, but then it's of course it's not in like-for-like studios with a studio space during the year. So it's still -- it's not that everything is back to normal.
That's not the case. But in number of tables that we operate were more or less same.
Lars-Ola Hellstrom
And also another question just to [indiscernible] NetEnt and EVO. Going into 2021 after the restructuring you have made in December, how many of the NetEnt employees is still left?
So what share of the 8,700 legacy EVO employees?
Martin Carlesund
This is in the slide, I think it's 818 related to NetEnt and the 8,700 are Evolution or what you want to call it.
Lars-Ola Hellstrom
Yes. And on the revenue synergies of €30 million plus for this year, will that be tilted as slot revenues that you are bringing NetEnt to your customers in Asia?
Jacob Kaplan
Even though it's a bit too early to comment on -- and we weren't sort of tilted to one or the other direction due to -- we wanted to be slot other. We just need to focus on the best user experience and the best products on the market, and we'll see where it sort of lands.
Lars-Ola Hellstrom
And also, I noticed that the NetEnt margin that you reported for December was below the Q3 level that NetEnt reported. Was that burdened by -- from special items, et cetera or was it just lower volume on the costs?
Jacob Kaplan
It's a little lower. Still it's also -- it's 1 month and of course, a lot of moving parts.
We, of course, try to capture -- some of those one-off things are in the nonrecurring items, but there's -- we don't capture everything. So it's -- yes, it's -- I wouldn't sort of make too much out of that 1-month number, but...
Lars-Ola Hellstrom
And also another NetEnt specific question. I guess they have had a larger exposure to Germany as they compared to what you had.
And we -- for example, so bets online was 70% down in Germany in the last 2 weeks of December. Have you seen that effect from NetEnt as well?
Jacob Kaplan
We haven't said any numbers. But I would say the effect it's quite -- it's about what we said in the third quarter.
I mean, we see a significant drop in German volumes. And then once the regulation is in place, we hope that could come back.
And you're right. I mean the effect from it may be little.
But not -- I wouldn't say it's a huge difference. But yes, Germany negative in the fourth quarter.
Lars-Ola Hellstrom
And the final question here is a topic I used to come back to is with the B2C contract. Are you now at the table in discussion with the Ladbrokes Coral brand?
Or if it's some kind of time period where Playtech has a exclusivity? Or I guess...
Martin Carlesund
It’s a good question. However, I won’t answer it.
But we – our ambition is to sign any and all operators, specifically the big ones and others in Europe.
Operator
And as there are no further questions, I'll hand it back to the speakers for closing remarks.
Martin Carlesund
Okay. Thank you very much for joining this call and listening to our figures.
It was a lot of figures, new figures, and we look forward to come back and reporting the Q1. Thank you very much.