Q1 2025 Flutter Entertainment PLC Earnings Call
Krista: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flutter Entertainment First Quarter 2025 earnings conference call. Thank you very much for joining us today. Thank you very much.
Krista: All Lions have been placed on mute to prevent any background noise. [inaudible]
After the speaker's remarks, it will be a question and answer session.
Krista: If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad.
Speaker Change: And if you'd like to withdraw your question, press star one again. Thank you. And I would now like to turn the conference over to Paul Tymms, Group Director of Investor Relations. Paul, you may begin. Thank you very much.
Paul Tymms: Hi everyone and welcome to Flutter's Q1 Result School. With me today I'll Flutter CEO Peter Jackson and CFO Rob Coldrake. After this short intro Peter will open with a brief summary of our operational progress and then Rob will run through the Q1 financials and our updated guidance for 2025. We will then open the lines for Q&A. Thank you very much. Thank you very much.
Paul Tymms: Some of the information we are providing today, including our 2025 guidance constitutes forward-looking statements that involves risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements.
Paul Tymms: These factors are detailed in our earnings press release and our SEC filings.
Paul Tymms: In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statements, except as required by law. [inaudible]
Speaker Change: Also, in our remarks or responses to questions we will discuss non-GAAP financial measures, reconcilations are included in the results materials we have released today available in the investor's section of our website, and I will now hand you over to Peter.
Peter Jackson: Thank you, Paul. I continue to be really pleased with how the scaling of our US business is driving a step change in the earnings profile of the group.
Peter Jackson: Our international business is also demonstrating the benefits of scale and diversification, with particularly strong performances in FEA and India.
Peter Jackson: These factors combine to drive year-over-year net income and adjusted EBITDA growth of 289% and 20% respectively in Q1.
Peter Jackson: Before I turn to the quarter's performance in more detail, I want to touch on some of the themes that have been at the forefront of discussions during the quarter.
Peter Jackson: Firstly, the potential impact of any change the broader economic outlook on our sector in the US in particular.
Peter Jackson: Our business is resilient. During previous periods of consumer pressure in our international markets, we saw no discernible impact on our businesses and we have conviction that online sports betting and eye gaming have strong defensive characteristics over the long term. [inaudible]
Secondly, sports results. [inaudible]
Peter Jackson: The Nature Sports Solve, where Influence, are called Clear Results, as we have seen in NFL in Q4, and March Fabness in Q1. [inaudible]
Peter Jackson: But over time, these variations are transients and we do not compromise our compelling growth model, a long-term value creation opportunity.
Peter Jackson: In fact, here's these ups and downs in sports' results that make sports so exciting and drives engagement.
Peter Jackson: Thirdly, we're really excited about our revolutionary outcome-based pricing technology. They'll allow us to price and offer an almost infinite number of outcomes across the most relevant and immersive betting markets.
Peter Jackson: Your way is the first surfacing of this pricing capability to customers and the results of date have been encouraging.
Peter Jackson: The opportunities that this unlocks are unique, and we believe create an amazing platform for long-term innovation across both our US and international markets.
Peter Jackson: Fourthly, we also closely monitoring the developments around futures markets and a potential direct and indirect opportunities for Fandall to explore.
Peter Jackson: We already operate the world's largest sports betting exchange, the Baffer exchange, and have vast experience in this space.
Peter Jackson: And finally, our position as an end business is clear to see as it completed another major milestone in the expansion of our portfolio in Italy for the acquisition of Sni and the continuation of our buyback program.
Peter Jackson: With strong organic performance and multiple levers to drive a recreation, we remain incredibly confident in our long-term outlook.
and turning to performance in the quarter.
Peter Jackson: From a sports book perspective, handle growth was in line with expectations and reflected the continued shift to higher revenue margin, the lower handle, parlay and same game parlay products.
Peter Jackson: Basketball Handle Growth was lower than anticipated, offset by growth in other sports.
Peter Jackson: And we believe this handle softness is specific to the basketball market and we have a number of commercial and products initiatives that were specifically enhanced basketball engagement next season.
Peter Jackson: As we move into the summer season, handle trends remain in line with expectations, with encouraging MLB trends.
Peter Jackson: It's worth remembering that handle growth is just one driver of our long-term revenue growth, alongside product-driven structural gross revenue margin expansion, new customer acquisition, higher retention, gaming cross-sell, wallet share gains, and promotional spend efficiencies.
Peter Jackson: Which all work to drive the most important output are net revenue growth.
and all before the benefits of any new state launches.
Peter Jackson: We had a great Super Bowl, but overall US Sports results were nevertheless customer-friendly in the first quarter, driven primarily by an unprecedented number of winning favourites from March Madness. [inaudible]
Peter Jackson: In eye gaming, we go from strength to strength, with highlights including sight-wide jackpots and even more exclusive content.
Peter Jackson: We hit a million amps to the first time, demonstrating the strength of the fangil eye gaming proposition.
Peter Jackson: This performance underpinned our clear leadership position with sports betting and eye gaming, gross gaming revenue market shares of 43% and 27% respectively, and a 48% net gaming revenue sports book share.
Peter Jackson: Performance across our international division continues to be positive, with the year over year revenue grows to 3% constant currency.
Peter Jackson: We are benefiting from our scale and geographic and product diversification with good growth in our SEA region in particular.
Peter Jackson: We were delighted to welcome Sni into the group just last week, significantly adding to our scale in Italy and we expect to rapidly realise both the operational and financial benefits of the combination.
