Q2 2025 Flutter Entertainment PLC Earnings Call

Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Calvin, and I will be your conference operator. Today, at this time, I would like to welcome everyone to the Flutter Entertainment Second Quarter 2025 update call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the call over to Paul Tymms, Group Director of Investor Relations. Please go ahead.

Hi everyone, and welcome to Flutter's Q2 update call with me. Today are Flutter CEO, Peter Jackson, and CFO, Rob Cole Drake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will go through the Q2 financials and updated guidance for 2025. We will then open the lines for Q&A.

Some of the information, we are providing today, including our 2025 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.

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 statements except as required by law.

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 over to Peter.

Thank you, Paul. I'm delighted to report a strong set of results for the quarter across the group. Our operational performance was excellent, and we're making meaningful progress against our strategic priorities.

This in turn is driving our strong financial performance.

June Q2, we saw around 16 million average, monthly players. Engaging with our products driving Revenue, 16% ahead year-over-year and adjusted i-bidder 25% ahead.

While increased non-cash charges resulted in net income. Reducing by 88% year-over-year cash from operating activities. Was 36 million higher

Before I provide an update on our us and international businesses, I would like to update. You on the excellent progress, we're making against our strategic, priorities, starting with our transition, to the US,

Following our move to. Yes, primary listing in May. Last year, flutter has become a well-established business within us Capital markets.

This is demonstrated by our inclusion in, both the crisp and Russell indices during Q2, and the increased levels of liquidity. We now see for flutter stock.

We also believe we remain very well placed to admissions to other major US indices in time.

Secondly, we continue to demonstrate our credentials as a business deploying capital for high returns, organically, to M&A and returning cash to shareholders.

This is again evidence in July with the extension of our US market access partnership with Boyd.

this deal increased, our ownership of financial to 100% at an attractive valuation and also secured US state Market access at much more favorable terms

This is also a great example of a longer term cost. Levers, we have available which helped underpin our confidence in the delivery of our long-term adjusted ebit. Margin targets.

On the US regulatory front, I believe our sector is making meaningful progress and encouraging, lawmakers to adopt a balanced tax strategy which promotes market growth and investment.

We believe our substantial us scale positions as well to mitigate tax changes.

This is both from a direct mitigation perspective, as well as benefiting from the market share gains. We're typically observed Market leaders experience over time. When regulatory changes are introduced,

we were of course disappointed to see the state of Illinois. Introduce a wager fee on July the 1st, which I'm fairly impacts our recreational. Lower handle customers and significantly increases operating costs in the state.

As previously announced starting September 1 will introduce a 50 cents fee on each bet, placed in Illinois to help mitigate this impact.

We are confident that evidenced by the majority of approach to date. The Illinois is an outlier and the lawmakers generally will recognize the importance of adopting, a balanced approach.

Fourthly the events, contract landscape continues to develop a pace.

We have 2 decades experience of operating, the world's largest betting, exchange the betrayer exchange, which shares similar characteristics with events contracts and this will help inform our views.

We're closely monitoring regulatory developments and assessing the opportunities and potential participation strategies. This may present for fuel.

In our International markets, we're to complete the SNY and NSX transactions during the quarter.

Creating a leadership position in Italy and establishing a scale position in Brazil.

In Italy, SNY integration plans are well underway and are good. Progress means we have increasing confidence in our Synergy targets.

Within the quarter with over 30% share of the online market, our attention is now on bringing SNY customers onto the Sea's market-leading online platform in the first half of 2026.

And finally, in the newly regulated Brazilian Market, we will retain a strong conviction that the market opportunity will be very significant and that those operators with scale and the best product will win the largest share of the market.

Leveraging, the flutter Edge and local management expertise. Our strategy is to elevate our Brazilian proposition

We've targeted quick wins and product and marketing which we expect will deliver significant improvements to the custom proposition on both sports book and I gaming over the next 12 months, which have believed were placed as well for future success.

I'll now take you through progress in our us and international businesses during the quarter.

In the U.S., we maintained our clear position as the number one online operator in both sports betting and iGaming.

We had a great quarter with Revenue. Growth of 17% benefiting from the highest gross, revenue margin month on record in June for sports book and excellent. I gaming momentum

our phenomenal, I gaming performance with Revenue, 42% ahead and amps up. 32% is clear evidence of the benefits of our very strong product roadmap.

We launched our fuel rewards Club to all I gaming customers in April and added the second installment of our very successful. Exclusive huff and puff series

Leveraging the Flutter Edge via the proprietary platform we migrated to last year, we also added a record volume of new titles to the platform.

In sports book, continued product improvements, drove growth in player, frequency, 14 and handle 7%, higher year-over-year.

Has.

