Flutter Entertainment Aktie

All right. Thanks, everyone, for joining us this morning. I'm Jed Kelly, Senior Analyst at Oppenheimer. Happy to have Peter and Rob from Flutter to talk about recent developments in the company, what's going on into football; exciting time as always. So thank you, Peter, and thank you, Rob, for joining us.

Jed, let me see you. Thank you for having us.

All right. Thanks. Okay. So we'll just dive right into it. So you reported results last week, and we saw accelerating engagement, especially around the World Cup. But the big news is the incremental promotional investments impacting EBITDA by about $270 million you're making into FanDuel. So can we kind of dive into that decision and sort of the strategic rationale behind it?

Of course. I mean, look, we've been talking to a lot of people about this, Jed. And it's been a very straightforward decision for us to make. And let me give you the background to it. I think the first thing I'd say is that the sportsbook improvement plan we put into place in FanDuel has been working very well. So when I think about the recent performance of the business on a number of dimensions, I think we've been very pleased to see the progress that we're making.

So whether it's the introduction of the loyalty program, which is improving average player days, whether it's actually us providing better engagement and entertainment for our customers, I think that's certainly been the case. Look, as someone who spent a lot of time in New York, you'll have some sympathy for those customers who are betting on the matches and when they're on their long losing streak, we had a bit of fun with that, we're refunding customers their money.

We started at the soccer World Cup. We did that big promo around goals to be scored, particularly for the America team, but also around the group stage of the tournament, knowing that, that would give customers the winning feeling and get them excited as we go into the tournament.

So I think all those -- from a loyalty perspective, we have great traction with the Bet Protect+ products, which dealt with the injury issue. And I think we've had really good traction sort of landing the excitement that FanDuel brings to our customers. And when I see that from a -- when I look at what's been happening from a customer perspective, if I take the NBA Finals, we saw 26% more actives on a game this year compared with last year, 40% more handle. I mean, of course, it was terrific. If you had a chance to be in New York and feel the excitement of the city as the Knicks had that huge victory.

But with that great quality content, we saw really good traction and engagement from customers. Now it wasn't necessarily the most profitable thing from our perspective, but it meant that customers had full wallet going to the soccer World Cup. We saw 2.3 million customers engage with us through the World Cup. 1/3 of those were customers who had reactivated. So they are lapsed customers from the football season last year, people who got a little bit disappointed with the very high margins, the poor quality content we saw.

So we're sat here right now, and we're carrying a much bigger business from a customer perspective than we normally would do into the second half of the year. We're seeing good momentum, as I say. The loyalty program's working will be fully rolled out for the football season. Bet Protect, I think, is really resonating with customers. We had a great instance of it the other night where it paid out.

And so, for us, the question was, how do we make sure that we extend our leadership position in OSB, right? And so from my perspective, I want to make sure that when we exit 2026, we have a bigger business with a better trajectory for the future from a market share perspective. And so that's what we're focused on. And the way to think about this is it's an investment in growing ARPU, right? We've done a lot to build our [indiscernible] platform over the years, but this is about growing ARPU, share of wallet and also driving up the sort of expenditure in the category.

Rob, I don't know if there's anything else you want to add.

Yes. I think Peter has touched on the main points. This is about focusing on the longer-term U.S. opportunity, which we still think is very substantial for us, and that's a lot more important than maximizing short-term EBITDA, and that's why we're willing to make this investment. I think as we think about this into 2027, we need to trade through the NFL in Q3 and Q4 and see what kind of momentum that we've got exiting the year.

I also think it's sensible to assume that we continue investing into 2027 for the short to medium-term thing. I don't think we'll be doing this in perpetuity and there's lot of levers that we can pull in time. We're very confident about our longer-term margin trajectory. But certainly, we would foresee continuing this in the short to medium term, particularly given the levels of success that we're having early on in this investment program.

Got it. And just as a follow-up to that, I think when we think about FanDuel marketing here in the United States, you've done a very good job promoting the product, promoting the Same Game Parlay. Do you start to market more of the loyalty program to try to reengage those customers and drive awareness? Or do you think this is something that customers will find organically as they start to reengage with the platform into football?

I think -- look, our brand is a really important part of the whole sort of feature set and value proposition for customers, right? So I think it's important that we talk about our product features, whether that's the parlays or indeed loyalty or indeed Bet Protect. But I also think it needs -- when people see the FanDuel brand advertise and watch those commercials, they're going to be proud that that's the sportsbook that they're carrying, right? And so I think you'll see us try and use the FanDuel brand more as part of the value proposition that we have for customers as well. We spend a lot of money. We're on air a lot. We engage with a lot of consumers. And I think it's important that the FanDuel brand stands for part of that sort of value proposition that we deliver customers as well.

Got it. And I want to keep this more strategy, but I do have to ask but the one question we did get post the call was squaring the guidance. Obviously, we got the 3Q investment, then a pretty big 4Q step-up. So can you just help us how we should square that ramp into the fourth quarter?

Yes, sure. So I mean, if you look at the 4Q year-on-year, it steps up by about $200 million in terms of EBITDA and $100 million of that is just from sports results. As you know, we forecast to expected margin and actually last year in Q4, when you look at it holistically, we actually had some adverse luxsports results. About another $90 million is from the Missouri investment that we had last year. So we launched Missouri in Q4 last year, and we definitely lent in from an investment perspective there.

You then move into Q4 this year, we'll have the benefit from market making. We've got some cost improvements going through. So actually, a $200 million swing feels very achievable from our perspective, particularly if you take it off the back of some of the momentum that we've got at the moment.

And if you add to that how we're thinking about prediction markets, as we talked about, we think there's going to be some synergistic benefit for us on a nationwide marketing basis when we look at Predicts aligned with our core sportsbook products. But some of the later -- later than planned product rollout in Predicts will mean that some of the spend that we initially plan shifts out to the right on Predicts, we just need to see where our Predicts product is as we exit the year before we take any decisions on that investment into '27.

And I was looking at the NFL Christmas schedule and the NBA Christmas schedule just came out, that seems to be just given all the sports content that went on with some of the injuries last year, it seems like we could have a better time. If we have just a call it, stable content slate, that should add a couple of points to the growth, correct, as we think about 4Q?

Decent content is always welcome from our perspective. We typically get very good engagement around that as we've seen with the World Cup recently where we smashed through all of our targets because the content was so good. We recently had the NFL Hall of Fame Game, which is a few weeks before the start of the season. If demand on that is anything to go by, then we're quite encouraged by what we're seeing ahead of the new NFL season.

Got it. And then the other key topic, you said the U.S. online sports betting market is growing about 5%. iGaming is growing faster. So can you just discuss some of the dynamics, what's going on there?

Yes. I mean it's -- look, there's a lot of data and a lot of noise on the market, Jed. I really wish that we could find some consolidated view of NGR because that would give us the best real read on revenue, and that's what we have in a lot of other markets in which we operate. But let's just think about what we've seen over the last few quarters.

We know that there were some market-wide slowdowns in Q4 last year, right? The NFL content wasn't as compelling. We saw these very high win rates. Ultimately, people are there for fun and entertainment, and it stopped being that. I think we saw some market implications.

Obviously, our performance was not great in that situation. I think we made the situation a bit worse, and that's why we lost a little bit of share in Q4. But coming into this year, if you look at it on a GGR basis, the growth rates for the first 4, 5 months were pretty close to double digits, right? Now when you include the June data, there's a lot of swing in sports results in fact it's more like 5%.

And so when we were trying to plan for the second half, we've taken that conservative view and put the 5% in for H2. But when we see compelling content, we think about the very strong growth we saw with the NBA finals. We think about the performance we've seen in the Soccer World Cup. We've had some record weeks in MLB. Rob has talked about the Hall of Fame game from NFL.

So would I be tended to take the over on that at the moment? Probably. But look, we want to be conservative with our guide. We'll see what happens. And look, I think if we can get some great NFL content and we can keep our customers engaged with some of the exciting plans and propositions we have for them, we'll see what it can look like.

The important thing is that our focus is on growing the ARPU now. That's the big thing for us. We want to capture that extra wallet share from customers. We've got a real reason for customers to keep adding the FanDuel now because our loyalty program, which we're deploying to all of our customers will mean that there's a real incentive to get that next bet to FanDuel, which is going to be very different to what we saw last year.

Got it. And then just -- so -- and just obviously, the potential follow-up is maybe for people who aren't in the weeds on the industry like I am or some of the other investors is prediction market cannibalization because you do talk to some investors and like, I just look at the headline volumes and they think they're taking share, but there seems to be a lot more going on underneath the hood.

I think we need to distinguish between what is happening in the states where there's regulated OSB and the states where there isn't. And clearly, in the states where there isn't, prediction markets have a free run. There's no competitor to them other than the illegal bookies. I think in the regulated market, regulated OSB markets, we're seeing very limited cannibalization. We've got lots of different ways of triangulating it. We know our competitors are doing the same thing and they're coming to the same conclusions.

All the data we look at in the regulated states, we're seeing very limited cannibalization. And it makes sense because the sports offering on a regulated OSB is better than you can find on the Predictions market. And it's better in terms of the breadth of markets, but also we offer generosity, right? And we spent the beginning of the call talking about the big leaning where we're going to have around generosity in the second half. The Predictions markets are not offering the customers and it's very difficult for them to deliver that because of the nature of the variety of different market makers operate on their platforms.

Got it. And you just talked about ARPU and concentrating on ARPU. So when we start to look at net win margins, is it more about net win dollars per customer versus net win margins? Is that sort of the way we should start to think about it?

Not really. I mean this is something that we've obviously got lot of experience internationally and around the world. And we've got international markets which are way out front of the U.S. in terms of structural margins at the moment. We think there's a lot of headroom for the U.S. to grow into. We've got markets that are operating at higher promo percentage as a result than the U.S. and not all of the structural margin gains that you will see drop through to the net revenue line, they can get reinvested.

I think the key is that we see growth over time in that structural margin. And we think that there's a long runway of growth in the U.S. from the 8.7% that we've got. And for us, the key figure that we talked about at our Investor Day back in 2024 was the net revenue margin of 12%. We talked about the 16% with 4% generosity at the time. We're already at 16% structural margin in Q4 last year. So we feel that there's definitely more runway on that. If you think about the U.S. in terms of where it is in terms of parlay penetration compared to other markets, it's still got, we think, levels to go. There's more that we're doing around product innovation.

And actually, we do think that the generosity number will come down in the medium to long term, as I talked about earlier, and we've got initiatives like model-driven generosity that we've deployed in our Australian market that's worked very hard for us. So I think we look at both ultimately, and we're looking at a number of KPI metrics across the board. But I think when it comes to win margins, net win margin is what we're quite focused on from a percentage perspective.

Got it. And then -- so you haven't seen where if that net win margin creeps up over 10% over the last 12 months, you might see a handle decline. Is that more sort of back last December, last January, we just hold got really high for the customer because it was just pretty volatile for the sportsbook customers, and that's where we saw some of the churn.

I think there are 2 factors that compounded there, right? I mean putting it, first of all, if people are not having winning experiences, it becomes less exciting, right? There are those ones that get away, right? And when you've got your five-leg parlay, you just get let down on one of the legs and you tell your friends about how you nearly made it, that's fine.

But you do occasionally need to have some of these things that -- you do need to have some winning experiences. And in that very significant period of high margin, the content wasn't particularly compelling for a lot of people who are betting on and people weren't having those winning experiences. And I think we can create opportunities to help engineer those experiences for customers. I talked about some of the stuff we did going into the soccer World Cup, where we did our goals promo going into the group stage and knew there will be a lot of goals scored.

And look, I'm sure many people watching this call made some money off me with the goals that the U.S. team scored in their opening games in the World Cup. And that's part of the fun and excitement we want people to have. And so I think there's activation and sort of customer focus that we have to have that the team, I think, have got a better grip on now.

Got it. And you bring up an interesting point on the World Cup. If you sort of look at the U.S. World Cup hold rates versus ex U.S. World Cup hold rates, it seems like you did much better outside the U.S. So is there just a typical way given the complexity of our sports markets, the way the U.S. bettor is engaging with your product versus people outside the U.S.?

Well, I think there shouldn't really be a big difference. But in soccer, one of the things that American consumers like to bet on is the 120-minute market, right? So this is taking the game to end at regular time plus extra time. And typically, in the European markets, people are only betting to the outcome of the game at full time. And so there is a difference. You think about all those games that went to extra time and stuff. Bookies will always be hoping for a draw. It's the outcome that often delivers the best result for us because then you have either team winning. And that's I think one of the structural things you see, particularly around the way that we've created soccer markets in the U.S.

I think more generally, though, when I think about U.S. sport, you couldn't really design across the sort of NBA and NFL and MLB. You couldn't design better codes for wagering on. If you think about the nature of the player narratives, the fact that you even introduce breaks in the game, which are -- I think some people call them commercial breaks, but there are great opportunities for customers to get their bets on for what they think is going to happen in the next quarter or the next phase of play.

I mean it was pretty remarkable, last -- I think in the last football season, we had more handle on Gibbs than we did on the Patriots when they went through to the Super Bowl. So player narratives are absolutely crucial. We also know -- look, we spend a lot of time talking and focusing on parlays. We've done the analysis. We know that the more customers engage in our parlay product, the more legs they take, the high frequency which they take the product, the more likely they are to stay with us. So retention rates improve, whilst margins do often increase, retention rates also improve.

And so I think that the U.S. market is going to -- with that player narrative, that interest in parlays, I think we will end up with very good structural gross win margins in America, notwithstanding some of the differences that we might see on the soccer because of the way we structure the 120-minute markets.

Got it. Got it. All right. We'll focus now on prediction markets. Can you just give us an update on your strategy versus consumer-facing versus market making? It seems like it's a pretty street-smart strategy given leveraging your best-in-class trading. So I would love to hear more about that.

Yes. So we're actually targeting both as we've spoken about. So in our prediction market, product FanDuel Predicts, customer acquisition is clearly our priority there, that's where we see the real long-term benefit for the business when you think about the prediction market ecosystem. And as we've said this year, the product rollout that we've had has been slightly slower than we would have liked, and we've had some challenges along the way.

But I think moving our sports and novelty product to crypto is going to ensure that we're far better positioned on that front moving forward. By the end of the year, I think our product proposition is going to be a lot more competitive, and we've already recently seen quite a significant increase in our volumes. From a market-making perspective, we're really excited about that as an extra product line for us, if you like.

Progress to date has been very quick and profitable. And we think this is where the majority of the economics will sit within the prediction market ecosystem when you look forward. And we're focused on taking as big a share of that as we possibly can. I think the advantage that we've got coming back to it is actually looking at these complex parlay style bets with the correlated outcomes, we've demonstrated our expertise in this area, that is why we've got a pricing advantage on the core sportsbook, and that carries over here, and that gives us confidence that we can take that meaningful share.

And we're scaling that business really rapidly. I think the other thing we saw a few weeks ago, when we spoke -- speaking some of our investors about is the CFTC have guided recently that they're not going to allow the core market making on their own platform. So I think given where we sit overall at the moment, we see that as advantageous to us. We need to see how that plays through, but that's certainly an interesting development in the last few weeks.

And one thing with market making, right? Because I assume if you're using your back-end infrastructure on RFQs for third-party platforms, you're actually improving that experience for the retail users. So how do you sort of think about balancing the market making, which is highly profitable versus sort of cannibalizing the opportunity in some of those unregulated markets?

Well, Jed, I think you have to -- we have to look at this. And the primary area of the prediction market to gain traction is in these states which are unregulated. And so this is a great way for us to leverage, as Rob says, the pricing capability that we've built over the years into these new incremental -- into this new incremental opportunity. We already see plenty of people trying to scrape our prices and support their market-making activity, and we've got some plans for how we may deal with that. So...

With some of the Flutter Edge?

Yes, we'll see. So look, I'd rather directly monetize it. And I think that we can make very good returns on it. I think we've got the balance sheet to cope with some big volumes on it. And I think we've -- I think we'll have one of the best market-making capabilities, particularly in combos, and we will look to try and make a lot of money out of it.

And is any of this strategy sort of -- you kind of look at the states, I mean, I think the states are almost like 30 and 4 against prediction markets. I don't -- I mean we all assume this is going to the Supreme Court. But some -- and then you see the other day on Friday, right, the CFTC says we don't want you using American odds. Can you just discuss some of like the changes in the regulatory landscape as it kind of shifted your view on how you want to approach the market?

I think it's -- look, it's fair to say that the market is evolving quickly. And so trying to take a very sort of long-term assessment is really hard, right? You talked about the ruling of American odds. Rob mentioned this issue around market making people's own platforms.

I think ultimately, this gets resolved by the Supreme Court. And I'm sure there's a market on when that will actually happen. And we can have a look at what people think is most likely. I've always stated that I think whatever happens, the outcomes are either good or great for us. I think what we would like to see is clarity. And I think whatever happens, I think we're very well positioned.

There's 2 things we're focused on, and this is all -- this is why it's all sort of incremental to us. One is acquiring those customers in those states in advance of sports betting, regulating the market. So that's something that we're very focused on. And the second thing is making money using market peaking. And we talked about the GBP 50 million for this year. And I am very confident in the team's ability to do that. They did a brilliant job, and I'm excited to see how big a share we can take of that part of the profit book.

Got it. Is there a share you're targeting?

Large.

Large?

More than we have now. We'd like it to be larger.

All right. I'd like to hear that. And just last thing on prediction markets. You've obviously operated Betfair for a while. Can you talk about the similarities, the differences between Betfair, what's going on in the U.S.? I mean, it's different in the U.S. because 40% don't have access to an unregulated sportsbook or regulated sportsbook. So just kind of give us the puts and takes of your experience owning Betfair in that asset.

Yes. I mean I've been involved with Betfair since April 2013. So it's been a while now. And that is -- the Betfair Exchange is regulated as an OSB effectively in the U.K., in Italy, in Brazil and in all the markets in which we operate.

And in those markets, if I take the U.K. as an example, I know well, there's no regulatory or tax arbitrage, okay? So everybody in the U.K., wherever you live, whichever county, you can bet, right, everybody can. And so what we see is that the exchange takes sort of low single digit of -- of our U.K. revenues, right? So it's a niche product, right? And it's a niche product for 2 reasons, right?

The first is we don't offer generosity on the exchange. We can't, right? Because if Rob places a GBP 100 bet on his soccer team to win and the market maker wins the GBP 100 of him, the market maker is not going to fund Rob the free bet because the market maker can't be confident I get the next bet, right? It's all blind matched. And so that's a very important component of the trust associated with it. And I understand that's what the CFTC are also trying to achieve.

So generosity is very, very difficult to apply in the platform. That's one of the reasons it's never got as much traction. And then the other issue is the breadth of product offering is much narrower on the exchange. So look, for those reasons, it's never got as much traction. I think when I look at the U.S. market, at the moment, there's this regulatory arbitrage, right? And if I live in California, I can access prediction markets and I can't access OSB. I can't believe that in time, the regulatory arbitrage is allowed to sort of carry on to the same extent, right? And so we'll see what happens. Obviously, the Supreme Court will make their ruling. But I think whilst ever you see regulated RSP and the prediction markets side-by-side on a level playing field, the RSP wins, right, because of generosity and because of superior product offering.

Makes sense. So I want to go to iGaming now. Obviously, high 20s growth over the last 2 years. It's probably coming out of your last couple of Investor Days, sort of you weren't even in the first place and you've now done a really good job just growing market share. So can you kind of give us the outlook for that business, that segment, how we should be thinking about it?

Yes. We still think there's a huge iGaming opportunity, Jed. So the team have done a brilliant job, as you say, over the last 2 to 3 years, 2 points of share gain last year on top of 3 points in the year prior to that. So we've really kind of cemented that #1 position and the focus now is on maintaining that leadership through a differentiated proposition.

And we've had a playbook here that has worked very well for us in terms of direct acquisition, the experience that we've taken from other markets, including things like exclusive products and in-house products. And when you look at the rest of the runway for 2026 into 2027, we've got lots more exclusive content coming, lots of the franchises that have worked very well for us in the past, the Huff N Puff series of games, [indiscernible] series of games.

And ultimately, we're not even seeing penetration of rates that we thought we'd get to at the Investor Day where we said we'd get to 9.5% penetration in the U.S. I think that we said at the Investor Day was we anticipate one new state between '24 and '27. We're hoping we get that next year. I think there's a lineup of states at the moment that are getting close. Virginia potentially being one of them, but some bigger ones as well. I think we constantly said we get New York iGaming, it will be as big as sportsbook in California. So there's lots more to go after. I think that once the first domino falls, we will see a lot more iGaming states, which are really going to add to this profit pool for us.

And you do make a good point about regulation. Say the Supreme Court prediction markets become legal, right? Does that then force a lot of these states operating higher taxes for sports betting to legalize iGaming to sort of protect their sports betting properties?

I think there's lots of different outcomes. But ultimately, if you're sitting in one of those states, do you want to be sitting on the sidelines, not getting any tax revenues on these things when others are making hay while the sun shines. So I think there's lots of different potential outcomes here. But I think if you look at short term, what we're seeing in the regulatory space, in 2025, we saw a bunch of states increased taxes on our sector. We've only seen one this year in North Carolina, and that was a kind of a modest increase. We're seeing the tax increases in state slowdown. We're seeing lots of green shoots in terms of conversations of potential states opening up. And I think the overall dynamic around prediction markets and that narrative is probably only helping with that.

And sort of some of the promotional reinvestment we're seeing in sports, should we expect that to benefit iGaming? Or is more of the growth going to be driven by some of your casino-first players?

Listen, ultimately, our strategy has been mostly casino first, and that's been incredibly successful. But given the size of our sportsbook, when sportsbook is doing well, you do get a halo impact into iGaming. So in the World Cup recently where we delivered a lot more actives than we can sort of handle when we anticipated the iGaming product performed very well as a result as well because it was getting very good cross-sell. So we do get that halo benefit. I think we had less of that in Q4 last year as we experienced some of the challenges with the sportsbook. So as we go into the second half this year, hopefully, that's something that will continue to be a benefit off the back of the World Cup.

Got it. And can you give us an update on how Canada and how Alberta is trending?

So Alberta has got off to a great start. And I think this is quite consistent with our all state launches generally on a province launch in this case, if we're being specific, Alberta is half the size of Ontario, but within 2 weeks, it's done similar iGaming volumes in terms of acquisition. And I think within 3 weeks, the sportsbook volumes were 75% of what we achieved in Ontario. So we're off to a real flying start, that is clearly lots of latent demand. And I think it clearly demonstrates the resonance of the FanDuel brand that we've got across the U.S. and Canada still.

Got it. And now we'll go to the international markets. You're obviously a category leader, podium position on most of your markets. Can you give us an update what's working, where you're seeing progress? And then how the U.K. is going about 12 months after the tax increase?

Yes. So let me touch on the portfolio overall and maybe Peter can pick up on the U.K. But we're really pleased with the progress in the international business. I think our Italian business is performing particularly strongly. We've continued to grow our #1 position there. And that's even in light of slightly slower growth in our Sky business that we acquired [ last year ] as we've migrated on to the [indiscernible] platform. But actually, if you look at the growth across Italy and also in Turkey, which is part of our [ FCA ] market, the growth has been phenomenal. And there's high inflation in Turkey, but our growth has been 40% plus, and it's been outstripping inflation there. Our CEE business, which we don't talk about very much, has been growing double digit.

Central and Eastern Europe.

Yes, Central and Eastern Europe for those that don't know, has been growing phenomenally well. And actually, we've been making really good progress in Brazil, although the overall market in Brazil has been slightly dampened by some recent regulatory changes that I think people are aware of in the market. And then Peter can pick up on the U.K.

Yes. I mean I think it's worth reminding everybody because we often don't talk about the international business very much, but we continue to be #1 across sportsbook and iGaming in the U.K. So it's not just a podium position, Jed, but it's a gold medal, having twin gold medals in the U.K.

It's a very attractive market. It's the largest online market in Europe. I think if you look at our market share, we have a 39% share in sports, and we have a 22 point share in iGaming. So that's where we see significant headroom for growth. It's much more fragmented that part of the market than sports. Actually, the long-tail operators have about 35% share of iGaming in the U.K. market. So it's very, very fragmented.

I think the tax changes that the U.K. government have brought in, I think, are going to give us a really good opportunity to substantially increase our market share. They're going to be under those long-tail operators are going to be under a lot of pressure, both from a regulatory and tax increase. And I think there's an opportunity for us to use our scale as the market leader to better navigate these tax changes.

We've got a very sustainable and clear plan to mitigate the tax changes. I think we're going to keep our foot down hard on sort of the marketing and generosity side with other ways that we can help mitigate some of the increase in costs. And look, I think we will deliver those first order sort of cost savings we talked about. We expect to see some significant growth and benefits come through sort of second order impact as a result of competitors pulling back marketing or generosity or whatever they need to do to try and make their numbers work.

I think the team are doing a great job in the U.K. We've migrated the Sky business over to the core operating platform. And so we're now starting to see the sequential improvements you'd expect to see coming out of that significant shift. And I'm excited to see where we can take the business.