Peter Jackson: We recently submitted a tender for the Italian Lotto with majority position in a consortium with scientific games.
Peter Jackson: We believe the merits of this deal are compelling, in a market where we have demonstrated our extensive lottery experience to the success of our super-enovato proposition. [inaudible]
Peter Jackson: Performance within FEA has been very impressive, driven by CSAL, which achieved record high, telling quickly market share 15.4%. And we're also seeing very strong growth in Turkey.
Peter Jackson: In the UKI, sports work growth moderated from previous quarters and part due to the very operator funny results in 2024, while eye gaming growth remains strong.
Peter Jackson: The migration of our SkyBet customers to our in-house platform is progressing well with over 25% of customers already migrated and expected completion this quarter.
Peter Jackson: The strength of our Romney business in India is once again visible, now a tax change in Q4 2023 have been lapped, delivering strong year-over-year revenue growth of 45% to continue disciplined customer and product investment.
Peter Jackson: Within Australia, we continue to face into the racing industry's structural challenges. We've been able to partly offset our adverse racing humble trends by expanding our sport structural growth win margin through ongoing product led improvements.
Peter Jackson: and we've received regulatory clearance and expect to complete the acquisition of NSX imminently.
Peter Jackson: forming a new Flutter Brazil business and putting us in an enhanced competitive position in a fast-growing newly regulated market.
Peter Jackson: Combining a strong local management team, localised proprietary technology and a local hero brand in Betnaf Niel alongside our existing Bettoe Brazil business and Flutger Edge capabilities will position us for success in this very exciting market.
Peter Jackson: Overall I'm pleased with our first quarter performance and remain extremely confident in the long-term fundamentals of our business.
Peter Jackson: The global regulated market opportunity is significant and growing, and Flutter is uniquely positioned to win.
Peter Jackson: I remain excited by the opportunity for flutter, and I look forward to continuing to execute on our key growth drivers over the remainder of 2025 and beyond.
Peter Jackson: I will now hand you over to Rob to take you to the financials of our guidance.
Thanks Peter and hello everyone.
Rob Koldrake: It's great to be talking to you today almost a year since becoming Flutter CSO and over that time I've been really pleased with our progress.
Rob Koldrake: As Peter highlighted, we have all the key components to ensure long-term value creation. And I've delighted to share that this quarter we delivered underlying growth across each component of our compelling financial growth story.
Rob Koldrake: Group revenue increased by 8%, thanks to our scale and diversification.
Rob Koldrake: Overall group net income grew 289% while adjusted EBITDAL grew 20% [inaudible]
Speaker Change: Both measures benefited from the US-driven earnings transformation Peter described, while net income also reflects the fair value change of the Fox option liability, shifting from a loss in the prior year to gain this year.
Speaker Change: Earnings per share increased to $1.57 from a loss of $1.10, with our adjusted earnings per share at 51%.
Speaker Change: And importantly, we continue to enjoy the capsule optionality to invest organically, invest in M&A, and return capsule to our shareholders.
Speaker Change: Turning now to the quarter's financial performance, we are using our new segmentation for the first time, reporting under two segments, US and international, with the corporate overhead reports separately. [inaudible]
Speaker Change: This reflects how our operations are managed, and we believe the simplified structure will help external audiences understand the Flutter growth story more easily.
Starting with the US, revenues 18% higher year over year.
Speaker Change: This included sports but growth of 15% despite the adverse March madness outcomes and very strong eye-gaming growth of 32%.
Speaker Change: Adjusted EBITDA as $161 million was more than five times higher the prior year as our business delivered significant operating leverage.
Speaker Change: Thousand marketing saw 750 bits in proof leverage due to a combination of our maturing stake profile and the investment in the North Carolina launch last year.
Speaker Change: The court's performance was also impacted by the Illinois tax increase last July, which we have partially mitigated as previously guided.
Speaker Change: In international, revenue of $2 billion and adjusted EBITDA are $518 million for the quarter, reflected constant currency growth of 3% to% respectively.
Speaker Change: The result was driven by strong performance in our SEA and CEE regions combined with an excellent eye-gaming growth in UKI and in India.
Speaker Change: Across the segment, sports results were marginally adverse year over year, comprising favourable results in SEA and UKI and unfavourable results in APAC.
Speaker Change: Within international's regions, SEA had an excellent quarter with growth of 14% driven by 25% amp growth.
Speaker Change: UKI saw overall growth moderate to 2% that's included strong eye-gaming growth of 9% driven by an 11% increase in average.
Speaker Change: A pack results for the quarter included excellent eye gaming pro for 45% in India, offset by lack-impacted sports book revenues in Australia.
Speaker Change: and Singy Strong Growth 15% was driven by performance in Georgia and Serbia.
Speaker Change: From a cost perspective, we continue to operate high levels of discipline, giving us the agility to respond to changing trends in our business.
Speaker Change: And we are making good progress. The migration of our SkyBet customers to our in-house platform is on track to complete by the end of Q2. And the migration of Polestar's Italian customers onto Cisal technology is expected to be completed Q3.
Speaker Change: We are also ensuring we continue to put investment into the right areas. Flutter Edge investment increased by $6 million year over year to drive product innovation and optimise the efficiency of the services we provide across the group. [inaudible]
Speaker Change: From a cash flow perspective, net cash from operating activities reduced by 44% from free cash flow reduced by 52% year over year.
Speaker Change: Performance was impacted by decrease in player deposit liabilities, which is included in on cash flow from operating activities.
