Q2 2024 Flutter Entertainment PLC Earnings Call

Speaker Change: Good afternoon and welcome to the Flutter Q2 results call, hosted by CEO Peter Jackson and CFO Rob Koldrake. There will be a chance to ask questions later, but I will now hand the call over to Paul Thames, Group Director of Investor Relations. Please go ahead.

Operator: Peter Jackson and CFO Rob Koldrake. Hi, everyone, and welcome to Flutter's Qt Results. With me this afternoon in New York are Flutter CEO Peter Jackson and CFO Rob Poldrick. For this short intro, Peter will open up with a brief summary of our operational progress during the quarter, and Royal Coromanthy, the Q2 financials that are updated for 2024 go, will then open up the lines for Q&A. Some of the information we are providing today, including our 2024 guidance, constitutes forward-looking statements that involve risks, uncertainties, and other factors that could cause actual outcomes or results to differ materially from those indicators.

Speaker Change: Hi everyone and welcome to Flutter's Q2 results call. With me this afternoon in New York are Flutter CEO Peter Jackson and CFO Rob Poldrick.

Peter Jackson: After this short intro, Peter will open up with a brief summary of our operational progress during the quarter and then Rob will run through the Q2 financials and our updated 2024 guidance.

Speaker Change: We will then open up the lines for Q&A. Some of the information we are providing today, including our 2024 guidance, constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

Operator: These factors are detailed in our earliest press release under SCC 5. In addition, all forward-looking statements are based on current expectations, and I'm not going to take any obligation to update any forward-looking statement except as required by law.

Speaker Change: These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement except as required by law.

Operator: Also, in our remarks or responses to questions... We will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today, available in the Investors section of our website. And I will now hand you...

Speaker Change: Also, in our remarks or responses to questions, we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today, available in the Investors section of our website.

Peter Jackson: Thank you, Paul. I'm delighted to be joining you today from New York, the home of our new operational headquarters following our primary listing move back in May. With me is Rob Koldryk, Flutter CFO. This is obviously Rob's first call since he started at Flutter on May 31st. He has certainly hit the ground running given his experience within the group, and I know he's looking forward to meeting you all in due course. It's also appropriate to acknowledge that in recent weeks, one of the group's founders, David Power, passed away. He was a long-standing supporter of this business and a great sounding board for me and generations of Flutter leaders. May he rest in peace.

Speaker Change: And I will now hand you over to Peter.

Peter Jackson: Thank you, Paul. I'm delighted to be joining you today from New York, the home of our new operational headquarters following our primary listing move back in May. With me is Rob Koldrake, Flutter CFO.

Rob Koldrake: This is obviously Rob's first call since he started as CFO on May 31st. He has certainly hit the ground running, given his experience within the group, and I know he's looking forward to meeting you all in due course.

Speaker Change: It's also appropriate to acknowledge that in recent weeks, one of the group's founders, David Power, passed away.

Speaker Change: He was a longstanding supporter of this business and a great sounding board for me and generations of Flutter leaders. May he rest in peace.

Peter Jackson: I'll now turn to the performance of the business in Q2. It was a very strong quarter for the group, and they had market expectations. We delivered AMP growth of 17% and revenue growth of 20%, reflecting excellent execution against our strategic priorities and positive sports results. We have outperformed in our major markets, U.S. sports and iGaming, the UK, Ireland, and Italy, providing great momentum for the second half.

Speaker Change: I'll now turn to the performance of the business in Q2.

Speaker Change: It was a very strong quarter for the group and ahead of market expectations.

Speaker Change: We've delivered AMP growth of 17% and revenue growth of 20%, reflecting excellent execution against our strategic priorities and positive sports results.

Speaker Change: We have outperformed in our major markets, US sports and our gaming, the UK, Ireland and Italy, providing great momentum for the second half of the year.

Peter Jackson: In the U.S., Fanjoy had an exceptional quarter, with nearly 40% of the entire U.S. sports betting and iGaming market. Market-leading products underpinned by the Flutter Edge and continued disciplined customer acquisition investment are driving our performance in the market. The improvements we delivered in our NBA, WNBA, and MLB products are increasing parlay penetration, driving up our structural hold and player retention rates, resulting in continuous strong returns on player In the quarter, both apprehension and new players increased by over 30% for sportsbook and iGaming compared to the prior year.

Speaker Change: In the US, Fanjoy has an exceptional quarter with nearly 40% share of the entire US sports betting and iGaming market.

Speaker Change: Our market-leading products, underpinned by the Flutter Edge, and continued disciplined customer acquisition investment are driving our performance in the market.

Speaker Change: The improvements we delivered in our NBA, WNBA and MLB products are increasing parlay penetration, driving up our structural hold and player attention rates, resulting in continuing strong returns on player acquisition investment.

Speaker Change: In the quarter both amps and new players increased by over 30% for sportsbook and iGaming compared to the prior year.

Peter Jackson: This reflects a strong start in North Carolina, where we have 59% of the market and 20% growth in new players from pre-2022 states. These excellent KPIs point to a long runway of growth in these states and the market more broadly. They also vindicate the consistent posture we have taken since the market launched by investing behind Foundry's excellent return on customer acquisition. In iGaming, we completed an important milestone in the migration of FanDuel Casino onto our proprietary technology.

Speaker Change: This reflects a strong start in North Carolina where we have 59% of the market and 20% growth in new players from pre-2022 states.

Speaker Change: These excellent KPIs point to a long runway of growth in these states and the market more broadly.

Speaker Change: They also vindicate a consistent posture we have taken since the market launched by investing behind Fangell's excellent return on customer acquisition.

Speaker Change: In iGaming, we completed an important milestone for the migration of FanDuel Casino onto our proprietary technology.

Peter Jackson: In time, this will unlock important benefits through access to in-house content, promotional capabilities, and also greater platform stability. This, combined with the launch of more exclusive titles and promotional features in the quarter, is further evidence of the fantastic roadmap of improvements we still have for our high-gaming players. Outside of the US, the group's scale and diversification contributed to AMP and revenue growth of 15% and 10%, respectively. The Euros are the marquee event of the quarter, with our UKI and Italian businesses delivering same-game parlay product improvements for players in advance of the tournament. C-SAL is the first operator to offer same-game parlay in a...

Speaker Change: In time, this will unlock important benefits through access to in-house content, promotional capabilities and also greater platform stability.

Speaker Change: This, combined with the launch of more exclusive titles and promotional features in the quarter, are further evidence of the fantastic roadmap of improvements we still have for our high gaming players.

Speaker Change: Outside of the US, the group's scale and diversification contributed to AMP and revenue growth of 15% and 10% respectively.

Speaker Change: The Euros are the marquee event of the quarter, with our UKI and Italian businesses delivering same-game parlay product improvements for players in advance of the tournament.

Peter Jackson: Proof of the benefits of Flutter's edge when it comes to delivering compelling product advantages for our brands in their local markets. Seasouth's same-game parlay accounted for nearly 20% of stakes on the Euros and helped deliver a record market share performance for Seasouth in the fourth quarter. This encapsulates the strong performance in C-Cells since acquisition, where on a pro-forma basis over the last two years, shipments have increased by 60% and revenue by 37%.

Speaker Change: CSAL is the first operator to offer same-game parlay in Italy.

Speaker Change: Prove for the benefits of Flutter's Edge when it comes to delivering compelling product advantages for our brands in their local markets.

Speaker Change: Seasouth's same-game parlay accounted for nearly 20% of stakes on Euros and helped deliver a record market share performance for Seasouth in the quarter.

Speaker Change: This encapsulates the strong performance in C-cells since acquisition, where on a proforma basis over the last two years, amps have increased by 60% and revenue by 37%.

Peter Jackson: In the UK and Ireland, all our brands are delivering excellent growth, combining for a tenth straight quarter of market share gains based on gambling commission data. In iGaming, we leveraged the Palli Power brand in launching Palli's Mansion Heist, our most successful live casino game launch ever. In Australia, the previously noted and anticipated declines in the racing market were evident in the quarter.

Speaker Change: In the UK and Ireland, all our brands are delivering excellent growth, combining for a tenth straight quarter of market share gains based on gambling commission data.

Speaker Change: In iGaming, we leverage the Paddy Power brand in launching Paddy's Mansion Heist, our most successful live casino game launch ever.

Speaker Change: In Australia, the previously noted and anticipated declines in the racing market were evident in the quarter.

Rob Poldrick: However, we saw strong customer engagement around marquee rugby events, where player acquisition doubled year-on-year. Overall, the group had a very strong quarter, strengthening our leadership position in the U.S. and delivering excellent momentum in our diversified ex-U.S. business. And with that, I hand you over to Rob. Good afternoon, everyone.

Speaker Change: However, we saw strong customer engagement around marquee rugby events where player acquisition doubled year on year.

Speaker Change: Overall, the group had a very strong quarter, strengthening our leadership position in the U.S. and delivering excellent momentum in our diversified ex-U.S. business.

Rob Poldrick: Thanks for joining us. It's a really exciting time to be stepping into the CFA role, and I'm delighted with the current momentum. The group delivered a really strong performance, with revenue growth of 20% and adjusted EBITDA growth of 17% to $738 million. The group had a net income of $297 million on a reported basis, which is after non-cash expenses including the amortization of acquired intangibles of $147m and a $91m gain on the fair value of the FOX option.

Speaker Change: And with that, I hand you over to Rob.

Rob: Thanks, Peter. Good afternoon, everyone. Thanks for joining the call.

Rob: It's a really exciting time to be stepping into the CFA role and I'm delighted with the current momentum in the business.

Rob: The group delivered a really strong performance in the quarter, with revenue growth of 20% and adjusted EBITDA growth of 17% to $738 million.

Rob: The group had net income of $297 million on a reported basis, which is after non-cash expenses including the amortisation of acquired intangibles of $147 million, and a $91 million gain on the fair value of the FOX option.

Rob Poldrick: Limited Earnings Per Share increased 290%, while Adjusted Earnings Per Share increased 56% due to the strong financial performance and the positive movement in the FOX option. Free cash flow was $171 million versus a cash outflow of $95 million in the prior year.

Rob: So limited earnings per share increased 290% while adjusted earnings per share increased 56% due to the strong financial performance and the positive movement in the Fox option.

Rob: Brain cash flow was $171 million versus the cash outflow of $95 million in the prior year.

Rob Poldrick: Our strong deleveraging profile saw our leverage ratio reduce to 2.6x from 3.1x at the end of December 2023. We are almost within our medium-term leverage target range, two to two-and-a-half times. We look forward to updating you on our capital allocation framework and the range of capital allocation opportunities we have at our investor day on September 25th. Signing now in each of the states.

Rob: Our strong deleveraging profile saw our leverage ratio reduce to 2.6 times from 3.1 times at the end of December 2023.

Speaker Change: We are almost within our medium-term leverage target range, two to two and a half times. We look forward to updating you on our capital allocation framework and the range of capital allocation opportunities we have at our investor day on September 25th.

Rob Poldrick: In the US, the exceptional quarter noted by FITA translates to excellent financial returns with revenue growth of 39% and adjusted EBITDA growth of 51%. Pleasingly, the strong growth is across all state cohort types, with pre-2022 state launch revenue up 33% year-over-year, including pre-2020 launches 27% higher. Sportsbook revenue grew 41% from stakes growth of 35% and a fair expansion of our structural sportsbook net revenue margin.

Speaker Change: Turning now to each of the segments.

Speaker Change: In the U.S., the exceptional quarter noted by data translates to excellent financial returns with revenue growth of 39% and adjusted EBITDA growth of 51%.

Speaker Change: Pleasingly, the strong growth is across all state cohort types, with pre-2022 state launch revenue up 33% year-over-year, including pre-2020 launches 27% higher.

Speaker Change: Sportsbook revenue grew 41% from stakes growth of 35% and a fair expansion of our structural Sportsbook net revenue margin.

Rob Poldrick: Our gaming revenue is 47% higher, reflecting the gains we are making in the direct casino segment of the market from the product improvements the team has delivered over the last two years. This revenue performance, combined with operating leverage in sales and marketing, helped deliver adjusted EBITDA of $260 million, well ahead of market expectations. Outside of the US, revenue increased 10% due to strong performances in the UK and International.

Speaker Change: Our gaming revenue is 47% higher, reflecting the gains we are making in the direct casino segment of the market, from the product improvements the team have delivered over the last two years.

Speaker Change: This revenue performance combined with operating leverage and sales and marketing helped deliver a justed EBITDA of $260 million, well ahead of market expectations.

Speaker Change: Outside of the US, revenue increased 10% due to strong performances in UK and I, and international.

Rob Poldrick: The UKNI, the combination of continued iGaming momentum, the European Football Championships, and positive sports results, drove revenue and adjusted EBITDA 18% higher. Sports results were very favourable in the quarter, adding 190 basis points to our sports net revenue margin. Positive results were most notable during the Euros, which continued into July. However, the previously noted softer Australian racing market resulted in associated year-on-year declines in that market, with revenue down 10%.

Speaker Change: The UK and I, the combination of continued iGaming momentum, the European Football Championships and positive sports results, drove revenue and adjusted EBITDA 18% higher.

Speaker Change: Sports results were very favourable in the quarter, adding 190 basis points to our sports net revenue margin.

Speaker Change: Positive results were most notable during the Euros which continued into July.

Speaker Change: The previously noted softer Australian racing market resulted in associated year-on-year declines in that market, with revenue down 10%.

Rob Poldrick: In international, the addition of max bet and 12% constant currency revenue growth in our other consolidate and invest markets drove revenue 16% higher on a constant currency basis. Turning now to our updated guidance for 2024. In the US, we have increased our midpoint revenue guidance to $6.2 billion and adjusted EBITDA midpoint to $740 million.