Got it. And then just dovetailing off that. Can we sort of talk about the cost savings initiative, Phase 2 and how you sort of allocate that across geographies?

Yes. So we talked about an incremental $500 million at Q2 that we think we'll get by 2029, and that's across OpEx and CapEx, circa 20% of that we think is CapEx. The narrative that we put around this deliberately is that it provides us headroom to absorb inflationary pressures and tax headwinds and essentially also free up capacity to invest in revenue-generating initiatives across the business.

So given that most of these cost initiatives will be weighted towards our international and corporate segments, about 20% of this is the U.S. We've already announced a U.S. restructuring this year, which has started to take out some of their portion of the cost savings. We see the international really underpinning that 5% to 10% growth algorithm that we've talked about previously.

In the last year, international EBITDA has been relatively flat when you look at it on an absolute level, and that's largely because we've been navigating through the period post UK iGaming tax change and the loss of India. If you look into 2027 and beyond, we think that we're going to be up towards the top end of that growth algorithm. If you look at these cost savings and the phasing, we are quite confident that we'll be able to get after a lot of this cost savings quite quickly. And previously, as we've talked about, normally, we'd say $1 of cost saving on an annualized run rate basis is a $1 of cost from a one-off perspective.

But we think given the nature of this envelope of costs and the fact that a lot of it is coming out of our technology estate and then a lot of it from our operating model is where we see the cost being slightly lower than that. We're going to come back at Q3 and provide a bit more color in terms of the phasing and the lay down of how we see that playing through.

Got it. And then can we just talk about capital allocation, particularly about deleveraging the balance sheet. You're obviously making these investments in the U.S., maybe extracting some savings internationally. So can you kind of give us an update on like the target leverage on the next 18 to 24 months?

Yes, sure. So I mean, as we exit Q2, we're running at 4.3 on our leverage, which is slightly higher than what we anticipated given the challenges and runway that we had earlier this year. But ultimately, our capital allocation priorities have remained unchanged since we set out talking about these at the Investor Day.

So we continue to invest where we see the highest returns. And we've always said that that's typically been organically, and that's why we're investing behind the U.S. business at the moment where we see a long-term trajectory that we talked about earlier and in our international growth markets such as Brazil, where we think there's huge growth opportunities going forward.

We obviously paused the buyback program because we're focusing in the near term on deleveraging the balance sheet. I think as we go through 2026, we intend to take the 4.3 down to a number beginning with a 3 by the end of this year, then we'll significantly delever as we go through 2027 as well.

Ultimately, we'll start looking at buybacks again when we feel like we've got a healthy and robust balance sheet. As we will delever quite quickly, we don't think that's too far out. And then from an M&A perspective, clearly, there's not much that happens in this sector without it coming across our desk first. Our immediate priority is around deleveraging. And then I'm sure as we work through the next kind of 12, 18 months as further opportunities come across our desk, we'll have a look at it. But we are pretty confident about returning to our guided 2 to 2.5x leverage range in the medium term.

And I'm not expecting to tell your acquisition strategy, but do you feel like there are certain markets across the globe where you feel like you could -- that could be additive to your whole portfolio?

Yes. When we think about the international business, I mean, look, we've got a mixture of different markets in there growing at different rates. I think we're fortunate that we've never been in a situation where we've been a forced buyer, right? You never want to be one of those businesses as having to make a sort of strategic acquisition somewhere, which is known for overpaying.

We've done deals where we've wanted to do them, not where we've had to. I think there are some interesting opportunities that are sort of opening up for us where we're beginning to look at sort of some organic market entries, right? So there may be some markets where we wouldn't be comfortable buying an asset in that market. We'd rather just do it clean market entry. We actually -- our business in Italy actually effectively did that into Turkey and into Morocco. So we got some of these capabilities in-house to be able to do some of that organic market entry. So you might see us start to do a little bit more of that to allow us to target some of these higher growth market opportunities all around the world.

Got it. And coming up to the bottom of the hour here. I guess, Peter, you're obviously you're stepping down in October. We've had some strategic management changes in FanDuel. Just can you give us a sense on like how investors should be viewing sort of the changes we're seeing in management and how that impacts the overall strategy?

Yes. I think I'm very pleased, as I was talking about at the beginning of the call, with the performance that we're seeing in FanDuel at the moment. I think the team are doing a very good job executing against the sportsbook improvement plan. I think they're making better decisions, faster decisions, putting the customer first. And I think we're seeing the benefits of that. So I think I'm happy with the changes we made. I think we removed some of the complexity and getting back to basics. And I think that's standing the business in good stead.

As regards to my move, Dan and I have worked very closely together my entire time here. Dan's obviously been very closely involved in all of the businesses In international. He spent the last several months helping to drive and push the sportsbook improvement plan in FanDuel, so getting much closer to that business.

Dan and I are very closely aligned as we are with Rob. And I think this decision to invest behind the success we're seeing in FanDuel at the moment is the right one, right? I'm taking a bit on the chin, but for Dan, it's a great gift for him to be able to, I think, have that opportunity to sort of invest behind the success we're seeing at the moment in the business. He's very supportive of it.

And I think about the cost program, we've done a lot around costs across the business with Phase 1, Phase 2, Dan is very supportive and removing some of the duplication of the business is something we've wanted to do and we're doing it. moving our technology towards more of a service-orientated architecture is something we're doing.

And of course, extensive use of AI across the business, which is a big unlock for us. So yes, I think you'll see Dan and I are very aligned. He may talk a bit faster than me, but I think we're trying to achieve very much similar things. And I look forward to seeing him be the most successful CEO the business has had.

Got it. And as we close out here, you did mention AI. How do you see that impacting the gaming sector? Does it allow sort of smaller competitors maybe to catch up to your pricing edge? Or are you able just to expand on just grow that competitive moat around pricing even more?

I think it's -- look, AI clearly has very far-reaching implications, whether it's around pricing, whether it's around our ability to massively accelerate what we're doing with our product development lifecycle, marketing, all those sort of things.

I think in general, the way I look at it is from a cost perspective, a lot of the stuff that we will do and are doing gives us -- may give us a short-term advantages, but it's stuff that people can access relatively easily. I think when I look at the size and scale of the data that we have from a consumer perspective, that's a very powerful tool that other people don't have, right?

So the model-driven generosity tools that we have, where we're able to use the information we have from our global customer base is very powerful to help us work out how to deploy that generosity appropriately. You talked about pricing. We have -- we see more back stream data than anybody else does, and that's very powerful in terms of helping us drive our pricing.

I think the stuff that gives me ultimately real conviction in this business and this category is you can't solve sports through AI, right? And it's why you're seeing massive investment going into live, into sport because it's going to be a cornerstone of entertainment. And of course, we bring excitement to life for customers around that. And I think what our tools are doing, things like AI in FanDuel, allowing us people to sort of engage and construct new bets that they haven't thought about before. It's going to allow us to radically change the presentation-led customers, personalization, all those things that are reliant on data. I think that this business is incredibly well positioned to take advantage of it.

Great. And so Rob and Peter, I want to thank you for your time. Anything you want to leave our audience with closing remarks or anything before we let you go?

Jed, thank you very much for having us, and thank you for spending time talking about international business. Sometimes people forget about that fantastic part of the portfolio.

Yes. Thanks for having us, and looking forward to see what you're offering upcoming in a couple of weeks. Can't wait. Take care. Bye. Thanks, everyone.

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Flutter Entertainment Q2 2026 Earnings Call. [Operator Instructions]

After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the call over to Paul Tymms, Group Director of Investor Relations. Paul?

Hi, everyone, and welcome to Flutter's Q2 update call. With me today are Flutter's CEO, Peter Jackson; and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will go through our Q2 financials and our updated guidance for 2026. We will then open the lines for Q&A.

Some of the information we are providing today, including our 2026 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.

I will now hand you over to Peter.

Thank you, Paul. Good morning, everyone, and thank you for joining us. Before we get into the results, I wanted to say a few words about the announcement we made this morning. After nearly 9 years as CEO, this is the right time to hand over to Dan, and I'll be stepping down at the end of September. It's been an enormous privilege to lead this business, and I do so a tremendous confidence in Flutter's future and the team we've built and in Dan's leadership. One thing I've always tried to do throughout my time as CEO is to take a long-term view of how we create value for shareholders. There are sometimes meant making decisions that weren't universally welcomed in the moment because we believe they will strengthen the business over the long term.

In 2019 and 2020, for example, we continued to invest heavily in FanDuel at a time when many question those decisions because of the impact on near-term earnings. Looking back, those investments proved to be the right thing to do. They strengthened our competitive position and laid the foundations for the business we have today. And we're making the same type of decision again today. We see a significant opportunity to invest behind our leadership in U.S. sports betting and iGaming, strengthening our proposition and positioning the business for future growth.

We recognize that this way on near-term earnings but we convinced is the right thing to do to maximize long-term shareholder value.

With that, let me turn to our results. We've delivered an encouraging quarter relative to our expectations, and I'm pleased with the progress we're making across the business. In the U.S., we've implemented our new leadership structure, made good progress on our Sportsbook improvement plan and further expanded our prediction like offering and capabilities. H2 will be delivering an improved value proposition for our customers a move, we believe, is critical to strengthening our #1 position in the highly competitive U.S. market, aligned with our new customer first strategy and better positioning the business for market share gains in 2027 and beyond.

During Q2, U.S. revenue was 6% lower year-over-year, reflecting a 6 percentage point growth impact from customer-friendly sports results as a next legendary win in June put some cash back in our customers' wallets in time for the World Cup. Customer engagement with exon throughout the NBA finals and the FIFA World Cup. And even when you adjust for these marquee events, Underlying sportsbook trends were in line with our expectations as our sportsbook improvement plan continues to deliver. We continue to see a limited cannibalization impact from prediction markets on our existing customer base in regulated sports book states. And we believe FanDuel's operational execution and our performance both in recent state launches and during key marquee events, confirms the strong demand for traditional sports betting products when sports content is compelling.

We expanded our loyalty program to 70% of customers this quarter, which has helped with engagement metrics with 82% of customers surveyed saying the Rewards Club improved their experience and more than half saying it lists their betting activity. We also introduced [indiscernible], our best-in-market injury protection feature and enhanced our soccer offering for the World Cup leveraging the Flutter Edge to offer unique features such as SuperSub. And while FanDuel trends have been encouraging, the market continues to be subdued, and we estimate that the market grew by around 5% in H1.

Although we continue to closely monitor the implications of the growth in prediction markets on the broader online sports betting market, we believe the market is yet to rebound from the disappointing NFR performance experienced in Q4 2025. We firmly believe market growth will ultimately return to higher levels with more compelling content driving stronger customer engagement. There are forecasts prudently achieve market growth rate in H2 will be broadly consistent with those seen in the first half. The U.S. leadership changes we recently implemented are working, and we are well positioned to deliver improved performance through a more competitive customer-led proposition.

In fact, the encouraging underlying signs we're seeing give us the confidence to increase generosity customers and improve our value proposition. And while this proactive action will result in a reduction in near-term profitability, Investing behind customer momentum is an approach that has consistently served us well. This momentum and the current market dynamics mean now is the right time to move from a focus on margin growth to prioritizing AMPs and growing ARPU. This will position us well to extend our leadership in the U.S. market and capture further share in 2027.

Turning now to prediction markets. We view prediction markets as an attractive opportunity. And while we are closely monitoring their impact on the broader online sports betting market, we continue to see prediction markets as incremental to sports betting and iGaming growing the overall market by capturing new demand. Our own prediction market offering, FanDuel Predicts, allows us to acquire customers ahead of sports betting regulation in new states, while delivering incremental economics in the meantime. And while operational progress in H1 was slower than planned, we are gaining traction and have a clear road map for improvement. The integration of the Crypto.com, exchange to expand our sports offering ahead of the FIFA World Cup has significantly enhanced our product proposition.

And in coordination with CME, we have agreed that all FanDuel predict sports and loyalty contracts will now be moved to Crypto.com, while continuing to provide our customers access to CME's extensive financial markets. This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season start. Our One app offering is also enabling us to leverage FanDuel's nationwide brand equity, driving both accelerated penetration and marketing efficiencies. We believe we are also uniquely positioned to provide liquidity for combination markets across different prediction market platforms with a market-making offering, they can scale rapidly and at low incremental investment.

It is very early days, but we already expect to generate approximately $50 million of revenue from market making this year, demonstrating both the good progress made so far and the potential opportunity. Turning now to international. We've made good progress in the quarter. We strengthened our market-leading position in Italy and leverage the power of the Flutter Edge to drive record engagement during the World Cup. As a result, revenue grew 10%, including the benefit of our Snai and Betnacional acquisitions. AMP growth in the quarter was impacted by the closure of our India business last year. Italy continues to deliver exceptional levels of growth across both Sportsbook and iGaming, and our revenue performance continues to outpace the market as we extend our market leadership. This was despite the short-term impact from the SEU migration, which we successfully completed back in April.

As expected, the migration resulted in a brief period of share loss. The performance recovered strongly in June as customers embrace a significantly expanded product offering without increasing 30% in June and strong parlay penetration during the World Cup. SEA iGaming revenues were up 34%, driven by new and exclusive content in Italy and an expanded product offer in Turkey. The post-migration recovery in Snai and the strength of our first half performance in both Italy and Turkey give us confidence in sustaining this strong growth in the second half. In the UKI, SkyBet customers are adapting well to the new highly rated user interface, driving a sequential improvement in SkyBet performance, while overall iGaming growth in the UKI remains robust at 7%.

The increase in UKI iGaming tax became effective in April. As a leading operator in the market, we are confident in the delivery of our first order cost savings and in our ability to gain share as other operators begin to react to this increase. In Brazil, good operational progress, including the integration of Flutter's products and pricing capabilities into our local platform was offset by more challenging market conditions driven by government social economic measures. This resulted in Flutter Brazil organic revenue declining year-over-year, in line with the market. We will continue to enhance our Sportsbook product offering with further product rollouts enabled by the integration and improve iGaming generosity mechanics in the second half of the year.

Brazil remains an attractive long-term opportunity, and we are focused on building a market-leading platform that scales our customer base and delivered strong returns. Our performance in APAC was broadly in line with expectations, with positive performance in key sports offsetting continued softness in racing. And while excellent execution in CEE saw us gain market share in all of our main markets. And finally, we've also announced today that we've initiated the next phase of Flutter's cost transformation, reshaping our cost base to fund our next stage of growth. Rob will cover this in more detail shortly.

To close, I'm encouraged by the progress we've made in Q2. In the U.S., we're delivering continued sequential improvements in key sportsbook metrics alongside sustained our gaming growth. The new U.S. leadership team is driving a renewed customer-first approach, and our proactive investment will help place us in the best possible position for growth in 2027. Within International, we are executing at pace and Flutter Edge enabled product improvements are driving our momentum in the second half. I'm confident that the choices we're making today from investing in the U.S. to expanding our term with FanDuel Predicts and Market Making, strengthening our international businesses and advancing the next phase of cost transformation will deliver sustainable long-term value for our shareholders.

And with that, I'll hand over to Rob.

Thanks, Peter, and good morning, everyone. Q2 performance was ahead of expectations with revenue growth of 3% and reflecting the benefit of M&A and excellent engagement during the FIFA World Cup across the U.S. and international. This was partly offset by an adverse swing in U.S. sports results year-over-year. The increase in U.K. gaming taxes and planned investments in both prediction markets and World Cup marketing resulted in adjusted EBITDA declining 45%. Net loss of $296 million for the quarter versus a net income of $37 million in Q2 2025 was primarily driven by the reduction in segment profitability and one-off historical tax costs of $95 million.

These were partially offset by an improvement of $81 million and $171 million in other income expense and taxation, respectively. Loss per share and adjusted loss per share declined to $1.57 or $0.49, respectively, reflecting these profitability factors and a noncontrolling interest benefit. Net cash provided by operating activities increased by $4 million with the increased net loss in the quarter, offset by the benefit of an increase in other current liabilities, including the impact of U.K. gaming tax increase historical tax cost provisions and a positive swing in player deposit liabilities.

As a result, free cash flow, including financing CapEx and excluding player funds, reduced by 56% year-over-year. We ended Q2 with a leverage ratio of 4.3x. We expect our second half cash generation will drive a reduction in leverage by the end of 2026. We continue to prioritize organic investment in our core business and strategic initiatives, including emerging opportunities such as prediction markets, while also maintaining a clear focus on deleveraging the balance sheet. We expect to return to our target leverage range of 2 to 2.5x in the medium term, consistent with our stated policy with exact timing dependent on the cadence of our strategic investments.

Moving now to our group-wide cost transformation program. Phase 1 of our program is delivering ahead of expectations we are on track to deliver in excess of the previously guided $300 million of savings by 2027 and $200 million of additional cost savings that were announced as part of our U.K. gaming tax mitigation plans also expected to be delivered in 2027. Building on the significant progress, we have initiated the next phase of Flutter's cost transformation. Phase 2 reflects a broader program to reshape our cost base build a more efficient and resilient cost structure for the long term and protect profitability through removing duplication, delivering technology efficiencies and leveraging AI this cost action will reflect an evolution in how Flutter operates, leveraging our global scale while still maintaining a fundamental local focus on the customer.

We expect Phase 2 to deliver an additional $500 million of gross savings by 2029, providing the headroom to absorb inflationary pressures and known tax headwinds whilst freeing up capacity to invest in revenue-generating initiatives. In the U.S., we believe that this will ensure the business is well positioned for its next stage of growth. In international, we expect that the benefits will underpin our 5% to 10% revenue growth algorithm by both protecting adjusted EBITDA margins in more mature markets and enabling investment in growth areas. These actions are also expected to drive a meaningful improvement in cash generation. Our plans are progressing well, and we will be in a position to share more details of our Q3 results in November.

Moving now to our 2026 outlook. Early Q3 trading was ahead of expectations, reflecting good engagement in the knockout stages of the FIFA World Cup and slightly favorable sports results. Full year guidance is therefore updated to reflect positive impact of Q2 trading in U.S. and international; expected market making revenue and adjusted EBITDA benefit of $50 million. additional operating cost savings of $45 million delivered through our efficiency program in the U.S. The impact of confirmed 1-week delay to the 2026-2027 NFL season start not previously captured in guidance of $75 million revenue and $50 million adjusted EBITDA, investment to strengthen our proposition and accelerate FanDuel's Sportsbook momentum, as Peter outlined earlier and forward FX rates in international.

These movements result in a reduction to our full year group revenue guidance of $395 million to $17.91 billion at the midpoint and a reduction of our adjusted EBITDA guidance of $210 million to $2.655 billion at midpoint. We've also improved our capital expenditure guidance to $815 million to reflect incremental project efficiencies, also resulting in a reduction in depreciation and amortization guidance to $730 million. Additionally, group transaction, restructuring and integration costs will be approximately $500 million, reflecting an increase of approximately $200 million from our previous expectations, primarily due to the initial cost to implement our 2026 cost efficiency programs and tax provisions of $95 million relating to historical India and U.S. sales and use tax exposures.

Additional detail on our guidance is available in today's release.

Before I close, I'd like to acknowledge and thank Peter. His leadership over the past 9 years has been instrumental in building Flutter into the global leader it is today. On a personal note, have greatly valued his support and advice since becoming CFO, and I'm incredibly grateful for his partnership. Having worked closely with Dan over the past 6 years. I'm equally confident we have the right leader for the next phase of Flutter's journey. He knows our business exceptionally well, has played a central role in shaping our strategy is ideally placed to lead the company as we continue to execute our strategy and deliver sustainable long-term shareholder value.

In closing, I'm really encouraged by the momentum we have built through H1, and in particular, during the FIFA World Cup which give me confidence in delivering our second half guidance.

Peter and I are now happy to take your questions.

[Operator Instructions]

All right. It looks like our first question today comes from the line of Ed Young with Morgan Stanley. .

My first question is on the additional $270 million of EBITDA investment you're putting into the U.S. business. Can you give us some color on how we should think about the components of that? Because obviously, on promotions, you've launched a new [ Nortyscheme. ] There were some events noise in Q2, but you're already at 540 basis points of promo spend. So some thoughts on that. And then on marketing, similarly, how should think about the CAC-to-LTV top on the incremental marketing dollars you intend to put to work in the current competitive environment?

And then my second question, Peter, in your written remarks, you mentioned -- I think you reiterated in your verbal rocks as well about long-term thinking the business in your letter, you noted your convinced Dan shares a similar mentality. I guess given your expectations for a mid-single-digit growing market in the U.S. at least for now, how do you the argument that some of your international markets might be as or more deserving of incremental investment than the U.S.? .

Thank Ed, I think what we have to focus on is the sports book improvement plan and the great progress we're seeing on that at the moment in FanDuel. If I think about the growth we saw in handle around the NBA finals were up sort of 40% year-over-year per game, actives up 25% year-over-year 2.3 million customers engaged in the World Cup of which have been reactivated and recent trading, I think we've seen some record weeks from an MLB perspective. So I feel like we've got good momentum in FanDuel, the Sportsbook improve plan is working. The changes have made loyalty, there's a generosity posture from a product perspective, things like BetProtect and fortunately, we brought SuperSub here in on FanDuel around so there's good momentum in the business. And I think what we've always found before is that when we've got great content, great product, we've invested behind it, it's helped build a bigger business for the future.

And that's what we're intending to do. We want to invest behind the momentum we're seeing in the moment. Rob, do you want to pick up on the specifics?

Yes. A couple of points to add. I mean, this is an investment in generosity deliberate investment decision. [indiscernible] made really good progress with the Sportsbook improvement plan in the last quarter. We're really encouraged by the customer response that we're seeing. We're also seeing really good returns on our marketing spend, both on sports and in casino, and that's been boosted by the World Cup, the paybacks that we're seeing at the moment are excellent. This is a proactive decision that we're making around the longer-term U.S. opportunity. We're really seeing an opportunity to lean in at the moment, and it's working well. We intend to continue that in H2 and exit 2026 with the strongest business possible.

On the international versus U.S. investment? .

Well, look, I think we've always been very focused on investing behind organic opportunities across the business. If I look at the progress that we're making in Italy, in Turkey, in Central and Eastern Europe, the sequential improvements we're seeing in the U.K. These are all benefiting from the investments we're making behind the business. And so I think we are focused on delivering the plans driving growth in international and in the U.S. market. And I think as Rob mentioned, we see good returns on the investments we're seeing here in the U.S. and in international, and that's why we're the investing line base.

And our next question comes from the line of Barry Jonas with Truist Securities. .

I wanted to get some maybe additional thoughts on what do you think is driving the softer market-wide trends in the U.S. you commented on prediction market cannibalization, but curious with the increasing popularity of combos if maybe those risks have increased from an OSB cannibalization perspective?

Barry, I think we -- if we look at the success of the NBA Finals and the World Cup where -- with exciting content, we've seen really good engagement from a customer perspective. I just -- I mentioned that the 2.3 million customers, further those were reactivated going into the World Cup. They're seeing active numbers up 26% year-over-year on our NBA finals games. We're seeing very good content from a -- these are big marquee events, and I think it's helping drive engagement from a customer perspective. Clearly, parlays are very popular for us. So we've made a bunch of changes to enable us to drive some improvements from a parlay penetration perspective through things like the World Cup and the NBA, which we delivered on.

I think from the question around cannibalization, we have seen, as we stated before, low single-digit impacts on the business, I look at this as incremental TAM. These are -- there are opportunities for us to go and acquire customers in advance of sportsbook regulation passing in, frankly, the half of America that we can't currently operate in. And then there's the opportunity for us to leverage our pricing and risk management capabilities through market making on a national basis. And both of those things are incremental ton to us we are going to deliver a step change in our position market product as we go into the football season, the launch of the 1 app, which is going to enable customers nationally to access the tremendous user experience that we have currently available in our regulated state is going to be important but we're going to see a really big step change in the sort of catalog that's available to our customers through the integration and movement of all of our sports contracts to Crypto.com.

I think I'd just add as well that you look at the rate of World Cup sort and when you got really good concept, it really kind of reaffirms the demand that there is out there for traditional sports betting products. So in June and July, in the U.S., we had our highest respective active months ever and we're carrying that momentum through now albeit it's a slightly lower point in the sporting calendar from a phasing perspective, but we're seeing really strong volumes through into the MLB season, which is really encouraging. Of course, still early days in Q3. And whilst that momentum is really encouraging, ultimately, performance in the quarter and the second half will be determined by the focal season as we...

Got it. And then just for a follow-up. North Carolina just recently passed the tax increase for OSB to be rate to 22%. While they also effectively added a 6% tax for prediction market. How does that weigh into your thinking strategically about prediction markets given the state effectively is signing off on it here. Just curious if the mix you want to lean in more or less strategically between the 2 offerings?

There's a lot of questions working on from a regulatory perspective around sort of prediction markets. Some of these things, the extent to which they can be rolled out will be resolved by the Supreme Court. I mean, from a state-by-state tax perfective, there's also a lot going on at the moment. I think we've been pleased with our focus on trying to get new states to open. I think that's an important component that we need to recognize as well. And I think we're excited the progress we're going to be able to make around both iGaming and sports betting as well.