Speaker Change: The final day of the quarter fell on a weekday this year, compared with a weekend last year, resulting in $211 million lower cash balances in customer wallets.
Speaker Change: While this means that reported cash flow was lower year over year, we remain confident in the cash flow trajectory of the business over the long-term horizon as set out at our investor day.
Available cash remained unchanged, quarter and quarter, approximately $1.5 billion. [inaudible]
Speaker Change: The marginal increase in total debt to $6.8 billion against last quarter was a function of your own sterling strengthening against the dollar.
Speaker Change: Net that for the court was $5.3 billion with our leverage ratio of 2.2 times based on the last 12 months adjusted EBITDA consistent with the ratio at the end of 2024.
Speaker Change: We recently announced the acquisition of snobbers completed using existing debt facilities at attractive terms.
Speaker Change: As a result our leverage will increase in the very short term before rapidly reducing given the clear profitable growth opportunities that exist across the group.
Speaker Change: We remain committed to our medium-term leverage ratio target of two to two and a half times.
Speaker Change: The share repurchase programme, which started last November and we expect will return up to $5 billion to shareholders over the coming years, continued into 2025, with 891,000 shares repurchased in the quarter for $230 million.
Speaker Change: We continue to expect to return approximately $1 billion to shareholders via the program during 2025.
Speaker Change: Moving now to the outlook for 2025, our existing four-year guidance remains unchanged on an underlying basis with the updated view adjusting for M&A, FX and the adverse year-to-date sports results. Providing a little more colour on each of these in turn.
Speaker Change: We've included the acquisition of Snipe from May the 1st, 2025 with expected revenue of $850 million and adjusted EBITDA of $190 million.
Speaker Change: NSX is now included from mid-May 2025 with expected revenue of $220 million and an adjusted EBITDA loss of $70 million.
Speaker Change: Foreign currency movements of $360 million revenue and $80 million adjusted EBITDA, reflecting the strengthening of your own sterling since our previous guidance. [inaudible]
Speaker Change: And finally, the transit trim impact of unfavorable U.S. sports results for April year to date with $280 million for revenue at $180 million, adjusted fee better.
Speaker Change: Within our existing US states, we remain on track with the previously guided underlying growth of 22.5% and 5.4% each point expansion in adjusted EBITDA.
Speaker Change: For new states and territory launches, we continue to issue a Q4 launch from Missouri and an early 2026 launch for our birds at Canada.
Speaker Change: Group revenue is now expected to be 17.08 billion dollars at the midpoint.
We've adjusted a bit to our 3.18 billion dollars for the year. [inaudible]
Speaker Change: representing 22% and 35% year-over-year growth respectively, or 14% and 30% before including the benefits, [inaudible]
Speaker Change: With that, Peter and I are happy to take your questions and I'll hand you back to Chris Ditt to manage the call.
Krista: Thank you. We will now begin the question in answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue, and if you'd like to withdraw your question, simply press star one again. We also ask that you limit yourself to two questions. Thank you very much.
Speaker Change: Thank you. Your first question comes from Ed Young with Morgan Stanley . Please go ahead.
Ed Young: Good evening. I've got two questions both on the US and I'll start with the obvious one perhaps.
Speaker Change: In your shareholder letter, Peter, you spoke about what you think are...
Ed Young: Specific basketball-related factors on handle. Could you elaborate a little on what you mean by that? And when you said you've seen Q2 handle in line with your expectations and encouraging MLB trends, you just confirm that you're indicating therefore you've seen a handle of the acceleration in Q2. You've seen Q2 handle in Q2. You've seen Q2. You've seen Q2. You've seen Q2. You've seen Q2.
Ed Young: Second, on eye gaming, there's still a lot of focus on handle, given those barriers concerned around maturity or economic stress, whatever it might be, but US eye gaming is showing clearly very strong growth.
Speaker Change: Can you discuss where you are in terms of product and execution versus beers? And do you think it's plausible eye gaming could display these kind of growth trends of the US
Speaker Change: Well, good afternoon, Ed, and well, good evening to you. Thank you for the question. I'll get some thoughts, I'm sure Rob will want to chime in as well.
Speaker Change: I think if I take your first question about basketball issues and handle, you're right we mentioned it in the shareholder letter and I think the most important point to make here is that a handle in the quarter was in line with R. [inaudible]
expectations.
Speaker Change: You know, when you do look at it from a sports perspective, you have to remember that there's always going to be some ads and flows and you know...
Speaker Change: We have seen, we did see some weakness in basketball, but we saw some very good strength, you know, off the back of, you know, NFL. And actually when I look at the MLB performance at the moment, we're very pleased with handle great there as well. Thank you very much for joining us today, thank you very much for joining us.
Speaker Change: For Q2 Handle, don't forget we are, if you're looking at the comments from last year, we've got the North Carolina, there was included in there and so you will expect, you know, whilst the underline Handle can be forming well, you know, when you are ready to complete, you could make sure you factor that into the numbers.
Speaker Change: From an eye-gaming perspective, we're really delighted with the way that the team have been delivering for us. Remind you, we talked about how in this year we plan to get ahead of competitors and we've clearly delivering that from a product perspective. [inaudible]
Speaker Change: The on-play jackpot capability that we've brought into the business, I think is resonating well. We'll also trial in some of our new reward mechanics as well.
Speaker Change: There's a strong pipeline of initiatives there, we've got some unique content which we're deploying as well, so I think we're very pleased with the way that eye gaming is performing first in the market.