Speaker Change: In international, the addition of max bet and 12% constant currency revenue growth in our other consolidated invest markets drove revenue 16% higher on a constant currency basis.

Speaker Change: Turning now to our updated guidance for 2024. In the US, we have increased our midpoint revenue guidance to $6.2 billion and adjusted EBITDA midpoint to $740 million.

Rob Poldrick: This equates to year-over-year growth of 41% for revenue and 219% for adjusted EBITDA. This reflects the strong momentum we have in the business, including the excellent performance in Q2, including the sports results benefits, and it's after the $40 million net impact of the tax changes introduced in Illinois in July. The gross tax impact in Illinois is $50 million in 2024, and we expect to miss go 50% of the tax from 2025 onward. That is prior to any additional second order benefits such as market share gains from sub-scale players which we have typically seen where regulatory or tax changes have been implemented in our other markets. On a quarterly basis in the US, we expect a small EBITDA loss in Q3, with significant earnings to be generated in Q4.

Speaker Change: This equates to year-over-year growth of 41% for revenue and 219% for adjusted EBITDA.

Speaker Change: This reflects the strong momentum we have in the business, including the excellent performance in Q2, including the sports results benefits, and is after the $40 million net impact of the tax changes introduced in Illinois in July.

Speaker Change: The gross tax impact in Illinois is $50 million in 2024, and we expect to mitigate 50% of the tax from 2025 onwards.

Speaker Change: That is prior to any additional second-order benefits such as market share gains from subscale players which we have typically seen where regulatory or tax changes have been implemented in our other markets.

Speaker Change: On a quarterly basis in the U.S. we expect a small EBITDA loss in Q3 and significant earnings to be generated in Q4.

Rob Poldrick: In Group X US, we now expect an increased revenue of $8 billion and an adjusted EBIT of $1.77 billion at the midpoints of our guidance. This equates to year-over-year growth of 8% for both metrics. As always, our guidance is provided on the basis that sports results are in line with our expectations for the remainder of the year, at current foreign exchange rates, no new state openings for the remainder of the year, and in a consistent regulatory and tax environment.

Speaker Change: In the Group X US, we now expect both increased revenue of $8 billion and adjusted EBITDA of $1.77 billion at the midpoints of our guidance.

Speaker Change: This equates to year-over-year growth of 8% for both metrics.

Speaker Change: As always, our guidance is provided on the basis that sports results are in line with our expectations for the remainder of the year, current foreign exchange rates, no new state outings for the remainder of the year and in a consistent regulatory and tax environment.

Operator: This guidance demonstrates the strong momentum we have across the group. With that, Peter and I are happy to take your questions. In the interest of time, can we ask that, as usual, we limit to two questions per person? With that, I'll hand you back to Jeremy to manage the rest of the questions. All right, thank you so much. To ask a question today, please press star followed by the number one on your telephone keypad.

Speaker Change: This guidance demonstrates the strong momentum we have across the group.

Speaker Change: With that, Peter and I are happy to take your questions.

Speaker Change: In the interest of time, can we ask that, as usual, we limit to two questions per person. With that, I'll hand you back to Jeremy to manage the call.

Jeremy: All right, thank you so much. To ask a question today, please press star followed by the number one on your telephone keypad.

Operator: All right. Our first question comes from Clark Lampin from BTIG. Please go ahead.

Speaker Change: All right. Our first question comes from Clark Lampin from BTIG. Please go ahead.

Clark Lampin: Thanks. Good evening, guys. Appreciate you taking the questions. Peter, I wanted to see if we could open up by talking about U.S. performance. 2Q results were nicely ahead. Full year guidance was raised net of Illinois. I think Rob said pre-22 state growth was up 33%.

Clark Lampin: Thanks. Good evening, guys. Appreciate you taking the questions. Peter, I wanted to see if we could open up by talking about U.S. performance. 2Q results were nicely ahead.

Clark Lampin: full-year guidance was raised net of Illinois. I think Rob said pre-22 state growth was up 33%. Could you give us a little bit more color around, I guess, just what's sort of driving, you know, sort of strong results right now and what also is embedded for back half guidance?

Peter Jackson: Could you give us a little bit more color around, I guess, just what's sort of driving, you know, sort of strong results right now and what also is embedded for back half guidance? Second question I have is related to the 40 million net headwind that you guys called out from Illinois. As we think about managing potential additional increases in taxes going forward, what are the key levers that you guys have at your disposal to mitigate those headwinds? And is a potential tax surcharge on player winnings maybe part of that calculus? Thanks very much.

Speaker Change: The second question I have is related to the $40 million net headwind that you guys called out from Illinois. What do you think of that? Thank you. Thank you.

Speaker Change: As we think about managing potential additional increases in taxes going forward, what are the key levers that you guys have at your disposal to mitigate those headwinds, and is a potential tax surcharge on player winnings maybe part of that calculus? Thanks very much.

Peter Jackson: Thank you for the questions, Clark. It's nice to be talking to you in your time zone for once, and may this continue. Let me give you some thoughts on the U.S. performance, and then I think I'll probably ask Rob just to give us the major building blocks. As I said in my opening remarks, I'm really pleased to see the strong performance in Q2. I think it's a really good vindication of the posture that we've adopted in the market of acquiring as much business as we can whilst we meet our return criteria. And to remind you, that's just to make sure that we can see less than a two-year payback.

Speaker Change: [inaudible]

Speaker Change: Thank you for the questions Clark and it's nice to be talking to you in your time zone for once and may this continue.

Speaker Change: Let me give you some thoughts around the U.S. performance, and then I think I'll probably ask Rob just to give us the major building blocks.

Rob: Yeah, as I said in my opening remarks, I'm really pleased to see the strong performance in Q2. I think it's a really good vindication of the posture that we've adopted in the market of acquiring as much business as we can whilst ever we meet our return criteria.

Rob Poldrick: And I think we pushed hard in the first half, and you can definitely see the benefits of that come through in the player numbers, the increase in acquisition that we saw in Q2. I think it's found us really well stead as we go into the back half of the year. But Rob, maybe you want to just talk about the building blocks.

Rob: And to remind you, that's just to make sure that we can see less than a two-year payback. And I think we pushed hard in the first half, and you can definitely see the benefits of that come through in the player numbers, the increase in acquisition that we saw in Q2. I think it's found us really good stead, as we go into the back half of the year. But Rob, maybe you want to just talk about the building blocks.

Rob Poldrick: Yeah, I think, first of all, Clark, I'm delighted to be talking about an upgrade to the four-year guidance for revenue and to even throw in my first earnings. As Peter said, we've had a terrific performance in Q2, and that's partly driven by the positive sports results. What we see as a result of that is an extremely strong drop through in Q2. We're looking forward to the second half.

Rob: Yeah, I think, first of all, Clark, I'm delighted to be talking about an upgrade to the four-year guidance for revenue and EBITDA in my first earnings call.

Rob: As Peter said, we've had a terrific performance in Q2 and that's partly driven by the positive sports results. What we see as a result of that is extremely strong drop-through in Q2. We're looking forward to the second half.

Rob Poldrick: The second half of the year still accounts for 40% of the revenue upgrade, but that won't directly drop through to EBITDA for a couple of reasons. Firstly, we're choosing to invest a further $20 million in customer acquisition, given those returns that we continue to see well within our 24-month paybacks that we've previously stated. That momentum should set us up really well for 2025 as we take a larger business into next year.

Speaker Change: The second half of the year still accounts for 40% of the revenue upgrade, but that won't directly drop through to EBITDA for a couple of reasons.

Speaker Change: Firstly, we're choosing to invest a further £20 million behind customer acquisition given those returns that we continue to see well within our 24-month paybacks that we've previously stated.

Speaker Change: That momentum should set us up really well for 2025 as we take a larger business into next year.

Rob Poldrick: In addition, we've got an additional $20 million of operating costs, and that's partly due to the higher payment costs which have been driven by changing player behavior and more frequent deposits and withdrawals, and partly due to some additional costs associated with the Beyond Play acquisition. If you then factor in the net Illinois impact of $40 million, you get some four-year guidance. So essentially, the four-year upgrade excluding Illinois drops through at 35%, or it's 15% ex-Illinois. So we're absolutely delighted. Thank you, Rob.

Speaker Change: In addition, we've got an additional $20 million of operating costs and that's partly due to the higher payment costs which have been driven by the changing player behaviour and more frequent deposits and withdrawals and partly due to some additional costs associated with the Beyond Play acquisition.

Speaker Change: If you then factor in the net Illinois impact of 40 million, you get to the four-year guidance. So essentially the four-year upgrade excluding Illinois drops through at 35% or it's 15% ex-Illinois. So we're absolutely delighted with that.

Peter Jackson: And look, I suspect, Clark, you've got a question about the situation in Illinois, and I can imagine that a number of other people will have questions around how we're thinking about positioning ourselves in it. So I think it probably makes sense for me just to give a slightly more expansive answer to that question. And then I don't anticipate us needing to answer the question on it later for other people. To start with, I think it's important to recognize that there's a happy medium for tax rates that enables operators to maximize market growth, provides the best experience for customers, and over time maximizes revenue for states, and most states are taking a sensible approach today. I do think that instituting a graduated tax system that punishes those who have invested the most to grow their businesses is wrong.

Speaker Change: Thank you, Rob. And look, I suspect, you know, Clark, you've got a question around the situation in Illinois, and I can imagine that a number of other people will have questions around

Speaker Change: how we're thinking about positioning ourselves in it. So I think it probably makes sense to me just to give a slightly more expansive answer to that question and then I don't anticipate us needing to answer the question on it subsequently for other people.

Speaker Change: To start with, I think it's important to recognize that there's a happy medium for tax rates that enables operators to maximize market growth, provides the best experience for customers

Speaker Change: and over time maximizes revenue for states.

Speaker Change: And most states have taken a sensible approach to date.

Speaker Change: I do think, though, that instituting a graduated tax system punishes those who have invested the most.

Operator: I think it will drive customers to offshore operators or potentially to onshore operators who are offering unregulated, untaxed prop parlays under the guise of sweepstakes. We have lots of patent recognition for operating internationally in high-tax locations, and our experience is that moderating levels of generosity or indeed reducing local marketing is the best response. As Rob mentioned, we often find as well that smaller players may also have to increase their prices, which leads to us capturing more share, which provides an offset. So we think that a moderating level of generosity and reducing local marketing is the best customer option, and we have no plans to introduce a surcharge for women. Thanks very much.

Speaker Change: to grow their businesses is wrong. I think it will drive customers to offshore operators.

Speaker Change: Or potentially to onshore prices, you're offering unregulated, untaxed crop parlays under the guise of sweepstakes.

Speaker Change: We have lots of patent recognition of operating internationally in high-tax locations, and our experience is that moderating levels of generosity, or indeed reducing local marketing, is the best response.

Speaker Change: As Rob mentioned, we often find as well that smaller players may also have to increase their prices, which leads to us capturing more share, which provides an offset for us.

Speaker Change: And so, we think that the moderating level of generosity of reducing local marketing is the best customer option, and we have no plans to introduce a surcharge for winners.

Jordan Binder: Our next question comes from Jordan Binder from Citizens JMP. Please go ahead. Good afternoon, everyone.

Speaker Change: Thanks very much.

Speaker Change: Our next question comes from Jordan Binder from Citizens JMP. Please go ahead.

Jordan Binder: Maybe just to follow on the CPA questions, you know, in 2Q here, that's been a big theme or topic across most players in the space. So, you know, are you seeing acquisition costs fall kind of equally across iGaming and sports betting? And, you know, can you maybe point to, you know, why is this happening maybe year to date?

Speaker Change: Good afternoon, everyone. Maybe just to follow on the CPA questions, you know, in 2Q here, that's been a big theme or topic across most players in the space. So, you know, are you are you seeing acquisitions?

Speaker Change: costs fall kind of equally across iGaming and sports betting and, you know, can you maybe point to, you know, why is this happening, maybe year to date?

Jordan Binder: And then the second question off of that, the updated U.S. guidance implies an increase in OPEX for the full year, even after kind of accounting for the Illinois impact. Are the declining CPAs kind of the core reason why you're stepping up investment here? Or is there anything else you're seeing in the market or into football season here that kind of, you know, allows you to invest more? Thank you. Thanks, Jordan.

Speaker Change: And then the second question off of that, the updated U.S. guidance implies an increase in OPEX for the full year, even after kind of accounting for the Illinois impact. Are the declining CPAs kind of that core reason why you're stepping up investment here, or is there anything else?

Speaker Change: you're seeing into the market or into football season here that kind of allows you to invest more. Thank you.

Peter Jackson: On a CPA basis, if I look at Q2 this year and Q2 last year, we actually would see that our costs have come down a little bit, even with the significant increase in customer numbers that we've acquired. It's often difficult to try and look very precise at it because you do get an impact of new state launches which can often dilute the CPA cost because of our large DFS customer base that we can sort of cross sell into and other mechanisms that we have that give us advantages.

Speaker Change: Thanks, Jordan.

Speaker Change: On a CPA basis, if I look at Q2 this year and Q2 last year, we actually would see that our costs have come down a little bit, even with the significant increase in customer numbers that we've acquired.

Speaker Change: It's often difficult to try and look very precisely at it because you do get an impact of new state launches which can often dilute the CPA cost because of our large DFS customer base that we can cross sell into and other mechanisms that we have that give us advantages.