Activity on the NBA playoffs with encouraging with 4 Separate 7 game series. Including the finals, helping to drive better engagement than expected.

On Sportsbook product, we continue to deliver Innovative and engaging features to our customers.

Harnessing our next Generation pricing capability. We added same game parlay plus, and profit boost functionality to our your way feature during the NBA playoffs.

We've been really pleased with engagement and are looking forward to offering a broader product proposition in the upcoming NFL season.

fuel, the same game parlay experience, continues to be by far, the standard proposition in the market, and under Pender further expansion in our structural gross, revenue margin to 13.6% during the quarter,

Time to deliver a record Wimbledon for fuel.

On mrb our batter up feature, which allows customers to Parlay outcomes for the next 3 batters up was rolled out for all live games and has been resonating. Well,

These product enhancements supported strong live, betting volumes, in the period, with live betting, making up over half our handle in Q2 and the same game parlay live our fastest growing component.

A seamless live proposition was key to this growth. As we leverage our Global live betting, expertise through the flutter Edge.

This includes a winning at the core fundamentals, such as optimized in-game settlement, and ultimately delivering an overall. Play experience that minimizes friction how maximizes ease of use.

Our international performance continues to be positive, benefiting from both our scale and diversification.

We delivered a year-over-year revenue growth of 15% in the quarter with the benefits of the SNY and NSX acquisitions.

We saw good product delivery in the quarter driven by our focus on the flutter Edge and have recently launched my combo to see how sports book in Italy ahead of the new soccer season.

This same game. Parlay proposition is a market. First, a represents, a step change in product, differentiation made possible by our global scale and deep industry expertise.

In July. We also launched flutters first Bingo Network following the successful partnership between cisal and Tombola, which brings the latter's Innovative product and deep liquidity pool to Sea, Sal's, Italian online, bingo customers,

We also executing our cost efficiency program as we successfully migrated 9 million Sky, betting and gaming, customers onto our shared Uki platform.

This will give customers access to new exciting features which will include a version of our Super Sub product in time the upcoming European football season.

Reaction to the new Sky. Better customer proposition has been positive and early performance on our gaming has been very strong.

The poker stars transformation is another significant pillar of the program and we delivered our largest Milestone to date in Italy in July with a migration of Poker Stars. Italian customers onto the shared sea platform,

In conclusion, looking ahead to the remainder of the Year, our strong performance in the first half of 2025, underlines the strength of flutters fundamentals.

I feel confident as we head into the second half of 2025. Our performance in Q2 positions us to deliver on our strategic objectives and execute strongly throughout the content-rich calendars for the NFL, NBA, and European soccer during the remainder of the year.

Our now hand you over to Rob to take you through the financials.

Thanks Peter. I'm really pleased to be presenting you with a strong set of results for the second quarter.

Group Revenue increased by 16% and adjusted ebit dog. Grew 25% driven by the sustained earnings transformation of our us business. As it rapidly scales. The benefit of the NSX and SNY Acquisitions and continued growth in international.

Group, net income was impacted by an increase. In non-cash charges this primarily related to the fox option valuation, which was the charge of 81 million versus a credit of 91 million in the prior year.

Other movements included the amortization of acquired intangibles related to the new acquisitions and the Poke stars and Sky Bet Transformations. And an increase income tax is spent as historic losses. We utilized in 2024 together. This drove an 88% year-over-year reduction in net income.

Adjusted earnings per share. Grew 45% while earnings per share decreased to 59 cents from $145 in Q2 2024, due to the impact of the non-cash items. I've just outlined

Turning to the U.S., revenue was 17% higher, including Sportsbook growth of 11% and exceptional iGaming growth of 42%.

Adjusted EBITDA was $400 million, up 54%, and the EBITDA margin was 530 basis points higher, driven by strong operating leverage.

this came primarily from sales and marketing which decreased by 440 basis points as a percentage of Revenue against heightened investment in North Carolina's launched last year as well as our decision to reallocate some marketing, spend from the quarter into the second half of the year,

with 15% and 13% respectively, as the inclusion of the SNY and NSX Acquisitions contributed 11 percentage points to the year-over-year revenue growth

This result was driven by strong underlying performance in Sea, despite lapping the European football championships and more favorable sports results in 2024.

This contributed to excellent eye gaming growth of 27% for the division with notably strong performance in Uki, APAC, and CE.

Adjusted EBITDA increased by 13% year-over-year, with the acquisitions of SNY and NSX contributing 7 percentage points of growth.

And ebit dar margin reduced by 40 basis points to 24.7% reflecting our ongoing investment in Brazil.

As Peter previously outlined, we have been really pleased with the progress on our cost transformation program, with the delivery of the Poke Stars and Sky Bet migrations in Q2 being important milestones on this journey.