Peter Jackson: I think just to build on a couple of points that Peter mentioned on Handle Basketball in particular. I mean, there was a reason that we called it out because we felt that, you know, within the overall basket of the different sports the basketball handle was perhaps slightly softer and we'd anticipated. I think it's a little different.
Peter Jackson: We attribute that to some factors that we've seen in basketball in the courts, including some less competitive matchups over the course of the regular season.
Peter Jackson: in terms of what we see. Some of the top teams have made the playoffs this year, and some sixes, sons, maps, yet that that may build through as well. But
Peter Jackson: You know, given our outsized position as market leader, we think the impact on us, maybe slightly disproportionate. Thank you very much.
Peter Jackson: You know that said we retain the conviction that we've got the best NBA product in the market
We've also got the highest structural margin.
Peter Jackson: in the MBA, and we have a clear, competitive, productive advantage that will continue to leverage and maintain. So we feel quite comfortable with that going into Q2. It's also worth mentioning that the playoffs have got off to a good start and it seems to be really good engagement around the playoffs. Thank you very much.
Thank you.
Peter Jackson: Your next question, your next question comes from a line of Jordan Bender with Citizens Bank. Please go ahead.
Speaker Change: You can start to see the omnichannel benefits between retail and online. And then my second question, it still early days for your way. But you're the only operator to be offering that product in the U.S. today. So, you know, there's rubbleings that a competitor might be launching a similar product in the near term. Does that, it'll change the player investment or reinvestment strategy if and when that offering becomes a little bit more competitive. Thank you. Thank you.
Speaker Change: Hey Jordan, it's Robert and let me start with the sni question perhaps and over to Peter on your way so you know with sni we're absolutely delighted to complete the deal and when we look at this it's the last available you know consolidation step of meaningful significance in in you know Europe's largest regulatory gaming market. Thank you.
Speaker Change: The deal will see us retain the gold medal position in that market And we're really confident about the synergy plan that we've got there. You know, we can put common technology stack in place
Peter Jackson: We really see ways in which we can optimize the operating model and there's a long turn of other synergies including preferential retail commissions. .
Peter Jackson: We think there's a synergy kit of base synergy case here of 70 million euros over over three years, you know, on a run rate 12 month basis, we think we'll deliver 10% of that in the first year and roughly 50% by the time we've got through a couple of years. [inaudible]
Peter Jackson: In terms of the integration plan, we've got a great plan and actually key decisions on organization and technology have already been made.
Speaker Change: I think it's Peter and I have said before, we really believe we've got the best team in the business in Italy with Francesco and his team. So, they're raring to get started and they've got good plans already in place. So, we're feeling very enthusiastic about getting snide under the...
The Flutter SEA, umbrella and see what we can do.
In terms of your way, I think it's worth...
Speaker Change: You know, just putting it back into some context and I talked about it a little bit in my opening remarks, but...
Speaker Change: and I'm super excited about what we're going to be able to do in the long term with it.
Speaker Change: I don't want people to think that this is just about the funky sliders that are available now or some of this of the cover matchups. There's a lot more that underpins it.
We've solved a lot of the math, we've re-architected our...
Fricing risk management capabilities. [inaudible]
Speaker Change: And we're now exploring what we can do with this from a consumer perspective.
Speaker Change: We've got some very great stats on the Super Bowl, which Drew shared before.
Speaker Change: We've got it enabled for the MBA playoff, so we've got further insight from there as well. But this is a long term set of initiatives and capabilities we're going to roll out, and I'm very excited to see
Speaker Change: What we can do with it, you know, your way is walk is effectively one feature that's unlocked. There's going to be a heap more things coming out in the periods ahead. [inaudible]
Very helpful. Thanks guys.
Speaker Change: Your next question comes from the line of Jed Kelly with Oppenheimer. Please go ahead. Let's go ahead.
Hey, great great, thanks for taking my question.
Speaker Change: It's just circling back on handle and sort of the first half that comes.
Speaker Change: It does seem that there was a lot of industry promotion last year you were copying...
Speaker Change: And should we expect some of the industry promo to normalize? [inaudible]
as we get throughout the...
throughout the balance of the year.
Speaker Change: And then just looking longer term, you know, you look at industry, iGaming.
Speaker Change: Thank you, jerseys, and it's 12-year from 20% or so in March. I mean, is that the right way to look at the long-term growth of the US sports betting and people are probably looking a little too much into these handles is potentially implying like it's low down the market? Thank you.
Speaker Change: I'll start by reiterating some of the points I made earlier. Handle is one of the factors, but there's a load more things that come into what is ultimately the most important metric for us, which is what's happening from a net revenue perspective, and that's what we're...
Speaker Change: Very much focused on and this large number of drivers that impact that.
Speaker Change: You're right in terms of what's happened from a promo perspective last year and actually even this year in some of the long-tail competitors are doing some...
Interesting things.
in terms of their promo style and so...
Yeah, I see it, I think.
Speaker Change: People are not always going to be rational, but we've maintained in all the years we've been running the business. A very disciplined stance to this stuff, and we're not going to try to generate a handle. It doesn't make any sense to do that. [inaudible]
Um, yeah.
Speaker Change: You're observations around eye-gaming, I think you're interesting, I remember, we launched. . . .
Speaker Change: in Jersey, originally, and here we are all those years later and the businesses. Thank you very much.
Speaker Change: We've made a dramatic improvement to the quality of our products and the still more to come. And you've seen the benefit of that in terms of the growth rate that we're delivering for our business. Thank you very much.