Peter Jackson: But I think what's important is that we maintain the consistent posture that we've had in the market to acquire as much business as we can whilst we meet our return criteria. We're very confident in offering the best prices to customers in the market and the best products in the market. We will maintain high levels of customer lifetime value, and together with the significant benefits of customer acquisition, it gives us real confidence to continue to acquire as much business as we can. Thank you.

Speaker Change: But I think what's important is that we're maintaining the consistent posture that we've had in the market to acquire as much business as we can whilst we meet our return criteria.

Speaker Change: We're very confident in offering the best prices to customers in the market and the best products in the market that we will maintain high levels of...

Speaker Change: customer lifetime value, and together with the significant benefits we get in customer acquisition, it gives us real confidence to continue to acquire as much business as we can.

Rob Poldrick: Congratulations on the second part of your question, George. So, as Peter said, you know, A, we're investing behind what we're seeing as some very strong paybacks. I think from an operating cost perspective, we've got the beyond play cost that I mentioned in the second half of the year. We're also seeing some slightly higher payment costs. We're very comfortable with the position that we've got for the second half of the year.

Speaker Change: I'll thank you for listening. Thanks, Peter.

Speaker Change: The second part of your question.

Speaker Change: Sure, so as Peter said, A, we're investing behind what we're seeing as some very strong paybacks. I think from an operating cost perspective, we've got the beyond play cost that I mentioned. In the second half of the year, we're also seeing some slightly higher payment costs.

Peter Jackson: Yeah, we're very comfortable with the position that we've got for the second half of the year As I mentioned also earlier, we've got some very good momentum coming into the second half of the year from a revenue perspective

Rob Poldrick: As I mentioned earlier, we've got some very good momentum coming into the second half of the year from a revenue perspective. One of the other things that we will be very focused on for the second half of the year and beyond is actually driving more operating leverage. All the costs are coming into focus. We're really looking to be as efficient and optimal as we can from a cost-based perspective.

Speaker Change: It's one of the other things that we will be very focused on.

Speaker Change: for the second half of the year moving forward is actually driving.

Speaker Change: more operating leverage, you know, all the costs are coming into focus.

Operator: We do have a couple of additional costs. In addition, you've got the costs that we previously outlined in terms of investing behind the Flutter Edge capabilities and also some regulatory compliance costs in conjunction with our US listing. We've previously discussed both of those, and they're in line with our expectations. Awesome. Thank you both. Our next question comes from Ed Young from Morgan Stanley. Please go ahead. Good evening.

Speaker Change: We're really lucky to be as efficient.

Speaker Change: as optimal as we can from a cost-based perspective. But yeah, we do have a couple of additional costs. I think in addition, you've got the cost that we previously outlined in terms of investing behind the Flutter Edge capabilities and also some regulatory compliance costs.

Speaker Change: conjunction with our US listing but we've previously signposted both of those and they're in line with our expectations.

Speaker Change: Awesome. Thank you both.

Speaker Change: Our next question comes from Ed Young from Morgan Stanley. Please go ahead.

Ed Young: My first question is on the cohort growth that you talked through, Rob, on slide six. It presents as very bullish to see obviously strong growth across all these different cohorts. I perhaps wonder if, Broadbrush, you could give some color on the relative mix of AMP growth and revenue per AMP growth you're seeing across those different cohorts, just to give us an understanding of what's driving some of that across the different areas.

Ed Young: Good evening. My first question is on the cohort growth that you talked through, Rob,

Speaker Change: Slide six, it presents as very bullish to see obviously strong growth across all these different cohorts. I perhaps wonder if broad brush you could give some color on the relative mix of

Speaker Change: growth and revenue per amp growth you're seeing across those different cohorts just to give us an understanding over what's driving some of that across the different areas. And then second of all, perhaps a novelty of a non-US question, in the UK and I, obviously the Euros was...

Ed Young: And then, second of all, perhaps a novelty of a non-US question. In the UK and I, obviously, the Euros was known to be a good event, but you've obviously had much stronger IKM growth than sports betting growth. I just wonder if you could give a bit more color on what's driven that and how you've seen the tournament progress from where you were pre-tournament. Thanks. Hi Ed.

Speaker Change: It's known to be a good event, but you've obviously had much stronger eye-gaming growth than sports betting growth. I just wonder if you could give a bit more colour on what's driven that and how you've seen the tournament progress from where you were pre-tournament. Thanks.

Peter Jackson: Yeah, good evening. Let me give you just a few thoughts about cohort growth, and I think this is probably where you're coming from. We continue to see increases in things like our parlay penetration among our historical cohorts. I think that's been something which has been very beneficial to us. If I think about that together with the step-ups we've seen in our structural margin position, it has really helped drive the historical cohort performance. I think it's true, and you can see that in all of the different timeframes that we lay out. Robert, are there any answers to that?

Speaker Change: Hi, Ed. Yeah, good evening.

Speaker Change: Let me give you just a few thoughts about the cohort growth, and I think this is probably where you're coming from. We continue to see increases in things like our Parlay penetration.

Speaker Change: in our historical cohorts. I think that's been something which has been very beneficial to us. If I think about that together with the step ups we've seen in our sort of structural margin position has really helped drive the historical cohort performance.

Speaker Change: I think it's as true, and you can see that in all of the different time frames that we lay out.

Rob Poldrick: I think specifically, we're very confident in the major cohorts and the growth they're driving. Pre-2022, revenue was up 16%. Amps are up 20%. In 2022 and 2023, cohort state revenue is up 45%. We've got some incredible growth coming through there with regard to the UK performance in the Euro-Pacific. We're absolutely delighted. The fact that Harry Kane didn't have his shooting boots on helped us with that, and we obviously exited Q2 with some great momentum.

Robert: Robert, I don't know if there's any answers to that. Yeah, I think specifically, Ed, I think, you know, we're very confident in, you know, the major cohorts and the growth that they're driving, so pre-2022 state acquisition, revenue was up 16%.

Speaker Change: amps are at 20%. In 2022 and 2023, cohort state revenue is up to 45%. So, you know, we've got some incredible growth coming through there.

Speaker Change: with regards to the UK performance and the Euro specifically.

Speaker Change: I mean we're absolutely delighted. The fact that Harry Kane didn't have his shooting boots on helped us with that and we obviously exited Q2 with some great momentum and that continued into the third quarter with the first half of the month with the Euros.

Operator: That continued into the third quarter and the first half of the month with the Euros. In addition to that, I think what's even more encouraging for the UK is its gaming performance. So we're seeing some excellent gaming momentum this year, and actually, all four brands in the UK are posting gaming growth of 20% plus year-on-year, which we're particularly happy with. So, you know, the UK is in very good shape at the moment as we move into H2.

Speaker Change: In addition to that, I think what's what's almost more encouraging for the UK is the gaming performance So we're seeing some excellent gaming momentum

Speaker Change: And actually all four brands in the UK are posting gaining growth of 20% plus year on year, which we're particularly happy with. So UK is in very good shape at the moment as we move into H2.

Operator: Thank you. Our next question comes from Ryan Sigdahl from Craig Hallam Capital Group. Please go ahead. Hey, good afternoon, guys. Want to start, there's been a couple of rumors. You might sign an agreement with Diamond Sports Group for naming rights for regional sports networks separately, potentially looking at Penn Interactive, and ESPN bet.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Ryan Sigdahl from Craig Hallam Capital Group. Please go ahead.

Peter Jackson: Peter Jackson and CFO, Rob Coltrick.

Ryan Sigdahl: No need to comment specifically on those rumors or directly, but curious how you think about media tie-ins and what you've learned from other markets. And then, secondly, second question: Caesars sold their intellectual property for a World Series of Poker to GG Poker, your main global competitor. They're just curious how you think that may impact the competitive dynamics in your strategy around poker. Thanks. Thank you, Brian.

Paul Tymms: There will be a chance to ask questions later but I will now hand the call over to Paul Tymms, Group Director of Investor Relations. Please go ahead. I then open up the lines for Q&A.

Ryan Sigdahl: Hey, good afternoon guys.

Ryan Sigdahl: I want to start, there's been a couple of rumors, you might sign an agreement with Diamond Sports Group to earn naming rights for regional sports networks separately.

Ryan Sigdahl: potentially looking at Penn Interactive, ESPN Bet. No need to comment specifically on those rumors or directly, but curious how you think about media tie-ins.

Speaker Change: and what you've learned from other markets. And then secondly, second question, Caesar has sold their intellectual property for a world series of poker to GG Poker, your main global competitor. They're just curious how you think that may impact the competitive dynamics and your strategy around poker. Thanks.

Speaker: Some of the information we are providing today, including our 2024 diamonds, constitutes forward lifting statements, but involves risks, uncertainties, and other factors that could cause actual outcomes or results to different materially from those indicators in these statements. These factors are detailed in our earliest press release and our SEC findings. In addition, all forward lifting statements are based on current expectations.

Peter Jackson: I think we've always been able to benefit from our strong media tie-ins here in the U.S. Scale is definitely our friend. I think if I look at the way in which we've been able to showcase our products and pricing with good integrations, I think it's always been important for us, and I think it's part of what's helped with our strong customer acquisition performance. I think it's, of course, really important you've got a quality product you can back it up with, right? There's no point in people testing and trialing your products and finding that they don't like them.

Speaker Change: Thank you, Brian. I think we've always been able to benefit from our strong media tie-ins here in the U.S. Scale is definitely our friend. I think if I look at historically the way in which we've been able to showcase our products and pricing with good integrations, I think it's always been important for us. I think it's part of what's helped with our strong customer acquisition performance. I think it's, of course, really important you've got a quality product you can back it up with. There's no point in people testing and trialing a product and finding that they don't like it. We're fortunate we have the best product.

Speaker: I'm going to take no deportations to update any forward lifting statement except this required by law. Also, in our remarks or responses to questions, we will discuss non-duck financial measures.

Speaker: Recommendations are included in the results materials we have released today available in the Investor section of our website.

Peter Jackson: And I will now hand you over to Peter. Thank you, Paul. I'm delighted to be joining you today from New York, the home of our new operational headquarters following our prime minister move back in May. With me is Rob Coltrick, plus of CFO. This is obviously Rob's first course since he started his CFO on May 31st. It certainly had the ground running, given his experience within the group, and I know he's looking forward to meeting all the due course.

Peter Jackson: We're fortunate we have the best product in the market. I think from a sort of Caesar's perspective, you're right, they have done this deal with, I think, GG Poker, a global competitor to our poker business, albeit one which operates in a lot of markets that we wouldn't be prepared to operate in. So I think there are some interesting questions there for some of those people involved.

Speaker Change: in the market.

Speaker Change: Bye-bye.

Speaker Change: Yeah, I think from a sort of Caesars perspective, you're right, you know, they have done this deal with, you know, I think with GG Poker, who's the global competitor to our poker business, albeit one which operates in a lot of markets that we wouldn't be prepared to operate in. So I think, you know, there's some interesting questions there for some of those people involved.

Peter Jackson: It's also appropriate to acknowledge that in recent weeks, one of the group's founders David Power passed away. He was a long-standing supporter of this business and a great family board for me, for generations of flutter leaders, many rest in peace.

Rob Poldrick: I think the poker-style business provides us with an important opportunity in the U.S. market. I think the extent to which we can get shared liquidity across states could give us some advantages. When you look at it around the world, poker is breaking down into smaller segments from a liquidity perspective, and I think we're in a reasonably strong position in some of those regulated markets because of the strength of the local hero brands.

Speaker Change: I think the poker-styled business provides us with an important opportunity in the U.S. market. I think the extent to which we can get shared liquidity across states can give us some advantages.

Peter Jackson: Now turned to the forms of the business in Q2. He was a very strong force for the group and ahead might be expectations. We delivered ant growth of 17% and revenue growth of 20% reflecting excellent execution against our strategic priorities and positive sports results. We have outperformed in our major markets. US sports and our gaming, the UK, Ireland and Italy, providing great momentum for the second half of the year. In the US, Fanger had an exceptional quarter with nearly 40% share the entire US sports betting and our gaming market.

Speaker Change: There is a sort of, when you look at it around the world, poker is breaking down into smaller segments from a liquidity perspective, and I think we're in a reasonably strong position in some of those regulated markets because of the strengths of the local hero brands that we have.

Rob Poldrick: I think just to answer Peter's point, from a poker perspective, we talked about in Q1 the fact that we've started to embark on a transformation for PokerStars that's progressing really well, we're very pleased with the progress, and actually, later this year, we'll see our poker platform rolled out into Italy, which I think demonstrates our agility and how quickly we can move there. Also, from a performance perspective, PokerStars is doing very well in the US, we're seeing some real green shoots, and we're very optimistic about how big that business can become there.

Speaker Change: Yeah, I think just to answer Peter's point from a POCA perspective.

Speaker Change: which

Speaker Change: talked about at Q1 the fact that we've started to embark on a transformation for Pokestop. That's progressing really well. I'm very pleased with the progress.

Peter Jackson: Our market leading products underpin by the flutter edge and continued discipline customer acquisition investment, a driving ant performance in the market. The improvements we delivered in our MBA, WMBA and MLB products are increasing pilot penetration, driving a fast structural hold and player attention rates, resulting in continuing strong returns on player acquisition investment. In the quarter, both ants and new players increased by over 30% for sports books and our gaming compared to the prior year.

Speaker Change: And actually by later this year, we'll see our poker platform rolled out into Italy.

Speaker Change: which I think demonstrates our agility and how quickly we can move there. Also from a performance perspective, A, Polk Styles is doing very well in the U.S. We're seeing some real green shoots and we're very optimistic about how big that business can become there.