Our next question comes from the line of Brandt Montour with Barclays.

So I wanted to start off with the market making and get your sense on how that market feels for you guys going into the second half? I think following the prediction markets, it's been out there that -- these markets are getting efficient pretty quickly. And so I know you guys did $6 million in the 2Q and you've got $50 million for the year. So what are you baking in for the second half? What platforms do you think you'll be most active in -- and what can you tell us about the mix between where you're trading in single leg versus combos as a percentage of mix?

Yes. So let me pick up on that one. I mean we're really excited about the opportunity in market making actually Peter and I were with the team in Jersey City last week, and we're definitely seeing volumes continue to increase across the ecosystem, and that gives us an increased level of confidence in the long-term potential of that market. Our ambition here, as we've stated before, is to establish a leading position in this space by leveraging the pricing and risk management and the trading capabilities that we've gone developed over the years with our sports book and we feel that we've got a real advantage in that place in pricing complex and correlated markets as but the combo volume increases, we're a better place to take advantage of that.

And we see that as a really attractive and high-margin segment for us. Of course, it's still early days. I think the volumes that we're achieving in the second half of the year are encouraging and we think this got potential to become a meaningful revenue stream for us. But you see how we trade through the second half of the year and then we will update forecast into 2027.

Okay. Great. And then a follow-up on NFL. Could you just flesh out a little bit more details about the delayed start. This is a market that you've commonly wanted to invest, obviously, ahead of the start the time when there's the best customer acquisition opportunity. So what sort of the playbook with the delayed start, how will you approach -- how will you have to approach that differently?

The delayed start is really just a technicality Brandt that's sort of around the timing of the [indiscernible] and where [indiscernible] falls and this can move from 1 year to the next. We're not actually changing our investment posture at all the staff, the NFL season is something that we'll lean into. It's really important for us in terms of reengaging customers. What I would say is that during the World Cup, we actually reactivated a bunch more customers than we were anticipating, which is very encouraging for us. We're actually starting in a stronger position. We're also clearly focused on college football at the start of that, which is a key opportunity for us to get behind some sort of customer initiatives as we start the NFL. But from a posture perspective, we're not going to be changing our approach massively.

Having the rewards club live for all customers this year is also going to be really important. So we've already rolled it out to 70% of customers by the start of the NFL that's going to be available for all of our customers. We're seeing really good traction behind that. So with the college foot will start in the week before that's a great opportunity. It's a prime customer, while we hope to see a running start to the NFL season.

Okay. So the NFL schedule delay was not previously got -- was not previously in guidance? is today, but this is an NFL schedule, not a Flutter schedule.

Correct. This is NFL schedule, which was a previously in guidance, and we've updated our guidance for it.

And our next question comes from the line of Jordan Bender with Citizens.

So direct casino [indiscernible] actually looked pretty strong in the quarter. And keeping in mind, you can't grow iGaming revenue 40% forever. Can you just talk about what the sports betting to iGaming cross-sell looks like now? And should we expect the investment into sports in the NFL season to actually help casino growth in the back half of the year? And then, Peter, I guess the second question handle up 31% in July, which was better than your June performance. Just trying to piece together some of your comments around your market growth won't pick up in the back half of the year, but you did say MLP starting to pick up a little bit. I guess, just like what does that imply for your actual underlying business outside of the World Cup in July? .

Okay. Thank you, Jordan. Look, picking up on the gaming we clearly harness the World Cup opportunity to increase football relevant content or soccer relevant content during the World Cup which obviously help drive reactivations and cost activation in the total. You've got to remember that the main focus and push for us from an iGaming perspective is around acquiring those direct-to-casino customers. And the Love Island unlocked launch we had in June, our new brand ambassador [ Automatix ]. We've seen some really good success from that the monopoly live exclusive launch. Yes, so there's been a lot of great content that we've got supporting iGaming.

Clearly, the smaller sports betting business we had coming into the year did impact cross-sell. But it's worth mention we've got a bigger base now. So look, I think we're feeling good about the prospects for the iGaming business. Your question around market growth. We are -- we have seen this strong performance through Q2. We have seen the strong NBA finals. We've been very pleased with the engagement we see around the World Cup. We are pleased with how we started into Q3.

Look, the football season was tough last year. We think a bunch of that was down to the content, which wasn't an engaging for consumers. There's also obviously some execution issue from our perspective around generosity. But we're planning some great campaigns this year. We're hoping for some very compelling matches and content. And I think we'll see what happens. But our forecast assumes some prudent views around market growth in the second half. And I hope we find that the market outperform at good it was the right thing to take the growth we saw in the first half and use that for the second half guidance.

The other point to mention on iGaming is that clearly, the success of our casino business has been built on direct acquisition, which remains very strong. the cross-sell piece, we've been really pleased with draw the World Cup, but the cross-sell actives are actually slightly ahead of our expectations. And if you compare Q4 this year versus Q4 last year, the cross-sell was actually slightly lower than we last year because of some of the execution issues, Pete, Q4, which means we're quite optimistic about how the cross-sell will perform as we moved to Q4 this year as well.

[Operator Instructions]

And our next question comes from the line of Trey Bowers with Wells Fargo.

I guess just if we could -- on a pure modeling sense for the U.S. business, could we get a sense of the breakdown of the EBITDA for the balance of the year for Q3 and Q4 and just how potentially Q4 loaded the outlook is from here.

Yes, maybe pick that 1 up, Trey. So for Q3, we are assuming roughly breakeven EBITDA with $500 million of EBITDA in Q4, which is down from circa $700 million in our previous guidance. So if you roll through the factors that the generosity phasing in terms of the increased investment that we're making, you've got the NFL schedule effects, which is in Q3 only. There's also some state launch costs playing into that, where we've got the continued Arkansas investment this year. We obviously had Missouri launching last year, which was briefly in the guidance. things called out is we've got some operating cost savings coming through as part of the overall plan in the U.S., we've got about $45 million of operating cost savings in the second half. So those are the key moving parts for Q3 and Q4.

Our next question comes from the line of Jed Kelly with Oppenheimer.

Just going back to the investment in generosity -- should we just think of the U.S. sports book given all the sports, the engaging nature that this is just a lower net win margin market versus some of your other international versus some of your other international markets that just might not have the sports steps that we have in the U.S. .

Yes, we've seen some improvements as we come into Q2 around our structural margin. And I think I know there have been some questions around that. I think we would expect to continue to see growth in structural margin. I think we are seeing strong momentum in the business at the moment. I think we're feeling confident that the Sportsbook improvement plan is working. We'll have the loyalty scheme rolled out an entire customer base when we go into the football season. I think we've started making better customer focus and customer first decisions in the business. And I think as we've done in the past, it's time to invest behind that and make sure that as we move into '27 we have a bigger business and a better trajectory for the business.

So a bigger business means we can invest in having better products from a customer perspective. And look, I think we can also make sure that we're sort of growing ARPU as well as AMC. And that's something that's really important for us as we said look to grow and expand the business.

And medium to long term, we see a very clear path to that margin expansion, as we've talked about previously, Tray say. We've consistently dove straighted across all of our international businesses, our ability to grow parlay penetration, also improve the product mix over time, and we think there's meaningful opportunity to do that in the U.S.

And our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

Curious with the transition to Crypto.com, for sports from CME, all your JV will work from a contract volume standpoint through non-CME exchanges. I guess Specifically, I believe it was a 50-50 economic split with CME. How does that work now with other exchanges? .

Ryan, look, we are excited about extending the sports and novelties catalog that will have available for our customers as a result of switching to this new venue for those products, and we will keep our existing financial markets with CME. So look, the economics for the financial markets with CME stay broadly as they were I think there's probably a slight positive for us in moving towards Crypto.com. This is a modest economic benefit. But the really important thing here is the step change we're going to see in the catalog to for customers. And together with the enhanced sportsbook proposition look and feel of the 1 app, I think we're going to have a very selling proposition available for consumers nationwide.

And our next question comes from the line of Clark Lampen, with BTIG.

Peter, I'll echo what some of my peers have said upfront and say thanks and sort of best of luck. I'm glad we're doing this at sort of 9 a.m. now as opposed to 3 or 4 a.m. in the past also. My question is on the U.S. iGaming business. In prior quarters, you guys sort of have a soft target for high teens growth. I'm curious if that was adjusted as part of the U.S. outlook. And maybe a sort of second component of this is if we're thinking about revenue margins and cost reduction opportunities for the U.S. business, how would you think about slots versus [ cable ] being mix opportunities for improving revenue margins and then first-party content moving forward.

Yes. Let me pick up the iGaming question. So we've always said in our guidance that we expect the iGaming business to grow at high teens for the year. And we expect that to be slightly lower in H1 than H2, given the base of the Sportsbook numbers coming into the year. As Peter said earlier, we're really pleased with the momentum that we've got in the iGaming business in the World Cup. The cross-sell actives were higher than we'd anticipated. I think from a content perspective, we -- we're actually going through the plan with the team last week, but we've got exclusive content launches every month from now until the end of the year, and there's some popular franchise stuff in there and some repeats of some of the franchise ties that were really well for us in the past like half and put on the [indiscernible] side so say -- we're really pleased with where iGaming is and we've reiterated our guidance in the second half of the year. And as I said, with the cross-sell piece earlier as well in Q4, we're anticipating a slightly that's a cross-sell performance in Q4 than with last year. .

And look, we can see that, Clarke. And as you say, the difference between the table games and slots, we can see a very clear distinction there the direct casino so that stops growing very strongly and look, as we said a few times on the call, we then coming into the year with the smallest for space impacted table games. But look, I think as we've gone through the World Cup, seeing that big step-up in performance, the NBA Finals all the plans we've got for the football season, they will be excited to see what we can do in the second half.

And our next question comes from the line of Joe Stauff with Susquehanna. .

I just wanted to clarify a few things on your prediction market strategy at this point. You answered a couple. But do you expect to own your own exchange at some point? Can you give us any 2Q volume or user metrics? And the new 1 app that you're going to launch before the new sports season, will that include a traveling wallet .

Thank you, Joe. Yes, there are -- this is a very fast-moving space. I mean there's been news in the last few days around some of the complexities of market making, if you own some of the exchange component. So we're just going to be thoughtful that we position ourselves as well as we can. And I think we're happy with the strategy that we have. As I said, the One App is going to deliver a real step change in performance from a customer perspective. And in terms of the traveling app, if you have opened the contract up when you were in California and you're here in New York, you will be able to close that contract down. That is something that will be available. So if that's what you mean by -- yes, we will have it available for customers.

Do you want to talk about the volumes?

Yes, the volumes are significantly up on quite a small base. So we're making really good progress as the predict numbers are consolidated within our reported financial results. But we are not separately disclosing the volumes at this point. So I think the catalyst for higher volumes, we anticipate will be the launch of the One App data with the team couple of weeks ago, it looks really slick. I think we're quite excited about the impact that, that will happen. It will be relatively seamless if you're a traveling from New York to California. But while it's a separate, it's very easy to switch between. So I think the product experience is going to be significantly enhanced from where it was. And the key for us is that we're going to have much more liquidity than we previously have there. It's going to be a much fuller catalog. I think that's going to be a real benefit to us as we go into the new football and basket [indiscernible].

And our next question comes from the line of Dan Politzer with JPMorgan.

Just a clarification on the prediction market and how you think about the guidance there. I think your guys now reflects $50 million of incremental EBITDA from market making. And if I recall, your guidance for the full year, it was $200 million to $300 million of expected investments. So I guess, given that you have this incremental piece, where does that kind of put you in terms of the total investment you expect here for this year?

Yes, you're right on the market making, Dan, as I said earlier, we're quite excited about that opportunity, and that's definitely increased quite a bit from where we were previously. With regards to the investment on Predicts what we've done as a business in the last couple of quarters is really integrate Predicts with the Sportsbook proposition. So we're no longer breaking out the investment separately. If you think about the cadence over the course of this year, our focus, as we said at Q1, was leaning more into making sure that we've got the right product experience, which we really feel like we're doing with the 1 up and some of the changes that we've made with Crypto.com being plugged in.

From a cost perspective, then this gives us this synergistic benefit that we've been looking for across the Sportsbook and Predicts where we feel that we could really get national scale and leverage on our marketing spend, which is very helpful for us. In terms of the economics of how that then brings back over time. That remains relatively consistent, we think, with how we've previously described them. We need to see how the new product lands in the second half of the year and the traction that we get on 1 before we determine what the investment profile will be into the next year. But certainly, the synergistic benefits that we will get from having a broader Sportsbook proposition, we think will stand us in very good stead.

And our next question comes from the line of Monique Pollard with Citi. .

It was just if I could come back to the investment that you're putting in, in the second half to accelerate FanDuel sportsbook momentum. So if I understood correctly, Rob, that investment is all centered around generosity. So I think that's an additional sort of 1.4% of last year's 2H handle that you're putting into promos and promos last year in the second half were already 5.6% of handles. So I guess we're going to go I'm just trying to make sure I understand this correctly, we're going to go to like 7% promos as a proportion of handle in the second half. So sort of what kind of customer paybacks, et cetera, are you expecting on that? And is that -- do you see that as a sort of one-off in the second half? Or might that continue as we go into the first half '27?

Yes. So let me start on the numbers, but we won't be at 7% of an incentive generosity in the second half of the year. We are increasing in terms of our overall position. So it will be closer to 6%, that's an increase from where we were last year. We previously anticipated that the profile would be slightly more as we got traction around the rewards club, et cetera. But as we've said, this is a deliberate investment decision based on sportsbook momentum that we're we've currently got is business. A lot of that has been generated by this approach that we've taken in Q2, where we've been leaning in a bit more we could have delivered higher EBITDA this year by investing less, but we don't think that's the right thing to maximize the long-term shareholder value.

We're seeing great opportunity to invest behind the customer proposition, and that's coming through in current even if you look at the last couple of weeks trading across -- last week, we had our record week ever in MLB. We've got a huge number of reactivated customers on the platform. We're really happy with the apps that we've got the ecosystem as we head towards NFL. So the investment is is a proactive one. If it's slightly ahead of where we were last year in terms of customer generosity as a percentage of Handle. And we will review the spending as we always do as we go into next year. We're constantly looking at paybacks and the ROI that we're getting. But if you look at the those returns that we're getting at the moment, they are looking very attractive and we'll continue to lead in .

The 1 thing I'd just add is we know we didn't execute on our generosity strategy as well as we could have done last year. And I think we're in a much better place now. I think with this investment, with the better execution with the loyalty plan we are seeing improvements around our ability to drive and grow ARPU and that has an important focus for us alongside of the growth as well. .

That's very clear.

And our next question comes from the line of Charlie [indiscernible] with BNP Paribas.

Firstly, just with respect to the incremental cost savings program, you've obviously updated the restructuring cost charges you anticipate to incur in 2026 but is it fair to assume that there will be ongoing cash restructuring charges through '27 and perhaps '28 to deliver that 2029 saving. And to think more broadly to that has the Board given Mr. Payer kind of a wider remit to review the corporate structure and strategy of the business? Or should we see this as the evolution of the strategy from here and no likely further major changes to come to?

Sorry. Let me start with the cost investment and how we think about then maybe Peter can pick up on the second part of your question. So a couple of things to mention. Firstly, from our initial cost transformation program that we launched in 2024, it's important to note that we're actually tracking ahead of that. So we've delivered all of the key component parts largely in terms of the activities. We've got the new UKI operating model in place. The SkyBet migration is complete, the PokerStars transformation is going very well, and it's at its final stages and the Snai migration went very well earlier this year. So really pleased with that.

With regards to the incremental $500 million that we're talking about today, this really builds on that progress that we've made and reflects the next phase of how we intend to operate. This is about simplifying the organization, it's about leveraging our global scale or it's about accelerating the use of technology and AI and continuing to remove duplication across the group. If you look at our SDI guidance for this year, we've got $100 million of cost matched against this which is in conjunction with the U.S. and the start of this program more broadly across the group. Of course, there will be some additional one-off costs into '27 and '28 typically, when we look at big restructuring programs, you look at $1 of cost for $1 of run rate savings, we actually think it will be lower on this because of the nature of the savings and the fact that a lot of them will be tech and AI driven. So we think the cost will be lower. But yes, there will be some incremental costs into '27, '28.

And Charlie, in terms of your question around Dan and strategy, look, Dan has been very involved in all of the strategy work that we've done as a group over the years and execution of the plants of the business is clearly very supportive of all the stuff that we're announcing today as well. So I think you'd expect to see a continuation of the strategy and the execution against -- picks up the range from the first of October.

And our next question comes from the line of Ian Moore with Bernstein.

I guess just harping on kind of what Monique was asking about earlier. I guess the incremental investment that you're putting into the generosity in the second half, obviously, given, I guess, Dan mentioned this a little bit earlier, but given the kind of missteps with managing generosity last NFL season. As you look into this NFL season with this incremental investment, what would success kind of look like 12 months out as your reengaging customers going into the next NFL season or said differently, like what specific is different about the setup into this NFL season versus last year? .

Thanks, Ian. Look, I think you've answered the question to [indiscernible] and yourself, right? So we -- the missteps last year, we didn't apply an approach this generality strategy as well as we should have done, particularly in a very high-margin sort of environment. We weren't there -- system for our customers. That is something we are addressing to the loyalty program, and I'm excited about the traction we're getting from that, the improvements in average player days, which, of course, translates into ARPU and what customers are telling us about their perception of our genesis as a consequence.

We are investing more as we go into the second half. I think it's the right thing to do to take advantage of the momentum we have in the business. The catch for us will be as we come into 2027, do we have a bigger business with a better trajectory than we had anticipated. And that's planning for. And we know that if we got better momentum, higher revenues in the business, it enables us to invest more behind delivering great product experiences for customers, and we'll be able to really take advantage of

the loyalty program and other features and offerings for them.

Our next question comes from the line of Chad Beynon with Macquarie Group.

And Peter, thanks for everything up to this point. Just with respect to U.S. iGaming and sports betting regulation. I know the main iGaming law, I think, just took effect for 2027. launch partnerships with the tribes is the way that, that was written. How are you looking -- I know it's early and a lot of this will come in the beginning of '27. But how are you looking at prospects for gaming or sports betting legalization in '27? .

Chad, when we talked at the Capital Markets Day, we said we would hope to have 1 new iGaming state by by the end of '27. And look, I think we're optimistic. I think Virginia has probably got furthest of any of our target states I think there's some interesting opportunities around D.C. But there's a bunch of them where we're hoping to build traction, whether it's Ohio or other places we can mention. So look, we think it's going to happen. And this is a little pent-up demand for us to be able to deliver the income and obviously experience to customers in those states.

And our next question comes from the line of Paul Ruddy with Davy.

Peter and Rob. A quick question on international, if that's okay. Just firstly, on the UKI just how has the market progressed since the introduction of the iGaming tax. Have you seen any evidence of kind of change in competitor behavior and general thoughts on mitigation? And maybe just secondly then on Brazil, just Brazil still seems to be rather bumpy thoughts on continuing to invest there and when that market might start to improve for you?

Thank you, Paul. I think the important point that we flag as the sequential improvement we're seeing in Sky gaming. I think customers have adapted to the new interface post migration. And we've had a very strong World Cup for all of our brands in the UKI. Look, I think we're we've obviously guided to our first order mitigants in the market. And I think we're adapting our approach around that probably taking a little bit more focus on head count savings rather than marketing because we want to maintain our posture in the market. We do think we're beginning to see some of our competitors pulling back as we anticipated. And so looking -- I think the second or the mitigants are going to be significant and will be well positioned to capitalize on this.

Yes. In Brazil, Paul, is really excited about our potential in this market there's a number of improvements that we implemented across the first half of the year. We've got our products and pricing capabilities now, including that builder in Brazil and the uptake on that has been very strong. We've improved the iGaming proposition and improve the generosity metrics around that. So we're feeling quite confident about our products and how we set up into '27. There is quite a moving piece with regards to the regulatory backdrop in Brazil, and that's some will stifling the overall market growth, but within the context of that market, I think we're happy with our performance, and we're still encouraged about the medium- to long-term opportunity there. .

And our next question comes from the line of John DeCree with CBRE.

And Peter, I'll pile on. Congratulations. You've got quite a career at Flutter. Maybe kind of looking ahead, this is probably a prediction markets TAM question. But when you kind of look at the comparable the Betfair Exchange in the U.K. and the U.S. and in states where predictions and sports coexist under a less vague regulatory environment. Do you see anything in the U.S. or U.S. consumer where predictions could be a much bigger piece of the overall sports pool than you see in the U.K.?

Well, John, if we look at the U.K. or other markets like Italy or Brazil where the Betfair Exchange coexists with other sports books we find that the exchange has a pretty small market share. And that's primarily because of the inability to offer generosity through an exchange platform for the person that needs to provide the generosities effectively the market maker, and they can't be confident I'll get the next back from a customer, if they've offered them some generosity back. I don't see that structure being any significantly different here in America.

So I think the extent to which you have put Exco existing with regulated OSB, I'd expect to see the regulated OSB continue to take the vast majority of the business. Clearly, there are some niche areas, shops and stuff like that, where they will be more likely to take their volumes to the Predicts type platforms -- but as we know, they're not things which the traditional bookmakers can make money from any work.

And ladies and gentlemen, we are running along. So we will conclude the Q&A session today. I would now like to turn the call back over to Peter Jackson for closing comments. Peter?

Okay. Thank you very much, Greg. And look, I'm sorry, we've overrun you just thought that having done this 35 times, we would have got the hang of it by now. So with apologies to those of you who didn't get to the IR team are around here to take any of your questions. Thank you very much, everybody, and I appreciate your support.

Thanks, Peter. And ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.

Welcome, and thank you for standing by. I would like to inform all participants that this conference call as well as any Q&A may be recorded and made available to clients of JPMorgan where a company is presenting, any recording may also be posted on their website. Views and opinions expressed by any external speakers on this call are those of the speakers and not of JPMorgan. Parts of this conference call may also be reproduced in JPMorgan Research.

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I would now like to turn the call over to your host.

Good morning, everyone. I'm Dan Politzer, JPMorgan gaming and lodging analyst in the U.S. I'm joined today with Estelle Weingrod, the European gaming and lodging analyst and leisure analyst here at JPMorgan as well as we're thrilled to have the CEO and CFO of Flutter Entertainment, that's Peter Jackson and Rob Coldrake here today to join us. I think that we can kind of get it started kind of high level. I'll focus on the U.S. and then Estelle will run through some of the international questions.

But I guess, Peter and Rob, whoever wants to take it, if we just kind of start high level. In the past 6 months at FanDuel, can you kind of walk us through what in your view has gone right, what has gone wrong? And can you talk through the changes in your approach or execution, whether it comes to any new products or the manner in which that you're promoting?

Yes. Good morning, Dan and Estelle, and everyone who is on the call. Thank you so much for having us. I'm not going to go through all of the history of Q4 for FanDuel, but we know that we didn't operate as effectively as we should have done. And so we exited 2025 with a smaller business than we would have planned to have. The issues, particularly around generosity were a problem. So we saw very high margins in Q4, which, to some extent, supports our view of where our gross margins can get to, but we didn't execute well on generosity. So we ended up starting this year with a smaller customer base than anticipated. So those challenges are well known, and we've talked about them.

I think we have been -- subsequent to that -- this year, we've been focused on 3 things which we're doing to face into. The first thing that we've done is we've made some changes to the organizational structure. We announced new leadership of FanDuel last week, but we've also got revised structure underneath that within the commercial functions. So we have Carol leading the sportsbook with all of the capabilities he needs. So there's a bunch of other organizational changes that we've made, which I think really will sharpen our focus on execution and delivery, which ultimately has been one of our challenges. But then what have we done, what are we doing about it to get ourselves on the front foot -- because I do feel like we're getting a little bit more onto the front foot, I think the first thing is that we talked about the success we've had in loyalty of our gaming business, and that's something we've now bought into sports relatedly, but we've now brought it into sports.

So we rolled it out in April. So obviously, we're effectively a month in first cycle through for a small cohort of customers. I think the reason we're feeling good about it is we've got customers beating the door wanting to be included in the loyalty program. So it feels like we've really identified something that we need to address. By the time we get to the start of the football season, that will be fully rolled out across all of our base. And I think it will give us a really good mechanism for being on the right side of the discussions we have with our customers around generosity, particularly when margins are moving around. The second thing that we did last year was we watched a number of people come into the market with products around protecting players when they're protecting customers from players that injured. And we had an okay offering, but we've come out with Bet Protect+, which we think is the market-leading product now, charging customers a small fee for that sort of insurance. And we've seen a much bigger uptake for that product than we thought.

I think the final thing that the team are doing is we just got a much better focus on our trading and sort of the cadence of getting stuff out into customers' hands. We're thinking about taking a much more customer-centric sort back to basics approach for customers -- and look, when we got injured, we're out there refunding customers. We had -- I mentioned on the call last week, we had a bit of fun when the met when they're losing streak. So we're tapping into the sort of being a bit cheeky into where the conversations flow from a customer perspective. I think that's really important. And we're seeing sequential improvements in our KPIs, which I think is giving us conviction that we're focusing on the right thing. I think -- I would answer your question about what's gone right with gaming. I think we're very pleased with our performance in gaming, obviously seeing strong growth in the first quarter, and that was despite having a smaller sports base to cross-sell into.