Speaker Change: We need to remember, we're still in the early days of this industry, right? There's a lot of growth ahead, there's a lot of penetration rates to take, there's new states to be on board, but we're delivering good growth in the business. [inaudible]
Thank you.
Speaker Change: Your next question comes from the line of Bernie McTernan with Needham & Company, please go ahead. Let's get started.
Bernie Mcternan: Great. Thanks for taking a question. Maybe they'll just follow up on the handle conversation.
Bernie Mcternan: Dean's talk about the, and maybe it was the point of Jed's question as well, but just the balance of handle growth versus promotion and how much you're investing in the customer right now, and maybe if we are in a world where handle growth is decelerating to mid-high single digits.
Bernie Mcternan: Going forward, what the offset could be on the promotional side.
Speaker Change: Yeah, maybe let me follow up on that first, Barry. So, I think as Peter said, we've always said that we're extremely disciplined when it comes to our approach in terms of customer generosity, I think the other.
Bernie Mcternan: The other point is we continue to innovate and develop our stance when it comes to customer-specific generosity and we're looking at a bunch of things that should hopefully give us more of a advantage over time.
Speaker Change: When you look at the broader market, and this is bringing in some of the kind of tier two and tier three operators, we are seeing some very high levels of generosity in the short term.
Peter Jackson: You know, if you look on a more medium to long-term horizon, we think some of those levels will be quite unsustainable. So, you know, we're following a playbook and an approach that's been very successful for us in the past, but as Peter says, you know,
Peter Jackson: In terms of the measures and the metrics that are really important to us over the long run, you know, net revenue is the thing that we really focus on. [inaudible]
Understood, thank you.
Speaker Change: Your next question comes from the line of Ben Shelley with UBS. Please go ahead. Thank you for your time.
Ben Shelley: Hi team, thanks for taking my questions, just got two. On promotions you've called out the Compton North Carolina, but on an underlying basis, would it be right to think of promotions as flat?
Ben Shelley: And then my second question is unfortunately also a new S-handle. Our sports betting AMP's outgoing handle, i.e. is the slowdown more so over R-2, if you will, rather than player volumes. Thank you.
Speaker Change: But maybe let me start on the promotion's question, but I think you're right that if you exclude North Carolina from the comp's then, then we are broadly flat so you're correct about that function maybe. [inaudible]
Speaker Change: And then your question was around what's happening to the ARPU for the sports betting customers in the quarter year over year?
I mean, we have seen, you know, growth, yes.
Speaker Change: We're seeing growth in average player days around 12% over the year and you can see what's happening to revenues and so there has been some expansion as a consequence, the answer going in line with handle and revenues being very fast. Thank you very much for your time.
Thank you, it's been extended.
Speaker Change: Your next question comes from the line of Clark Lampen with the TIG. Please go ahead.
Speaker Change: Thanks very much. Peter, I wanted to follow up on some of the comments you made around US eye gaming performance. I know you highlighted...
Speaker Change: The benefit that, you know, some of the daily jackpot, sorry, I did it again, and rewards features are having on the business, but I wanted to see if you could also talk about the push that you're making with first-party content.
Speaker Change: and specifically on the back end if you're successful with both of these. [inaudible]
Speaker Change: Is this going to be a revenue driver? Will it be something that helps you extract some cost savings?
Speaker Change: and then bigger picture. This feels like it's sort of part of what we've seen over a multi-year timeframe in the UK. So I'm curious, I guess if you could just help us maybe...
Speaker Change: contextualize things around what maybe is on the back end of this current push a few years down the road.
Speaker Change: We're really focused in the eye game business. It's true here in the US, but if we picked out any of our other markets, it would be equally valid on delivering what our customers want. [inaudible]
And if I think about the half and half. [inaudible]
Speaker Change: Launch, it's a very popular slot across casino floors in America and so, bringing a first-of-market for an online casino was important. It was a record-breaking launch first and it's ranked number one in unique actors for slots across all states. [inaudible]
Speaker Change: in the days of launch. These things are really important in terms of driving revenue and frequency and customer engagement. I think the extent to which we can find ways of bringing that's a unique content to the platform is important. [inaudible]
Speaker Change: And we know that's true in all of the markets, right? People want to have their favourites, but they also need to keep us fresh and exciting new content available for people as well.
Speaker Change: The work that we've been doing around Jack Potts, we've been really pleased with the number of our actors on the platform and we've hit a million amps in Q1 for the first time in our game so we've got a lot of them now.
Speaker Change: We've been really pleased with the way that Jack Potts have worked first on the platform. We've taken a decision to have higher frequency lower payouts, and we think that's working while it's delivering what our customers want. We take a very custom-obsessed approach.
Speaker Change: To Delivery, and I think the teams, whether it's here in the US or other markets around the world, do a really good job in terms of figuring out what's needed and landing that for our customers. [inaudible]
Speaker Change: Just building on Peter's first point as well, Clark, we do have our own kind of judos in the house which provide a certain proportion of art.
Overall content and games within our, you know, by gaming suite.
Speaker Change: Yeah, that's something that we've invested in and we're quite focused on but you know given the quiet. Thank you very much.
Speaker Change: Disaggregated nature of content and new games always coming out, you know, but that will always remain a relatively short, fortunate death. [inaudible]
Speaker Change: That's something we've got on our international markets and something that we're hoping to bring to the US in due course, which reduces rough share and has other benefits as well as kind of driving the top line.