Rob Poldrick: I think secondly, when you look at the PokerStars business in the rest of the world, we continue to see the positive impact of some pricing initiatives that we've put in place. We've made some changes to both loyalty programs, which have resulted in cost savings, and we've also had a number of offset savings across our casino products, so we're really happy with the way that we're trending on poker. Thanks, guys. All right. Our next question comes from James Roland Clark from Barclays. Please go ahead. Hi, good evening, thanks for taking the questions and well done. Great to see you too.

Speaker Change: I think secondly, when you look at the focus on business in the rest of the world, you know, we continue to see that the positive impact of some pricing initiatives that we've put in play, we've made some changes to both the loyalty, which has resulted in cost savings.

Peter Jackson: It reflects the strong start in all carolina, where we have 59% of the market and 20% growth in new players from pre 2022 states. These excellent KPIs point to long run where growth in these states and the market more forwardly. They also vindicate the consistent posture we've taken since the market launched by investing behind Fanger's excellent internal customer, in our position.

Speaker Change: And we also have a number of offset savings across our casino products, so we're really happy with the way that we're trending on PayPro.

Speaker Change: Great. Thanks, guys.

Speaker Change: All right, our next question comes from James Roland Clark from Barclays. Please go ahead.

Peter Jackson: In eye gaming, we completed an important milestone for the migration of Final Casino onto our proprietary technology. In time, this will unlock important benefits through access to enhanced content, promotional capabilities, and also greater platforms to build the team. This combined with a launch of more exclusive titles and promotional features in the quarter, a further evidence of the fantastic roadmap of improvements we still have for our eye gaming players. Outside of the US, the group's scale and diversification contributed to amp revenue growth of 15% and 10% respectively.

Speaker Change: Hi, good evening, thanks for taking the questions and well done. Great Q2. My first question is on Australia. You said there's no change to online trends and the upgraded EBITDA guide

Operator: My first question is on Australia, you said there was no change in online trends and the upgraded Ebitda guide is sports results driven. Can you just give us some color on what you're focused on, particularly there, that provides some confidence that trends have bottomed out, as you previously mentioned? And then secondly, a slightly nitty-gritty question on the interest charge, which has been guided up from £370 million to £405 million due to a delay in previously expected interest income benefits. Is this raised interest charge now for years, or is this just a timing thing?

Speaker Change: sports results driven, you just

Speaker Change: give us some color on what you're...

Speaker Change: focused on particularly there that provides some confidence that trends have bottomed out as you previously mentioned.

Speaker Change: And then secondly, a slightly nitty-gritty question on the interest charge, which has guided up from $370 million to $405 million due to a delay in previously expected interest income benefits. Is this a raised interest charge now for years, or is this just a timing thing? Thank you.

Peter Jackson: The euro's of the marquee events of the quarter, with our UKI and Italian businesses delivering the same-game pilot products improvements or players in advance of the tournament. CSOW is the third operator to offer same-game pilot in Italy, proof for the benefits of Flutter's Edge when it comes to delivering compelling product advantages for our brands in their local markets. CSOW's same-game pilot accounts at nearly 20% to stakes on the euro's and helps deliver a record marquee share performance for CSOW in the quarter.

James Roland Clark: Thank you. Yes, so I can pick up both those questions. So, firstly, in Australia, I think we're really pleased with the performance that we've seen in the quarter. I think it's demonstrating a really resilient performance in the face of quite a tough regulatory backdrop. So, as we said, you know, we're seeing really good customer momentum, and underlying trends are in line with the expected market declines that we've previously forecasted. We're particularly seeing strong customer engagement at marquee events like the States of Origin games and rugby, where we've doubled the customer acquisition year over year.

Speaker Change: Yeah, so I can pick up both those questions. So firstly in Australia, I think we're really pleased with the performance that we've seen.

Speaker Change: the quarter. I think it's demonstrating a really resilient performance in the face of what a tough regulatory backdrop.

Speaker Change: So as we said, we're seeing really good customer momentum and underlying trends.

Peter Jackson: This encapsulates the strong performance in CSOW since acquisition, where on a pro-former basis over the last two years, amps have increased by 60% and revenue by 37%. In the UKI, all our brands are delivering excellent growth, combining for a tenth straight quarter of marquee share games based on gambling commission data. In eye gaming, we leverage the Paddy Power brand in launching Paddy's Mansion Heights, our most successful live casino game, Norcheva.

Speaker Change: are in line with the expected market declines that we've previously signposted.

Speaker Change: We're particularly seeing strong customer engagement on marquee events like the Saints of Origin Games in rugby, where we've doubled the customer acquisition year over year, so there's some really good momentum in sports in particular, in Australia outside of racing.

James Roland Clark: So, there's really good momentum in sports, in particular, in Australia, outside of racing, and as we said, we've had a benefit from sports results in the queue as well, so factoring all of that in, you know, that's driving the upgrade in Australia, which we're very pleased about. I think from an interest perspective, some of the projects that we had talked about previously to unlock cash efficiency across the wider group now won't land In addition, when I came in and we had a look at the forecast, it was quite evident that some of our interest rates and cash assumptions in H2 were quite optimistic, so we have tweaked those and revised the forecast accordingly, which is why it's now sitting at a slightly higher number.

Speaker Change: As we said, we've had a benefit from sports results in the queue as well, so factoring all of that in, that's driving the upgrade in Australia, which we're very pleased with.

Peter Jackson: In Australia, the previously noted and anticipated declines in the racing market were evidence in the quarter. However, we saw strong customer engagements around marquee rugby events, where player acquisition doubled year-on-year.

Speaker Change: I think from an interest perspective some of the projects that we had talked about previously to unlock cash efficiency across the wider group now won't land until 2025 when we'd originally envisaged from H2 2024.

Rob Coltrick: Overall, the group had a very strong quarter, strengthening our leadership position in the US to delivering excellent momentum in our diversified X-US business, and with that, I hand you over to Rob. Thanks, Peter. Good afternoon, everyone. Thanks for joining the call. It's a really exciting time to be stepping into the CSOW and I'm delighted with the current momentum in the business. The group delivered a really strong performance in the quarter with revenue growth of 20% and adjusted EBITDA growth of 17% to $738 million.

Speaker Change: So, you know, that's making a path to change.

Speaker Change: In addition, when I've come in and we've had a look at the forecast, it was quite evident that some of our interest rates and cash assumptions

Speaker Change: In H2, we're quite optimistic, so we have tweaked those and revised the forecast accordingly, which is why it's now sitting at a slightly higher number, but we're very confident in the number that we've now got, and that's what we think we'll hit for the full year.

Rob Poldrick: But we're very confident in the number we've now got, and that's what we think will hit for the full year. I think just to add to that as well, we did refinance some very expensive euro and US debt in May, and we'll see the benefit of some interest cost savings on that versus the current run rate in H2. Our next question comes from Dan Pulitzer from Wells Fargo. Please go ahead.

Rob Coltrick: The group had net income with $297 million on a reported basis, which is after non-cash expenses, including the amortization of acquired intangibles of $147 million, and a 91 million dollar game on the fair value of the Fox option. Voluted earnings per share increased 290% while adjusted earnings per share increased 56% due to the strong financial performance and the positive movement in the Fox option. Free cash flow was $171 million, versus a cash outflow of $95 million in the prior year.

Speaker Change: I think just to add to that as well, we did refinance a very expensive euro and US debt in May. And we'll see the benefit of some interest cost savings in that versus the current run rate in H2.

Speaker Change: Flutter Entertainment PLC

Speaker Change: Our next question comes from Dan Pulitzer from Wells Fargo. Please go ahead.

Dan Pulitzer: Hey, good evening, everyone, and thanks for taking my question. The first one, Peter, maybe you could remind us of some of the parameters through which you evaluate M&A and, you know, how do you think about U.S. opportunities or, maybe, balancing these relative to opportunities in Brazil or other jurisdictions? And acknowledging here that your leverage, I believe, is 2.6 times. Your target is 2 to 2.5 times. Maybe How high would you be willing to go for the right deal?

Dan Pulitzer: Hey, good evening everyone and thanks for taking my question.

Dan Pulitzer: The first one, Peter, maybe could remind us on some of the parameters through which you evaluate M&A and, you know, how do you think about U.S. opportunities or maybe balancing these relative to opportunities in Brazil or other jurisdictions?

Rob Coltrick: Our strong deleveraging profile saw our leverage ratio reduced to 2.6 times from 3.1 times at the end of December 2020. We are almost within our medium-term leverage target range 2 to 2.5 times. We look forward to updating you on our capital allocation framework on the range of capital allocation opportunities we have are invested in on September 25th.

Speaker Change: acknowledging here your leverage I believe is 2.6 times, your target is two to two and a half times. Maybe how high would you be willing to go for the right deal? And then secondly your flow-through I believe you mentioned it was about 35% for the back end of this year ex-Illinois. Is that kind of the right ballpark to think about your flow-through on a normalized basis from here? And that's it for me. Thank you.

Peter Jackson: And then secondly, your flow-through, I believe you mentioned it was about 35% for the back end of this year, ex-Illinois. Is that kind of the right ballpark to think about your flow-through on a normalized basis from here? And that's it for me.

Rob Coltrick: Starting now to each of the seconds. In the US, the exceptional courts are noted by Peter, translated to excellent financial returns with revenue growth of 39% and adjusted EBITDA growth at 51%. Pleasingly, the strong growth is across all state co-haul types, with pre-2022 state launch revenue up 33% year-over-year, including pre-2020 which is 27% higher. Sportsbook revenue grew 41% from 6% to 35%, and a fair expansion of our structural sportsbook in that revenue margin.

Peter Jackson: Thanks Dan. I'll answer the M&A question, and then we'll chat about the flow through. I think the first thing to remind everyone is we've done a lot of M&A here in the US. We recently acquired Beyond Play, and we bought the financial business back in 2018 as well. We will be happy to make acquisitions in this market if we think they will help us. It's also important to recognize that internationally, there are many, many markets in either regulated or soon-to-be-regulated markets where we are not yet present with either a podium position or, certainly, a gold medal position.

Speaker Change: Thanks, Dan. I'll answer the M&A question and then Rob will chat to you about the flow-through. I think the first thing to remind everyone is we've done a lot of M&A here in the U.S. and internationally.

Speaker Change: We recently acquired Beyond Play, of course we also bought the financial business back in 2018 as well. We will be happy to make acquisitions in this market if we think it will help us.

Rob: It's also important to recognize that internationally there are many, many markets in either regulated or soon to be regulated markets where we're not yet present with either a podium position or certainly a gold medal position.

Rob Coltrick: By gaming revenue, 47% higher, reflecting the gains we are making in the direct casino segment of the market, and the product improvements the team has delivered over the last two years. This revenue performance combined with operating leverage and sales and marketing helped deliver adjusted EBITDA of $260 million, well ahead of market expectations. Outside of the US, revenue increased 10% due to strong performances in UK and I in the nation. The UK and I, the combination of continued I gaming momentum, the European football championship and positive sports results, through revenue and adjusted EBITDA 18% higher. Sports results were very favorable in the quarter, adding 190 basis points to our sportsbook in that revenue margin. Positive results were most noticeable during the Euro's which continued into July.

Peter Jackson: And we've had a great track record of acquiring businesses in those markets, applying the Flutter Edge, and seeing a big step up in performance. CSAL is a great example of that. Actually, Tombola is another example of us doing it in the market. Our experiences in Jarabat.

Speaker Change: And we've had a great track record of acquiring businesses in those markets, applying the flutter edge and seeing a big step up in performance.

Speaker Change: C-SAL is a great example of that, actually Tom Bola is another example of us doing it in market. Our experience is in a Jarabet.

Peter Jackson: All around the world, we've had great experiences. We pride ourselves on making sure that we look at almost everything that gets traded in our space. And if necessary, we will go beyond our leverage targets to do the right type of deal if we've got confidence that we can do leverage quickly, and that is what you've seen with us recently. We're bringing our leverage down now, on the back of the very strong growth in earnings in the U.S. With regard to the flow-through question, I have a couple of points to mention on this. I mean, A. We are going to see some difference in flow-through by quarter as we move forward because it can be impacted by a number of factors, including both sports results and seasonality.

Speaker Change: Yeah, so all around the world we've got great experiences and we pride ourselves on making sure that we look at almost everything that gets traded in our space.

Speaker Change: And if necessary, we will go beyond our leverage targets to do the right type of deal if we've got confidence and we can do leverage quickly, and that is what you've seen with us recently. We're bringing our leverage down now off the back of the very strong growth in earnings in the U.S.

Rob Coltrick: The previously noted softer Australian racing market resulted in associated year-on-year declines in that market, with revenue down 10%. In international, the addition of max bet and 12% constant currency revenue growth, not other consolidated best markets, broke revenue 16% higher on a constant currency basis.

Speaker Change: Bye. Bye.

Speaker Change: With regards to the flow frequency, a couple of points to mention on this, I mean, A,

Speaker Change: we are going to see.

Speaker Change: some difference in flow through by quarter as we move forward because it can be impacted by a number of factors including

Peter Jackson: And also, where we see opportunities to continue investing at the level of paybacks that we talked about, we'll continue to do so because that's what's driving our superior returns, that's what's driving our market share gains, and our overall virtual firewall as a business. So, we're not holding ourselves or anchoring to a specific number, but we are quite confident at this stage that given the momentum that we've got, we will continue to see a decent drop-through on the incremental revenues that we're driving. Thanks so much.