So our performance actually amongst direct casino customers, I think was up around 24% year-over-year. That part of the business is performing really well. I think we've got really good traction in that. And of course, the other thing that we should also recognize is the progress we're making on prediction markets as well, but I'm sure we'll end up spending more time talking about that.

So I guess if we're sitting here having the same conversation in 6 months, what are some of those KPIs or metrics or things that you want to see the team having achieved with Christian and Dan now in the leadership seat?

I'd like to see us continue this focus on some execution, right? So in 6 months' time, we'll have fully rolled out the loyalty program. I think we'll see the injury stuff [indiscernible] and I think we'll be much more on the front foot from a trading perspective. So this customer-centric approach, I think, will be something that we will really lean heavily to. And I think we'll see the benefits of that in our KPIs. Of course, we also -- I'm sure we'll continue if we're looking 6 months into the future. I think we've got to keep the momentum going in iGaming as well. And I think we're [indiscernible] quite an interesting point on prediction markets. When I think about the opportunities we have to go after supporting the FanDuel customers wherever they are in America with a great sports experience on the cusp of delivering that. And we're making money in market making already. So that's -- we're probably one of the few people who's making any money in our prediction markets at the moment.

Makes sense. And then I mean, I think this is probably one of the most prolific topics, but maybe not your favorite is the handle discussion, right? So industry handle in the U.S., it's obviously decelerated. What do you attribute the slowdown to recognizing prediction market cannibalization, it does seem to be generally understood to be fairly modest. And you've also talked about handle trends improving from down 10% in January to growth in March -- ex March Madness. So I guess, can you give us a sense on what's been happening overall with handle? And maybe any sense on April or May to date trends and how you envision kind of the trajectory over the rest of the year for handle?

Yes. Why don't I answer the first part of that and then Rob can talk a little bit about recent trends and how we're thinking about the full year. And I think it is important to recognize that when you're looking at handle performance year-over-year, you've got to acknowledge that big swings in margin have a big impact on what you see in handle. And it's been a particularly noisy 2 quarters for the industry when you think about Q4 and Q1. We saw in Q4 '25, we saw particularly strong gross win margins in NFL, which contrasted with low for the prior 2 years, right? So consumers suddenly saw a big flip in how they were feeling about their waging from NFL. And if margins went -- if margins move from 10% to 20%, half the amount of handle you generate. So this is really material in terms of the impact it has on hand generated.

And then again, this year, we actually made good margin in March Madness. And last year, we made on $1 billion of handle, we made nothing less than $10 million. So to try and get too forensic about what's happening month-to-month is tricky because there's a lot of noise. I think we saw the market delivering good growth last year. I think there are questions around whether it has slowed down [indiscernible] going into the back end of the year. I think it's hard to read it. I think we'll know more as we get into the back part of this year. But Rob, do you want to...

Yes. So I think as we've said consistently that we tend to think about handle as one component of revenue, but we're looking at broader stuff KPIs as Peter alluded to, it's fair to say that at the start of the year, we had some softness in the top line coming out of Q4 and some of our execution there. As we move towards the end of Q1, we certainly saw some improvement in March. So we saw ramps coming back on to the platform and some positive year-on-year movement in terms of apps, which we retained into the NBA playoffs, which is encouraging. We also see some improvement in handle over that period. We're getting some real good engagement behind NBA, which is clearly one of our key sports, actually our top revenue spot when you look at calendar year-end.

So we're feeling reasonably sanguine about some of that underlying improvement we're seeing in the end of Q1 and into Q2. When we think about that through the rest of the year, as I mentioned on the call last week, we've baked in a graduated improvement through the year. It's not heroic assumptions. It's a gradual improvement. And we've got a number of product and generosity initiatives landing over that period. So by the time we exit Q4 this year, we're looking at a modest handle improvement year-over-year, which we think is very achievable given the product and generosity improvements we've got in the pipeline.

Got it. That's helpful. And then if I think back to 2024 in your Analyst Day, one of the things that really stuck out to me was this kind of formulaic 16% structural margin, 4% promotions equals 12% net win margin, right? That was, I think, kind of the goal to where you get to. And I think that in Australia, the kind of formula there is 18% structural win like 6% promotions gets you back to -- I don't know if it's a magical number of 12%, but for whatever reason, it's 12% too.

I guess as we sit here today, and the way -- I think in the first quarter, your structural hold was down a little bit just because the sports mix, like what is kind of the path to getting longer term to that 16%, minus 4% equal 12? Is it a different formula that gets you to 12%? But I guess how do you get there? How do you think about that kind of formulaic dynamic in terms of promotions and overall win margin?

Yes. There's probably a few key parts to this that we should touch. I mean one, as we've seen and experienced throughout the world is parlay penetration, and we're expecting that to continue to improve this year. We don't think we're ceiling yet in the U.S. So we think there's definitely some room to go in terms of parlay penetration. There's obviously been some sports mix dynamic in terms of results and that's kind of carried into the first half of this year, but we expect that to be more temporary and transient in nature. I mean, for us, getting the right balance between structural hold and net revenues is kind of the key barometer that we look at and obviously, a key part of that our promotions. If we look back at last year, it's very evident with the benefit of hindsight that we were slightly inefficient in our generosity approach and laid out generosity last year. So actually, as we come into the second half of this year, we'll be comping that and be slightly easier comps for us as we get more efficient with that later.

Add to that, the new loyalty scheme, which we've launched, it seems to be getting good traction initially, it will be in full flow by the time we get to the NFL and the fact that we are trialing our model-driven generosity that's been delivered in sports bet. We've got a team from Sportsbet over working with our FanDuel team to make our generosity deployment more efficient, so we get more bang for our buck in the U.S. That all gives us a high level of confidence that we can hit that 16%, 4%, 12%. And whether it's 16%, 4%, 12%, or 16.5%, 4.5%, 12% or it's 17%, 4%, 13%, we're very confident that's going to grow from where it is today. I think from a handle perspective as well, we're confident, as I said in my answer to the earlier question that we're going to see some sequential growth as we move through the year given some of these initiatives that we're going into these trends.

So even in a world where you have those net win margins of 12%, handle should theoretically still be growing at some level. Is that a fair assumption or -- conclusion from that?

Yes. We don't think we've reached anywhere near the maturity of penetration in the U.S. market, which absolutely gives us confidence that there's still headroom to grow on the top line.

Dan, we've seen similar situations in penetration rates in markets like the U.K. where the penetration rates have slowed down a little bit and then actually driven back up again when people develop better engagement into basis for more recreational customers and things like that. So I'm sure we'll see similar things happen in the U.S.

This is more near term, but I think it will just be helpful for all the listeners. Just the second quarter EBITDA guidance, I think through people, the implied guide is about $104 million of EBITDA at the midpoint. Is there any way to just walk us through the moving pieces? If we start at the second quarter of 2025, I think your EBITDA was around $400 million. Can you maybe bridge us to where the $300 million year-over-year decline kind of gets -- comes from?

Yes, sure. So the first point I'd mention here is that nothing has materially changed from our perspective. We always assume that Q2 this year would be a little bit lighter from an EBITDA perspective than Q2 '25. So there's a few things to bear mind. Firstly, sports results. So last year, we had about $90 million of positive sports results in the numbers. That's $90 million revenue, $70 million EBITDA. We've got the Arkansas launch this year, so we're factoring at about $20 million of investment in Arkansas. We're also factoring in investment in prediction markets. So roughly, we've got tacked about $60 million to $70 million for production markets in Q2.

As we mentioned on the call last week, we've now got PokerStars North America in the U.S. numbers, and that loss is slightly skewed towards Q2. So that's in there as well. And then you've got some smaller factors such as the annualization of some of the tax increases that we saw last year. When you roll all of those up, they form the majority of the bridge year-on-year. And then you've got a bit of a mix impact where we've got more iGaming growth coming through this year relative to sports, that has a bit of a change in the mix.

And then probably the last point to mention is the World Cup, because I think there's a bit of a misconception sometimes that the World Cup is a huge profit-making machine for us. We view it more as a customer acquisition event. We're very excited about it, but we think we're going to get great engagement from our customers and we think we're going to get new customers as well around the World Cup. But that doesn't tend to drive incremental EBITDA, and we've put a fair amount of investment behind it from a marketing perspective as well, some of which will be in Q2. So they're the main bridging elements. But as I say, nothing has really changed with regards to how we're thinking about Q2. That's not a recent change.

Did the second quarter embed much organic growth in there?

So the second quarter has got organic growth in iGaming. From a sportsbook perspective, we're still modestly behind last year from an underlying perspective. And then I say you've got those other factors that I mentioned on top.

Got it. No, I appreciate the clarity there. And then a lot of your call last week had talked about sequential improvements. It does sound even this morning, like the worst is in the rearview for online sports betting. Recent data points have certainly been a little bit more positive. Can you maybe give some of those monthly KPIs that give you confidence in that kind of full year guide and how the team is executing. It's just one of those things -- this is the last question, I promise, on at least this year's guidance. If we just kind of think about the first half of the year, I think revenue growth -- revenue is declining about 8%, trying to adjust for hold. The second half implies somewhere in the mid-teens revenue growth. And it's just kind of a big difference. So I mean, is this just those -- that sequential improvement kind of -- those sequential improvements gaining momentum? Or is there something else embedded in there with the comparisons?

Yes. So there's a couple of factors to bear in mind. One factor you didn't mention there is actually sports results year-on-year. So when you look at 2025 as a whole versus our expected margin, we were at $200 million plus underwater from our expected margin based on sports results. A lot of that was in Q3 and the start of Q4. So that will actually naturally come back this year if we're on or around our expected margin. When you look at top level handle improvement year-on-year, the phrase that we're using in terms of our assumptions are they're not heroic. So actually, we started off the year with slight downgrade year-on-year in terms of revenue from -- and that was the overhang from Q4, as I mentioned.

In Q2, we still think from a sportsbook perspective, that is going to be slightly negative year-on-year. As we get into Q3, we expect it to be more neutral and that's then into modest improvement in Q4. If you zoom right back out and think about our assumptions from a net revenue perspective, iGaming is in the mid- to high teens, which we're hitting that run rate, and we're feeling very confident about our direct acquisition strategy continues to work really well for us. And from a sportsbook net revenue perspective, including the luck element that I talked about before, we're at high single digits or just into double digits if you exclude the luck. So all of it feels very achievable. And that's also underpinned by some of the generosity efficiency that I talked about where we were slightly inefficient last year, and we've got a bunch of efficiency measures coming into play on our generosity playbook this year.

And then the last thing I'd also mention is OpEx. So we're really laser focused at the moment in terms of cost discipline. We will be driving more leverage as we go through the year. We've also been looking very closely again at our cost of sales, and there's a number of initiatives around cost of sales, which will take off as we move into the second half of the year, and we'll be lapping slightly easier comps. So we're feeling pretty sanguine about the guidance. As we've said continuously, we think it's a sensible measured guidance for the full year.

Got it. And then I recognize this is not performed for '27 guidance changes, and I'm not going to ask what that might look like. But I guess if we just think about the moving pieces from when you talked about how you envision '27 versus where you are today, a lot has changed on the tax front. So -- and certainly, even in the fundamental picture. So I think it would be helpful if you can kind of walk us through what's been tracking better maybe than what you had originally forecast as you were thinking about '27, what's been -- and where there's maybe room for improvement? And what are the other big kind of moving pieces that just you couldn't necessarily forecast like taxes and maybe a few other things?

Yes. I mean as you say, Dan, we need to trade out this year to see where we are from a timing and a phasing perspective. If I reflect back on that the foundational blocks that we laid out at the Capital Markets Day, I mean, firstly, you've got the structural revenue margin, where we said by '27 we'd be 15% target, longer term 16%, that we talked about earlier. We're very confident about that. We continue to see improvement in our structural revenue margin. We've got that playbook from the rest of the world, and we're very confident in terms of our delivery in the U.S. From a map expansion perspective, we said 2% a year on the sportsbook. We've been hitting our straps on that. I think the -- it's quite interesting with the emergence of the prediction market. I think if anything, they should have a net favorable impact in terms of the cadence of new sportsbook states over time.

From a map expansion iGaming perspective, we said one new state in the next 3 years. I think there's some good pressure building around that and the monies that we're investing behind the super pack are laying some good green shoots for us. And I think in time, we'll have some progress on that front. The performance of our iGaming business has been stellar, and that's actually ahead of our expectations, and we continue to see headroom there. And from an operating leverage perspective, I think trust us on our track record there. We've delivered good operating leverage around the world. And as Peter mentioned earlier, we've got some plans that already we're putting into play in the U.S. this year, and we'll continue to get that operating leverage over time. We've demonstrated on -- through the P&L, things like sales and marketing, we will get that over time.

So I think to summarize, we're probably slightly behind where we thought we'd be from an overall sportsbook perspective, and that's moved to right. But I think judge us at the end of the year, as we've traded out this year, we'll be able to give a bit more color in terms of where we are on timing.

That's fair. iGaming, that's been obviously a big bright spot for the company. Your market share is up. You've been gaining A&Ps. And it's an interesting dynamic as we look at it because you've been gaining a lot of momentum. One of your other competitors has been gaining momentum, and then there's another 2 that have been losing a little bit. Can you maybe talk about what you're seeing across the competitive environment? Is it a product differentiation that's driving this dynamic? And I guess, how do you think about overall industry growth in the coming years, acknowledging, Peter, your comments on the call that you can't just underwrite 30% growth in perpetuity?

I do think it is important to think about iGaming and compare it with sports. There are some fundamental differences. I mean in sports, you're subject to someone else's calendar, right? There's a World Cup for soccer this year and the football season starts on a certain day and you may get this many games in the NBA playoffs, et cetera. And in gaming, you make your own calendar. And you have your own opportunity to drive that, particularly amongst the direct casino customers. And that's been a real area of focus for us. I think the team has done a great job of executing around delivering exclusive content. I think the loyalty program is working really well for us, and we just got to the sort of second year anniversary of that. And just getting all the basics right from a customer perspective. And I think in a very, very competitive environment, and it has been very competitive. I think the team have performed very well.

It makes me feel old because I remember when we first launched our original casino operation in New Jersey back in sort of 2013. But we're still growing. You look at the growth rate in New Jersey and it's because the penetration rate has still got a long way to go, sort of -- there's still another 50% head on penetration rate.

So I think growth isn't going to be at the sort of 38% we delivered last year. And I think we -- as I said, we can't [indiscernible] that forever, right? But we are not expecting high teens growth this year. Q1 would have been higher were it not for the fact that we came in with a smaller sports base, which has impacted our sports cost. So look, if I -- if I look at our international business and maybe here's a plug for what we're doing in our international business, a lot of very mature so-called mature markets there. We still grew gaming 15% in Q1.

So I think iGaming is exciting. I think there's lots of structural tailwinds. It's the one area where U.S. consumers spend time going to physical casinos, and this is the sort of natural conversion from land-based to online. And we're super excited about new states coming on stream. One of my favorite stats is when the day comes and we get iGaming in New York, it's a bigger opportunity than sports betting in California.

Interesting. Yes, I guess that makes sense. We'll see. As a native New Yorker, I'm skeptical on the time line. All right.

Let's move to prediction markets. We want to make sure, obviously, we cover that. There's a lot of ground there. I mean, look, it sounds like market making has become a very quickly and quickly profitable emerging kind of area that you're talking a lot more about as well as your peers. But as you think about overall the prediction market ecosystem, where do you see the greatest opportunity just given your skill set, given the background and kind of the competitive advantage that you bring to the table?

I think it's important when we look and talk about this just to make sure we're all sort of in the same place from a sort of language perspective because when we talk about market making, we're actually on principal risk. So it's actually no different really to a lot of the [ foot-making ] activity we'd undertake for a regulated RSV, where, again, we're taking principal risk.

And we can leverage a lot of our pricing accuracy capabilities in both areas. So there's a natural opportunity that the businesses that are best placed like we are and have the highest gross margins ought to be very good in the market-making opportunity position. And that's why we're leaning in heavily into it, where we can particularly leverage our capabilities around parlays to get into the combo space. And that is an area where we have a lot of expertise.

And of course, as you were saying, Dan, we're making money there already. There's no complexity around sort of managing sort of lifetime value of customers. We can switch it on, we can price and we can immediately make money. And so there's a lot of opportunity there for us, which I think is exciting, and there's very, very little of that in our guide for the year ahead.

I think when you then look at what are we doing with the core to [indiscernible] customer acquisition flow, what's the point in that? Well, now that we've got our unified app in place, right? So if you open your FanDuel Sportsbook app when you travel to Florida or California that you're using in Manhattan today then, you'll find that the [indiscernible] product launches in there now, right? So we've got that unified experience for customers.

We will soon have an sort of integrated experience. So our [indiscernible] product will look very similar to what we do from a sports standpoint, albeit the catalog will not be as extensive. So we want to make sure that we are there for our customers wherever they go in America and focused on delivering great sports experiences for FanDuel customers. And so it's principally around customer acquisition, and that's how we're thinking about it.

And ideally, we'll be acquiring lots of customers in states where we'll be able to ultimately launch regulated OSB, which is what our true north still is for this business.

Is there a scenario where at some point, you're going to be disclosing some of the prediction market volumes or trading activity or any of those metrics explicitly?

We need to think about what we're going to do from a disclosure perspective. And I think at some point, it's going to be helpful for people to understand how to translate between the different volume metrics because, of course, $1 million of handle in a sort of OSB, an odds of 8:1 translates into sort of $8 million of volume in prediction market.

So it's not all apples-to-apples with some of the comparisons that people see. But look, we're thoughtful about what are the right metrics that we can have to talk about what we're seeing in our business in the different parts of it.

Is there any way to think about that opportunity over time for market making? Obviously, it's early days, but we -- publicly, we only see big volume numbers coming out of the prediction market operator. So it seems like a ripe opportunity. And obviously, it's profitable. So it seems like a bright spot. I don't know if there's any way kind of longer term to think about it or frame that opportunity.

I am excited about it. I think for us, the opportunity is in the combo space. And I think that you'll have seen from some of the public commentary from [ Tarek ] around what county would do and what proportion of their business is combos. And you can work out what would be a reasonable share of that for us to take and what would the margin be?

You can get to some big numbers, right? And so to some extent, the VCs are putting money into customers' pockets and then we can take that through the combos, we'll have it.

Right. That makes sense. It will be interesting to see how it plays out. For the direct FCM license, how do you view the strategic optionality of having that? And is this something you would do alongside the CME partnership? Or is it kind of an independent endeavor?

We need to make sure that we have the right flexibility in our operating model to adapt to this environment, which is moving very quickly. I mean it wasn't -- we weren't talking as excitedly about market making such a long time ago. We're now live in the market.

I think the strategy for having a unified app is the right one, but that wasn't always clear there and we put in place. So we'll adapt to make sure that we can win for our -- win in this space. We're working with the CME to ensure that we're aligned on what's required by part to be a success. CME obviously gives us access to the leading financial market products and capabilities. We -- as part of our relationship and agreement with them, we can use other venues for sports in certain circumstances. So if they don't have the coverage that our customers need, we can get to other venues.

And so that's something that we're looking at to make sure that we can deliver a good experience for our customers. An STM license application provides us with further optionality. So we're just making sure that we're there in this rapidly evolving environment to win.

Have there been any limitations in terms of the partnership thus far in terms of just getting the product out there that you want to have? What are kind of the advantages as you think about to kind of more owning the rails, so to speak?

Well, I think you need to look at the products in three ways. I mean I think we're going to be able to make money through market making, which is something where we can leverage all of our sort of core pricing and trading expertise. And that's something where we've got a lot of experience there.

We've developed and deployed a reasonably early prototype from a product perspective, but we'll soon have our fully-pledged platform live. And then really, I think you've got to distinguish between what the user experience looks like within the sort of unified app. And it's very clear to us that we want to launch an experience that looks very similar to the FanDuel Sportsbook. We know that that's what people know and understand and using. And so we're on our way with a sort of unified code base to deploy that.

And then when we find things that work well, everybody gets the benefit of them. So that's something that is actually independent of the rails that you operate on. I think the question is whether you are able to sort of stand up the breadth of market that you -- whether we can set up the breadth of market that we need with our relationship with CME. And that's where I think the optionality of alternative venues comes into play for us. So I think we'll continue to work through it, but I think we're pleased with our sort of positioning that we have in the market.

And these market-making capabilities, when you start integrating those into your own product, does that change those customer unit economics at all or the generosity equation?

It's just -- we're trying to reconcile, it seems like you're playing a lot of different areas here. So from a customer standpoint, how should we think about what that experience is going to look like in terms of generosity or kind of just playability or betting options?

One of the challenges in prediction markets is the lack of generosity. And we know from operating ISPs around the world that when you are severely constrained in your ability to offer customers generosity, it has a real impact on customers' longevity and frequency of APDs and all those sort of things.

So this is a real issue that we are -- that we've seen elsewhere. We're focused on sort of the twin track of making sure that we can leverage our capability in market making. And I think that with combos on third-party platforms as well as our own. And then we're also going to make sure that our FanDuel customers have a great experience wherever they are with this unified experience.

I think the question as to whether you can start drawing the two up and what happens if you're market making on your own platform, you can't guarantee that you're going to win the bid when someone is requesting a combo. So it's one of the issues and one of the reasons why [indiscernible] markets don't have that sort of same clean cut approach to generosity that you do in an OSB.

Got it. we think about, I guess, the next few years for prediction markets, it's still early days, and I recognize that 2026 revenues are modest and investments are probably somewhere in the $300 million neighborhood. But I guess directionally, how do you think about the contribution in '27, '28? Is it safe to presume that '26 is going to be a peak investment year?

Yes. I mean we've always said consistently that this is the dot year, if you like, in terms of investment. And that's why we've maintained that we'll be towards the top end of that $200 million to $300 million range that we talked about.

As you move out in time, we've always said that we think that prediction markets will reflect similarly to new sportsbook stakes in terms of profitability. So moved to contribution positive after a year or so and then cumulatively contribution positive after a couple of years. I mean, as Peter said, it depends slightly on the regulatory landscape and how that develops along the side. So there could be a slightly shorter or longer inflection profile when you look at that.

But what gives us a high degree of confidence at the moment as well is that we think this $300 million envelope will be very synergistic across our sportsbook as well. And in time, as we develop this product with the go-to sportsbook across regulated OSB states and other states, then actually, we'll have the huge opportunity to use our marketing on a national basis synergistically across sportsbook and prediction markets and the two will be able to interplay for us, which is great.

And then you add to that the market-making opportunity that Peter referenced earlier. We're feeling quite encouraged by what we see. I mean ultimately here, as we've always maintained, our number one objective is to acquire customers and to build the database to actually sell regulated sportsbook to in time. And that's our North Star in this space. Hopefully, we can make some money along the way, and we'll see how the regulatory landscape plays out.

Okay. I have one last one on prediction markets, I promise, and then I'm going to hand it over to Estelle for more on the international side of the business. So from a product perspective, you rolled out your combined app. You added more markets in recent months.

I guess what are the next goalposts that we should be thinking about from that product perspective to see that you're showing progress in terms of the timing of the customer acquisition ramp. What are the hurdles or kind of opportunities that need to be passed to kind of get to where you need to be?

Well, naturally, when we look at this through that sort of sports first lens, we've got some exciting opportunities coming up. There's the World Cup and then there's the really big, which is the launch of the football season. So we're really focused on sort of how we can prepare ourselves for those things and really trying to deliver a continuous set of product innovations along the way as we do with any of our businesses.

I think there's a few things that we will want to deliver. I think we want to deliver an integration of the wallet experience. I think there's always going to be questions of coming funds, which are more complex that we need to deal with. But I think having integration of the work will be important. We clearly need to expand the catalog, right, that we have available to customers, particularly around flare crops, which we know is something that's very important.

And as the people who develop the parlay, we know how important combos are. So that's something that we have to make sure we're there delivering on in the same way that we deliver for parlays for our customers in the OSB space. So I think there's a lot of that stuff going on. And then ultimately, to have a UX, which looks and feels like our experience in our sports space is going to be very important because we know that works well for us and people understand and can get around the navigation. So we want to leverage that.

Okay. That's great. Thank you for all the insights and comments. I'm going to hand it over to Estelle now for the international.

International now. '26 guidance implies EBITDA flat year-on-year and also more Q4 weighted. What are the biggest drivers keeping EBITDA flat? Are we talking, I mean, Brazil investments, U.K. changes, COGS mix? And can you outline the bridge to flat and where you see the most upside downside, please?

Yes. There's a few parts to start in terms of the EBITDA growth and the factors in '26, but where we think we'll be able to kick on inflect from '27 onwards. Clearly, the U.K. tax increases, as you mentioned, the gaming tax increase from the 1st of April. So we're working through that.