Speaker Change: Thank you. If I may, I know last quarter wasn't the best time to sort of discuss.
Speaker Change: A lot will bid because we are right in the middle of that sort of bidding process, but now that that's behind us I'm curious if you could potentially give us...
Speaker Change: A sense of the strategic merits, what sort of compelled you to bid for it, is the contract, you know, sort of high NPV or high IRR on its own, or re-bidding for this mainly for the cross-style opportunity. Any color you could provide would be very helpful. Thanks. Thanks.
Speaker Change: Yeah, so the best way to characterise the lots of opportunities you can't see, you know, it's a really unique...
Speaker Change: and Sidewalk opportunity to cement our leadership positioning in Italy.
Speaker Change: And as Pete mentioned, as I've been stating, we have made a bid in a consortium with scientific games, and we think we'll bring significant expertise to the consortium and...
Speaker Change: They're expecting to hear the outcome in early Q3. In terms of our strategic rationale, this lotso is the largest draw-based concession. It's low risk and it's highly profitable and its own right. [inaudible]
Speaker Change: If you look at the digitization of that product at the moment, it's low single digits versus, you know...
30% plus in France and 60% plus in the UK.
Speaker Change: In the UK there's really unexploited growth potential from a digital perspective and yes you're across that was a key component that we will look at as well and that's an area where we've had success with the super and a lot of products already in Italy.
Speaker Change: You know, through the consortium, we'll share the capsule outlay and as we've set the deal would be highly synergistic and you know the financial returns we think would be very compelling if we were to win the bid. Thank you very much.
Thank you, Rob.
Speaker Change: Your next question comes from the line of Brandt Montour with Barclays. Please go ahead.
would race to win.
Arthur Brown, let me start with the prediction markets. [inaudible]
question. And yeah.
Speaker Change: I've said this to people before, but it's worth reminding you, we do operate the world's largest sports betting exchange, so we know this space, well, the bat fair exchange.
Speaker Change: Has, you know, for many years, you know, given us very good insights in terms of how this stuff can play out. [inaudible]
Speaker Change: You know, I think it tells us that, you know, [inaudible]
Speaker Change: You've got to be quite thoughtful about how exciting the exchange product can be.
Speaker Change: When you are a fully fledged sports betting product available to you.
Speaker Change: You know, we can see how important the Parl Amex is to a U.S. audience.
Speaker Change: And of course you can't access that in the same way with something I'd be exchanged. So we're very thoughtful about it, particularly having seen so much success in terms of having the best product in the market. Yeah.
Speaker Change: And I think that free-existing states where sports betting is allowed, I'm not that that confident that this is a significant impact.
Speaker Change: But I think there aren't new markets which could become available to customers and state-to-sports players already allowed. The political stuff is something that people talk about and other gamified markets as well. So we're interested in the potential opportunity.
We have through some of our...
Team who have experience in building these products and services.
Speaker Change: From the Beth Fair Exchange business, put them into hand, or to help us evaluate the opportunity. So, look, we're working through it, clearly in states that haven't regulated as a sort of primal pump type of opportunity that is not that dissimilar to some of the DFS stuff. [inaudible]
Speaker Change: Or Bear, it's worth remembering that DFS is a really good precursor to the parlay product, whereas the prediction markets aren't quite limited. So, they're not fit, we're interested in potential opportunity, there's put some takes on we're working our way through. We're working our way through, we're working our way through, we're working our way through.
Speaker Change: Maybe picking up on your second point, Brandt, in terms of the cup of quarters of favourable results and whether or not that has to be residing. It depends on a number of factors. It depends who the winners are, the mix of those winners, how much they're winning. But, yeah.
Speaker Change: Ultimately, you know, customers having more back in their wallets, you know, can't be unhelpful and to court is still to come, so we want to sort of faculty.
Speaker Change: I think that the point to reiterate here is that we've got absolute conviction in our pricing and our structural margin assumptions and that we're we're getting that right. You know it's not the first time in in history that we've had. [inaudible]
Speaker Change: The period of customer friendly results, as Peter mentioned in his introductory comments, that's why we've got a business at the end of the day. People keep coming back because of the unpredictability of sports. That's what we're talking about.
Speaker Change: has been similar examples in the UK eye market, for example, in the past where it experienced two or three successives.
Speaker Change: Negative Results in Q4, the very positive results in Q4 last year, and if you look on the net basis over a three-year period.
Speaker Change: You know, the margin was actually marginally favourable, so there's not not the first time we've seen this and probably won't be the last time, but we're very confident in our underlying kind of pricing and structural margin.
Thanks, everyone.
Speaker Change: Your next question comes from the line of Paul Ruddy with Davie. Please go ahead.
Paul, your line is open. [inaudible]
Speaker Change: Ladies and gentlemen, please limit yourself to one question. Your next question comes from the line of Barry Jones, which through his securities, please go ahead.
Barry, your line is open.
Speaker Change: Your next question comes from the line of Joe Stauff with Susquehanna, please go ahead. Okay, great Peter Rob, can you hear me?
Joe Stauff: We can, thank goodness, sorry, I thought we were going there. One in a row, okay. I wanted to ask you about...
Speaker Change: You know, Profandoned in the U.S., are there any states where...
You can...
Speaker Change: Reasonably assess that you're approaching maturity in terms of customer penetration and whether that's a comparison with your Australian market or, you know, maybe the US market could be higher level penetration. That was the first question. Let's get started.