Progress to date, gives me even more conviction in a hundred million dollar savings that I shared with you as our investor day last September.

We continue to expect the majority of the million dollar savings to arise in 2027 following the final plan, migration from the Poke Stars technology stack in the second, half of 2026.

From a cash flow perspective, net cash from operating activities increased by 11% driven by the earnings growth. I previously referenced

free cash flow reduced by 9% driven by the acquisition of SNY and higher investment in our technology Platforms in Q2 the prior year.

This technology investment continues to pay dividends as we harness the flutter Edge and continue to innovate at PACE.

Available cash increased quarter on quarter to 1.7 billion dollars while net debt for the quarter was 8.5 billion with leveraged, 3 times. Our last 12 months adjusted ebit da, including SNY,

As Peter already highlighted, we extended our Market access agreement with Boyd in July, which we expect will deliver approximately 65 million in annual cost savings.

We purchased Boyd's 5% holding in FanDuel at an attractive price, which has been financed through additional debt on competitive terms.

we therefore expect our leverage to increase in the near term but then reduce rapidly given the highly visible and profitable growth opportunities that exist across the group

We remain committed to our medium-term leverage ratio, Target of 2 to 2 and a half times.

We continue to return Capital to shareholders through our share repurchase program with total repurchases of dollars in the quarter. And we still expect to return up to 1 billion dollars to shareholders via this program during 2025

as an and business, we are highly disciplined allocators of capital.

We expect to return up to 5 billion dollars of cash to shareholders over a 3 to 4 year period. Whilst also maintaining the flexibility to invest significant amounts of capital, both organically and inorganically. The boy deal is a great example of both this flexible approach and the value, we believe we can create

Moving now to the outlook for 2025 performance since our q1 earnings when previous guidance was set, has been positive and we are upgrading our full year. Adjusted ebit dial guidance to include the 100 million positive, impacts of us, sports results, a 40 million advert impact from us, tax changes in Illinois, Louisiana, and New Jersey, which we expect to be almost entirely mitigated by the Boyd Market access savings. And finally, a 20 million dollar benefit due to the timing of our anticipated launch in Missouri moving later to the beginning of December.

We therefore now expect group revenue and adjusted ebit da of 17.26 billion and 3.295 billion respectively at the midpoint representing 23% and 40% year-over-year growth, our improved us Outlook includes expected, 2025 revenue and adjusted ebitda of 7.58 billion and 1.245 billion respectively. Representing year-over-year growth of 31% and 146%.

Foreign currency changes. Since our previous guidance are not material and therefore, International Revenue and adjusted eBid, dog guidance of 9.68 billion and 2.3 billion is reaffirmed. Representing year-over-year growth of 17% and 11% respectively,

additional information on guidance is available. In today's release, including additional income statement and cash flow items.

Operator to manage the call.

Thank you. Ladies and gentlemen, we will now begin the question and answer session as we enter the Q&A session. We ask that you please limit your input to 2 questions. I would like to remind everyone to ask a question, please press the star button, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again.

1 moment, please for your first question.

Your first question comes from the line of Ed young of Morgan Stanley. Please go ahead.

Um, good evening. Um, my first question is on, uh, us marketing, uh, your gross profit was a little bit better than we had, but your contribution was a lot better and your marketing is already in your investor day range, uh, um, um, um, a couple of years early and an absolute terms. You mentioned the year on year. North Carolina, tell me. But it's actually almost exactly flat with what it was in 22 and 23. So, I wonder if you could talk a little bit about the drivers of efficiencies and leverage in that line and can you quantify how much the benefit was from the reallocation into Q4? Um, the second question is on prediction markets, 1 of your peers, says that actively exploring in is now explicitly guiding X prediction Market investment and your other main peer is saying, it has no desire to be a first mover and no presumption that has a right to win in that space. So we're on the scale, has your thinking, got on the opportunity to this point and how should we think about potential investment?

This year or until 8 years, thanks.

Evening Ed. Um let let me pick up the prediction markets, 1 first, and then Rob will come in and talk to you about the US marketing.

Look with with prediction markets, it's clearly, a fast moving space and, you know, for, you know, for those of you on the call who are a bit less familiar with our international business, it's worth remembering that we've got sort of 2 decades, experience of operating. The world's largest betting exchange, the betrayer exchange. You know, we offer this product in lots of markets around the world and it shares some similar characteristics with event contracts, which obviously be helpful to us as we consider the landscape in any developments.

But you know, as you as you say, we're evaluating the various regulatory developments and assessing the potential opportunities. This may present for FanDuel

You know, naturally we've got a lot of important stakeholders that we need to consider, and so we're watching this space very closely.