Rob Coltrick: Turning now to our updated guidance for 2024, in the US we have increased our midpoint revenue guidance to $6.2 billion and adjusted EBITDA midpoint for $740 million. This equates to year-on-year growth for 41% for revenue and 219% for adjusted EBITDA. This reflects the strong momentum we have in the business, including the excellent performance in Q2, including the sports results benefit. And it's after the $40 million net impact of the tax changes introduced in Illinois and July.

Speaker Change: both sports results and seasonality and also where we see opportunities to continue investing at the level of paybacks that we talked about, we'll continue to do so because that's what's driving our superior returns, that's what's driving our market share gains.

Speaker Change: and yet our overall kind of virtual firewalls of business.

Speaker Change: We're not holding ourselves or anchoring to a specific number, but we are quite confident at this stage that given the momentum that we've got, we will continue to see a decent drop through on the incremental revenues that we're driving.

Rob Coltrick: The growth tax impact in Illinois is $50 million in 2024, and we expect to mitigate 50% of the tax from 2025 onwards. That is prior to any additional second order benefits such as market share gains from sub-scale players, which we have typically seen where regulatory or tax changes have been implemented in our other markets.

Operator: Our next question comes from Paul Rudy from Davey. Please go ahead. Good evening, guys. Just two from me, well probably both interconnected.

Speaker Change: Thanks so much.

Paul Rudy: Just on maybe the competitive intensity, firstly, maybe in iCasino when you think about that MGM and speaking to you about increased investment in iCasino, is there anything there you feel you may have to respond to? And the second, similarly, in the sports sphere, there's a couple of operators speaking about refreshed product launches. Could you kind of give us some detail on why you think your product advantage will hold through into the new NFL season? Evening, Paul. I mean, fairly straightforward responses for you.

Speaker Change: Our next question comes from Paul Rudy from Davey. Please go ahead.

Paul Rudy: Hey, good evening guys. Just two for me, well probably both interconnected, just on the, maybe the compositive intensity, firstly maybe in iCasino when you think about that MGM, speaking to increased investment in iCasino.

Rob Coltrick: On a quality basis in the US we expect to small EBITDA loss in Q3, with significant earnings to be generated in Q4. In the Group X US we now expect both increase revenue of $8 billion, and adjusted EBITDA of $1.77 billion at the midpoint of our guidance. This equates to year-on-year growth of 8% for both metrics. As always our guidance is provided on the basis that sports results are in line with our expectations for the remainder of the year. Current foreign exchange rates, no new state owe thinks for the remainder of the year, and in a consistent regulatory and tax environment. This guide demonstrates the strong remains we have as foster groups.

Speaker Change: Is there anything there you feel you may have to respond to? And the second, similarly, you know, in the sports sphere, there's a couple of operators speaking about refreshed product launch. Could you kind of give us some detail on why you think your product advantage will retain into the new NFL season?

Peter Jackson: I think from a competitive intensity perspective, we've always maintained what I would describe as a robust posture, acquiring as much business as we can, whether that's in the states that just do sports or the states that do sports and iGaming. Of course, we get the benefit of the cross-sell for iGaming, but we're very pleased with the performance in the first half. We were talking about Q2 today, and Bob just referenced what we're going to do to think about continuing to push hard in the second half of the year.

Speaker Change: Evening, Paul, it's been fairly straightforward.

Speaker Change: Bye-bye.

Speaker Change: Yeah.

Speaker Change: responses for you. I think from a competitive

Speaker Change: intensity perspective, you know, we've always maintained that, you know, what I would describe as a robust posture, you know, acquiring as much business as we can, whether that's in, you know, the states which just do sports or the states that are doing sports and iGaming. Of course, we, you know, we get the benefit of the cross-sell for iGaming, but, you know, we're very pleased with the performance of the first, you know, the foot...

Speaker: With that, Peter and I are happy to take your questions.

Speaker: In the interest of time can we also, as usual, we limit to two questions per person. With that, I'll hand you back to Jeremy to manage the call. Alright, thank you so much. Thanks, good evening guys. I appreciate you taking the questions.

Speaker Change: in the first half. We talked about Q2 today and Bob's just referenced what we're going to do to think about continuing to push hard in the second half of the year.

Peter Jackson: It's not just about investment in marketing. We have also been investing a lot in building out our product capabilities. I'm really pleased when I look at the performance of car lanes in MLB at the moment. Historically, it wasn't an area of strength for us, and we almost got to the same level of penetration as we would do in things like the NFL.

Speaker Change: It's not just around investment in marketing. We have also been investing a lot in building out our product capabilities. I'm really pleased when I look at the performance of Carle A's and MLB at the moment. Historically, it wasn't an area of strength for us.

Clark: Peter, I wanted to see if we could open up by talking about US performance. Two few results were nicely ahead. Folier guidance was raised, Nancy Villanoi. I think Rob said pre-22 state growth was up 33%.

Peter Jackson: Clearly, the product advances we've been making, we've been doing a lot around line betting, and there's a stack load of things that we're going to deploy to take our product forward into the new football season that launches at the beginning of September. We've got the best product in the market, we've got the best price in the market, and we intend to work very hard to keep a long way ahead of our competitors. Thank you. Our next question comes from Joe Stauff from SIG. Please go ahead. Hello Peter, Rob.

Clark: Could you give us a little bit more color around the guest just what sort of driving, you know, sort of strong results right now and what also is embedded for back cast guidance.

Speaker Change: and we almost got to the same level of penetration as we would do in things like the NFL. So, clearly, the product advances we've been having.

Speaker Change: We've been doing a lot of rounds of live betting and there's a stack load of things that we're going to deploy to take our product forward into the new football season that launches at the beginning of September. We've got the best product in the market, we've got the best pricing in the market and we intend to work very hard to keep a long way ahead of our competitors.

Clark: Second question I have is related to the 40 million net headwind that you guys called out from Illinois. As we think about managing potential additional increases and taxes going forward, what are the key levers that you guys have at your disposal to mitigate those headwinds and is a potential tax or charge on player winnings maybe part of that calculus.

Peter Jackson: Thanks very much. Thank you for the questions, Clark. It's nice to be talking to you in your time zone for once and long way this continues. Let me give you some thoughts around the US performance and then I think a progress route just to give us the major building blocks. As I said in my head mirror mark, I'm really pleased to see the strong performance in Q2. I think it's a really good vindication of the posture that we've adopted in the market of acquiring as much businesses we can and whatever we meet our return criteria.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Joe Stauff from SIG. Please go ahead.

Operator: I had two questions, please, on the U.S. amp growth in the quarter of 27%. I was wondering if you could disaggregate that for us between OSB and iCasino. And then two... With respect to the effort to insource a lot of the, say, technical and tech stack capabilities of your USI casino offering, where are you in that process? The reason I ask is I'm trying to anticipate, say, the gross margin pickup you get once that's fully in-house. Thank you. Hi Joe.

Joe Stauff: Hello Peter, Rob. I had two questions please on the U.S.

Joe Stauff: Amp growth in the quarter, 27%. I was wondering if you could disaggregate that for us between OSB and iCasino and then two

Speaker Change: With respect to the effort to in-source a lot of the

Speaker Change: say technical and tech stack capabilities of your USI casino offering, where are you in that process? The reason I ask is I'm trying to anticipate, say the gross margin pickup you'd get once that's fully in-house. Thank you.

Peter Jackson: And so mind you, that's just to make sure that we can see less than a two year payback and I think we push hard in the first half and you can definitely see the benefits of that come through in the player numbers, the increase in that position that we saw in Q2. I think it's and that's really good stead in good stead as we go into the back half of the year, but what maybe we'll just talk about the building blocks.

Joe Stauff: Well, that's a great question because I'm delighted to tell you that we've actually brought our iGaming product in-house to the U.S. It's not a cosplay, but it's certainly going to improve our ability to deploy our own in-house content into the U.S. market, which is not something we've been able to do in the past. It's also going to help improve the So we will definitely drive benefits from it, and I think there are a lot of exciting initiatives that we can deploy off the back. And then...

Speaker Change: Hi, Joe. Well, that's a great question because I'm delighted to tell you that we've actually bought our iGaming product in-house in the US.

Speaker Change: And it's not, you know, it's not a cosplay, but it's certainly going to improve, you know, our ability to deploy our own in-house content into the U.S. market, you know, which is not something we've been able to do in the past. It's also going to help improve things like, you know, the stability of the platform as well. So, you know, we, you know, we will definitely drive benefits of it. And, you know, I think there's a lot of exciting initiatives that we can deploy off the back of it.

Rob Coltrick: Yeah, I think first of all, Clark, I'm delighted to be talking about an upgrade to the four year guidance for revenue and the entire my first earnings call. As Peter said, you know, but a terrific performance in Q2 and that's probably driven by the positive sports results. What we see as a result of that is extremely strong drop through in Q2 without looking forward to the second half. The second half of the year still accounts for 14% of the revenue upgrade, but that won't directly drop through to even after a couple of reasons.

Peter Jackson: Rob, I don't know whether you want to just talk about the AMP... Yeah, so in terms of the AMP, we're a third party to both Sportsbook and iGaming. There's a small decline in DFS, as you'd expect, given a bit of cannibalization being out there. We're really happy with the growth rate across the place, sports flicking away. And, you know, that's very much continuing into the second half. And just to clarify, Peter, so it is 100%, then say, in source at this point in terms of the iCasino tech stack.

Speaker Change: Thank you.

Speaker Change: Paul, I don't know whether you want to just talk about the AMP. Yes, in terms of the AMP, we're 30% on both Sportsbook and iGaming.

Rob Coltrick: Firstly, we're choosing to invest a further 20 million behind customer acquisition given those returns that we continue to see a well within our kind of 24 month paybacks that we've proved stated. That momentum should set us up really well for 2025 as we take a larger business in the next year. In addition, we've got an additional 20 million dollars of operating costs and that's partly due to the higher payment costs which have been driven by the changing player behavior and more frequent deposits and withdrawals.

Paul: There's a small decline on DFS, as you'd expect, given a bit of cannibalisation, but we're really happy with the growth rate across both sports, flick and wicket, and that's very much continuing into the second half of the year.

Paul: And just to clarify, Peter, so it is 100% then, say, insourced at this point in terms of the...

Peter Jackson: Clearly, the big part of iGaming is working with third-party providers, and we'll continue to work extensively with partners in that space, but when I look at all the work that we've done around deploying our own cross-product promotional engine into iGaming, the stuff that you'll see us doing around that, all the work that we've done around the stability of control, there's a lot of things that we Thanks very much.

Peter Jackson: the iCasino tech stack, say.

Peter Jackson: Yeah, I mean clearly, you know, the big part of iGaming is working with third-party providers.

Rob Coltrick: And partly due to some additional costs associated with the beyond play acquisition. If you then factor in the net Illinois impact of 40 million, you get for the full year going so essentially the full year upgrade excluding Illinois drops through 35% or it's 15% ex Illinois so we're absolutely delighted with that.

Peter Jackson: We'll continue to work extensively with partners in that space, but when I look at all the work that we've done around deploying our own cross-product promotional engine into iGaming, the stuff that you'll see us doing around that, all the work we've done around the stability of the control, there's a lot of things that we've been able to bring from our experiences around the world into the U.S. market, and we now sit on our own in-house tech stack. Thank you. Thank you.

Peter Jackson: Thank you all. And look, I suspect you've got a question around the situation in Illinois and I can imagine that a number of other people will have questions around. How we're thinking about positioning ourselves in it. So I think it probably makes sense for me just to give us like more expensive answers to that question and then I don't anticipate this needing to answer the question and subsequently for other people. To start with, I think it's important to recognize that a happy medium for tax rates that enables operators to maximize market growth, provides the best experience for customers and over time maximizes revenue for states.

Rob Poldrick: All right, and as we continue, since we are running low on time, we would like to ask everybody that saw the question to limit themselves to one. Alright, we will continue with Monica Pollard from Citi. Please go ahead. Oh, hi. Afternoon, everyone. Okay, I'll stick to one then.

Speaker Change: Thanks very much.

Speaker Change: All right. And as we continue, since we are running low on time, we would like to ask everybody that saw the question to limit themselves to one.

Speaker Change: All right, we will continue with Monica Pollard from Citi. Please go ahead.

Monica Pollard: On the U.S. gross margin, the gross margin was really good in the quarter, 45.1%. Presumably, if I just think about sort of, you know, how you've been growing in the different states, there's been some scaling, therefore, of the non-tax COGS. So, I'm just trying to understand what sort of initiatives are being put in place there. And also, when we think about the full-year gross profit margin, we talked about 43.5%. Obviously, that was excluding the Illinois tax impact. Is that still the guide, Illinois tax impact, or has that also been increased?

Speaker Change: [inaudible]

Monica Pollard: Oh, hi. Afternoon, everyone. Okay, I'll stick to one then. On the U.S. gross margin, the gross margin was really good in the quarter, 45.1%. Presumably, if I just think about how you've been growing in the different states, there's been some scaling, therefore, of the non-tap cog.

Peter Jackson: And most states are taking a sensible approach today. I do think that then introducing a graduated tax system that punishes those who invested the most to grow their businesses is wrong. I think it would drive customers to offshore operators or potentially to onshore operators to offer unregulated and tax prox parlay under the guise of sweepstakes. We have lots of pattern recognition of operating internationally in high tax locations. And our experience is that moderating levels of generosity or indeed reducing local marketing is the best response.

Speaker Change: So I'm just trying to understand what sort of initiatives are being put in place there. And also when we think about the full year gross profit margin, we've talked about 43.5%, obviously that was excluding the Illinois tax.

Speaker Change: impact. Is that still the guide, extra Illinois tax impact, or has that been also increased?