Speaker Change: I think I'm limited to two questions but I was just wondering just a quick one on the on the on the exchange is it fair to consider
Speaker Change: I guess one of your scenarios that you're considering in terms of Betfair to register Betfair as a national exchange with the Ethical with the CFTC. Thank you.
Speaker Change: Hi, Joe. We're not going to take you to all the details of how we're thinking about attacking the prediction markets. There's a bunch of different ways. We can think about it and when we're ready to share that, we'll tell people what we're going to do. From a penetration perspective, we're not seeing any state yet where we've reached this point where we think it was a tapped out. I mean, you have to remember every year and you [inaudible]
Speaker Change: Group of people become eligible from an age perspective. Even without that we'll continue to see good growth in penetration in the existing states. There's nothing that we would point to as an area where we've hit saturation or something like that. We'll continue to see good growth in the future. We'll continue to see good growth in the future.
Speaker Change: On the exchange rates piece, we're not going to share any details, but we've clearly got the in-house expertise with Betfair, and we're looking at the options closely. There's a number of routes to market we think we could access quite quickly if we needed to.
Understood. Thank you.
Speaker Change: Your next question comes from the line of Monique Pollard, which to be, please go ahead.
Hello, evening, can you hear me?
We can Monique yeah
Speaker Change: All right, a couple for me, the first is just on Brazil, obviously grace and
Speaker Change: With quite materially negative this quarter, I know that you're existing Brazil businesses quite small.
Speaker Change: And I know there were challenges with registration at the beginning, but just wondered, you know, if you've seen an improvement there and sort of, you know, what you're thinking about, you know, what happened in the first quarter there. And then the second question also, ex-
Speaker Change: US is on the UK, do you think you're losing share in the UK market this quarter with some competitors, you know, admittedly from a low base doing a bit better? Yeah.
Thanks.
Speaker Change: Let me start on Brazil many quickly. So, you know, we have seen a few challenges with that very Brazil due to the changes in the regulatory environment. That's mainly around some friction in the sign-up process for customers. See, we've seen that impacting on activation. But we have actually encouraged the scene so then...
Speaker Change: Uplifting in R.P., which is good. That's in the Bat Fair Business, it's clearly the NSX business which we hope will be coming in late this month is performing really well and in line with our expectations, so it's over 20% up.
Speaker Change: In Q1, on a year-on-year basis, despite some of those regulatory friction challenges, we're really pleased with what we're seeing so far in Brazil.
Speaker Change: In the UK money, I'm pleased with gaming year over year. I mean, let's not forget we've had a cup of very strong years of performance in the UK, and I think some of our competitors have got some...
Speaker Change: Significantly softer comps than us, so I think you're seeing a little bit of that really come to play. I think I would use to maybe look at some of the year over two years and metrics while that.
Yep, Thomas Kent, thank you.
Thanks.
Speaker Change: Ladies and gentlemen, in the interest of time, please limit yourself to one question. Your first question comes from Robert Fishman with Moffitt Nathanson. Please go ahead. Thank you very much.
Speaker Change: Thank you and good afternoon. One follow-up on the prediction in sweet steak products in the U.S. Just curious if you've had to adjust any of your fan dual pricing to compete and do you think this is actually an opportunity to push the states for quicker legalization or any other thoughts on how legalization can regain momentum? Thank you.
Hi Robert, I look on the sub legalisation rollout, you know.
Speaker Change: Yeah, I think, you know, we feel reasonably good about that. If there is any benefit that we get from prediction markets, encouraging faster rollout will take it, right? You know, we would love to make our product available more broadly to more customers. Thank you very much.
Speaker Change: We offer the best prices for the market. It's an important part of our strategy. I don't think we've seen any impact.
Speaker Change: from the prediction markets. Don't forget, the vast majority of people are betting on parallelism. This is just not something you can get close to experiencing in a state, if you look at the way the prediction markets are set up.
Speaker Change: Your next question comes from line of Barry Jonas with truest securities. Please go ahead. Thank you very much for your time.
Speaker Change: Hey guys, just want to follow up on the Italian Lotto commentary. Are there other US or international libraries that you're thinking about bidding on as well in the years ahead? Or is this really just unique to Italy? Thank you.
Speaker Change: I'm happy to give some thoughts on this, Barry. We've seen a really good example in the Italian market of being able to use retail locations across the lines of online lottery and then actually about to expand the products available to customers from lottery to gaming and ultimately sports.
Speaker Change: Some of those routes are not available in other markets. If you are a luxury in the UK, for example, yes, you can drive cross-stop from retail to online but you can't.
Speaker Change: then cross that into other gaming or sports web products. So the situation in Italy is pretty unique, you know, also remember there's no advertising allowance, so this is a great way of acquiring online customers. And I think, you know, that's why we're so focused on the opportunity there. Yeah.
John Decree: Your next question comes from the line of John DeCree with CBRE. Please go ahead. Let's go ahead.
Alright guys, thanks for taking my question.
Speaker Change: Maybe one big picture and not sure Peter if there's much to add here, but you've mentioned that in your experience in your international markets doing periods of economic softness, but there was really no discernible.
Impact, if you're wondering if you can...
Speaker Change: elaborate on that or if you have any anecdotes you could share and I guess I'm most curious about is there any option out of your potential to kind of have any softness as a customer acquisition event for you if people are looking for substitutes versus perhaps going out? So if anything on that that would be helpful. I appreciate it.