As we said at the time of the increases, we think we'll be able to mitigate circa between 25% and 30% of that this year and then 40% of annualized kind of run rate. Our Indian business, obviously, we had to shutter it last year. So you've got the year-on-year impact of that and the EBITDA that we were making there. Last year, we continue to invest behind Brazil, which we're very excited by, but it is another investment year for us in international in Brazil that will reflect profitability in time.

And then we've got the World Cup investment in Q2 and Q3, which we alluded to earlier. But again, that should result ultimately in more customers on the platform and future revenue growth in time. I think when you look at the second half of the year, we're lapping some easy comps in terms of some of the cost initiatives that we've got in place and some of the transformation initiatives that we've already delivered. And then we also had some adverse luck in the international business last year, when we had about $110 million of adverse luck in 2025. So when you put all of that together, the international EBITDA is obviously broadly flat year-on-year. As we move into 2027, we will be stepping up again in terms of overall profitability.

On the U.K. iGaming tax, so yes, you mentioned almost doubling of the tax from the 1st of April. You expect some sort of like first order mitigation and second order share gains, but also the risk of customer shift to unregulated operators. What is your mitigation toolkit and pricing, promo, product, marketing? And how will you measure and limit the trade-off between profitability and channel migration?

Yes. I mean, ultimately, here, we're quite well insulated by virtue of our scale. And actually, when you look at the gaming market in the U.K., there's a very long tail of subscale operators. I think those are the ones that ultimately will be most impacted by this and have to cut the deepest in order to be able to live with the tax changes.

As we said at the time, we think there will be some leakage to the black market, but I suspect that most of that share donation will come from that longer tail. With regards to our position on this, we're very confident about our plans a lot that comes from the first order mitigation. But we've seen with these kind of tax changes over time in different markets around the world that there does tend to be a second order mitigation.

The time line of that, you can't always be 100% accurate, but it will happen over time as some of these smaller players adapt to deal with the changing economics that we're seeing. But with regards to the plans that we laid out in terms of tax mitigation in the U.K., we still feel very confident about this.

Okay. Now on Brazil, sorry, I'm moving from country to country. You talk about international IPs and like 40% up and the upcoming integration of proprietary pricing to unlock the further advantages ahead of the World Cup. What is the time line or KPIs for the integration? And what incremental uplift do you expect in H2 performance?

Well, it's obviously -- I mean, the religion in Brazil is soccer. I mean I can remember being there when the soccer World Cup was on a couple of times ago. And I mean there wasn't even a dog on the street. So to say that Brazilians get excited about this when the games are being played is an understatement.

So we're very excited about having this integration in place. And as you say, it will bring an improvement to the product and pricing for customers, particularly giving them access to more multis and that whole parlay journey that we've been on in America. The integration is on track to deliver ahead of the World Cup. So the first phase is live in production and we'll complete the product rollout in May.

And in terms of what we expect to deliver, it's not going to deliver a huge step changes, we should expect to acquire a lot of customers in the World Cup. That's always a focus for us around the world. But we expect to see a steady ramp-up in performance across the second half as the performance of the pricing capability and the frictionless customer experience improves. It is also a place where we haven't historically had a lot of sophisticated generosity. In fact, at one point there was no sort of bonusing capability. So there's a bunch of features and capabilities we're bringing to [indiscernible] I think we're excited to see what we can do with our business.

Okay. And in terms of the cost efficiency program, you're making good progress on the $300 million '27 cost efficiency plan with the full rate savings expected to be achieved by year-end, how much is already effectively delivered versus still to come? And where will savings then in terms of cost of sales versus OpEx? And I guess that's one, how would you ensure savings on product delivery?

Yes. So we're really pleased with the progress that we're making around the cost transformation. As a reminder, in terms of the buckets within the $300 million, we have $120 million in terms of PokerStars transformation, $80 million for the [ Snai ] synergies in Italy, $100 million for the UKI efficiency program and $30 million for the UKI platform integration.

And taking each of those in terms of the PokerStars transformation, we've made great progress, and it's probably more advanced than we thought it would be at this stage. We have proof of concept in Italy. We've now got full liquidity with PokerStars, that business is performing as well as it ever has. And actually, it's outstripping COVID times in terms of the [indiscernible] revenue that we're getting at the moment we've gained market share. So not only are we getting cost savings, but we're proving that this is additive on the revenue line as well.

From a [ Snai ] perspective, we've just very recently completed the migration onto the Sisal platform at the end of April. So again, that gives us confidence about delivery and actually overachievement of the $80 million envelope, and we'll start to see some revenue benefit as well as the cost synergies in time as we can roll out our Sisal blueprint there.

In the U.K., the new operating model is in place under Kevin Harrington, making very good progress on that. We've migrated the Sky Bet technology on to the core UKI platform. So we've been in a period of transformation flux there, but now we're out of that, we're seeing some green shoots in Sky Bet, as Pete mentioned earlier.

So when you look at run rate by the end of this year, we're actually run rating towards that $300 million. I'm actually reasonably confident that we'll end up exceeding the $300 million. And now better never stops as far as cost is concerned, we're really still focused on what we can do next. So we're on to the next phase of cost transformation, and we're looking at costs both in our U.S. business, what else can be done in international, but also at the group level as well. We expect to be able to talk a bit more about that at Q2.

And perhaps just to come back to the U.K. I mean Q1, you had negative FX trends, and you called out Sky Bet being behind expectations post migration, though improving. What is structural versus transitory in the U.K. [ Snai ] softness, Sports results versus migration product versus competitor behavior perhaps? And what are the specific KPIs we expect to improve in Q2 onwards?

Yes. I mean most of this was transitory as we navigated the Sky migration. It's both the bet and gaming business that we migrated last year. Look, it took customers a bit longer to adapt to the new interface. It probably took some of our colleagues who are running the business a bit longer to adapt to it as well, which is not something that we're not that familiar with that happened with Paddy Power.

I do think it's worth acknowledging that customers now have access to the full extensive Flutter product suite that we have available for our U.K. consumers. And I think we've seen momentum improve across the quarter. And if I look at it from a betting perspective, we had our highest customer acquisition in January for 5 years. We had a brilliant festival in Cheltenham, which is a big sort of horse racing festival. And actually, the underlying sportsbook was back showing growth in March.

So all important KPIs for us. I think if I look at our gaming business, I think in March, the first time we had more than 1 million customers on the platform. So when we look at the leading indicators, I think we're feeling good about it, and we're confident that will continue to improve.

And we have not covered Australia yet. So just one question here. You just -- I mean, under the new advertising regime, what are your expectations for sports bet growth trajectory for FY '26? And maybe more specifically impacts to CAC, competitive intensity net revenue margins. Just want to a bit better how to look at Australia for the remainder of the year.

Yes. The measures have been discussed and debated for a long time. So this has not been a surprise to us. And I don't think we foresee a material impact on the business. Like a lot of these regulatory changes, we've been trying to position ourselves as well as we could have done. We removed odds from some of the advertising that we have in live sports.

We've also been reducing our [indiscernible] volumes as well. And this stuff doesn't come in place until the 1st of January 2027 anyway. What we found in other markets around the world is that the scale operators often benefit from any restrictions around advertising. And so we are the scale operator in Australia. And look, I think we -- ultimately, we see a potential for a return to net revenue growth from H2 onwards in the business.

We've got good momentum in higher-margin sports and all the stuff around model-driven generosity where we're really pushing the boundaries using technology to deploy that more effectively. We're doing that in Australia first, learning benefits from it. And I think we'll see that start to come through in the business in the second half.

And the last question from me on capital allocation. How do you see -- how do you think of your capital return priorities versus deleveraging and M&A, particularly with your shares at these levels?

Yes. I think Peter mentioned this on the call last week that we're focusing on delevering the balance sheet a bit at the moment. I mean we've always said with our capital allocation framework that we've got the flexibility to dial up and dial down as we see in the moment. And we'll always focus on deploying the capital to the areas that generate the highest returns.

Thinking about that in the short term, we're obviously focused on investing behind our production markets product, as I talked about earlier, but also strengthening the balance sheet. And if you think about the leverage guidance that we set out previously 2 to 2.5x, we're focused on getting back within that. We think based on our current cash flow trajectory, that would be more towards the end of 2027.

But actually, if you look at the runway of cash growth in this business over the next few years, we feel really confident about. We see significant cash generation. We will delever the balance sheet, and that will give us more opportunities to look at things inorganically in due course.

Peter, Yes. I think one last question. I think we're at time. This is just kind of a high-level subjective one. I guess the stock obviously has seen better days. I guess as we sit here today, what are kind of the key points that you feel like investors need to understand or that you're trying to get across as we kind of think through the opportunity set here?

Well, I appreciate the chance to talk about our international business because I think people sometimes skip past that and it's a profitable part of the group. I think we're incredibly well placed with a lot of very exciting opportunities in front of us.

And when I look at the growth that we're doing in places like Italy or Turkey, I think we've got a very exciting few years ahead of us. And the cash flow conversion is going to really improve as a result of all the cost initiatives. So I think when you look at our underwriting the business, the international part is a very large component of it. And then I look at the U.S. and look, I think we are continuing to execute very well in iGaming. I think that is a part of the business which is going to continue to grow, and I think we're incredibly well placed to use our scale there.

I think from a sports perspective, there were a few things that we didn't execute on very well last year. I think we've actually -- we've identified that. We recognized it, we got to groups with it. We've made the changes, and we've got the sports improvement plan in place, and I think we're beginning to see the benefits of that come through. And I think investors obviously want to see us continue to execute, but we are still the largest player in America.

We're profitable. And I think we will -- we're determined to get the business, not just back on the front foot, but we need to get our mojo back and show that we can keep growing our share and help grow the category.

And then the final piece is prediction markets. And I look at that, and I'm very excited around the money we can make in market making using a sort of core capability that we've shown time and time again around the world, we're best placed to deliver on. And I think ultimately, this just gives us all incremental talent that we couldn't access before, which is tremendous. And I think we showed in March when we did a small bit of generosity that there's a real appetite, real latent demand for the FanDuel-branded sports, and we're going to lean into that and take advantage of it.

All right. I think that's it for me. Estelle, any last burning questions?

That's it for me, too. All good.

All right. Great. Thanks so much, Peter and Rob. We really appreciate it. We'll talk soon.

Thank you.

Thanks, guys. Bye.

Hello, everyone. Thank you for joining us, and welcome to Flutter Entertainment Q1 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Paul Tymms, Group Director of Investor Relations. Paul, please go ahead.

Hi, everyone, and welcome to Flutter's Q1 update call. With me today are Flutter's CEO, Peter Jackson; and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress and then Rob will go through our Q1 financials and our updated guidance for 2026. We will then open the lines for Q&A.

Some of the information we are providing today, including our 2026 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 pleased to share our Q1 results and update you on the progress made against the key strategic objectives we outlined in February. But first, I wanted to address the management changes we've announced today. [ Amy Howe ] will be leaving the business. I'd like to thank Amy for her contribution to Flutter and FanDuel and recognize the impact she's had on the business since joining in 2021. We wish her every success for the future.

Looking forward, the U.S. market and FanDuel's #1 position within it represents one of the most significant growth opportunities in our industry, and it is essential that we have the right structure and leadership in place to fully capitalize on it. [ Taylor's ] track record of driving growth and executing on complex strategies, making ideally suited for his expanded role. [ Christian ] has proved to be an exceptional leader and has been instrumental in scaling the FanDuel business and market leadership. These changes will sharpen our focus on the U.S. sportsbook to strengthen the connection between our U.S. and international divisions and fully leverage the group's expertise, capital and strategic ambition. I'm confident this gives us the right structure for long-term success and strengthens our ability to deliver sustained long-term growth.

Now turning to the results in the quarter. In the U.S., we saw encouraging signs and underlying growth in Q1. Overall, AMP were 1% behind last year and revenue grew 6% with headline KPIs improving as the quarter progressed. As outlined in February, overall sportsbook performance was adversely impacted by NFL trends observed in Q4 by persistently high gross revenue margins negatively impacted customer activity, leaving us with a smaller player base as we enter 2026. We outlined our sportsbook and generosity improvement plans to maintain our leadership position in these areas, and we're now executing against them.

From a generosity perspective, we are focused on delivering a truly customer-first proposition. Examples include the launch of early win promotions through March Madness and opportunistic payers to capture the social side of betting, which aided engagement, met fans or know what I mean. In April, we began rolling out our support for loyalty program, which has had a very positive response from the initial cohort of customers to gain access to the program. We also launched [indiscernible] protect an industry-first generosity mechanic, allowing customers to ensure their bets for the full game for small fees. The initial response has been excellent, with adoption rates double our expectations and continue to grow.

From a sportsbook perspective, product enhancements in the quarter included expansion of our popular [ Patek ] feature to Super Bowl, more personalized and simplified NBA same-game parlay building with [indiscernible] again and full screen streaming for key sports. And these changes are gaining traction with our customers. Underlying trends across our headline KPIs have been positive. Without handle and structural revenue margin all improving through the quarter.

Looking ahead, we have a strong pipeline of improvements plans, and we expect these positive trends to continue into Q2. This includes significant expansion of our new loyalty program through Q2 and Q3 ahead of a full rollout of the NFL 2026, 2027 season and new soccer product features ahead of the World Cup. In iGaming, [ Bandel ] delivered another strong growth quarter, another strong growth of growth, low strong quarter growth with AMP up 10%. Expansion of our direct casino player base coupled with improved frequency among higher-value cables to a revenue growth of 19% year-over-year. This was driven by enhanced rewards delivered through our loyalty program, including daily reward boxes and the continued rollout of new and exclusive content. At the start of April, we migrated [ PokerStars ] customers to the FanDuel platform unlocking improved products and cross-state liquidity for bigger customers.

Turning now to production markets. First, we continue to see limited cannibalization impact on production market operators on our sportsbook growth. SP625580412 We believe this is attributable to the fundamental differences and product propositions between sportsbook and production market platforms, customer age profiles and concentration of production market activity amongst entertainment first and low-value users. However, we continue to monitor the impact that production market operators in the broader sports betting ecosystem.

Second, in terms of the opportunity, we continue to view production market as an attractive incremental customer acquisition opportunity ahead of sports betting regulation in new states. The fast-moving and complex regulatory environment as a time has made product delivery time challenging. However, we are prioritizing new product rollout and focus on building the operational flexibility required to deliver our ambitions.

In March and April, we widened our range of sports markets and early testing of our generosity capabilities saw encouraging returns with strong app downloads through March Madness. We launched the FanDuel One App at the start of April, dynamically serving customers, sports betting and sportsbook states or prediction markets in non-sportsbook space. Critically, this now allows us to leverage FanDuel's strong nationwide brand awareness by just One App delivers access to an increasingly compelling sports experience.

While Q1 revenues were modest, reflecting the early stage of the journey, we are focused on delivering the improvements needed during 2026 to serve customers an exciting sports bet experience by Q4. The [ 2627 ] NFL season launch will be a major milestone with further improvements planned for the FIFA World Cup. We believe our world-class proprietary pricing capabilities can also unlock significant market-making opportunity. We began market-making services on a major third-party production market platform in April. Early indicators have been encouraging, and we expect to launch the initial phase of our market-making platform in the coming months.

Turning to our International segment. Our performance in Italy has been extremely strong. We are the clear #1 operator online, outgrowing the market and our main competitors. This performance is even more remarkable given the drag from our Snai business, which while in growth during the quarter had yet to benefit from the migration onto the [ SEA ] platform, which successfully completed at the end of April transitioning around 2 million accounts. [ CSAL's ] market [ First MyCombo ] product saw excellent engagement with multi-leg bets contributing half of prematch softer handle with over 30% of [ bets ] carrying 5 or more legs. And this drove a significant step-up in parlay penetration and structural margin.

In iGaming, [ CSAR ] benefited from the continued rollout of exclusive content. I'm very excited about the outlook for the rest of the year in Italy. With [indiscernible] ongoing exceptional performance and the unlocking of [ CSL's ] market-leading [indiscernible] Snai following the platform migration.

In the UKI, strong double-digit iGaming revenue growth was delivered across Paddy Power, [ Tombola ] and Betfair driven by new slot content and robust retention. Although Sky Bet's performance has been behind our expectations, as customers adapted to the new user interface post migration, momentum has improved with its highest customer acquisition volumes in 5 years in January, and underlying sportsbook revenue returning to growth in March. Market competitiveness remains stable ahead of the U.K. iGaming tax increase to 40% on the first of April. We now expect less profitable operators to begin adjusting marketing and generosity strategies.

As a leading U.K. operator, Flutter is well placed to deliver material first order litigation, as previously outlined, and to benefit from second order market share gains over time. In Brazil, performance remains encouraging with [indiscernible] AMPS over 40% higher year-over-year. We will soon integrate our proprietary pricing capabilities, unlocking a best-in-class parley product and promotional improvements ahead of the FIFA World Cup in June.

In APAC, we saw modest year-over-year growth in sportsbook APMS and handle. Rating, excluding [ Brayan ], were still declining year-over-year, was ahead of our expectations. We also welcome advertising restrictions announced in April and believe sports bet is well placed to build on its market-leading position. Overall, I'm pleased with how we've executed on our priorities across the group and particularly in the U.S., we've made significant progress embedding the improvements discussed in Q4. FanDuel's predicts is building momentum and I'm excited about our market-making opportunity. Internationally, our Snai and NSX integration is progressing well, and we are investing with commission in Brazil. We now have the right organizational structure in place to deliver against our strategic priorities, giving me confidence in the outlook for the year and our ability to deliver sustainable shareholder long-term value.

Finally, I wanted to note our plans to review our London Stock Exchange listing as we consider streamlining the dual listing. We expect this review to conclude you in Q2, and we'll update on our findings at that time.

I'll now hand you over to Rob.

Thanks, Peter, and good afternoon, everyone. Group delivered 17% revenue growth in Q1 2026 with adjusted EBITDA up 2%. This reflected contributions from our Snai and [indiscernible] acquisitions and a positive year-over-year swing in sports results. Performance included 10% sportsbook revenue growth with excellent underlying momentum in SEA and the U.S. showing encouraging signs of improvement, as Peter outlined. We also delivered continued strong iGaming performance across the U.S., SEA and UKI, with total iGaming revenue growth 28%. Net income of $209 million declined $126 million year-over-year, driven by a [ $71 million ] increase in interest expense and $122 million increase in depreciation and amortization. These were partially offset by an $88 million noncash year-over-year benefit from the FOX option fair value adjustment.

Earnings per share and adjusted earnings per share declined to $1.23 and $1.22, respectively, reflecting the factors mentioned above and $61 million year-over-year noncontrolling interest benefit as we lapped the prior period. This included an expense reflecting [ Boyd's ] 5% ownership of FanDuel. Net cash provided by operating activities increased by $142 million or 76% year-over-year primarily driven by positive year-over-year [indiscernible] player funds for $153 million from an outflow in the prior year related to CECL lottery payout to an inflamed in the current quarter. This more than offset higher tax interest payments and assume the [ PAC ] contribution in the period to support our U.S. advocacy initiatives.

Capital expenditure was higher year-over-year due to lower prior year phasing in the quarter. As a result, free cash flow, including financing, CapEx and excluding player funds declined by 46%. There is no change to our full year 2026 capital expenditure guidance. Our disciplined capital allocation policy provides the flexibility to respond effectively to evolving market conditions and emerging opportunities. We continue to prioritize organic investment in our core business and strategic investment, including emerging opportunities such as prediction markets, which we continue to view as an optionality driven investment within a defined cost envelope. While deleveraging is now a priority, buybacks also remain an important part of our capital allocation policy.

At our Q4 earnings in February, we communicated our plans to return [ $250 million ] to shareholders commencing in H1. This tranche began in Q1 and remains ongoing. As of May 1, $190 million has been returned to shareholders. Consistent with our flexible approach, we will continue to evaluate the buyback program as we progress through the year. From a leverage perspective, we ended Q1 with a leverage of 3.7x. We expect leverage to decrease by the end of 2026, initially increasing through Q2 and Q3, reflecting the profitability profile of the business before reducing in and moving us towards our target ratio of 2 to 2.5x over the medium term. We also continue to drive efficiencies across the business and have already embedded significant cost savings through our ongoing cost transformation programs.

In international, we are on track to deliver the full $300 million run rate from our cost efficiency program by the year-end with most major milestones already achieved. We are now actively defining the next phase of cost transformation into 2027 and beyond with a clear emphasis on sustained cost discipline and operating leverage. In the U.S., we are equally focused on cost efficiency with 2026 savings realized across initiatives, including payment provider efficiencies, improved supplier rates and overall process optimization. This includes the closure of our FanDuel TV racing network and FanDuel [ Picks ] products in 2026 in order to optimize costs and ensure investment is directed towards the highest return areas.

Moving to our 2026 outlook. We are pleased with the trading momentum in April and our full year guidance is unchanged on an underlying basis, adjusting only for unfavorable Q1 sports results in the U.S. and international and launch costs in Arkansas not previously included. Guidance also reflects the internal transfer of management of our [ Pecos ] North America business from our international business to the U.S. Group revenue is now expected to be $18.3 billion at midpoint and adjusted EBITDA of [ $2.865 billion ] for the year, representing [ 12% ] year-year growth, respectively. Additional detail and guidance is available in today's release.

To reiterate Peter's comments, I'm encouraged by the positive operational signals we are seeing, which give me conviction in our full year outlook. Peter and I are now happy to take your questions.

I'll hand back to Samantha to manage the call.

[Operator Instructions] Your first question comes from the line of Jordan Bender with Citizens.

I do want to start I guess the management changes over the last couple of months, but including today, from our perspective and some of the questions we're getting, like, how should we be viewing kind of these changes in real time? Is this an effort to kind of get back to where we were maybe to start the NFL season with [ Christian Dan ]? Or is this kind of a change in strategy on what you're trying to do, including maybe like willingness to spend on generosities.

And then the second question, Robert, Peter, 2Q EBITDA, about $104 million by my math. Can you maybe just help us with some of the inputs to -- you have a lot of moving pieces in the quarter, just kind of how we get to that number.

Jordan Look, I'll take the first question and then [indiscernible] the Q2 EBITDA one. In terms of the management changes, now is the right time for us to put in place new leadership in the business. I'm excited to see what Christian and Dan can do. But we're getting on to the private foot as a business. The sportsbook improvement plan is working. We're starting to see some sequential benefits of it in the quarter. And I'm excited to see what we can do with our loyalty program is that launches and [indiscernible] out through the course of the year. I think we've been trading the business harder. I mentioned that the stuff we've been doing with the [ Mets ] and some other things, I think the team have been doing to get on the front foot which is working, and I'm pleased with the progress we're making with [indiscernible]. So there's no change in our strategy or cost in the business.

Just picking up on your Q2 question, Jordan, in terms of where we are. So there's no change in our expectations for Q2 and where we were previously. And actually, if you look at our trading at the moment, we're trading in line with our expectations, and we've actually seen some slightly favorable sports results in recent weeks. I think if you look at consensus, there's potentially some adjustments that need to be made to the phasing within that where it's slightly too high in Q2 and too low later in the year. The main things to consider in the year-on-year bridge, we're thinking about Q2 would be -- the prior year included about $70 million from sports results. We've also got some prediction market spend in the forecast for this year in Q2, which we expect to ramp up slightly from Q1.

And then we've got some marketing around the World Cup, which will kick off in Q2, and that's in addition to the new states investment that we'll continue to lay down around Missouri and Arkansas. And just from an undying perspective, clearly, as we said in Q1, we've got a slightly lower player base that we started the year off with and that flows through from an online perspective. But ultimately, no change in Q2 from our previous expectations.

Your next question comes from the line of Barry Jonas with Truist.

Great the prediction legal environment remains pretty active, I'd say. Curious to hear your expectations for how you think this plays out in the court. And does that weigh into how you think about your investment spend going into next year and beyond?

Barry. Well, you're certainly right that the -- there's a lot of noise around the legal position of serving solution markets. I think it's important that we remember a few things. I mean first of all, I think the team have made good progress recently. I think launching the market-making capabilities, the One App, which allows consumers wherever they are across Americas have access sports on FanDuel I think its important progress. And I think we demonstrated the strength of our brand, some of the stuff we did around March Madness.

So I'm excited about the incremental opportunity this presents for us. Until we get through and understand ultimately what the Supreme Court say, I think we're going to live with this uncertainty. I think in the meantime, we're going to continue to invest in the market-making we're really pleased with the early indications that we're seeing from that, and it's a good opportunity for us to monetize this business. And then from the core [ fix ] product, look, ultimately, we will acquire as many sports customers we can ultimately onto our regulated ASP products. And that's what our real focus is. And so that's -- our intention is to build a great sports experience for customers wherever they are in America. And that's what we're going to do with One App.

Got it. And then just for a follow-up. I think a lot has happened since your 2024 Analyst Day and Street numbers are certainly adjusted. But I'm curious to get your thoughts at a high level if -- how you think about the path and timing about ultimately hitting those original targets.