Yeah. Hi Ed. Uh, just picking up on the sales and marketing question. Obviously when you when you look at it year on year, um, we're about, um, 4 percentage points, um, lower, um, quarter versus quarter. Part of that is due to the maturing State profile. We also have the North Carolina launch of your member in Q2 last year. And, you know, as we said proactively in our, our statement, we have faced some marketing into H2,

um, which will help us um in front of a, a very um busy new NFL and NBA season, so um, which we're looking forward to

Are you able to quantify that phasing? Are you. Are you not?

It's it's broadly broadly. 20 to 25 million.

Thank you.

Your next question comes from the line of Jordan. Bender of citizens. Please go ahead.

I want to continue.

On the conversation with prediction markets for a second but not the the will you or won't you? But rather kind of how you underwrite the risk. So you know I guess the question is you know the total Capital outlay could be quite significant. So how do you get comfortable investing that type of money? Given the backdrop that you know, potentially 3 years from now there could be a different us Administration or even change a political party here in the US. And then the second 1, um, I want to touch on the Illinois, search charge. It was that done on a on a state basis or should we view that more as a company policy moving forward that you could look to utilize. If if states do increase taxes in the future, thank you.

Fueling the black market, which is not good for, um, for you know, Integrity of sport. It's not good for player protection and it's certainly not good for, uh, collection of of Revenue to the state. So, um, you know, we, we, we didn't think it was a good idea but, you know, we we introduced this fee which I think is the fairest way to to deal with it. It's like we think we think Illinois is an outlier. We don't expect this to happen. Anywhere else.

Um, you know, we we'll introduce the fee and we'll see what happens.

Great, thanks.

Your next question comes from the line of fairy Jones. It's true of security. Please go ahead.

Hey guys, just to follow up on. Illinois is the transaction fee mitigation and guidance assume the fee is taxable and if it doesn't, does that change, your could that change your strategy at all whether that's moving to a minimum adjusting pricing or or anything else? Thank you.

Yeah. Hi Barry. It it doesn't issue that it's taxable. Obviously we are monitoring this situation, um, quite quite closely at the moment. Um, we landed on the transaction fees. It's quite simple for our customers to, to understand, and it also ties directly to the legislature that was issued. Um, it's also more more straightforward to implement from a tech perspective. So, you know, we're monitoring and you know, if

If there are some changes around the way that um, that the fee is perceived by the state, then we'll address that accordingly.

Got it and then I was hoping you could spend a minute talking about California. Maybe provide any update on how sports betting could look there. And how that factors in, uh, with, you know, I believe the a recently gave an opinion on DFS. So just curious how that all kind of comes together in the latest on, on California.

I mean we've talked about, um, California. Um, before you know, you, you're right about the, um, you know, the AG issuing. So this this non-binding view around, um, on DFS. And clearly something that which we're following, uh, carefully. Um, yeah, I think from from our perspective, you know, we have a lot of respect for for the tribes and, um, you know, we, you know, we will be, um, you know, very thoughtful about, um, you know, making sure that, you know, we are, you know, working with them and and listening to them, you know, they're clearly the important, uh, stakeholder in in the state of California and we have a lot of respect.

Great, thank you so much.

Your next question comes from the line of Jed. Kelly of Oppenheimer. Please go ahead.

Hi, thanks for taking our questions. This is Josh Homme for Jed. I just wanted to see if you could uh speak to any of the early uh July handle Trends or a whole trends that you guys are seeing

No, I'm afraid. We're not going to come in until 6 current trading

Okay, and then maybe you could touch on, uh, I guess how your, um, your way parlay is kind of progressing into to football and and just talk about some, uh, some of the, the, the highlights that you've seen in the NBA Playoffs, um, using the, your way partly.

Yeah, you're you know as a reminder says you're on the call. You know, your way is just 1 feature in this of underlying technology with, with building for our Sports, um, betting business. And they think, you know, it's going to be very exciting for for customers, uh, in in the future. And it's going to be a, you know, a revolutionary approach to to sports books and yeah.

Will allow us to deliver, you know, a meaningful Superior experience to to customers.

um, you know, in terms of the, you know, the way in which, you know, we were able to utilize it, you know, in the in the a NBA playoffs, you know, um, we weren't, we weren't pushing it, but we saw um in a big skew towards um you know, same game parlay within the Yurts um capability

And there's some exciting plans, we got, you know, um, you know, you know, further further products as we get into the football season, we clearly we're not going to, um, put all of the details of it into the, into our competitors. Um, yeah. Mine's right now but, you know, um, rest assured. This is a, a foundational change that we're making. And I think, when you think about how important it is to ensure you've got a broad range of markets, whether that's in Live or, um, pre-market. Um, you know, that your way products allows that, um, you know, sort of huge choice. And, you know, we think that we'll also allow us to sort of improve the, you know, the presentation of of betting to Consumers as well.