Speaker Change: I think there's a couple of places that we could point to. We have most recently in the UK seen some challenges from a cost of living perspective with energy prices and stuff and over that period of time we saw really strong growth in our tumbola business.
Speaker Change: With no impact, really, at this moment we're talking about the business has grew stronger than it had done historically.
Speaker Change: And that being a product is something that's focused on the lower social demographic segments, which you would ordinarily have anticipated would have been impacted by the inflationary pressures that were in the UK at the time.
Speaker Change: So that's one example, but there's plenty of others we could point to around the financial crisis and how that impacted the businesses in the UK, Ireland, Italy, etc. It just didn't cause any issues. So, I think your point there is the right one, which is that consumers can trade down and still enjoy a bet. So, you can go and watch a game in a bar and pay bar prices for your beer, or you can buy the beers and have them at home and still watch [inaudible]
Speaker Change: The Game and Enjoy a Bet. And we bring Simon to life, you know, you put your pile out and you cheer your players on. And, you know, I think that that's, you know, that's what we've seen historically and I think we would expect to see here as well. The Game and Enjoy a Bet.
Speaker Change: Your next question comes from the line of Ryan Sigdahl with Craig Hallam. Please go ahead. Thank you for your time.
Speaker Change: Hey, good afternoon. This is Will on Forion. Just a quick one here. You launched Fandall Picks pretty recently. Curious what made the timing right for now? And how do you think about differentiation in that business versus the competition? Thanks.
Hi, well long for Ryan. [inaudible]
Speaker Change: Yeah, we also have to be thoughtful about the regulatory position and I think from our perspective we think that the law in many states has now been settled. [inaudible]
Speaker Change: Peer-to-peer DFS is legal, and I think that that gave us the confidence to launch the peer-to-peer pick-and-style products in a handful of states.
Speaker Change: We'll see how it works, you know, as a separate app using your same sort of login details but you know we'll see what happens. Thank you.
Speaker Change: Your next question comes from the line of Ardrin Distante Hilaire with Bank of America. Please go ahead.
[inaudible]
Speaker Change: Yeah, thank you. Thank you for squeezing me in. So just one for me.
Speaker Change: You seem to have suffered more than the broader market in the US from a terrible sports results. I suppose that's partly a function of your mix of ballet in there. Could that potentially lead to a change in your approach as to how you push ballet? It seems like the other operators are handling the sports results slightly better right now. Thank you very much.
Hi Adrian, it's Rob here.
Speaker Change: The answer to that is no, you know, as I mentioned earlier, we've got absolutely conviction in our pricing and structural margin assumptions and it's the, you know, the parlay and the same game parlay that help compound up. [inaudible]
Speaker Change: To why we've got the, you know, the structural, best structural margin, you know, in the sector, you know, volatility is something that will come with that.
Speaker Change: And, you know, we accept that, we don't try and kind of hedge that volatility because, you know, we're true proper sports book and you know. [inaudible]
Speaker Change: The approach to this, we're not intending to change, it's worked for so far and it will continue to work for us in the future.
Speaker Change: Your next question comes from the line of Robin Farley with UBS. Please go ahead.
Robin Farley: Great, thanks. I wonder if you could just talk a little bit about the timing more broadly for the role out of your way. You mentioned, you know, now live for MBA. Kind of...
Robin Farley: Time frame wise, when do you think that will be, you know, in all of the major products that you'd like it to be and, you know, we could kind of think about, you know, seeing that, that impact. Thanks.
Robin Farley: We're not going to share all of our plans for the rollout of all of this news of pricing capability, Robin, I mean you.
Robin Farley: I talked earlier about the fact that, you know, this is a sort of, you know, your way is one component and of course, yeah, we...
Robin Farley: We will make sure that when we get into the next season it's more extensive but it's also just going to be the first of many initiatives that we land. . . . . . .
Robin Farley: I don't want to, I don't want to find place, everything we have, a bus leads to our competitors, but we've got some exciting cool stuff that we're bringing to market.
Robin Farley: Your next question comes from the line of Chad Beynon with Matt Quarry, please go ahead.
Afternoon, thanks for taking my question.
Robin Farley: On the back of record Kentucky Derby viewership, I wanted to ask about that partnership, how it's going, and any numbers or statistics you can provide just in terms of Crossell, given that I believe you're the only operator with a single platform with the horse racing offering. Thank you.
Speaker Change: Hi, Chad. You know, please you spotted we are the only people who offer that to have integrated, you know, ADW for our customers. Yeah.
Speaker Change: And despite the weather we were pleased with the way that the team delivered and performed in the Derby, we had good market share, I think it's around 24%.
Speaker Change: And, you know, good growth here every year, 8% up and inactive. Rob, I don't really have any more details but, you know, we're, yeah.
Speaker Change: We're not dislating this at the cross-album, I think it's an important component of the overall experience for consumers for Fandall. Yeah, and these type of big events, you know, are great to bring, you know, different types of customers into the ecosystem, but can it? [inaudible]
Speaker Change: We had almost three quarters of a million active for the Kentucky Derby, which is an impressive number, and yeah, there certainly would have been some process of benefit from that.
Paul: And that concludes our question and answer session and I will now turn it back over to Paul for closing comments.
Paul Tymms: Okay, I'll make the closing comments. Thank you very much everybody for joining. I know there are a couple of people who we struggle to get on to the line. So we apologise and please call us afterwards and we'll speak to you. But thank you all very much for joining us. We appreciate it. Thank you very much.
Paul Tymms: This concludes today's conference call. Thank you for your participation and you may now disconnect.