Yes. Let me pick that one up, Barry. So ultimately, we still see a very compelling pathway to growth in the short to medium term, obviously, from the targets that we set out at the Capital Markets Day in 2024, it's right to assume that things have moved out to the right slightly given some of the underlying changes in the business since that time. But if you think about some of the key structural foundations that we set out at the Investor Day. We retained confidence of those, we retain confidence in our ability to be able to increase structural margin. We continue to see higher penetration. We continue to see move into new states in terms of regulated OSB. We said it would be 2% per year, and we've broadly seen that since. We said on new iGaming stake in the next 3 years. We're actually seeing some encouraging conversations and hopefully there'll be music moving in the right direction there.

So we're still feeling very confident about the longer-term plans. We need to trade through the next couple of quarters and see where we're exiting 2026, and we'll be able to give a bit more color at that point in time.

Your next question comes from Jed Kelly with Oppenheimer.

Great. Just going back to the market making and how you're able to integrate that into your product, can you talk about -- does that just give you the ability to merchandise that product better either through customer credits or other things you can do to drive engagement. Can you just talk about the importance of putting market making behind that.

Jed, you're right. that market making is an exciting opportunity. And I think it's a great way that we can showcase the quality of our pricing capabilities that we have in the business more generally. And so when we think about the opportunities, it's principally around the combos. We're going to be market making in those many platforms as we can. And I think it's a good opportunity for us to monetize our pricing expertise in doing so. I think the point you're raising is the extent to which if we're doing it on our own platform, it may allow us to change the dynamics of the customer objective. I think there are some interesting possibilities to that, that we're of course we're considering.

Got it. And then just as a follow-up, just philosophically, in the U.S., how does the -- how do you guys kind of go maximizing for net win margin versus trying to drive maybe more players. Do you ever think about toggling down the net win margins maybe to get more players and maybe the net win margins in the U.S. for whatever reason, might not be as high as other countries?

The biggest driver of our net win margin is really the bet mix and the extent to which customers are building the same game parley products. And this is something that people want to do. And that's -- we're simply meeting that customer need. You then have to look at the relationship, of course, between the structural gross win margins of generosity and you've got to get the balance right between them. And as we know, if you don't get the balance right, you can see customers quickly become dissatisfied and not have that good experience. We've got lots of experience of that around the world. And I think we're well placed here in the states to deliver great experiences for our customers.

Your next question comes from [ Trey Bowers ] with Wells Fargo.

I just wanted to revert back to kind of the cadence in the U.S. as I just run the math on the second half loading it looks like Q2, the expectation is slightly down revenue and EBITDA down 75% year-over-year, but then the back half is 25% revenue growth and 100% EBITDA growth year-over-year. So if you guys could just kind of dig in a little bit on another layer of kind of expectations, I don't know, around promotional activity or just some of the signposts we should look to that should help give confidence that back half loading is doable at this point.

Yes. Let me pick that up, Trey. So the first one I'd say that we set itself with our initial guidance with Q4 a couple of months ago, we said we anticipated sequential improvement as we move through the year on the top line, and that's something that we're starting to see already I think the best way to look at this simplistically, is to view the year in 2 halves. And in H1, broadly a continuation of the trends that we're seeing. As we said, we exited 2025 with a slightly smaller customer base, and we're seeing handle slightly down year-on-year with some improvement in Q2 versus Q1.

We've also had some slight amounts to structural margin impacted by the sports mix. With the new launches in Arkansas that we talked about previously and also with Alberta in July and the World Cup but also see a slightly higher generosity in the first half, but actually for the year overall, we're anticipating a broadly similar generosity envelope.

So then into the second half of the year, we do lap a weaker prior year NFL performance, and we are expecting handle and structural revenue margins to move to some modest growth year-on-year. We also expect to get some significant efficiency in our generosity as we lap the launch of Missouri last year, and we also get the benefits from the loyalty program that we've launched that we're already starting to see some green shoots from. So to put it all together, we feel very comfortable. I think, as I said in the answer to the previous question, we've not moved from where we [indiscernible] were and actually we always said that we'd have some sequential improvement as we move through the year, and we're starting to see that in the start of Q2. So we're quite comfortable with our position.

And then just as a follow-up on the prediction market side, given you're up in the investment a little bit for the year. As we exit this year, what would you guys view as a success in terms of kind of user levels in the non-licensed states to prove out that the investment is playing out like you would like.

We're not up in the level of investment. I think what I'd say around what we're doing with collection markets, there's opportunity to monetize this category through our market-making capabilities. [indiscernible] things in combos, and that's something you'll see us do. And then I think, look, we are focused on delivery of the One App is in the market now, and that lets us utilize and leverage the FanDuel brand nationally, right? So wherever you are, you can open the FanDuel sportsbook app up and access either regulated RSP, you hear like I am in Manhattan or if you're in California, you'd access our [indiscernible] products. And I think we want to acquire as many customers as we can on that in it through that platform. And I think leverage the national marketing that we already have. We know that FanDuel brand resonates very well. We're building out and improving the quality of our experience for customers. We know how to do this, and we will expand the catalog and deliver a much better experience for customers. And so that's what we're focused on delivering this year.

[indiscernible] building [indiscernible] is set to say that we will remain very disciplined in terms of our investment around production markets. And if we will invest more as we see opportunities to do so and be great positions in at the end of the year if we're getting real traction, and we really want our shoulder behind the world with this. But equally, we will follow same rigorous framework that's driven our success in the sportsbook business. and we will continue to monitor the returns in the CAC to LTV as we move through. But certainly, when the improved product is in place for the World Cup and then start with the NFL season, we certainly see some exciting opportunities.

Your next question comes from Jeffrey Stantial of Stifel.

Can you hear me?

Yes, we can.

Two from us. First, Peter, you mentioned in the release some challenges shipping product for prediction markets just at the velocity you would have expected or consistent with sports, given some regulatory constraints. Can you just talk about or clarify sort of where this bottleneck is most pronounced. Is there sort of a function of the JV partnership? Is this more the lack of guardrails that you're seeing from the CFTC, just sort of what explains this restriction the product development pacing?

And then second, just a clarifying question. The release does not revenues were about $90 million ahead of your guidance in Q1, if you exclude the $45 million of hold impact. Can you just clarify where is this $90 million come from? Is this sort of core sports or casino is Arkansas or prediction markets and then the decision not to sort of flush this through to the guide?

I'll pick up the [indiscernible] product question, first of all. I think we have made some good progress in the first quarter. I referenced that in the fact that we are now live with our unified One App is it's been important, I think, is a great step for us and most the market-making capabilities. I think we are working hard to improve the breadth of our sports coverage we have, particularly around sort of combat. And there have been some as I said in the release and challenges around that, I think it's principally around our ability to access the range of content on our -- rather than a sort of product front-end issue. And I'm confident that our teams have the capability to deliver great user experience and products for our customers.

If you look at the -- actually the Betfair [ Predix ] product, which is live in the U.K., I think it's a fantastic example of what the teams can deliver. And I know that there's a lot of work going on to make sure that we can expand the range of product particularly from a combo perspective onto our own platforms. And we will make sure that we adapt as we need to in order to win in sports.

Picking up on your question around the underlying [indiscernible], yes. So there were a couple of factors that we certainly saw some strong NBA handle in the quarter, which helped us offset the impact of slightly unfavorable sports results and the Arkansas launch. Thinking about the year as we set out our guidance a couple of [indiscernible] ago, we did say that we're taking a sense for a measured view to the guidance. It's early in the year. Encouragingly, we are seeing some early signs to our plans are gaining traction. But given it's early in the year, we're not going to be updating the guidance at this stage aside from the technical factors mentioned in the release.

Our next question comes from the line of Bernie McTernan with Needham & Company.

Great. First, just wanted to follow up on the continued theme on the second half ramp. Just maybe any building blocks you can give in terms of how you think you're going to get back to year-over-year handle growth in the second half of the year? And just by the response of the last question, it sounds like NBA is trending positively. Would it be possible to see if any sort of quarter-to-date trends on handle just so we can compare versus the 1Q results? And then I have a follow-up.

Yes. So as I mentioned, Bernie, we're pleased with the momentum that we're seeing at the moment.We see some positive year-on-year handle trends in NBA. As we talked about many times for our this school, we're not absent looking at hand as the one metric, and that's one of the factors and building blocks for the full year, but we don't actually need to see a huge incremental improvement from where we are in the year-on-year handle variance for us to hit the targets that we set out in the guidance, that we set out. We're also anticipating a small amount of structural margin expansion as we move into the second half of the year, which should be helped by the mix of sports.

And as I said, for the overall generosity envelope for the full year, we're expecting that to be broadly in line. But I'd say in the short term, we're seeing some encouraging trends, and it's absolutely in line with our expectations and the phasing that we did certainly set out when we look at our guidance.

And Bernie, I think the when I look at the sportsbook improvement plan, the changes that we're delivering the benefits were saying to things by to already the perception data that I'm seeing clearly demonstrates the benefits we're getting from the very early cohort into the program. Excited to see what happens when we roll that out of the full year. The bet protect stuff, I think, is getting real traction. So there's a lot of good things coming down the track, which I think we see the benefits of already. And as we get to the back half of the year, I think we'll -- we'll see those in full rollout, and we'll get the full benefit of the.

Okay. And then just one financial question. Just gross margin in the U.S. were almost 200 basis points lower year-over-year despite revenue growth. What was the major driver there? Any one-timers? Was this just launch impacting the promotional spending? Just any puts and takes you provide there would be helpful.

Yes. There's a couple of facts. I think one would be the tax increases that we've seen year-on-year from a state perspective. We have New Jersey, Illinois, [indiscernible], which is approximately 220 basis points total. So that's probably the main moving part. And of course, when you look at this year-on-year, the sports results impact to take into account.

We're making great progress, as we've said before, and things like payment and fraud costs, and we've really got cost of sales in our cross-sales in terms of how we make more efficiencies as we move forward. But the main movement margin-wise year-on-year will be down to the tax changes.

Your next question comes from the line of Ben Shelley with UBS.

I've just got 2. One on U.S. promotions. I'd like to understand more about how U.S. online sports betting promotions in the quarter, excluding state launches, how did they fare on a same-state basis? And then with regards to prediction markets and CAC inflation. Can you comment on whether you're seeing any inflationary impact on customer acquisition costs from prediction market-related marketing spend?

Ben, why don't I pick up the question around the production market inflation. And I think from our perspective, we are not seeing any change in terms of the competitiveness we have in the market. We have reasonably long-term deals in place for a lot of our marketing deals with our partners. And so we're not subject to sort of very [indiscernible] of short-term fluctuations in people trying to spend more money on that. So I think it's -- it remains a very competitive place, but it has been for some time. And I think the nature of our national partners and deals that we have put us in a clinical space.

Yes. When you look at the generosity year-on-year, you have to take in probably about 50 basis points from the new states. I think our focus at the moment is on how do we get the big bang for buck from our generosity lay down across our customer base. And as Peter outlined earlier, I think we've seen some really encouraging response so far from the changes we've made and the customer feedback has been incredibly positive from bet protect plus and so the early days of the new loyalty scheme in sportsbook that we launched. So we're really positive about that. We've said previously that our generous envelope for the full year, we anticipate being broadly in line with 2025, and we've not changed our view amount.

Your next question comes from the line of Brandt Montour with Barclays.

The first one is on prediction markets. How do you think about the cadence of the spend on prediction markets, 2Q, 3Q, 4Q in light of the fact that I assume that the One App is not necessarily where you wanted to eventually be in terms of the product level, but then also the sports calendar, do you need to be there in a big way for World Cup. Do you want to wait and save dry powder for NFL? And how do you sort of balance that sports calendar as well against that?

Yes. Let me pick up on that, Brandt, in terms of how we're currently thinking about that. So starting off in Q1, that was really about testing and learning for us really in terms of generosity and marketing around our predict products and demonstrating our ability to be able to acquire customers and actually establish some presence in the category. We spent a circa $40 million in Q1. As I said in my previous answer, it's pretty early days, but actually, we've always said consistently that we anticipate the majority of our spend on this to be in the second half of the year and our view has not changed. So we will invest behind the World Cup, and we expect to ramp our spend slightly from where we've been in Q1 in Q2.

We also retain the right to flex that, as I mentioned earlier, because we're going to closely be looking at the returns that we're getting on CAC and LTV basis on the prediction customers that come into our ecosystem. And then we really want to get behind the start of the NFL season in the second half of the year. But we need to make sure that we've got the right products in place to do that. And we'll be looking at the prediction investment envelope alongside what we're doing in our core sports book as well. And as we've always said, our capital allocation framework, we'll be investing where we see the best returns in the business. But we don't see the overall envelope changing from where we were previously at we predict at this point in time, but it's an evolving picture. As I said earlier, it would be great to be here at the end of the year, saying we're actually spending more because it's really taking off behind NFL in the second half of the year.

Okay. Great. And then just a separate question on [indiscernible] that market in the U.S. slowed a little bit sequentially and one of your key competitors hinted at that being a tougher competitive environment, yet you guys outgrew the market and gained share. How sustainable is that sort of performance that you saw? And do you also think that the market's gotten any either less growthy or more competitive sequentially??

We were really pleased with the iGaming performance in Q1. The AMPS were up 10%, revenue was up 19%, and revenue growth from the direct casino customers was even higher. So to some extent, our performance was impacted by the fact we came into the year with a smaller sports business. I think the focus we've had on our Rewards Club, and this is a sort of second year we've had the program, the focus on our exclusive content and the relationships we have with the key influencers has been really important for the business. And I think the team is doing a great job executing.

As it relates to market growth, the market can't keep growing at the same percentage rates, right, because it becomes -- as the market grows, you inevitably see some slowdown. But when I look at the market penetration level, there's still a long way to go. So I think the team are executing well, and we've got the leading position in iGaming, and we're performing well.

[Operator Instructions] Our next question comes from the line of Joe Stauff from Susquehanna.

Just in time. I wanted to ask on your generosity investment -- reinvestment in FanDuel OSB. Is it fair to say that largely started in March. I'm wondering if [ ANS ] grew in April?

Did you have a second question, Joe, are you just taking one.

Yes, sure. For the World Cup, Peter, you had mentioned another exchange that you could plug into. Will you be plugged into that more than the CME going into the World Cup?

Let me take -- I'll take the World Cup question and then follow up on your first question. We want to make sure that we have a compelling sports offering for our customers as we can. We have got a very exciting set of products that brings for our regulated ASP, leveraging the flutter edge and the global expertise we have in soccer. So we're excited about that and opportunity to bring customers onto the platform.

I think from [ Pdx ] product, we do have the right to connect up with other venues is something we are focused on and the timing of it is tight, but we see where we can get to in terms of that for the World Cup.

Yes. On your first question, Joe, from an AMPS [indiscernible] perspective. So as we've said, we're laying down a number of new initiatives, which we're very pleased with some of the traction that we're getting and we are seeing sequential improvement in a number of our KPIs from Q1 into Q2. We're not getting a hung up on any one metric. But across the board, we're seeing a lot of green on the dashboard, which is helpful. We also have some noise. We said we'd see this around March badness where we had a very customer-friendly period in the prior year, and you always get some noise around handle and AMPS as you move through that period, but actually we'd be taking the March Madness that we had this year over last year and the day over the week. So we're quite pleased with the way that, that played through for us. And we're pleased with the momentum that we're now seeing into Q2.

Our next question comes from the line of Ed Young with Morgan Stanley.

In your shareholder letter, Peter, you said that you've got a clear plan of improvement for the sportsbook, and you've laid out a lot of the product and kind of [indiscernible] that are coming. But I wonder if you could sort of help us take a step back and give a bit more of the diagnosis of what you think has gone wrong within the business? Obviously, you've made some changes and it's good to see some decisiveness there.

But on a bigger picture level, where is the business not been doing what it should have been doing? And are there any kind of beyond organizational changes, any kind of macro changes in terms of how FanDuel need to approach the market in terms of competitive intensity or promotional intensity. It doesn't sound like that's what you're saying, but you're also saying that [ Dan Taylor ] is coming in to sort of review and oversee the business. So please use your diagnosis and perhaps could you share some of it with us today.

Evening. Well, [indiscernible] your time, Ed. I think we've been pretty clear around what the issues are for us from a sports perspective in the U.S. And I would describe the intentions of the team as being one way, we just -- we're getting back to focus on the customer-first approach, yes. And we've seen that with the way in which we've been trading the business in the last -- in this last quarter where I mentioned in my opening remarks, the stuff we've been doing around the [indiscernible], I think there's been some good sort justice refunds the team have been doing. And I think it's engaging and it gets you on the front from a sort of social perspective. And that's important to do. And I think it's something which we do around the world.

I think that, bet protects product was important as we needed to deal with the issue of injuries, which was -- has been a real challenge for us in the market. And I think we've got a great solution in place. As I mentioned, we've seen the twice the level of engagement that we had expected with that product already and there's certainly plenty of ways in which you can see us evolving it in time.

Clearly, one way we can evolve it is with the launch of the loyalty or reward program, there may be tiers of it, for example, where we can give customers access to feedback protect. And so the integration of all of the different aspects of the product is something which is going to be really important for us to make sure that we're offering great value to our customers. So there's -- this isn't about a fundamental change in posture of margin and generosity or anything like that. I think we know what we need to do around loyalty. We know we need to do around the injury stuff. We are getting better on the front foot from a trading perspective. And I think we're making lots of progress there.

I think the 2 other things I'd pull out from a product perspective is we have superior structural growth rate margins in comparison with everyone else in the market. And that's something which is -- doesn't have back and I think it's as a result of the quality of our accuracy of our pricing, and that's something that's really important and it's something that we intend to continue to invest behind and sustain. And I think that is a feature that you see from us in all of our markets.

And the other aspect I'd pick on is there's a lot we're doing from a sort of core product hygiene perspective. And it sounds like these are simple things. The IRS launch time is now less than 2 seconds. We've got full screen streaming available for key sports. We've upgraded some of our live betting with simplified Same Game Parlay buildings, and you could track 5 bets on the [indiscernible] small enhance unlike that, that we will continue to roll out and deliver and actually, the cadence of delivery of this stuff is all being improved with our sort of investment and focus in AI. So the throughput we're seeing from a product perspective is stepping up materially. And it's really exciting to see that translate into the product that customers are seeing in their hands on their phone. So there's no change in strategy, I think we've got clarity. I think we're putting customers first, and we're getting back on the front foot, and we're starting to see the sequential benefits of that.

Your next question comes from the line of Estelle Weingrod with JPMorgan.

I've got one in the U.K. Sports handle was a negative 5%. You mentioned in your remarks an improving momentum in March. Could you elaborate on the actions you are taking in the U.K. in that segment? And how is the improvement confirmed and sustained in April and May?

I mean the biggest drag on performance in the U.K. is Sky Bet. And -- but we are an area where we're seeing now sequential improvements coming as time passes by since the migration we've seen a big step change. If we look at revenues up 9% on a normalized basis in March, which is compared with flat for the Q1 period as a whole. So good sequential improvements in sports.

And I think from a gaming perspective, we're also making progress. And if I look at the leading indicators, we've had the highest customer acquisition volumes 5 years onto the brand. Sky Gaming has now got more than 1 million customers, which is the first time ever that happened in March. And actually, the [indiscernible] and [ Crytek ] rank the second. So there's been a big step-up in how that's perceived from a customer perspective. And it's #1 for betting interface in [indiscernible]. There's been a strong chat lots of other metrics we could talk about.

I think from my perspective, it just feels very similar to the experience we had post the Paddy Power migration where there was a first year sort of reset and then we've obviously seen very strong performance from [indiscernible] And we've now got great products for the Sky customers. We've addressed some of the issues that we've seen post migration, and I think we're starting to see some of the green shoots come through.

Your next question comes from the line of Paul Ruddy with Davy.

Just one follow-up on the U.S. generosity and customer acquisition journey. Just regarding paybacks on the state launches, and I suppose the customers you're trying to...

Paul, we've lost you. Sam are you still there?

Yes. We will move on to the next question and reconnect Paul when we can. Our next question comes from Chad Beynon with Macquarie.

Just one for me. Just given your previous success in acquiring brands, most of which had podium positions. Given the stock dislocation right now in our sector, whether it's B2C, B2B, sports data, affiliate, what's your appetite to maybe do another deal at this time given depressed valuations in the market?

We have done plenty of deals, as you say, Chad, I think we've been really pleased with the progress we're making with the integration in Brazil. It's going to be great to see the benefits of the pricing and promo capabilities go into that business ahead of the Soccer World Cup. I think it's going to be super exciting to see what Snai do with all of the capabilities we'll give them access to now that the migrations happen successfully there. There's a lot for us to go after across the business. We are always open to sort of M&A, if we think that the prices are right. I think right now, for us, we are continuing to focus on those integrations. And there's a lot to do in the U.S. business. We also need to acknowledge our sort of leverage and I think there's a focus the moment on deleveraging.

Your next question comes from the line of Ryan Sigdahl with Craig Hallum.

This is Will on for Ryan. Just wanted to ask on sort of some of the portfolio optimization we've seen lately. You shuttered FanDuel picks last month, FanDuel [indiscernible] racing is shutting down. I think that fair in Mexico has also ceased operations. Just curious if there's an increased focused on sort of portfolio and resource optimization and if there are any other products and/or markets that are being considered?

Yes. Will. I mean this is a constant focus for us in terms of optimization and efficiencies and the decisions that we take around FanDuel TV [indiscernible] easy for us in terms of where we want our focus to be in the U.S. with FanDuel at the moment and actually a bit in particular with FanDuel TV that delivers some good cost efficiency for us. I think with regards to the broader portfolio across the group, we will continually review but as we sit here today at the moment, the majority of our brands are performing well for us, and that's not a problem that we have in the near, we'll continue to focus on costs and where opportunities present themselves will lead into that.

Your next question comes from the line of Shaun Kelley with Bank of America.

So Peter and Rob, just maybe super high level. We noticed that there was an application for a direct FCM license recently. Just wondering if any of the management changes may allow for a bigger or slightly bigger rethink on strategy and your approach to vertical integration in prediction markets.

And then, Rob, if we could just give a little color for the second half on sort of your thoughts around revenue contribution and what's baked into the guide directionally, obviously, not solid numbers, but directionally for production markets in terms of contribution in the second half.

Sure. I'll be very brief because you've asked 2 questions. On the license application, I think in general, I'd get back to what I was referring to earlier on the call. We want to make sure that we can adapt and do what we need to do in order to win. I mean, I think we're very much focused on ensuring that we can build a great sports solution for customers wherever they are. And we need to make sure we've got the right range of products available to them. We're connecting to other venues at the moment. But of course, we have made an application which provides us with further optionality. We've got to adapt and do what we need to do in order to win for our customers.

And on the production market revenue contribution, we're not guiding in detail this as I think that the best indication that you can take short is what mentioned earlier in the sense that we intend to step up the spend as we move through the year. So we'll see some uptick in Q2. And then we'll intend to do more behind the NFL in Q3 [indiscernible] Y.

Our next question comes from the line of John DeCree with CBRE.

Peter and Rob for taking all of our questions. Maybe an easy one. I think there was a comment about reduced cross-sell from sportsbook to [ Eye Casino ] in the U.S. Obviously, iGaming results kind of offset that. But we kind of assume that might just be the lower AMP in the sports platform in the quarter, but curious if there was any change in behavior among cross-sell?

You answered the question, John. That's exactly the point. We've seen very strong performance of the [indiscernible] part of our business as we always have. And with a smaller phase coming into the year, it impacted our denominator effectively. So this is not an issue in terms of any change in behavior other than that.

And we continue to be the top brand for awareness and preference on [indiscernible] casino customers. So we'll continue to harness that.

Your next question comes from the line of Monique Pollard with Citi.

I just had a question on this market-making capability in the U.S. around production markets as you're trialing it and then you're going to be launching it later in the year. It feels to me like potentially that could be quite a material opportunity. So just trying to understand if you think it can be quite material over time and whether in that second half U.S. adjusted EBITDA guidance, anything is baked in for that market-making capabilities that ramp up through the year?

I've spent time with the team who are doing this market-making. I'm excited about it. I mean it's Greg. We're making money today from offering this capability, particularly focused on combos and leveraging the pricing expertise we have it. It's small scale at the moment. And we will launch our own platform in the coming months. And I think we'll then better step up the volumes that we're doing.

The only bit that's factored into our guide at the moment is the investment. And look, we need to wait and see how we are, and then we can talk to you about the revenues that we're generating. But I think we're -- I think we've got some conviction around our ability to offer a very compelling service in this area [indiscernible] the pricing expertise that we have.

Your next question comes from the line of Robert Fishman with MoffettNathanson.

Just curious, how did the [indiscernible] polymarket striking partnerships with the major U.S. sports leagues impact how you plan to partner or approach the leagues going forward?

I think from our business perspective, we have relationships with lots of leagues and sport bodies and teams across the country. We want to be the -- we are the #1 place for people to go for regulated online sports betting. And I think we want to be the premier destination for sports, whether that's through OSB or the prediction market [indiscernible]. And I think our One App allows us to do that dynamically. So wherever you travel across America, you better access our products and capability. And I think we can leverage our national sort of advertising as a consequence of that. And I think there will be some interesting questions and conversations for us to have with those leagues and sporting bodies and other relationships we have.