Your next question comes from the line of burning, maternal, of medium Company. Please go ahead.

Great. Um, thanks for taking the question, maybe just continuing on the product conversation. If you could just talk to how your merchandising and pushing players to, to try same game parlay live, um how the retention of those products have been and and what it means for the upcoming NFL season.

Live betting for us is something that we've been doing for years in Europe, um that it's a Mainstay of our products offering, um, you know, in software Cricket tennis, you know, whatever whatever Sports you you think about. And in fact, you know, it's worth remembering that we invented cash out. So, you know, this is something that we've been really thoughtful about for, for a long time. Um, and when I look at, uh, you know, live betting in in the US, you know, there are 3 things, which I think is really important here. 1 is to make sure you have a really good same game, parlay proposition. Um you know people will want to be able to, you know, pick the uh, appropriate Thing game parlay depending on what's happening in the game. Because you know, let's remember Sports is inherently unpredictable and that's what makes it so much fun to watch and so much fun to bet on. And so you know, making sure that we can, you know, reduce the the friction for for

See investor watching the game, they can select that same game parlay very quickly. Um, it is important and that's of immersive front end experience to ensure that they can discover that. You know that same game parlay, they can track it um and then they get the scoreboards and other visualizations are important. And you know, look when we combine all those things we think

Positions us very well with the, with the leading, uh, live product, uh, in the US market.

Understood. Thank you. Then maybe just a a more broad 1 on eye gaming. Um, just you know, given the impressive results accelerating in the quarter on, on difficult comparisons, just where can it go from here and, and do you think you're expanding the market, um, or you're or you're taking share?

if we, um, if we look at our gaming at the moment,

yeah, the penetration rates are still got a, you know, a long way to go. Um, so I think that we are, uh, you know, still, you know, early in where penetration can get to an eye gaming, you know, we're clearly with uh, the FanDuel business very focused on acquiring, you know, direct, um, to casino customers.

In the early days we were focused on crossover. But you know the biggest opportunity is the direct Casino customers and when I look at what we've been doing with

You know, the Rewards Club, exclusive content, the jackpots. Um, there's a lot of great. Um, product work we can do, which has been really helping push near fuel to be number 1 and there's a long way to go a lot more opportunities for us. Um, big opportunities to increase, uh, penetration in the states that are operating

Thank you.

Your next question comes from the line of brand Montour of Barkley's, please. Go ahead.

Um, good evening, everybody. And thanks for taking my question. So guys, when I look at the, uh, guidance for 25 and the, and the changes that you made here, it's all sort of non-core um, things and you and you and you laid it out, very cleanly and I go back last quarter, you know, again it was a sort of the same thing where there was no changes to sort of your underlying thinking. And I just want to level set, you know, for the first 6 months of this year, um do you feel better or the same across those core kpis like handle, hold promo? Uh, I gaming. Um, I know that's a sort of a convoluted question but just want to understand the evolution of your confidence on those core kpis, sort of halfway through here

Yeah, Hi Brent. Yeah, I I think in summary, we feel really, you know, good about the momentum that we've got at the moment. Particularly for moving from q1 into Q2, definitely seeing some, you know, some, some strength in the underlying kpis, with regards to the guidance for the full year. As you mentioned, you know, it's largely mechanical the moves.

You know, we did slightly beat our expectations for Q2 on an underlying basis and that was a combination of the marketing phase. And I talked about earlier and some slightly better underlying sports book and I gaming performance. But listen, it it's early in the year, you can't extrapolate the summer performance. Um, we're going to take a reasonably prudent approach, given the seasonality of the business and, you know, we're really pleased with the underlying fundamentals.

Uh, green negotiation, that, that sort of really did set a new low mark on what the value of those access fees could be worth, what is that going through that, um, negotiation and that that deal. What is that sort of um, make you feel about your other access agreements? Is that a 1-off or do you think that there's opportunity there for you?

Yeah, listen, there's definitely opportunity for it, it's longer term. These are very long-term agreements, you know, there was signed a few years ago, when there was a different landscape and a different backdrop to, to Market access. So there are definitely opportunities but we consider them as longer term opportunities. I think they will be material when they come around, but it's largely from 2030 onwards in the meantime as we've previously said and laid out of the investor today. You know, we we are confident that we've got other levers within our cost of sales, you know, um, that that can act as mitigation for other cost increases.

Right. And next quarter, guys. Thank you.

Your next question comes from the line of Joe's. Talk of s. Please go ahead.