Peter Jackson: Hi Monique, I think one of the points I'd like to make is to remember the impact of the sports results, which has quite a profound impact, particularly when not all of our foster sales are subject to 25% of the impact on handles. That will have a bearing, but Rob, I don't know if there are any more details. I think there are probably a couple of points to mention, Monique. One is when you look at cost of sales more broadly, we now expect it to be roughly 56.8% of revenue, which is very much in line with the previous guidance of 56.5%.

Speaker Change: Hi Monique, I mean I think one of the points I just made is to remember the impact of the sports results, which has quite a profound impact, particularly when not all of our foster sales are, you know, 25% of the impact on handles.

Peter Jackson: As Rob mentioned, we often find as well that smaller players may also have to increase their prices, which leads to us capturing more share which provides an offset for us. And so we think that the moderating levels of generosity or reducing local marketing is the best customer option and we have low plans to introduce a search arch for winners.

Speaker Change: That will have a bearing, but Robert, I don't know if there's any more details you want to...

Robert: I think there's probably a couple of points to mention, Monique. I think one is when you look at cost of sales more broadly here, we now expect it to be roughly 56.8% of revenue, which is very much in line with the previous guidance of 56.5%.

Speaker: Thanks very much.

Peter Jackson: When you look at the composition of our cost sales, obviously, as Peter said here, some of it's driven by sports results, but there are some other levers that we can put in cost sales, and we will pull over time. If you look at payment costs, for example, we've had an increase in payment costs as a function of our deposits and withdrawal system that we've got set up for our customers, which essentially makes it easier for them to deposit and withdraw, and they love that feature.

Jordan Bender: Our next question comes from Jordan Bender from Citizens JMP. Please go ahead. Good afternoon everyone. Maybe just to follow on the CPA questions, you know, in 2Q here, that's been a big theme or topic across most players in the space. So, you know, are you seeing acquisitions cost fall kind of equally across eye gaming and sports betting? And, you know, can you maybe point to why is this happening, maybe your to date?

Robert: When you look at the composition of our cost of sales, obviously as Peter said here, some of it's driven by sports results, but there are some other levers that we can put in cost of sales and we will pull over time. If you look at payment costs, for example, we've had an increase in payment costs as a function of our...

Peter Jackson: deposits and withdrawals system that we've got set up for our customers.

Peter Jackson: But as a percentage of revenue, payment costs are about 6% of our revenue, so it's quite a significant cost, but we've got significant pattern recognition from other markets across the world, other jurisdictions, where we've lent into payment costs and reduced them over time, and we definitely see some opportunities to do that in the U.S.

Speaker Change #100: which essentially makes it easier for them to deposit and withdraw. They love that feature.

Jordan Bender: And then the second question off of that, the updated US guidance implies an increase in all effects for the four year, even after kind of accounting for the Illinois impact. Or the declining CPA is kind of that core reason why you're you're stepping up investment here, or is there anything else you're seeing into the market or into football season here that kind of, you know, allowed you to invest more. Thank you.

Peter Jackson: But, you know, as a percentage of revenue, the payment costs are about 6% of our overall revenue. So it's quite a significant cost, but, you know, we've got significant pattern recognition from other markets, you know.

Peter Jackson: across the world other jurisdictions where we've lent into payment costs and reduced them over time. We definitely see some opportunities.

Rob Poldrick: There's actually a system coming in next year where we think we'll start to make some inroads to payment costs. You've got other things as well in cost sales, like geocomply costs, that we also think that over time, we'll be able to address. So, yeah, in line with guidance, there's a number of things that leave us that we think we can put a long-term cost of sales moving forward to stay within the longer-term guidance that we've previously outlined. All right, our next question comes from Robert Fishman from Moffett & Nathanson. Please go ahead. Hi, good afternoon.

Jordan Bender: Thanks Jordan. And on a CPA basis, if I look at it, you know, Q2 this year and Q2 last year, we actually would see that our costs have come down a little bit, even with the significant increase in customers that we customer numbers that we've acquired. It's often difficult to try and look very precisely because you do get an impact at new state launches, which can often dilute the CPA costs because of our large DFS customer base that we can cross into and other mechanisms that we have to give us a long to just.

Peter Jackson: we also think that over time we'll be able to address. So yeah in line with guidance and there's a number of things that leave us that we think we can put put on cost of sales moving forward to stay within the longer-term guidance that we've previously outlined.

Speaker Change #101: Thank you.

Speaker Change #101: All right, our next question comes from Robert Fishman from Moffett & Nathanson. Please go ahead.

Operator: Peter, in your recent write-up on the similarities between Flutter Edge and Fergie's Man U, you discussed the importance of developing and maintaining a distinct competitive advantage. So I'm just kind of curious if you can talk about your confidence in maintaining or even growing your number one position in the US and if you want to speak about the success of North Carolina as an example. I'm pleased you read the article.

Jordan Bender: So, I think what's important is that we're maintaining the consistent posture that we've had in the market to hire as much business as we can whilst we meet our return criteria. And we're very confident in offering the best prices to customers in the market and the best products in the market that we will maintain high levels of customer lifetime value and together with the, you know, the significant benefits together customer acquisition, you know, because there's real confidence to continue to grow as much business.

Robert Fishman: Hi, good afternoon. Peter, in your recent write-up on the similarities between Flutter Edge and Fergie's Man U,

Robert Fishman: You discussed the importance of developing and maintaining a distinct competitive advantage.

Speaker Change #103: Thank you.

Speaker Change #104: Kind of curious if you can talk about your confidence of maintaining or even growing your number one position in the U.S. and if you want to speak about the success of North Carolina as an example.

Peter Jackson: I think it is important when you look at the business that we've assembled globally and the way that we've been able to do that in a way that empowers each other, the local market. I think businesses that try and do things in a central place can often get bogged down with trying to coordinate things around product roadmaps and stuff like that. We think it's really important to have local teams delivering on what's required in the local market.

Speaker Change #105: I'm pleased you read the article. I think it is important when you look at the business that we've assembled globally and the way that we've been able to do that in a way that empowers each of our local markets.

Jordan Bender: The second part of the question is, as Peter said, we're investing behind what we see as some very strong paybacks. From operating cost perspective, we've got the Beyond Play cost that I mentioned in the second half of the year, we're also seeing some slightly higher payment costs. We're very comfortable with the position that we've got for the second half of the year. As I mentioned also earlier, we've got some very good momentum coming into the second half of the year from a revenue perspective.

Speaker Change #106: I think businesses that try and do things in a central place can often get bogged down with trying to coordinate things around product roadmaps and stuff like that.

Speaker Change #106: We think it's really important to have local teams delivering on what's required in the local market. But what we do through the Flutter Edge is we ensure that in a small number of areas, we have really good examples of the teams supporting each other.

Peter Jackson: But what we do through the Flutter Edge is we ensure that in a small number of areas, we have really good examples of teams supporting each other. I call out what we're seeing here in America with our strength in our casino business. A lot of the teams who are leading that have come from around the world and have had great experience and patent recognition of having run big casino operations for us elsewhere.

Jordan Bender: One of the other things that we'll be very focused on through the second half of the year moving forward is actually driving more operating leverage. All the costs are coming into focus. We're really lucky that it appears efficient and optimal as we can from a cost-based perspective. We do have a couple of additional costs. In addition, you've got the cost that we previously outlined in terms of investing behind the Flutter Edge capabilities and also some regulatory compliance costs in conjunction with our U.S, listing. But we previously signed posted both the folks that are in line with our expectations.

Speaker: Awesome. Thank you both.

Speaker Change #107: I call that actually what we're seeing here in America with our strength in our casino business. A lot of the team who are leading that have come from around the world and have had great experience and patent recognition of having run big casino operations for us elsewhere. We've been able to bring things like our reward mechanic into the market from our UK business.

Peter Jackson: We've been able to bring things like our reward mechanic into the market from our UK business, and we've been able to bring technology from other markets as well. I think what we did here in the casino is a great example of the Flutter Edge coming to life. When you look at the same game parlays, we're the first to bring that to Italy, and as I mentioned earlier, 20% of our customers in Italy use it in euros. That's another great example of the Flutter Edge in action.

Speaker Change #107: And we've been able to bring technology from other markets as well. So I think what we've done here in Casino is a great example of the Flutter Edge coming to life.

Speaker Change #107: When you look at the same-game parlays, we're the first to bring that to Italy, and I mentioned earlier, 20% of our customers in Italy use that in the euros. That's another great example of a flutter edge in action.

Ed Young: Our next question comes from Ed Young from Morgan Stanley. Please go ahead. Good evening. My first question is on the cohort growth that you talked through Rob on slide six. It presents a very bullish to see obviously strong growth across all these different cohorts. I perhaps wonder if broad brush you could give some color on the relative mix of Amp growth and revenue grant growth. You're seeing across those different cohorts just to give us understanding over what's what's driving some of that across the different areas.

Operator: Our next question comes from Jed Kelly from Oppenheimer. Please go ahead. Hey, great. Thanks for taking my question. Just going back to taxes, and I understand not implementing the surcharge, but can you talk about, just given your experience in other jurisdictions, how you, Flutter, can be proactive in terms of preventing sort of some of the state contagion, especially if some of your wage margins continue to go up? Thanks. I think you have sneaked in in terms of a slightly different approach to the point I made earlier.

Speaker Change #107: i

Speaker Change #107: Our next question comes from Jed Kelly from Oppenheimer. Please go ahead.

Jed Kelly: Hey, great. Thanks for taking my question.

Jed Kelly: Just going back to the taxes, and I get not implementing the surcharge, but can you talk about just given your experience in other jurisdictions, how you, Flutter, can be proactive in terms of preventing sort of some of the state contagion, especially if some of your wind margins continue to go up? Thanks.

Ed Young: And then second of all, perhaps a novelty of a non-U.S, question. In UK and I obviously the euros was known to be a good event, but you've also had much stronger. I came in growth and sports but in growth. I just wonder if you could give a bit more color on what's driven that and how you've seen the tournament progression where you were pre tournament.

Jed Kelly: [inaudible]

Speaker Change #109: I think you probably sneaked in, in terms of a slightly different approach to the point I made earlier.

Jed Kelly: We do operate in a lot of different markets around the world, and I think there are plenty of examples we can highlight where in some places where they've pushed the tax rates up, they've actually seen the tax decline. So these are not straightforward decisions for these bodies to take because they may not actually achieve what they're aiming for. We will all be familiar with the latter curve. There are optimal points, we believe, for taxation to be set.

Speaker Change #110: We do operate in a lot of different markets around the world and I think it's, when you look at, there are plenty of examples we can highlight where in some places where they've pushed the tax rates up, they've actually seen the tax decline.

Ed Young: Thanks. Hi Ed. Good evening.

Ed Young: Let me give you just a few thoughts about the cohort growth. And I think this is probably where you're coming from, but we continue to see increase in increases in things like our parlay penetration in our historical cohorts. I think that's been something which has been very beneficial to us. If I think about that together with the step ups we've seen in our structural margin position has really helped drive the historical cohort performance.

Speaker Change #110: So these are not straightforward decisions for these bodies to take because it may not actually achieve what they're aiming for.

Peter Jackson: And we try and spend as much time as we can educating and sharing our experiences with state bodies to ensure that they can achieve the best outcome for themselves and for customers as well. Our next question comes from Joseph Thomas from HSBC. Please go ahead. And you may be on mute if you're trying to talk.

Speaker Change #110: We'll all be familiar with the LASA curve, there are optimal points, we believe, for taxation to be set.

Speaker Change #110: We try and spend as much time as we can educating and sharing our experiences with state bodies to ensure that they can achieve the best outcome for themselves and for customers as well.

Ed Young: You know, I think it's as true and you can see that in all of the different time frames that we lay out. Bob, I think specifically Ed, I think we're very confident in the major cohorts and the growth rate. I think so pretty 2022 stay up position. Road news up 60% absolute 20% in 2022 and 2023 cohort stay revenues up to 45%. So you know, we've got some incredible growth coming through that.

Speaker Change #110: Thank you.

Speaker Change #110: Our next question comes from Joseph Thomas from HSBC. Please go ahead.

Speaker Change #111: And you may be on mute if you're trying to talk.

Operator: Alright, we'll move on. Our next question comes from Simon Davies from Deutsche Bank. Please go ahead. Hi guys, just one from me.

Speaker Change #111: i

Speaker Change #111: i

Speaker Change #111: All right we'll move on. Our next question comes from Simon Davies from Deutsche Bank. Please go ahead.

Simon Davies: Brazil looks like it's finally set to launch in the new year. Can you just talk a bit about how well you're positioned in that market? And is it one of those markets where you might need to bring in M&A to scale up? Hi Simon.

Simon Davies: Hi guys, just one from me. Brazil looks like it's finally set to launch in the new year. Can you just talk a bit about how well you're positioned in that market and is it one of those markets where you might need to bring in M&A to scale up?

Ed Young: With regards to the UK performance and the Euro specifically, I mean, we're absolutely delighted, you know, the fact that Harry Kane didn't have his shooting boots on, and it helped with that, and obviously, Exited QT was some great momentum, and that continued into the third quarter with the first half of the month with the Euro's. In addition to that, I think what's almost more encouraging to the UK is the gaming performance, so we're seeing some excellent gaming momentum this year, and actually all four brands of the UK are supposed to be gaming growth of 20% plus year-on-year, which we're particularly happy with. So, you know, UK is in very good shape at the moment, as we move into H2.

Peter Jackson: Yeah, look, I talked about Brazil in our preliminary earnings call in 2018. So, you know, I mean, we're finally getting there when the regulation is going to pass this time. We are excited about it. You know, there's tremendous congestion, a lot of time there. You know, they're all absolutely sort of soccer mad.