Okay. I think we have no further questions now. So I'd like to thank everybody for dialing in and asking us all the questions. Much appreciate it if you have any follow-ups or other questions, please let us know afterwards. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

So hello. I'm delighted to be joined by Peter Jackson and Rob Coldrake, from Flutter. Thanks very much for joining us again at the conference.

Thank you very much for having us.

So you reported results last week. Revenue was up 17%, EBITDA was up 21%. But obviously, an awful lot of drivers within the business. So perhaps for ease, we'll start with the U.S., as you probably expect me to say. So I guess as a sort of short overview at the start what did you make of the U.S. performance in '25?

Yes. well thank you, Ed. I mean hopefully, we'll get to speak about international...

You will.

As that is an important part of the business. But from a U.S. perspective, I think that -- look, let's start with the most successful part of our business, which is the iGaming business. We exited Q4 with 28% of GGR. I think our strategy of building exclusive content, having access to the loyalty program has been working really effectively for us. We're excited with the way that the business exited last year and the prospects for it through the course of this year.

If I take our sports business, I have no doubt we'll talk about Q4 at some stage. Actually, the progress we're making in terms of getting towards our structural margin, making really strong progress. We remain the #1 operator here in the U.S. I think that there are a couple of areas where we were -- we lost a bit of share through the course of '25, but we know what happened. We know what we need to do to fix it. Principally amongst that, it will be our -- some changes we're making to our product and our loyalty program.

But we were delighted that we're able to also launch our prediction markets product. So who would have thought that being sat here in California, we actually have a product we can make available to customers from a sports perspective. We thought that would take us much longer before we could do that.

Yes. Well, let's address one of the big topics straight of the bat, which is handle. Obviously, it doesn't just affect Flutter, it affected the whole market and this affected sentiment. We've seen obviously a deceleration of handle through Q4 and into the start of this year. So perhaps the most open way of asking it is, what do you think are the drivers behind that? What are you seeing from your side?

Well, when I look at the business, look, handle is an important component, but we also look at our gross win margin as well, and the combination of them is what gives us our GGR. If I look at this football season in its entirety, we would have made more than a 19% margin on football, so ahead of expectations, which is a big contrast for the preceding 2 years where margins were below expectations, I think people were worried about whether we could ever get there. Actually, we hit our sort of long-term margin aspirations at the back end of the year.

And I think what we have to accept for us, take December, margins doubled year-over-year. And so we shouldn't be surprised that handle come under pressure. I mean if losses were consistent, handle should have halved. Now obviously, our handle didn't halved, but handle is going to come under pressure. We see it in other markets. when you see such big swings occurring in margins. And actually, through the course of Q4, margins are getting stronger and stronger. And that was something that everybody benefited from in the -- across the sector but it does have a corresponding impact on handle.

Okay. So I guess, first of all, why do you think FanDuel is more affected than others because the relative handle performance was sort of worse within that. Is that related to the margin point? Or is there other kind of product or channel or sport types that were part of that, do you think?

Yes. Look, I think there are 2 things which are very clear from our perspective, one, we have a structural margin advantage. So we have much higher margins than other people. And you can see that through -- into Q4, where our margins would have been 50% higher than other people in the sector. So of course, we're going to see a corresponding impact on our handle relative to other players in the market, you would expect that.

And that's a function of the higher parlay mix that we get, which is because consumers are more interested in picking the parlays. One of the other factors that we saw, and look, this was an issue on us was we didn't execute our generosity strategy as well as we should have done through Q4, particularly in the face of seeing 11 weeks of unbelievably strong margin. At the same time, as the quality of content in football is deteriorating. We saw more handle on 1 of The Lions' players than we saw perhaps in the tournament, for example. That was a challenge. And so I think we didn't execute on our generosity playbook as effectively as we should have done in Q4. So I think that's compounded it for us.

Okay. So if we think about the -- because I guess from an investor point of view, I think it's very reasonable to see concern around handle because, yes, there's a reflexive relationship between handle and margin. But equally, at some point, margin will get to a level at which it is structurally mature or plateaued or whatever. And then underlying growth essentially is handle growth.

And the guidance of this year, which we can come back to a little bit more later, but it also -- you've talked about some level of conservative within the guide and clearly, it was lower than people expected. So what you're sort of suggesting is that margin went up, so that effects handle, but the guide appears to have some conservatives around handle. So how have you embedded that kind of handle growth perspective into guidance? And on a more normalized basis, what does handle growth look like in the way you think about projecting the business going forward?

Let me tell you about the 2 things we're doing to sort of face into the challenges that we saw in Q4. And then Rob can talk to you about how we're seeing the guide for the year, if that's okay.

I think the first thing we -- I acknowledge our generosity strategy wasn't as effective as it could have been. So we have a lot of experience of running personalized bespoke of generosity strategies. It's even more important in the U.S. market when you're thinking about football. It's 100 games the matter. You go through the course of the season, the frequency of them drop. So volatility really gets amplified, particularly for us with our parlay mix. So we have to do a better job of making sure that we react to that on an individual customer basis. You have to deaverage this.

This is complex, right? It's not straightforward, but we know how to do this. We've done it in other markets. But we're also going to launch our loyalty program in the next quarter. It's been a really important component of what's seen us win in casino building out wallet share amongst consumers, principally because we do a much better job of being consistent with generosity for people but also making sure that without spending any more money, we get a lot more bang from our buck from consumers understanding why we're giving them generosity.

And so the saliency and the recognition that we offer value stepped up very significantly when we launched our loyalty program for casino. We'd expect it to do the same thing for us when we launch it in sports shortly.

And building on what Peter said from a guidance perspective, so some of the softness in volume that we saw towards the back end of the year with the extended run of bookmaker-friendly margin that we have towards the end of the year, that continued into the start of January. And it was quite a noisy NFL season overall. So I think post our guidance that we gave in Q3 for the full year 2025, we then went on a sustained run of 11 weeks where margin was ahead of where we expected it to be in the NFL.

And that culminated with the last week of the year, we had a 35% margin which is quite -- and at the same time, as Peter said, we've kind of dialed back our generosity a little bit, and we found that some customers came out of the ecosystem probably had enough of betting on the NFL for the season.

What we've seen post NFL, post the Super Bowl is some sequential improvement in volume, in revenue, particularly in NBA, that gives us some confidence that the '26 guide that we've got where we see some graduated improvement through the year comes to bear.

The other thing that gives us confidence around the guide for the year from a sportsbook perspective is some of the initiatives that we're putting into play. We've talked to a lot of people about our loyalty scheme, sportsbook that we intend to put into play in Q2. We've talked about other product initiatives that we'll be landing throughout the course of the year, some are insurance products around the sportsbook, et cetera. And then from an iGaming perspective, we are forecasting that will be a high-teens revenue improvement year-on-year.

Last year, we were in the high 30s. We always anticipated that would moderate slightly over time, but we're still seeing really good growth, still retain the market leadership. So I think the word he used was prudent but we're using a sensible measured, but we're feeling quite confident about the '26 guidance.

Okay. Let's turn to products. There were a few comments within the release in your remarks during results last week about competitors having stepped up. So where do you see your relative position versus competition? And what are the carriers of focus to stabilized relative position or to regrow your relative position on products?

Yes. We -- talking purely about sports because obviously, I think questions we could ask or answer around casino. But talking about sports, we maintain our leadership position in parlays. I think we've got a strong position there. We can see when we benchmark our performance against others. We have a consistent advantage and you can see that in the structural margin that we have. But we're not standing still. So we'll continue to enhance and improve our parlay offering through the course of the season.

But we're also doing some of what I would describe as block and tackling, the basic e-commerce building blocks of the business. Now in Q2, we'll halve the load time of the app, right, from the home page. You've got to just go after these things every now and then and so there's a bunch of grit in the system, which will --which we need to eliminate and we will do that.

We found social products have been successful for us. So we had a great promotion around Thanksgiving, Pass The Leg, offer, right, where you could start with a parlays effectively pass it to me, I'd add the next leg and then turn to Rob and take that. So that sort of social product is really important. We found that to be successful for us in Australia. We see great success with that in Italy. So you'll see us do more around social in the market.

And then the loyalty program is also going to be really important. It's great mechanism for us to introduce, make sure that our consumers understand what they need to do to get us to do things for them and while we're doing certain things for them we'll make sure that there's much more transparency. And I think if people feel like they've got more agency, I think they feel more engaged.

Okay. So it sounds a little bit on the user experience around loyalty, social. You're not really suggesting there's any major change in terms of a greater focus on in-play or a greater focus on XYZ, is that a fair read of it that you're in an okay place there? Or are there other bits behind the scene?

I don't think there's anything that we'd point out. I think we've got behind in a certain area. Live is a really important area for us. But it's important for us because of the quality of our parlay products. And parlays is really important and Live. We're making improvements to sort of cash out availability and uptime. So there's stuff that we're tweaking all the time to improve. But look, I think we are behind the sector, to some extent in not having a loyalty program for our sports product. We have 1 in casino, we know how effective it is. This is something, I guess, that will be 1 area where we're catching up.

And the World Cup, perhaps briefly, obviously, you've got a huge global business. Is that an area of competitive advantage for the U.S. this year? Do you think you can go ahead in that area?

I mean, we're super excited about the World Cup. I think about our business in Brazil, where that is popular sport that will stop the nation, all around the world, all of our different markets will participate. Soccer is actually, I think, the fourth biggest support we have here in the U.S. So it's clearly something which is really resonating with consumers in the market. And the benefits we'll have is, be able to bring our global product and expertise into the U.S. market.

The way that we typically think about something like the World Cup is it's fantastic for customer acquisition, right? It's a great way of introducing our product, putting it in front of the people. And of course, the brilliant thing this year is that even in states like California, where we haven't got regulated OSB, we're going to make -- it's all incremental for us through FanDuel Predicts.

Let's talk promotions. You mentioned it a little bit. So you talked about sort of loyalty side going forward. But I think probably most of us have seen generosity. I mean you talked a lot about over the years, Peter, generosity and being able to tokenize it, apply it properly has been a big source of competitive advantage.

And obviously, FanDuel's scale, that plays into it as well. You said very clearly, it didn't go how you wanted to, how you expected it to in Q4. Could you briefly touch on what went wrong and then what is fixing. So part of it is the loyalty scheme, but it's quite surprising thing to a lot of investors, what happened in Q4. Could you give a bit of color on what laid behind it?

Yes. Look, I think it was a confluence of factors, right? And we were not anticipating that we would see such a strong set of week after week, outperformance from a margin perspective. And I think for our customers who last year and the year before, football was a very comfortable things for betting on. They're getting good returns on it. This year, the reverse was true, and it was consistent. There was literally week after -- I mean there were a bunch of Sundays where were it not for the last game on the Sunday. the favorites on it. We could have had 50% margins, right? So we're having days at 35% margin.

And elastic -- sometimes it snaps, right, if you go too far. Look, I think there's some stuff that we've got to factor into our into our sort of run book around generosity. I think we were -- I think we're a bit inconsistent with the offerings for customers. I think we needed to step in and respond after a very considerable period of losses. But the factor that we have compounded to some extent was that the quality of content that is available to bet is also deteriorating as we didn't see the big teams come through.

Okay. Let's move on to prediction markets. First of all, I guess, the time line, we're all keen to be able to judge where FanDuel Predicts gets to on a like-for-like basis versus competition. Late last year, you were saying you have a market-leading product by Q2. Now it sounds a bit more like you'll have the product ready for NFL. So there's been -- it feels like there's been a bit of slippage there. So when is the product going to be at a point where we can see either through product comparison or through you putting marketing behind it and then app downloads, that kind of thing when you're really competing in that arena?

Yes. I think what we have to think about with the FanDuel Predicts products there's 2 aspects to it. The whole sort of user experience, right, the user journey, which we're in the market now. We're learning how our customers want to use the product. But there's a bunch of enhancements we're going to fast follow through with now that the products in the market. Separately and it is separate, when you think about what the product catalog looks like in terms of the breadth and depth of content that we make available to our customers. And we're working hard on both of those things.

And to some extent, the really important missing piece is landing parlays, combos in [ Predicts piece ] And we are building our market-making capability, which will allow us to light that piece up. We're excited to make sure that we build and evolve the product. We will -- we are prepared to invest money when we got a product that we can stand by from a marketing perspective.

Look, there's the Soccer World Cup, obviously, the biggest opportunity for customer acquisition from a sports-focused perspective, which is what we're going to be in Predicts is going to be around the launch of the football season, right?

And so that's something we have to be absolutely focused for. But Q2 is a really important time for us to do the evolution of the product experience, the catalog and also thinking about what we do from a market-making perspective, which allow us to standout the parlays solutions.

So perhaps 2 for you to get to that Rob. First of all, when it comes to the market making side, you've talked, I think, broadly to the margins on the overall exchange as it is at the moment. But how should we think about the incremental opportunity there? And how should we understand your sort of moving up weighting to the top end of your investment range of $200 million to $300 million losses you've got to the top end of that already so in the journey, what are you seeing or what changed that you want to put more capital behind it?

First of all, from the market-making perspective, that's where the majority of the margin lies, and that's also where our expertise lies. So it's an obvious place for us to lean into from a -- in terms of the overall economics of prediction markets. We haven't factored in any margin from market making at this point in time. We're still working through a solution, but we're pretty confident that we get something into market this year.

We said last week that we anticipate being towards the upper end of the $200 million to $300 million envelope. Clearly, we've demonstrated in the past that we're very sophisticated in terms of how we think about CAC to LTVs, it's early days at the moment, and we're a bit in the test and land phase. And we don't want to spend too much until we're confident that we've got the product. So more of that's coming in Q2 when we'll have to combos and other product improvements that come. We'll start ramping up the spending at that point in time.

I think the World Cup is a good opportunity for us to be able to get behind prediction markets. The thing that we're really excited about is the new NFL season because at that point in time, as we said, we should have a much more improved product offering. And that's where the big acquisition volumes are, which we're keen to get behind.

And you spoke last year, I remember that the virtual fireside we did back in November, maybe you were talking a bit more about the payback period, essentially, you sort of felt like '26, if you like, is the year of investment and you'd actually have most of that sort of starting to pay back on a GP basis in '27. If we're sort of looking at it a little bit later, are you probably looking at some of those losses carrying further into '27? Is that how we should be thinking about the phasing of losses?

Potentially, I mean, ultimately, there are some parallels to sportsbook. This is the big different year, we think, in terms of investment and actually with prediction markets, given some of the regulatory landscape and the fact that this could all go to the Supreme Court in a couple of years, and we don't know what will happen thereafter. It's a shorter investment time frame.

So there's a big different this year in terms of the $200 million to $300 million. We then expect it to be broadly contribution positive in '27. We're not giving an exact timing point on that and then cumulatively positive into '28. In the meantime, we'd anticipate that within that time horizon, you'd see more states regulating online sports, but where, ultimately, that's the big prize for us in our North Star. That's what we're shooting towards.

Are you seeing any green shoots. In that regard at the moment?

I mean we're in legislative season now. Obviously, we had 1 state over the line last week. There's a number of bills that are actively being discussed. We don't like to get too far ahead of ourselves. I think what we always come back to is what we said at the Investor Day back in '24 in terms of how we think this will play out in the short to medium term. And that was 2% incremental sports population each year. We've broadly been tracking to that. This year, we have Alberta, Arkansas now, there's 1 or 2 others that are being debated. And we said one new iGaming state and there's a couple that we think are getting a bit closer there, including Virginia.

It'd be great to see iGaming state over the line.

Do you -- so I guess 1 of the -- if we were around the debate to where people were worrying in, I don't know, August, September, October last year, is that where you'd be able to do prediction markets at all? And you've clearly come to a point where your existing states are allowing you to continue on a normal basis, and then you're doing prediction markets in states where you don't offer OSB. So structurally, you're a little bit different. Some of the pure production markets operators who are obviously pretty national.

What sort of cannibalization are you seeing or that you can detect? And how do you broadly think about the capacity for [indiscernible] to cannibalize because as you said, we're sitting here in California, you're going to have a product addressing a whole load of extra population, that's clearly an opportunity. But in the short term, especially within the context of handle, people worry about the negative side as well. So how do you frame it? What do you see in the data that gives you a perspective?

Yes. Our data gives us real confidence that we're not seeing cannibalization in states where you've got regulated OSB. I think a great example of that is the recent launch we had in Missouri, where we saw 1 in 20 of the population sign up to FanDuel within the first month of us being live in the state. I think good indication of how people would prefer to take a regulated OSB over prediction markets. And there's 2 reasons for that. One is the generosity strategy that you can pursue in regulated OSB.

And the second is the breadth of the product offering. And I think they're really important sort of tempo for us to maintaining our success. So when I look at the opportunities around prediction markets for us, there's a lot of incremental business working after, whether it's in California or Texas or Florida, the state we couldn't have previously addressed. And I think that's super exciting. I think there'll be -- there are going to be some states where we'll be operating Predicts where we know we'll never have regulated OSB. So Utah is never going to pass regulated OSB.

We have to think about the opportunities in Utah with that in mind. Here in California, we hope that at some stage, there so -- we can see some regulated OSB come to market. So that gives us a different perspective in terms of the ability to acquire customers and better cross-sell them in the future.

Prediction market is fast evolving. One of the areas that I think creeps up increasingly in conversations is whether prediction markets will go into gaming adjacencies. Do you think that will happen? And if it did happen, would you follow?

I think the U.S. market is unusual, and we've got relatively low levels of population penetration in terms of eligibility for iGaming. We're about 11% at the moment. And I think the best case scenario, you can see that getting to is 40%. Now that will be a big step-up from where we are. But it still means there's going to be 60% of the U.S. population going to be living in states where there's no online provision for iGaming.

And I think it is interesting to ask yourself a question around how are people meeting that need today? When we look at the prevalence of retail 1 day options, when we look at some of the equity trading that's happening. When we think about some of the other financial markets that people are speculating, are they getting that -- they're scratching that sort of dopamine hit that ordinarily they would have gor through iGaming in that area.

And I think there are many other closer substitutes we see social casino and other products as well. So I think the extent to which we can participate in that sort of white space, which is not our regulated, I guess, it's really interesting for us. I think there's a possibility that prediction markets allows people to play there, but I think there's other angles as well that we can contemplate.

Okay. Europe's largest gambling market is Italy. Business retook top spot there during Q4. Could you talk a little bit about what you're seeing there? There's obviously a licensing event? Do you see that as a big opportunity to get a step change in market share and perhaps ask you to touch on Snaitech integration, which this is where the rubber hits the road this year, I guess?

Rob, do you want to pick that up?

Yes, we're delighted of our performance in Italy. And this is our business since we acquired, it has gone from strength and strength, particularly from an online perspective. Since Snai came under the Flutter umbrella last year, we've really seen a turnaround in terms of the underlying performance, and that's into growth year-on-year, and we're operating some of the playbook that we've already deployed within Sisal. We brought it into an SCA framework. We've got the Sisal team, have got the experience of the market running alongside the Snai team. So we're really pleased about it.

In terms of the online licensing piece, we don't see that as a huge game changer in terms of market share. We think it's probably worth 1% or 2% market share to us. Clearly now, 1 of the interesting things when we have our operational reviews with the SCA team is the amount of times they use all-time high and record.

I mean every month, they're coming back. And they're actually -- the underlying performance is extremely strong, essentially in Sisal and Snai. We've got great business in Turkey, where the growth is 30% plus year-on-year. We've put a Poker product, the PokerStars transformation, the first part of that is in Italy, it's performing fantastically. We've actually had better numbers on our Poker product in Italy in 2025 -- at the end of 2025 than we did during COVID in an all-time record period.

So really we've got Tombola being deployed in Italy now as well. So really pleased with the trajectory in Italy and the growth prospects which we're seeing through this year.

At the same time you did Snaitech, you did NSX in Brazil to do that and you have upweighted your investment into Brazil this year. Looks like margin was pretty tough for everyone in H2, but what sort of underlying trends are you seeing there competitively in Brazil? Why is now the right time to put more investment in? And how should we think about the sort of growth prospects through this year and into next year.

So we're incredibly excited about the Brazilian market. It's a huge market, very soccer-focused, plays to a lot of our expertise. And we're really pleased with the progress that we've made since we bought Betnacional. So we've put a number of experts from around the business down into Brazil. A lot of their processes were actually quite immature when we bought them, they didn't really have any meaningful generosity or CRM, we've gone in and fixed quite a lot of basics, actually, in the second half of the year, lapping the regulation that obviously saw in the first part of last year, we've seen some brilliant green shoots within Betnacional.

And that gives us huge confidence to put this additional investment behind it. We think 2026 is going to be a key year. We feel really validated because actually, at the same time, the Betfair business that we had in Brazil, we've been struggling to get as much traction with that business. Whereas with Betnacional, we're really getting traction and moving forward. So we're tremendously excited. I think the World Cup is going to be a big event in Brazil as well. And I think our Brazilian business will go from strength to strength.

The 1 thing I'd add is when I think about the integration efforts that we're making, we've seen early success in casino. And I think we're seeing really strong performance there in Betnacional. We know we've got some exciting stuff to do from a user experience upgrade, we're going to deliver and all of our pricing capability or see in land. So we -- that's why we want to put our money behind the strength and momentum we're seeing in the market.

And the U.K., obviously, it's a big part of the international business. Obviously, some very difficult tax headwinds to face, what do you see? Are you seeing anything so far in terms of operator response? Or what should we expect in terms of what your posture will be, I guess, through that transition from April onwards?

We've made sure that we've positioned our business to think through the tax changes, right? So we're already reflecting that into all of our CAC to LTV calculations, and we set ourselves up to work on that basis. Even with that additional tax burden, I think we're very -- we see very good returns, right? So I think the question for us is how we can invest even more into the U.K. market.

We've got more headroom in gaming than we actually have in sports. And we think we've got some really good opportunities to dial that out with some of the content that we have. I think we'll see some of the longer-tail operators struggle post the tax changes, but I don't think they're going to take action before they start seeing their new tax bill landing and the impact that, that has in the business.

Okay. going to a little bit about '26 and leading to the '27 CMD guidance. It's been from September '24, when you laid it out, we've been working towards it. Obviously, with the '26 guide where it is, which is little progression year-on-year in terms of EBITDA. It doesn't make those targets look very stretching, let's put it that way. So I really wanted to focus, Rob, if you have a perspective on how that affects the cash conversion targets as well. Because I think that's a big part of what we found positive around the CMD, obviously, with less EBITDA progression that creates some sort of pressure, but you've also talked about optimization and platforming and all these other kinds of stuff in remarks. So how should we think about cash conversion in this business this year and into next year, what's the right kind of normalized state for improvement?

Yes, I mention just before I come on to cash quickly is that in terms of our medium- to longer-term guidance from an EBITDA perspective, we're very confident around the foundational blocks. So think about the key things and tenets that we talked about in terms of structural win margin, the progress that we're making around that, the penetration within the sportsbook, the iGaming growth, the operating leverage. These are all things that will deliver potentially been pushed slightly to the right from where they are, given where we are with our '26 guidance, but the fundamental foundation is still in place.

From a cash conversion perspective, there's a few things that give us real confidence about the ability to really dial up the adjusted free cash flow conversion over time. One is the transformation work that we're doing. So at the Investor Day, we talked about a $300 million envelope of costs that we're going to take out of the business. A lot of this delivered by the various transformation initiatives that we have in play, one being the PokerStars transformation, which we talked about earlier with Italy and other being the Sky Bet migration in the U.K., the Snai synergies, all of these progressing really well. By the time we get to '27, a lot of that will be delivered, and that cost will be out in the business.

That cost is exceptional costs at the moment. So that cost comes out of the business and hopefully leads like we've seen with PokerStars in Italy to some of the top line improvement as well. We're going to have CapEx efficiency. So if you think about the CapEx within the business at the moment, circa $800 million, a lot of that we're spending on tech and product. we're going through a review at the moment. But actually, of the 8,000 technologists that we've got in the business, a huge proportion of that is the software development life cycle. A lot of this is now being done by AI or supported by AIs. We're looking at the amount that we spend on tech within the business, there's huge efficiencies within CapEx.

And tax as well, which has made some changes to our debt structuring where we've moved some of our debt. The U.S. becomes more tax efficient, and we think we're going to make more tax over this time.

There's a bunch of things coming through, very quickly, I would say adjusted free cash flow conversion for '25 was around 25%. We think that will move into the low to mid-30s this year. And we're very much working towards our longer-term target of 40% plus.

Okay. In a few seconds we have left, Peter, when you look towards '26, what are you most excited about? What do you think is perhaps least appreciated about when you look at the business and excite you and when you talk to investors about where they are, what's the area you're most focused on?

I think we spend more time talking about international now just today than I have done in many meetings. And that I think is a very important component for us. When we think about the progress of some of these transformation initiatives and the impact that, that has on the sort of EBITDA progression that the business will have. But I think here in the U.S., our casino business is performing incredibly well and it's going from strength to strength.