Uh, thank you. Hello, Peter Robb. I wanted to ask on FanDuel, you know, as we think about say your guide and the outlook in the new sports calendar, how to think about your sports amp growth and the outlook.

You know, is this a season essentially, where you press the monetization levers a little bit more say, than the volume levers? Um,

That you've pressed historically. Um, and then my follow-up is

to that is, um, just

On the previous marketing spend question you know it it is down rob you commented on it. Um but is there does is FanDuel in a position where the preference is to use the promotional line.

versus say the, you know, the advertising and marketing line for engagement and user growth similar to

where you are and other jurisdictions or is it too early?

Joe. Hi um, nice. Nice to hear from you.

Go back to some of the conversations. We've had historically around sort of acquisition. It's worth remembering that we've always been very focused on acquiring as many customers as we can whilst ever then meet us at cedel TV criteria. And you know that's it's always been a Mainstay of the business and it will remain the same.

And we also think in the same way though around, you know, in the application of generosity, you know, that as well. And, you know, you know, I think when we think about how we've been applying generosity, um, you know, over the course of this year and how you get it to the right customer segments. That's also really important. And so, I think your, the characterization of a shift from volume to monetization, may may not be right, but I think we've always been very focused on, you know, that sort of cacti, LTV Dynamic, and that's what we use to drive. Um, both, you know, where and how we applying this a generosity, and also, how hard to push from a, um, customer acquisition perspective.

Yeah, from an amp perspective, Joe, clearly, you know, there's a couple of Dynamics to this, for the, for the quarter and how we're looking at it for the rest of the year. But we're obviously seeing phenomenal growth in our I gaming amps. Um, which we're up 32% in the quarter, we've seen a, a slight retracement in the sports book, amps in the quarter. But as we explained that that's largely due to the North Carolina launched last year where we effectively, you know, picked up 1 in 20 of the, the adult population at that launch. So, you know, we're feeling reasonably sanguine about the the volume of the handle that we're seeing. But as we previously, articulated at at q1 and Q4 handle is just 1 metric that, that we look at. Um, and, you know, we're seeing great frequency, we're seeing increased frequency from our customers, we're seeing excellent retention.

From those customers that we want to retain and, you know, we continue to see um the extension of our parlay penetration. So lot, lots of um, strong attributes to to the program.

Thank you guys.

Your next question comes from the line of Paul Rody of David. Please go ahead.

Could you flesh out that piece on the increased conviction and synergies a little bit? And then, secondly, just on the platform migration, will it require, um, that to happen for kind of the new product that maybe you're bringing in to seesaw, to be brought into smile, or can you start introducing that, that product, um, uh, the the kind of flutter Edge product into, snip, fairly quickly and then just very quick, follow up on us tax, if that's okay. Just would it be a sensible assumption for next year? That the known tax increases can be offset by the void uh, re negotiation?

Hi Paul. Um, look, let me just deal quickly with with SNY and then we'll talk to you about the um, us tax piece. I mean, yeah. I, I think, you know, as you as you pointed out, you know, we're planning to do a migration of the SNY, um, you know, business onto the effect of the CC Sal platform, um, in

In an H1 2026, that will allow us to offer this like customers the full Suite of products that, uh, sees our have access to. So things like my combo and, you know, the full full range of products, we have available on the platform. So excited about that. There are things we're doing in the meantime, um, to, uh, to provide, um, a, a step-up, uh, for further SCI customers. But, you know, it's not long to wait until that migration will happen. And, you know, I think the speed in which we can get that done, you know, we've got our hands on the business

that's why we sort of, you know, reaffirmed, our, uh, confidence in our ability to hit the, uh, the the synergies which, which we reference

Yeah, with regards to to the US taxes. So you know, we will see a higher benefit from Boyd last year next year as an annualized, it so 65 million. Um as we said it, it it largely covers for this year for next year, obviously that that's going to cover significant proportion of the, the tax increases that we will see. I think it's it's important to remember a couple of the other Dynamics. So, you know, we always talk about a first order mitigate mitigation where we think we can mitigate sort of Circa 20% in the first 6 months and that, that depends on the competitive Dynamics in the market. Um, and then you, you tend to see a second order mitigation, and, and kind of the scale benefits play out following that. So we expect that mitigation to to increase their after. So, as we've said on a number of occasions, we, we've got Boyd, but we've got a number of other tools in our, uh, kind of

Levers and Powers as well to to deploy. If we do see, uh, further tax increases

Helpful. Thank you.

Ladies and gentlemen, as we resume the Q&A session, we ask that you please limit your input to 1 question and your next. Your next question comes from the line of many Pollard of City. Please go ahead.

Thank you very much for taking my question.