Simon Davies: [inaudible]

Simon Davies: Hi, Simon. Yeah, look, I can remember talking about Brazil in our preliminary earnings call in 2018, so, you know, I mean, I think it's fun.

Speaker Change #113: We're finally getting there on the regulation.

Speaker: Thank you.

Simon Davies: is going to pass this time.

Speaker Change #114: Yeah, we are excited about it, you know, it's a tremendous contrast and a lot of time there. You know, they're all absolutely sort of soccer mad. There's obviously a lot of betting that happens in the market today. I think we're reasonably well placed with our Betfair brand in that market and of course we also operate PokerStars there as well.

Peter Jackson: There's obviously a lot of betting that happens in the market today. I think we're reasonably well placed with our Betfair brand in that market. And, of course, we also operate Pokerstar there as well.

Peter Jackson: But, you know, we are ambitious, right? We like to have podium positions, and, ideally, we'd like to have gold-medal positions.

Speaker Change #114: But, you know, we are ambitious, right? We like to have podium positions.

Peter Jackson: And we've been able to do that organically in many markets around the world. But we've also, in time, often resorted to M&A. And we think that when we do that, we're able to apply the Flutter Edge and supercharge these businesses. So, you know, we will work out what we want to do in Brazil. And when we've made a decision, we'll let the market know. There's nothing to say.

Speaker Change #114: And ideally, we like to have gold-medal positions.

Ryan Sigdahl: Our next question comes from Ryan Sigdahl, from Craig Hallum, capital group. Please go ahead. Hey, good afternoon, guys. I want to start. There's been a couple of rumors. You might sign an agreement with Diamond Sports Group during naming rights for regional sports networks, separately potentially looking at Penn Interactive, the SPN bet.

Speaker Change #114: and we've been able to do that organically in many markets around the world, but we've also in time often resorted to M&A and we think that when we do that we're able to apply the flutter edge and supercharge these businesses.

Speaker Change #114: We will work out what we want to do in Brazil and when we've made a decision we'll let the market know. There's nothing to say.

Operator: Our next question comes from Andrew Tam from Redburn. Please go ahead. Hi guys, thanks for taking my question. Um, so at the start of the year, you did pretty well, and there was an attack towards leaning into customer acquisition. Are you satisfied with your efforts during the first half? Do you think you could have gone harder?

Peter Jackson: No need to comment specifically on those rumors or directly, but curious how you think about media, tie-ins, and what you've learned from other markets, and then secondly, second question. Caesar's sold their intellectual property for a world series of poker to GG poker. Your main global competitor. They're just curious how you think that may impact the competitive dynamics in your strategy around poker. Thanks. Thank you. Well, I think we've always been able to benefit from all strong media tie-ins here in the US.

Speaker Change #114: Our next question comes from Andrew Tam from Redburn. Please go ahead.

Andrew Tam: Hi guys, thanks for taking my question. So at the start of the year you play pretty well.

Andrew Tam: that there was an attack towards leaning into customer acquisition. Are you satisfied with your efforts during the first half? Do you think you could have gone harder?

Andrew Tam: in that regard. And then, just as a follow-on, is there a natural tempering of expectations given the hit to custom metal TVs, certainly in the Illinois market, given the change there? And does that mean there's a reallocation of spend out of that market into other states?

Speaker Change #116: In that regard, and then.

Speaker Change #117: Just as a follow-on, is there a natural tempering of expectations given the hit to customer LTVs, certainly in the Illinois market, given the change there? And does that mean there's a reallocation of spend out of that market into other states? Thanks.

Peter Jackson: Scales are definitely our friends, and if I look at historically the way in which we've been able to showcase our products and pricing with good integrations, I think it's always been important for us, and I think it's part of what's helped with our strong customer acquisition performance. I think it's of course really important. You've got a quality product that you can back it up with, right? There's no point in people testing and trying products and finding that they like it, and we're fortunate that we have the best product in the market.

Peter Jackson: Andrew, we have talked in the past about looking at historical performance and wishing we'd leaned in and done more. And partly that's because we found that the lifetime values of customers ended up being greater than we had originally anticipated. I think that... and that's in part because of better retention, in part because of stronger cross-selling into iGaming, and it's also been because of the expansion of our grocery margin through parlayer penetrations and things like that.

Speaker Change #118: Andrew, we have talked in the past about having looked at historical performance and wishing we'd leaned in and done more, and partly that's because we found that the lifetime value of customers has ended up being greater than we had originally anticipated.

Andrew Tam: I think that, yeah.

Peter Jackson: I think from a Caesar's perspective, you're right. They have done this deal with, I think with GG poker, the global competitor to our poker business, albeit one which operates in a lot of markets that we wouldn't be prepared to operate in. There's some interesting questions there for some of those people involved. I think the poker style of business provides us with an important opportunity in the US market. I think the extent to which we can get shared liquidity across states can give us some advantages.

Speaker Change #119: And that's in part because of better retention, in part it's been because of stronger cross-sellings into iGaming. It's also been because of the expansion of our grocery margins due to parliar penetrations and things like that.

Peter Jackson: If you look at the performance in Q2, all of those things continue to be true, and so I think historically, we would always wish we had acquired more business. However, I think we did push hard in Q2, we kept within our guardrails, and I think the team delivered a great job.

Andrew Tam: If you look at the performance in Q2, all of those things continue to be true.

Andrew Tam: And so I think, historically, we would always wish we had acquired more business. I think we did push hard in Q2, we kept within our guardrails, and I think the team delivered a great job. We continue to refine our playbook, and if we think there are further opportunities to push and we can deliver the great returns, we will.

Operator: We continue to refine our playbook if we think there are further opportunities to push, and we can deliver the great returns we want. Our final question of the day comes from Robin Farley from UBS. Please go ahead. Great. Thank you. I wanted to circle back to your not having plans to introduce a surcharge. I'm just curious why you wouldn't see it as an opportunity to recapture a significant part of tax expenditure not only in Illinois but also in New York and Pennsylvania and maybe even prevent future states that might be following what Illinois did.

Peter Jackson: When you look at it around the world, poker is breaking down into smaller statements of liquidity perspective, and I think we're recently in a reasonably strong position in some of those regulated markets, because the strength of the local hero brands that we have.

Robin Farley: I mean, if you're the market leader, it seems fairly low risk if the two market leaders both pass along the cost, and no one's really at a competitive disadvantage. So, I'm just kind of curious why you wouldn't take that opportunity. Thanks. Robin. I doubted that earlier, and I don't have anything further to say. All right, now we will get a question from James Wheatcroft from Jefferies. Please go ahead.

Andrew Tam: All right, and our final question of the day comes from Robin Farley from UBS. Please go ahead.

Rob Coltrick: I think just to add to Peter's point, from a poker perspective, we talked about a Q1, the fact that we started to embark on a transformation for the poker style. That's progressing really well, very pleased with the progress, and actually by late of this year, we'll see our poker platform rolled out into Italy, which I think demonstrates our agility and how quickly we can do that. Also, from a performance perspective, a poker style is doing very well.

Robin Farley: Great, thank you. I wanted to circle back to your not having plans to introduce a surcharge. I'm just kind of curious

Robin Farley: why you wouldn't see it as an opportunity to recapture, you know, a significant part of tax expense, you know, not only in Illinois, but also in New York and Pennsylvania, and maybe even prevent future states that might be following what Illinois did. I mean, if you as a market leader, it seems fairly low risk if the two market leaders both pass along the costs and no one's really at a competitive disadvantage. So, I'm just kind of curious why not take that opportunity. Thanks.

Rob Coltrick: In the US, we're seeing some real cream shoots and real optimistic about how big that business can become there. I think secondly, when you look at the poker style business in the rest of the world, we continue to see that the positive impacts of some pricing initiatives that we've been playing, we've made some changes to poker loyalty, which is resulting in cost savings, and we've also had a number of offset savings across our casino products, and I'm really happy with the way that we're trying to come up.

Speaker Change #121: I doubted that earlier and I don't have anything further to say.

Speaker Change #121: [inaudible]

Speaker Change #121: All right, now we will get a question from James Wheatcroft from Jefferies. Please go ahead.

Operator: Good evening, Peter and Rob. Just a question really around product and development as we go into the next NFL season. I'm particularly thinking about vetting play and how that's going to be incremental to the parlay product, and how that will shape over the course of this following season and into next year. Hi James. I think if we look at Q2, we were really pleased with how our investment in live betting helped us.

James Wheatcroft: Good evening, Peter and Rob. Just a question really around product and development as we go into the next NFL season. I'm particularly thinking about betting play and how that's going to be incremental to the parlay product, how that will shape over the course of this following season and into next year, please.

Speaker: Great, thanks guys.

James Wheatcroft: Alright, our next question comes from James, Robin Clark, from Barclays. Please go ahead. Good evening, that's taken questions and my first question is on Australia. You said there's no change to online trends and the upgraded EBITDAQ guide is sports as old as driven. Can you just, you know, give us some color on what you're focused on, on particularly there that provides some confidence that trends have bottomed out as you previously mentioned.

Speaker Change #123: Hi, James. I think if we look at Q2, we were really pleased, actually, with how our investment in live betting helped us. We mentioned that we saw the proportion of customers betting in the NBA playoffs was four times higher than we had done previously. So, look, it definitely helps when we improve the quality of the product. And for the NFL, we got some great initiatives and plans that we plan to get behind this at the Sengen Parlay lives for the season start. So, yeah, it's an important product for us.

Operator: We mentioned that we saw the proportion of customers bet on the NBA playoffs was four times higher than we had done previously. So, it's definitely helped when we improved the quality of the product. And for the NFL, we have some great initiatives and plans that we plan to get behind this at the Sengen Parlor Live for the season start. So, yeah, it's an important product.

James Wheatcroft: And then secondly, it's not the crazy question on the interest charge, which is guided up from $370 million to $405 due to delay in previously expected interest income benefits. Is this raised interest charge in half the years or is this just a timing thing? Thank you.

James Wheatcroft: Alright, and that does conclude the Q&A. I will now hand it back over to Peter and the team for closing remarks. Thank you everybody for joining the call. It's been fantastic to do it from here at our operational headquarters in New York, and I hope all of our US-based analysts have appreciated not getting up in the middle of the night, you know, for this evening's print. But we're delighted with the performance in Q2 and look forward to catching up with you all soon. That concludes today's presentation. Have a pleasant day.

Speaker Change #124: All right and that does conclude the Q&A. I will now hand it back over to Peter and the team for closing remarks.

Rob Coltrick: Yeah, so I can pick up those those questions. So firstly in Australia, I think we're really pleased with the performance that we've seen in the quarter. I think it's demonstrating a really resilient performance in the face of what's up, regulatory backdrop. So as we said, you know, we're seeing really good customer moments and an underlying trends are in line with the expected market to colline that we've previously signed posters. You know, we're particularly seeing strong customer engagement on market events like the state of origin games rugby where we've doubled the customer acquisition year over the years.

Rob Coltrick: It's really good moments in sports in particular in Australia outside of racing. And you know, as we said, we've had a benefit from sports results in the queue as well. So you know, factoring all of that in, you know, that's driving the upgrade in Australia, which we're very pleased with. I think from an interest perspective, some of the projects that we had talked about previously to unlock cash efficiency across the wider group.

Peter Jackson: Okay, thank you everybody for joining the call. It's been fantastic to do it from here in our operational headquarters in New York, and I hope all of our US-based analysts have appreciated not getting up in the middle of the night.

Speaker Change #125: for this evening's sprint, but we're delighted with the performance and think you too, and look forward to catching up with you all soon.

Speaker Change #125: That concludes today's presentation. Have a pleasant day.

Rob Coltrick: Now we've landed until 2025 when we'd originally envisaged from age to 2024. So, you know, that that's making a path to change. In addition, when, you know, I've come in and we've had a look at the forecast, it was quite evident that some were interest rates and cash assumptions in age to quite optimistic. So we have tweaked those and revised forecast accordingly, which is why it's now seeing a slightly higher number.

Rob Coltrick: But we're very confident in the number we've now got. And that's what we think will hit for the full year. I think just to add to that as well, we did finance refinance and very expensive euro US debt in May. We'll see the benefits of interest cost savings in that versus the current run rate in age to.

Daniel Politzer: Our next question comes from Dan Pulitzer from Wells Fargo. Please go ahead. Hey, good evening, everyone. Thanks for taking my question. The first one, Peter, maybe could remind us on some of the parameters through which you evaluate M&A. And you know, how do you think about US opportunities or maybe bouncing these relative to opportunities in Brazil or other jurisdictions? And acknowledging here your leverage, I believe, is 2.6 times. Maybe how high would you be willing to go for the right deal?

Daniel Politzer: And then secondly, your flow through, I believe you mentioned it was about 35% for the back end of this year, ex Illinois. Is that kind of the right ballpark to think about your flow through on a normalized basis from here?

Speaker: And that's it from me. Thank you.

Rob Coltrick: Thanks, and look, I'll answer the KMNA question, I think, what we'll talk about the flow through. I think the first thing to remember is, we've done a lot of MNA here in the US, and it's in actually, we recently acquired Beyond Play, or we also bought the financial business back in 2018 as well. So we will be happy to make acquisitions in this market if we think it will help us. It's also important to recognise that internationally, there are many, many markets in either regulated or soon to be regulated markets, where we're not yet present with either podium position or certainly gold medal position.

