CEO COMMENTS FOR THE THIRD QUARTER 2019

Long-range efforts starting to pay off and pointing in the right direction

After three consecutive quarters of decline, I am happy to announce a trend shift in third-quarter revenues, which increased by +11% compared to the second quarter, making it the third-best quarter in the history of the company. Major growth came from the United States, now representing 17% of our total revenues year to date. Strong performance from our core product AskGamblers and Japan also contributed positively to this quarter's development. The European Casino segment, which has been in decline since the third quarter last year, leveled out this quarter and several products started to show positive growth in traffic and revenues.

AUGUST BEST-EVER FOR ASKGAMBLERS
Due to seasonality, it’s unusual for a Casino product to show growth between June and August. So after several traffic improvement activities conducted throughout the spring and sum-mer, we are delighted to announce that AskGamblers achieved its best-ever performance in August. Furthermore, to ensure future growth we recently launched the site in three new languages: Spanish, Portuguese and Japanese. Normally it takes a bit of time for a brand to establish itself in a new language, but even if it's at an early stage, the Japanese site has already shown a positive response, and we expect good continued growth from AskGam-blers in 2020.

UNITED STATES - SHOWING STRONG GROWTH
The US market and our revenues continued to grow during the third quarter. The Casino business in New Jersey showed steady growth, and, even though we didn’t expect the Sports business to surpass last year’s number when online sports betting was launched in that state, we are happy with the development and maintained our good position and high market share there. Pennsylvania went live for online Casino in the third quarter, allowing us to send traffic to operators from day one. With only one operator online in time for the NFL kick-off, the total demand for affiliate traffic was less than originally anticipated, giving us some push on the pricing. As we originally anticipated three or more operators going live from the start, this delayed our growth in Pennsylvania. Considering the slow start with fewer operators online, we are still very satisfied with our market share and revenue development. With more oper-ators live, we are looking forward to a promising development in Pennsylvania. As Indiana also went live recently, our view on the US market remains very positive. With several states expected to go live in 2020 we decided to further increase our investment levels in the US market to allow us to maintain our dominant position for years to come. The investment is mainly focusing on content creation and efficiency improvement, and we expect to continue these investments throughout 2020.

EUROPEAN SPORTS BETTING – STILL CHALLENGING
As reported, the second quarter was challenging for our European Sports betting segment. Even though it is low season for sports in the third quarter, especially compared to last year’s FIFA World Cup, we did plan for a recovery. When summarising the third quarter, we weren’t successful in doing so in some of our markets.

United Kingdom: We saw our traffic increase during the third quarter, however a rather large portion of that traffic came from consumers who already had an account with our customers, meaning we couldn’t charge for them. Due to changes in the Sports Betting market in the UK during the year, we are reworking our product strategy in order to shift this trend and enable further growth from fewer products. Combined with increased cost control, this will support stronger gross margins and is expected to show results during the first half of 2020.

France: Regulatory requirements forced us to split our website into two different sites in order to continue to do business in the French market. As a result, we had to close down our sites for some time, which brought down our revenues. The new sites have been developed and will go live during the fourth quarter.

Italy: The Italian marketing ban entered into force in July and halted business temporarily, but started growing back in August and September. The quarter-to-quarter revenues were down as a result, but we expect the revenue levels to grow back to historical levels during the fourth quarter.

Germany: The German market developed according to our expectations during the third quarter, somewhat slower compared to the second quarter due to the low season in Sports, primarily in football.

FINANCIAL SERVICES
Financial Services has been relatively stable in the third quarter-There is still considerable uncertainty, however, regarding effects on financial markets if and when the UK exits the EU. Lately, opera-tors have increased their focus on their marketing spend in order to reach short-term returns. To meet these new market conditions, we have worked to optimise our user funnel to increase conversions towards operators where we are seeing growth potential. We are also focusing to reduce our cost base in order to further improve the margin during 2020.

SUCCESSFUL INTEGRATION – INCREASED LEVERAGE
During the quarter, we finalised the successful integration of Bay-Bets, one of our largest acquisitions to date. In line with our expec-tations, settling a big part of the final payment in cash has resulted in an increased debt leverage during the third quarter. We continue to be compliant with our covenants, and are expecting a positive development of that key figure. Remaining asset purchase commitments primarily relate to the final payment of the US acquisitions, where the payments will fall due in the first half of 2020.

HEADING FOR CORE PRODUCT GROWTH  AND CONTINUED OPERATIONAL EFFICIENCY
With the European market growing slower than in the past, we have increased our focus on operating those market-dedicated prod-ucts more efficiently, in order to improve the margins over time. We will continue to increase our investments in products and mar-kets that are in incubation and growth stages to ensure our growth into 2020 and beyond. To conclude, I am satisfied that the work we have conducted over the past nine months, dedicated to quality and efficiency improvements, is starting to pay off, and that we are moving in the right direction. As we are acting in a fast-moving environment, we still have a lot to do, and will continue our improvement journey to enable further growth.

POSITIVE OUTLOOK FOR THE FOURTH QUARTER
With growth supported by our products in the United States, AskGamblers and Japan, I’m confident that the efforts we have taken are pointing us towards a bright future. But first we need to close this year. With the current momentum, the product improvements we have made, together with the market expansion, it looks promising for the fourth quarter.