Question then. Um, can I just ask on the US gross margin?

That's coming very strong. So the second quarter you do mention in the statement that there was 90 basis points of benefit from Payment Processing fees and those are changes you made back in the second half of 24. So obviously that's been annualized. Second half of 25. But do you think there are other things that you're working on? Whether it's, you know, further negotiations on payments or other things that could lead to further scaling of the non-tax part of the cost of goods, sold?

Yeah. Hi Monique. Um, yeah, as you correctly pointed out, I mean, we have um, been had some successes in the in this area. So a lot of the payment costs initiatives that we've put into play. We we made roughly around Q3 last year, and a number of these relate to our improving, our deposit to handle ratio, um, and also, renegotiation of payment costs, more broadly. I think, alongside that we've also been making some efficiencies in terms of the, the fraud cost line which

Which continues to come down and, you know as we we've also said in the past, you know, there's a number of other cost items that we're looking at uh the larger buckets within cost of sales, including the um you know, geolocation costs and the other large bucket. So, continue to make good progress. We're very pleased with where the cost of sales is and it's very much on track to be be within the parameters that we set out of the investor day in September.

Thank you very helpful.

Your next question comes from the line of Clark clampton a pi G. Please go ahead.

Mentioned low penetration. Um, you guys provided a really helpful, uh, Overview at the start of July of the product and platform work that you guys have sort of done cumulatively over the last couple of years. Um, I wanted to see if you guys could help us, you know, sort of digest. I guess the second, derivative implications of that. Um, where do you see the biggest Delta is versus peers from a product standpoint. Um, and if we were to boil it down, sort of in a purely quantitative way, do you believe that some of the advantages that are translating to share right now are sort of durable and that over time? You could have um, you could be a market leader. Uh, I guess for I gaming, thanks a lot.

Well, Clark, we we are the market leader, uh, for for our gaming. And I think that we are the market leader because we have, you know, continuously executed on our strategy. You know, we set out at the investor day in 2022 that we, you know, um, that we believe the majority of these are gaining time would come from katsina direct customers and I think that's suited to be the case. We also laid out a very clear, sort of, you know, 3 step approach to how we were going to get to product leadership, and we've done that. Um, and I think like, if I, if I look at it, you know, the the stuff I mentioned earlier, you know, the, the work we've done around chat jackpots, that what we're doing with exclusive content, the Rewards Club. Um, you know, it's actually, you know, leveraging the the flutter Edge as well in terms of, you know, bringing new titles there. So, you know, we're we're in a, you know, a team of done a phenomenal.

More job, huge growth in in amps and revenue, but we're still in the very early days. It's, you know, lots of lots of potential to come from a penetration perspective and I think that we're really well set to, you know, we've got the, the best product and we've got, yeah, some really exciting plans to keep innovating it

Your next question comes from the line of Robert. Fisherman of Moffett Nathanson. Please go ahead.

Hi. Thank you. Um, if I could do 1 more on I gaming, I think in the prepared remarks, you talked about adding a record volume of new titles. Just curious. If you can talk, how much of fanduel's I gaming handle or business? However, you want to talk about it is driven by in-house or exclusive content versus third-party games or or maybe just big picture, what the mix of of that in-house games has evolved over the past couple years and where you expect that to end up. Thank you.

Uh, hi Robert. Look, you the um, all of our content for FanDuel at the moment is all coming from the third parties. Now, you know, some of that is exclusive for us and we have exclusive exclusivity Provisions for periods of time on it. So, you know, the half, half and half and then half an even more path. Have been exclusive titles for us, uh, on our platform. It clearly, you know, in the rest of the organization, we do have access to our own enhanced Studios and content.

And in time, that's something that we can, um, put into the into the financial business to help. Yeah. Alleviate some of the uh, the costs of procuring that content, but at the moment we've been focusing on making sure that we have the broadest and best range available for our customers and delivering things like the, you know, the jackpots with over 200,000 jackpots have been won since launch and you know, the Rewards Club which, you know, I think is a very exciting piece of capability, getting that right? Has been a priority first before we start bringing some of the in-house content that we know how to do. And, you know, I mean, we've got good penetration levels in some of our other. I gaming marketer and the world for in-house content, but it's just, it's not something that we've been prioritizing getting into fanu yet.

Understood, thank you.

Your next question comes from the line of Chad Bain. And that's muire. Please go ahead.

Hi, good afternoon. Thanks for taking my question. I I wanted to ask about kind of a post-mortem question after the, the lottery tender. Uh, so now that the results are are final and, and you won't have a major cash outlay, uh, in the next couple of years, I guess 2-part on this 1, does it?