Rob Coltrick: And we've had a great track record of acquiring businesses in those markets, applying the Flutter agency, big step up performance. C-1000, a great example of that. Actually, Tom Bolo is another example of us doing it in markets. Our experience is in a jar about all around the world, we've got great experiences. We pride ourselves on making sure that we look at almost everything that gets traded in our space. And it's necessary, we will go beyond our leverage target to do the right type of deal, if we look at some of the leverage quickly. And that is what you see for this recently. We're being our leverage stand now off the back of the very strong growth in earnings in the US.

Speaker: Look, we've regard for the flow through question. A couple of points to mention. I mean, hey, we are going to see some difference in flow through by culture as we move forward, because it can be impacted by a number of factors, including both sports results and seasonality. And also where we see opportunities to continue investing at the level of paybacks that we talked about, we'll continue to do so because that's what's driving our superiors return.

Speaker: That's what's driving our market sharegames. And our overall kind of virtual firewalls of business. So we're not holding ourselves or anchoring to a specific number. But we are quite confident at this stage that given the momentum we've got, we will continue to see a decent drop through on the influence we're on use that we're driving. Thanks so much.

Paul Ruddy: Our next question comes from Paul Rudy from Davie. Please go ahead. Hey, good evening guys.

Peter Jackson: Just two from me, well, probably both interconnected. It's just on the, maybe the comparison of intensity. Firstly, maybe in like, you know, when you think about that MGM, speaking to, you know, increasing investment in like, you know, it's anything there you feel you may have to respond to. And the second, similarly, you know, those in the sports fear, there's a couple of operators speaking about refresh product launch. Could you kind of give us some detail on why you think you're a product advantage will retain into the new NFL season?

Peter Jackson: Even Paul, I mean fairly straightforward, you know, responses for you. You know, I think from a competitive intensity perspective, you know, we've always maintained that, you know, what I describe as a robust posture, you know, acquiring as much business as we can, whether that's in, you know, the state which just do sports or the state to do sports and eye gaming. Of course, we, you know, we get the benefit of cross sell for try gaming.

Peter Jackson: But, you know, we're, we're very pleased with the thoughts of the first, you know, the first half of the, we talked about Q2 today and boxers reference. And what we're going to do to think about, you know, continue to push hard in the second half of the year. It's not just around investment in, you know, in, in marketing. And we have also been investing a lot in building our product capabilities. You know, I'm, I'm really pleased when I look at the performance of, you know, car lanes in NRB at the moment.

Peter Jackson: You know, historically it wasn't there in error strength for us. And we've almost got to the same level of penetration as we would do in things like the NFL. So, you know, clearly the, you know, the product advantage within having, we've been doing a lot, a lot of rounds of, you know, line batting. And there's a spatula of things that we're going to deploy to take our product forward, you know, into the new football season that launches at the beginning of September.

Peter Jackson: So, you know, we've got the best product in the market. We've got the best pricing in the market and we intend to work very hard to keep, you know, a long way ahead of our competitors. Thank you.

Joe Stauff: Our next question comes from Joe Stauff from SIG. Please go ahead. Hello, Peter.

Joe Stauff: Rob, I had two questions please on the US. Amp growth in the quarter, 27% I was wondering if you could disaggregate that for us between OSB and ICocino. And then two, with respect to the effort to outsource a lot of the, say, technical and tech stack capabilities of your US ICocino offering, where are you in that process? The reason I ask is I'm trying to anticipate, say, the gross margin pickup you'd get once that's fully in house.

Joe Stauff: Thank you. Hi, Joe. Well, it's a great question because I'm delighted to say that we've actually bought our IGaming product in house in the US. And it's not a cost play, but it's certainly going to improve our ability to deploy our own in-house content into the US market, which is not something we've been able to do in the past. It's also going to help improve things like the stability of the platform as well.

Joe Stauff: So, you know, we will definitely drive benefits of it. And yeah, I think there's a lot of exciting initiatives that we can deploy off the back of it. Then, what better whether you want to just talk about the Amp. Yeah, so in terms of the Amp, we're a better example, both sportsbook and ICGaming. It's happy with the road road across both sportsbook and ICGaming. And, you know, that's very much continuing into the second half of the year.

Joe Stauff: And just to clarify, Peter, so it is 100% than, say, in-sourced at this point in terms of the ICocino Textex. Yeah, I mean, clearly, you know, the big part of IGaming is working with third-party providers. You know, we'll continue to work, you know, extensively with partners in that space. But, you know, when I look at all the work that we've done around deploying our own cross-product promotional engine into IGaming, the stuff that you'll see us doing around that, all the work that we've done around, there's also a bit of security to control. There's a lot of things that we've been able to bring from our experiences around the world into the US market, and we now sit on our own in half-take time. Thanks very much.

Speaker: All right, now, as we continue, since we are running low on time, we would like to ask everybody that saw the question to permit themselves to one.

Monique Pollard: All right, we will continue with Monica Pollard from City. Please go ahead.

Monique Pollard: Oh, hi, Austin, everyone. Okay, I'll stick to one then. On the US gross margin, the gross margin was really good in the quarter, 45.1%. Presumably, if I just think about, you know, how you've been growing in the different states, there's been some scaling, therefore, of the non-tax cogs. So, I just trying to understand what sort of initiatives are being put in place there. And also, when we think about the full-year gross profit margin, we talked about 43.5%. Obviously, that was excluding the Illinois tax impact. Is that still the guide, extra Illinois tax impact, or has that been also increased?

Rob Coltrick: Hi, Monique. I think one of the points I just made is to remember the impact of the school's results, which has quite a profound impact, particularly when not all of our foster sales are, you know, in 25% of the impact on Handle. So, that will have a bearing, but what about other than any more details you want to... I think there's probably a couple of points to mention, Monique, I think one is when you look at foster sales is more broadly here.

Rob Coltrick: We now expect it to be roughly 56.8% revenue, which is, you know, very much in line with the previous guidance of 56.5%. You know, when you look at the composition of our cost sales, we'll see how it's being said here, some is driven by sports results, but, you know, there are some other levers that, you know, we can put in cost sales, we will pull over time. You know, if you look at payment costs, for example, you know, we have an increase in payment costs as a function of our deposits, and we've drawn a system that we've got set up for our customers, which essentially makes it easier for them to deposit what we've drawn.

Rob Coltrick: You know, they love that feature. But, you know, as a percentage of revenue, the payment costs are about 6% for our own users, so they're quite a significant cost, but, you know, we've got significant pattern recognition from other markets, you know, across the world, other jurisdictions where we've lent into payment costs and reduced them over time. We don't really see some opportunities to do that for the US. Now, that is a system coming in next year, where we think we'll start to make some Emeralds payment costs.

Rob Coltrick: You've got other things as well in cost sales, actually, I can apply costs. You know, that we also think that over time we'll be able to address. So, yeah, in line with guidance, and there's a number of things that leave us that we think we can put along across the sales moving forward to stay within the longer certain guidance that we've proved to the island.

Speaker: Please.

Robert Fishman: All right, our next question comes from Robert Fishman from Moffat, Nathanson. Please go ahead. Hi, good afternoon.

Peter Jackson: Peter, in your recent write-up on the similarities between Sletter Edge and Berge's menu, you discussed the importance of developing and maintaining a distinct, competitive advantage. So, I'm just kind of curious if you can talk about your confidence of maintaining or even growing your number one position in the US. And if you want to speak about the success of North Carolina, I think that's helpful. Robert, I think it's, I'm pleased you read the article.

Peter Jackson: Look, I think it is important when you look at the business that we've assembled globally, and the way that we've been able to do that in a way that empowers each of our local markets. I mean, I think businesses are trying to do things in a substantial place, you know, can often get bogged down with trying to coordinate things around product road maps and stuff like that. We think it's really important to have local teams delivered and delivering on what's required in the local market.

Peter Jackson: But what we're doing through the Sletter Edge is we ensure that, you know, in a small number of areas, we have really good examples of the teams supporting each other. I call that actually, you know, what we're seeing here in America with our, you know, strengthen our casino business. You know, a lot of the team who are leading that have come from, you know, from around the world. And they've had great experience and pattern recognition of having run big casino operations for us where we've been able to bring things like our reward mechanic into the market from our UK business.

Peter Jackson: And we've been able to bring technology from other markets as well. So, you know, I think what we've done here in casino is a great example of the Flutter Edge coming to life. You know, when you look at the same game parlay, so you know, with the first two, you know, to bring that to, you know, to Italy and I mentioned earlier, you know, 20% of our, you know, customers and Italy use that in the euros. You know, that's another great example of the Flutter Edge, you know.

Jed Kelly: Our next question comes from Jed Kelly from Oppenheimer.

Peter Jackson: Please go ahead. Hey, great. Thanks for taking my question. Just going back to the taxes and I get not implementing the surcharge, but can you talk about just given your experience and other jurisdictions, how you Flutter can be proactive in terms of preventing sort of some of the state contagion, especially if some of your Web margins continue to go up? Thanks.

Speaker: Hi, Andrew. I think you've probably sneaked in in terms of a slightly different approach to the point I made earlier. We do operate in a lot of different markets around the world. I think it's, when you look at, there are plenty of examples we can highlight where, in some places where they've pushed the tax rates up, they've actually seen the tax take decline. These are not straightforward decisions for these bodies to take because it may not actually achieve what they're aiming for.

Speaker: We'll be familiar with the latter curve. There are optimal points we believe for taxation to be set. We try and spend as much time as we can educating and sharing our experiences with state bodies to ensure that they can achieve the best outcome for themselves and for customers as well.

Joseph Thomas: Our next question comes from Joseph Thomas from HSBC. Please go ahead. You may be a mute if you're trying to talk.

Simon Davies: Our next question comes from Simon Davies from Deutsche Bank. Please go ahead.

Simon Davies: Hi, guys. This one from me. Brazil looks like it's finally set to launch in the new year. Can you just talk a bit about how well you're positioned in that market? Is it one of those markets where you might need to bring in M&A to scale up?

Peter Jackson: Hi, Simon. I can remember talking about Brazil in our preliminary earnings call in 2018. We're finally getting there when the regulation is going to pass this time. We are excited about it. It's a tremendous contrast from a lot of time there. So, soccer mad was obviously a lot of betting that happens in the market today. I think we're reasonably well placed with our bet fair brand in that market. And of course, we also operate a focus star there as well.

Peter Jackson: We are ambitious. We like to have podium positions. And ideally, we like to have global positions. And we've been able to do that organically in many markets around the world. But we've also, in time, you know, often resorted to M&A. And we think that when we do that, we're able to apply the fluctuation supercharges businesses. So, you know, we will work out what we want to do in Brazil. And when we made a decision, we'll let the market know it's learning to say.

Andrew Tam: Our next question comes from Andrew Tam from Redburn. Please go ahead. Hi guys, thanks for taking my question. So at the start of the year you played pretty well, that there was a tack towards leaning into customer acquisition. Are you satisfied with your efforts during the first half? Do you think you could have gone harder in that regard? And then just as a follow on, is there a natural tempering of expectations given the hit to customer TV's in certain areas? Certainly in the Illinois market, given the change there. And does that mean there's a reallocation of spin out of that market in double states? Thanks.

Peter Jackson: Andrew, we've talked to the past about having looked at historical performance and wishing we'd leaned in and done more. And partly that's because we've found that the limetime values of customers has ended up being greater than we had originally anticipated. I think that, you know, and that's in part because of, you know, better retention in part has been a stronger cross-selling into eye gaming. It's also been because of the expansion of our grocery margin to apply the penetrations and things like that.

Peter Jackson: If you look at the performance in, you know, in Q2, you know, all of those things continue to be true. And so I think we would always wish we had acquired more business. I think we did push hard in Q2. We kept it in our guard rails. And I think the team delivered a great job with it. We continue to refine our playbook. And if we think of further opportunities to push, we can deliver the great returns. All right.

Robin Farley: And our final question of the day comes from Robin Farley from UBS. Please go ahead. Great. Thank you. I wanted to circle back to your, you're not having plans to introduce the surcharge. I'm just curious why you wouldn't see it as an opportunity to recapture, you know, a significant part of tax expense, you know, not only in Illinois, but also in New York and Pennsylvania. And maybe even prevent future states that might be following what Illinois did.

Robin Farley: I mean, if you as a market leader, it seems fairly low risk if the two market leaders both pass along the cost and no one's really out of competitive disadvantage. So just kind of curious why not take that opportunity. Thanks.

Peter Jackson: Robin, I doubt about that earlier. I mean, fill it. All right.

James Wheatcroft: Now we will go question from James.

James Wheatcroft: We'd craft from Jeffries. Please go ahead.

James Wheatcroft: Good evening, Peter and Rob. I'm just a question really around product and development as we go into the next NFL season. I'm particularly thinking about how much better in play and how that's going to be incremental to the parlay product, how that will shape over the course of this following season and into next year, please. Hi, Jane. I think if we look at Q2, we were really pleased actually with how our investment in live betting helps us, you know, we mentioned that we saw the proportion of customers in betting in the NBA playoffs.

James Wheatcroft: It was a four times higher than we had done. It's definitely helped us when we improved the quality of the products. And for the NFL, we've got some great initiatives and plans that we plan to get behind the thing in parlay lines for the season start. So yeah, it's been an important part of it.

Peter Jackson: All right, and that does conclude the Q&A. I will now hand it back over to Peter and the team for closing remarks. Okay, thank you everybody for joining the call. It's been fantastic to do it from here in our operational headquarters in New York. And I hope all of our U.S.-based analysts have appreciated not getting up in the middle of the night, you know, for the seasons. But, you know, we're delighted with the performance in Q2 and look forward to catching up with you all soon.

Speaker: That concludes today's presentation. Have a pleasant day.