Maybe free up some Capital to do some things that you you would not have been able to do, um, if you had invested, uh, in that market and then second, um, related to this tender. Um, did it also kind of open up your mind to maybe, uh, other things within the lottery space in other geographies? Thank you.

A broader interest per se in other lottery products um around the world. Um with regards to whether or not it frees up Capital listen as we've said in a number of occasions we are you know very Diplomat when it comes to our Capital allocation we are you know very um

Committed to bringing our leverage ratio, back to the to an 2, to 2, and a half times that we've talked about in the medium-term. And and we believe that we've got a number of opportunities in front of us. And as we've said before, we think we can continue to be an amb business. So we'll continue to invest behind the business organically. We'll continue to look at accretive m&a opportunities, as they come along, and we'll continue to operate our share buyback. Which you know, is operating as we we set out previously and we'll, we'll buy back up to 5 billion dollars of our stock over the next 3 to 4 years. So, we feel we're in a really good place here with de deleveraging very quickly, very cash generative and that, that opens up a lot, a lot of opportunities for us.

Thank you, Rob. Appreciate it.

Your next question comes from the line of John decree CBR. Please go ahead

Hi, this is Max. Marsh on for John, decree. Thanks for taking my question. Seeing some good growth out of Brazil. Correct me if I'm wrong but I believe that's your only Latin American Market. Is your strong performance there. Impacting your, your thinking on expansion, expanding to other regulated markets, in Latin America. Maybe if you're developing a bit more of a flutter Edge in that market, that might be able to be replicated.

Hi Max. Um you know we we are yeah the world's you know biggest and most sort of you know Global um sports betting and gaming business and you know, when we sit here and evaluate you know what the opportunities are around the world, you know, you're you're right, we think about Latin America, we think about you know many many markets where we're not operating in, um but we have to evaluate. Where do we think is the best place to you know, Deploy on Capital? Um, I mean look there's a lot of software goes on in in Latin America. Um, you know there's some interesting opportunities there so you know, look, they're all in the in the mix as it, you know, as as we think about, you know, where we're going to be deploying our capital in as Rob said, you know, we're we're an amb business, you know, we invest organically in the business, we're doing share repurchases and we're also doing, uh, m&a. So you know, we we've only just closed the uh, snack acquisition and the Brazil acquisition, but they're clearly the team of thinking about other opportunities, uh, you know, around the world in Latin America, Europe, you know?

Space.

Thank you very much.

Your next question comes from the line of Ben Shell, Fues. Please go ahead.

Good evening, just on the international business. Can you walk us through the biggest countries of outperformance and underperformance versus your original expectations at the start of the Year? Thank you.

Yeah, hi been. Um, obviously there's been lots of over performance, so I'll probably talk about that for a while, and there won't be, won't take me long to, to cover the performance. Um, so in particular, I would say the sea business. Um, so the southern Europe and Africa is really outperforming that business has gone from strength to strength since we first acquired the sea, sell business and brought it into the group, a couple of years ago. At that point in time, sea, sell was doing approximately 400,000 amps a month online. It's now surpassed a million

If you look at the profitability inflection of that business as well. Yeah, it continues to go from strength to strength. We've now acquired the, the snitch business, which is a very complimentary brand and, you know, takes back the gold medal position for us in the Italian market. So we're very excited about Italy. In addition to that in that region, we've got turkey which is performing phenomenally well. We've recently signed a new contract with our partners in Turkey.

It's really, really working well for us.

Thank you, chaps.

Your next question is from the line of Ryan seagull of Craig Howland Capital group. Please go ahead.

Hey, good day, Peter Robb. Um, when I look at the new state within the guidance, um, the costs of 70 million, EBA I assume that's all for Missouri. Online sports betting launch, that's double. What you're closest pure, uh, in the US is guiding for. So, I guess curious, if you have any change in the, in your plans, from the state Playbook launch, I know it's a similar number from last quarter but just needs to be what what they're planning to spend and how you compare that to to previous launches. Thanks.

Yeah, hi Ryan. We've not changed our approach, so we've always been very consistent in terms of what we think new state launches cost. Um, we set this out at our Investor Day last year, where we said, you know, a contribution loss of circa $35 million per 1% of the population. Missouri is about 1.8% of the population. I think we've consistently held a number for Missouri. Um, we can't talk for others and their economics, but we're very confident in our own.

Workings.

Okay. Thank, thank you, uh, Robin. I think that's the end of the, um, questions. Now, there's no further questions on the call, I can see. So, I just like to thank everybody very much indeed, uh, for joining and look as we move into the, um, you know, second half of the year, you know, we're pleased with how we started Q3, um, and we're excited to see what we can do when we bring our great products to our customers, um, where that to the NFL MBA or European soccer season, thank you very much.

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