We're really using our scale to our advantage there. And I'm super excited to see what we can deliver this year in sports off the back of the loyalty program changes we're making and some of the other initiatives we've got. And also this big new opportunity to go after the half of Americans who can't currently access our regulated OSB with Predicts.

Okay. Thank you very much.

Thank you.

Thank you for standing by. My name is Jayal, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flutter Entertainment Fourth Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Paul Tymms, Group Director of Investor Relations. You may begin.

Hello, everyone, and welcome to Flutter's Q4 update call. Joining me today are CEO, Peter Jackson; and CFO, Rob Coldrake. After the short intro, Peter will open with a summary of our operational performance in the quarter, and then Rob will update on our Q4 financials and new 2026 guidance. We will then open the lines for Q&A.

Some of the information we are providing today 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 results materials and our SEC filings. 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.

And I will now hand you over to Peter.

Thank you, Paul. I'm pleased to share our strong fourth quarter results and reflect on our strategic progress in 2025. Flutter is the world's leading online sports betting and iGaming company with unique advantages delivered through the Flutter Edge and a proven track record of delivery.

2025 was another transformative year for the company marked by our strategic execution, continued market leadership and disciplined investment, delivering group revenue up 17% and adjusted EBITDA 21% higher. In the U.S., we maintained our clear leadership position in both online sports betting and iGaming. We also launched FanDuel Predicts in Q4 to capitalize on the emerging prediction markets opportunity.

In our international business, we strengthened our portfolio with strategic acquisitions in Brazil and Italy, extending our positions in high-growth and exciting markets. We made significant progress on our transformation and efficiency programs, and we are well on track to deliver the anticipated revenue growth and cost efficiencies.

Our swift, disciplined responses to regulatory changes in India where sudden legislations changed for the cessation of real money gaming and to higher U.K. gaming taxes underscored our scale benefits and business agility.

We entered 2026 in a strong position, and I've never had more conviction in our ability to capitalize on the long growth runway ahead.

Turning to the fourth quarter. Our Q4 group performance was strong, with revenue up 25% and adjusted EBITDA up 27%. In the U.S., revenue growth was 33%, with adjusted EBITDA 90% higher, lapping the significantly unfavorable sports results in the prior year.

We delivered another superb iGaming quarter. Revenue grew 33% driven by 18% AMPs growth and an increase in player frequency as our successful content strategy and reward scheme resonated well with our customers. FanDuel sportsbook Q4 revenue growth was 35%. However, Q4 sportsbook trends across the market diverged from expectations.

High gross revenue margins were offset by moderating handle performance. As a business, we always consider net revenue as our core revenue KPI, and we, therefore, always consider revenue and handle trends together in conjunction with customer activity levels. This is particularly important this quarter as adverse recycling was a key driver of the lower handle growth, with consistently high gross revenue margins leading to lower levels of customer engagement.

In addition, the second half of the NFL season saw less compelling content, with fewer popular teams and favorite players making the playoffs this season, adversely impacting customer engagement. These market trends were far more pronounced for FanDuel for 2 reasons. First, our significant structural revenue advantage resulted in a greater impact from adverse recycling as FanDuel recorded persistently high NFL gross revenue margins throughout November and December. Overall, we finished the NFL season 100 bps ahead of our expected margin at 19%.

Second, our standard generosity playbook proved less effective in Q4 as our investment phasing did not sectionally align with the pattern of sports results during this period. As a result, we saw a higher churn within our customer base and results of loss of market share. We also don't believe prediction markets are having a meaningful impact on our business. As you'd expect, we've undertaken a comprehensive review and found no evidence of material cannibalization on our existing business. And this finding is reinforced by our Missouri launch, where customer acquisition trends exceeded expectations, reaching 5% of the population within the first 30 days, making Missouri one of our best state launches to date.

Moderated market handle trends have continued into the start of 2026. We believe these trends reflect the halo impact of the factors evidenced in Q4, and we continue to monitor trends closely. And as set out in our shareholder letter, we have a clear U.S. strategy for 2026. Our market-leading, highly profitable U.S. position is driven by product superiority, enabled by our exceptional pricing capabilities, combined with highly different customer acquisition. This has allowed FanDuel to deliver an estimated 70% share of market EBITDA. However, recent trends have led us to take additional actions to strengthen these capabilities to reinforce our leadership position. We will leverage our scale, proprietary technology and data advantages to deliver experiences competitors cannot easily replicate, including more intuitive bet building, smarter personalization and richer [indiscernible] engagement.

In addition, we're enhancing how customers feel recognized and rewarded, with more engaging reward experiences, including the launch of a new loyalty program, extending a core part of our casino success into sports. I'm confident that the ongoing improvements to our sportsbook product and generosity strategy will harness our scale and structural advantages, driving a sequential improvement in our performance throughout 2026 and deliver market share gains.

Let me now update you on production markets and how we're going after this opportunity. We believe that prediction markets will accelerate state regulation of online sports betting and iGaming. This, in our view, is the most valuable long-term opportunity in the U.S. In the meantime, the near to medium-term growth potential on prediction markets for FanDuel is significant. There is new TAM to go after.

Prediction markets will enable us to acquire new sports and entertainment-first customers into the FanDuel ecosystem ahead of potential regulation. We can deliver attractive returns by providing sports markets, so the 40% of the U.S. population we cannot currently access, online regulated sportsbooks. We are exceptionally well positioned to harness this opportunity, and we launched our own offering, FanDuel Predicts, in Q4. Early signals have been encouraging, with most activity focused on sports and with average volume per customer in line with expectations.

We are also actively pursuing options to leverage our world-class proprietary pricing capabilities for market-making services, and we'll share further details in due course. Rob will update on our predictions market financial guidance. But as outlined in our Q3, we'll invest meaningfully with the ambition to deliver a leading position in this space. The opportunity across prediction markets is certainly far bigger than any potential cannibalization for existing sports.

Moving on to our international business. International revenue grew 19% in Q4 and adjusted EBITDA increased 6%. We are making excellent progress on our strategic transformations and integrations, building a strong platform for future revenue growth and delivering cost savings. In the UKI, the SkyBet sportsbook migration has delivered the expected cost savings, and we are now accelerating customer-facing investments to restore momentum. In SEA, Flutter gained the Italian online market leadership position in Q4. And the results of the PokerStars migration in Italy have been very encouraging, with revenue growth of 13% and new customer volumes more than doubling in Q4. PokerStars migrations will continue at pace into 2026 following the successful precedent we have now created in Italy, driving further growth and delivering planned cost savings.

The Snai business integration is progressing well. Customer acquisition initiatives, including Sisal's retail sign-up model and restructured generosity to boost cross-selling reactivations, drove all-time record iGaming AMPs and ensured Snai finished the year in revenue growth. The planned platform migration in Q2 will further accelerate this growth by providing Snai access to a vast, expanded product suite, including Sisal's leading products such as myCombo.

In Brazil, improved casino and digital marketing capabilities drove a surge in customer acquisition, up 51% since the start of the year. We believe the Brazilian market presents a significant and compelling growth opportunity for Flutter. The 2026 FIFA World Cup represents a unique moment in a soccer-obsessed market for us to take market share. As a result, we expect to invest more. And while extending our investment time line shifts the phasing of profitability, we have strong conviction that disciplined near-term investments will build a larger, more profitable and sustainable business over the long term.

Looking ahead to 2026, I'm confident in our strategic positioning. There are compelling plans in place to strengthen our leadership, unlock future value and deliver sustainable growth.

I'll now hand you over to Rob to take you through the financials.

Thanks, Peter. I'm pleased to present another quarter of strong financial delivery. Group revenue increased by 25% and adjusted EBITDA grew 27%, driven by good year-on-year performance across both segments and the successful integration of our recent acquisitions. As Peter noted, we are making excellent progress on our strategic transformations and integrations, and we are firmly on track to achieve our targeted $300 million cost savings by 2027.

We're embedding rigorous cost discipline across the business, identifying new efficiencies and optimizing opportunities to protect margins and fund strategic growth investments.

In the quarter, group net income was $10 million, compared to $156 million in the prior year, as the strong adjusted EBITDA performance was offset by higher interest costs relating to the financing of our strategic M&A and increased tax expense, reflecting the significant step-up in U.S. profitability year-over-year. Earnings per share and adjusted earnings per share declined by $0.50 and $1.20, respectively, reflecting these factors.

The group's net cash provided by operating activities declined by $224 million to $428 million, priorly reflecting the cash impact of these increased expenses and a $128 million adverse impact from a lower level of customer deposit year-over-year. Free cash flow declined by $335 million to $138 million, including the impact of M&A and increased investment in capital expenditure. The higher CapEx was driven by phasing of Italian concession payments and investment in future revenue-enhancing and cost efficiency projects, such as our PokerStars transformations.

We completed $245 million in share repurchases during Q4, bringing full year 2025 repurchases to $1 billion, in line with our guidance. Our disciplined capital allocation policy provides the flexibility to respond effectively to evolving market conditions and emerging opportunities. We remain committed to our long-term policy of returning capital to shareholders. We now expect [indiscernible] returning $250 million in H1 2026, and we'll provide guidance on our future buyback cadence as the year progresses, preserving our flexibility to invest in the business and strengthen our balance sheet.

We ended the year with a leverage ratio of 3.7x. Strong profit growth and cash generation will continue to drive leverage reduction throughout 2026, moving us towards our target ratio of 2 to 2.5x over the medium term.

Moving now to our outlook for 2026. In the U.S., we expect revenue of $7.8 billion and adjusted EBITDA of $1.05 billion, translating to year-over-year growth of 12% and 14%, respectively. This includes new state investment of $70 million in adjusted EBITDA as we expect to launch Alberta in Q2. The guidance also reflects current trading where the impact on our customer base from the very high gross revenue margins achieved in the second half of Q4, alongside a less compelling end to the NFL season, has driven lower customer engagement levels into 2026. Outside of NFL, year-over-year trends improved in February.

Although we believe that these market trends are largely transitory, we have taken a measured view of how these trends will progress, including when market handle growth rates will recover from the Q4 recycling impact. We also expect a sequential improvement in FanDuel's relative performance to the market due to improvements to our sportsbook products, generosity strategy and the launch of our new loyalty program during the year.

And we now expect that our prediction markets investment will be towards the upper end of the previously guided range, closer to $300 million, to reflect the significant opportunity we believe exists to drive customer acquisition. While it's still very early days, our view remains that the shape of the profit ramp for prediction markets should be similar to new sportsbook state launches.

In international, we expect revenue of $10.6 billion and adjusted EBITDA of $2.23 billion, revenue at the midpoint, representing year-over-year growth of 13% and 1%, respectively. We are really pleased with the underlying momentum in the first 2 months of the year, particularly in SEA where we have extended our online market leadership in Italy. The guidance incorporates an investment in Brazil of approximately $70 million to grow our market position and the previously guided impacts from the U.K. tax increases and the Indian market switch-off.

We expect our unallocated corporate cost to be $310 million, a $30 million increase compared with the prior year. This reflects an increased 2025 base driven by investment in shared technology, talent and costs associated with our U.S. listing, which will continue in 2026.

To conclude and reiterate Peter's conviction, we are excited for the year ahead and look forward to another year of strong execution. With that, Peter and I are happy to take your questions. I'll hand you back to Jayal to manage the call.

[Operator Instructions] Your first question comes from the line of Jordan Bender of Citizens.

Peter, I wanted to start with one of the quotes from the press release where it says it's difficult to be definite when market handle growth rates will recover from the impact in 4Q recycling. I guess what I'm trying to figure out here is, do you think any of this, what's going on, could be structural in nature? And do you ever see this type of phenomenon happen across any of your other sports markets globally?

And I guess the second or the follow-up questions that is, your sportsbook [indiscernible] were up 4% for the year. The story around increasing penetration into existing states is something that you've spoken to in the past. So I'm curious where you think you stand in terms of net new customers to support this environment where we are seeing handle flow?

Jordan, look, let's start with your question around sort of handle and how that compares with other markets that we operate in. And I think it's worth acknowledging that the period of time we're talking about in the U.S. in Q4 is in the football season. And I've talked before about the very high levels of volatility that we see around football in the U.S.

So I think when I think about other markets, the soccer-driven markets we see in the U.K. or Italy, rating in Australia, we would see less volatility and less sustained periods of sort of very positive sports results. And I can remember this time last year when we were talking about the football season and people were concerned as to whether we could ever see positive sports results in football.

Clearly, this season, we've seen very strong results. And as I stated earlier, we've seen a margin of 19% across the full football season. And so when you compare that with last year and the very substantial step-up in margins year-over-year, you would expect to see a commensurate drop in handle, right? It's the maths in terms of how it works from the customer play.

So that phenomenon sort of recycling and the impact that margin has on sort of growth of [ stakes ] is something that we've seen before.

In terms of your second question around sort of AMPs, I think the important thing is that our sportsbook AMPs in our pre-2025 states were also growing in Q4. And look, in the combined sports and iGaming business, we saw mid-single-digit growth. So we're still seeing growth in the old cohorts.

[Operator Instructions] Your next question comes from the line of Paul Ruddy of Davy.

Peter and Rob, just on -- it's a little bit of a follow-up to ask, but on the structural hold piece, it looks exceptionally strong. Has there been any change in strategy around pursuing a more a whole positive handle passive strategy in the way you've set yourselves up? And maybe if you could just give if there is any clarification on what you think the actual amount of handle impact might have been year-on-year from that recycling impact?

Paul, I think one of the things I'd state is when I think about the NFL season this year, when you look at the sort of the quality of the teams that got into the latter stages of the competition, there were a lot less of the sort of key marquee players involved. And that has a significant impact for us because of our dependence on the parlay market. I actually suspect that we saw lower levels of parlay penetration than we would otherwise have done if we'd had match-ups like we've had last year. So there's nothing -- we've not changed our [indiscernible] or anything like that. We simply saw a very considerable set of consecutively positive sports results.

I think 10 out of 11 weeks, we saw very favorable weeks of above-average margin there, a number of weeks above 30%, which we think has a relative impact on sort of customer sentiment when you get those sort of levels.

And then in terms of the black art of trying to work out, if it were not for that, what would have happened to handle? And it's very difficult. And I think there's a lot of -- it's a complex relationship between those things. And of course, you've also got to overlay what's going on from a generosity perspective as well. So I think it's hard for us to make a full assessment.

Your next question comes from the line of Barry Jonas of Truist Securities.

Can you maybe talk a little bit about the prediction product today and how you see that improving moving forward? And then maybe as a follow-up, curious to get your thoughts on probability of more U.S. state tax increases here? And is there any scenario where you might exit OSB in any uneconomically viable state to focus more on FanDuel Predicts?

Barry, yes, look, we've -- obviously, we're pleased we've got our prediction market product into -- from a sports perspective, into those 18 states where we can't currently offer our regulated OSB. Clearly, that's a lot of incremental opportunity for us to go after, that otherwise we couldn't have had.

We have got good plans to improve the breadth and quality of the product we have over the course of this year. There's, obviously, the World Cup coming up shortly, which is going to be a very important opportunity for us to showcase the quality of our soccer products, both for the half of America, who are in states where there's regulated OSB, where we'll be very excited about that. But also into the heart of America, who will be reliant on our Predicts product. Soccer is actually the fourth most popular sport for us by GGR. So I think we're excited about that. And we believe that we have a lot of expertise in that globally and, of course, can couple that together with the quality of the FanDuel brand and our experience on the bettor exchange to really push hard. There's lots of other product enhancements we intend to make over the course of the year before we get to the start at the NFL.

From a tax perspective, Barry, we're clearly at the outset of the year and moving into legislative season. As ever, there will be some noise and soundings about tax increases in certain states. I mean on the positive front, actually, just before coming on this call, we've had positive news getting a license in Arkansas, which is a positive move for us.

And ultimately, if we do see any tax increase, there aren't any that we see [indiscernible] certainty at the moment. But as a scale operator, we're very well-placed to mitigate those as we've proven in the past, and we have levers at our disposal, costs that we will use to mitigate that and work through it.

Your next question comes from the line of Jeff Stantial of Stifel.

Maybe starting off on the handle trends in Q4 and year-to-date, Peter, you talked to some market share loss, which is expected to moderate as the year goes on. But if you look at performance in the Missouri launch, there really doesn't seem to be much dilution of market share at all. So maybe could you just help us reconcile those 2 data points? And then for my follow-up, Rob, it looks like unallocated corporate is pacing well above the '27 targets that you introduced a few years back. Can you just frame for us what's changed, if anything, and where do you go from here?

Jeff, you're right, we've been very pleased with the launch in Missouri. And as I stated earlier, it's one of our most successful state launches to date in terms of the population penetration, and I think we're very pleased with that. I think it's -- and it's down to our excellent new state playbook.

I think the point I'd make around some of the handle trends that we saw in Q4 last year, it really ties back to some of what Rob was talking about in terms of the very strong and sustained periods of very high margins, coupled with the fact that we saw less popular teams getting into the playoffs for football. I suspect that there were some of our customers who -- to use another sporting analogy, put their cues back in the rack, and stopped betting.

So I think what we'll have to do is reactivate those customers. We're excited about the product changes that we'll be delivering over the course of this year. I mentioned the loyalty program, the changes we're making to generosity, we've got the World Cup coming up. So I think there's a lot of great opportunities, March Madness, for us to push hard and get these customers back on our platform.

From a corporate cost perspective, Jeff, there's a couple of points to make. So we are slightly above our original guide. There's a couple of [indiscernible] points to this. The first is we obviously resegmented the business at the start of 2025, and we saw some additional costs move into corporate as a result of that resegmentation. The second point with regards to 2025 is we actually had some reduced revenue-driven cost allocations as part of the year-end closeout, which is just kind of left pocket, right pocket.

We have been investing in cost [ and the ] center overall with the Flutter Edge, and we're seeing excellent payback in terms of the transformation, strategic transformation work that's going on across the group. And what I'd say lastly is actually we've just kicked off a comprehensive cost optimization program across the group, and we are looking to optimize further efficiencies as we go through 2026.

Your next question comes from the line of Brandt Montour of Barclays.

So digging into U.S. revenue guidance for low-teens growth expectations, I think we kind of got a sense now for sort of some conservatism around handle. Have you guys changed your philosophy around how you guide for sport [indiscernible] or for structural hold within that guide?

I'll pick this up, Brandt. So we've not changed our philosophy. What I'd say in summary for 2026 is we've taken a sensible measured approach to our guidance. The guidance includes 12% revenue growth for 2026 and 14% EBITDA growth in the U.S. We're not including any revenue from prediction markets, and that's as we want to trade through the period initially before we take a view on that.

As Peter mentioned, that it's quite a complex relationship between handle and gross revenue margin, and that's why we look at revenue as our core KPI and we guide to revenue only. We also haven't talked about iGaming yet, but we're assuming that the iGaming growth continues in the high teens, and we'll have double-digit sportsbook growth on revenue.

So overall, as I said, it's a sensible measured approach that we feel comfortable with. We should also see some sequential improvement through the year as we land some of the products and generosity initiatives that we talked to in the shareholder letter.

Your next question comes from the line of Ed Young of Morgan Stanley.

My question is around the less effective generosity playbook. You mentioned phasing, improved competitor offerings and elevated generosity in the market. So my question is, how should we square your commentary around your new generosity strategy, you said you want to be sort of disciplined but also competitive? Is that you saying effectively that you need to make your scale count by keeping your generosity at higher levels?

And then my follow-up is the commentary is also that the improved capacity offerings. So what's not worked on the product side to maintain sufficient leadership versus competition? And what sort of additional investment are you making or do you think you need to make to make that right?

Ed, thank you for the question. On generosity, look, I think it is a very important sort of topic for us. I talked about some of these heightened levels of margin that we saw. I think -- look, it's fair to say that we didn't execute our generosity strategy as well as we should have done. We pushed hard in the beginning of Q4, and actually, when you look at what the pattern of gross margins were throughout the back end of Q4, we just saw this very sustained period, including a number of weeks, as I said earlier, above 30%.

We should have pushed harder generosity at those points, and we didn't. And that's something that we will address and make sure that we incorporate into our playbook for the future.

So this isn't about putting more money on the table. This is about using what we have in a smarter way.

I think tying to that point about being smarter with it, when I look at what we do with our casino business, we get a lot more credit for the generosity we give our customers there as a result of the loyalty program that we have. The rewards program has been really a really important driver of the success seen in casino. We must be one of the few consumer businesses in the state that doesn't have a loyalty program [indiscernible] sports. It's been very successful for us in casino. And we -- as I said, we'll bring those -- we'll bring that experience into our sports book, which I think will be very important. That's something that we'll do in Q2 this year.

So we're going to remain disciplined. We saw a very unusual situation over the last couple of years where we've seen low margins in football sort of very high and very sustained periods of margin, and we didn't have the right playbook or tools really to be able to deal with it.

Picking up on the second part of your question, Ed, around products. We don't necessarily think this is something that's not worked for us per se, but more about the narrowing of the gap in terms of the product advantage that we've typically held over the last few years. And as we think about this, we're looking to double down on the product advantages we've had previously, and we're working on a number of things, both in the U.S. in our international business.

As we outlined in the release, there's a few specific areas, so we're looking at differentiation and innovation and really enhancing our SGP offering. You'd see actually outside of the U.S., in Italy, our myCombo products working extremely well for us, and that's allowed us to take the leadership position back in Italy. The rewards piece that Peter talked about, and also just elevating that the core journeys and the personalization and experience of being on the FanDuel site, which we've got a team working on.

The other piece, which we obviously talked about a lot previously, is our outcome-based pricing and how this really provides the structure and the foundation behind our product innovation and improvements moving forward. And we still remain incredibly excited about this. It's taking a while to work through, but fundamentally, we expect this to be a significant product advantage for us when we fully land and roll that capability out.

Your next question comes from the line of Shaun Kelley of Bank of America.

I want to follow up on Rob's comment about the double-digit growth you're seeing in sports book or you're expecting, I guess, embedded in the guidance. Just Rob, can you help us compare that to the run rate you're seeing in the business right now? I know current quarter is a little harder to comment on. But the market has been so dynamic, it's been a little hard to track. And while we can see handle numbers, it's harder to get that full NGR picture. So any color you could give us there to kind of square what you're seeing in the business with that outlook would be helpful.

And then also, if you could just comment maybe high level on what you're seeing share-wise for the NBA, because it feels like we've seen that as a product that Flutter has historically done extremely well in, but we've seen some competition ramp-up there.

Shaun, so yes, in terms of current trading, we started off the year with a continuation of the trends that we observed late in Q4, so the closing stages of the NFL season, as Peter alluded to, including the playoffs and the Super Bowl, saw some slightly less compelling player narratives, and that drove continued low levels of customer engagement into the start of the year.

But outside of the NFL, we start to see trends improving month-on-month into February, which is encouraging. We think some of the customers we're seeing from the positive sports results persisted into January as well. As Peter said, we have 10 out of 11 positive weeks. We ended up the NFL season with a 19.3% margin on NFL, which is incredibly strong for season overall.

And in terms of February data, based on the small sample that we have, the week-to-week volume trends are definitely improving, suggesting that part of this was potentially an NFL season specific dynamic.

But at this stage, it's still quite early. Visibility remains slightly limited on whether the current market dynamics will be short-lived or what we'll see over the next quarter or few months. But we're quite confident about our Q1 guide, and we'll continue to monitor the trends very closely. And we're confident that we have the right plans in place to continue improving our U.S. performance over the course of the year. And we've definitely seen a sequential improvement even over the last few weeks.

On the question around sort of high level on NBA, look, this has always been an area that's important to us. Again, it's down to things like the quality of the players that we have engaged in the games with the strength of our parlay offering. There are -- there's inevitably a bit of a bleed across between customers who are betting on both football and NBA, that [indiscernible] very high margins on football inevitably will have some impact on the ability to take on NBA.

[Operator Instructions] Your next question comes from the line of Jed Kelly of Oppenheimer.

Great. Just going back to your prediction markets, do you feel like you potentially would want to acquire your own DCM license just to control your own destiny? Or can you just talk about how your JV with CME is progressing?

We spend a lot of time working on how we wanted to tackle prediction markets. I think we've got our products into the market. We're into those 18 states that we can't offer our regulated sports betting products in. And look, we're going to make a series of product changes over the course of this year. We're very happy with the CME, a strong pipeline of product improvements coming through. I also referenced some of the stuff we're looking at around market-making as well.

So there's a lot going on in this space. We're investing -- we plan to invest a lot of money. And look, I hope we sit here in a year's time when we've been able to invest very successfully and acquire a lot of customers onto our platform.

Your next question comes from the line of Dan Politzer of JPMorgan.

I want to go back on prediction markets, unsurprisingly, I guess. I guess what have you seen that justifies the incremental spend there? Because it sounded like things so far were tracking in line with your expectation. And along those lines, how do you think about the competitive landscape evolving if and when we do get perfect regulatory clarity here?

Dan, we've got experience of investing organically in our business, right? I mean I think about what we're doing in Brazil at the moment, I think about all the quarters we had post [indiscernible] repeal. But we've always taken a very disciplined approach when opportunities arise. And we will make sure that we acquire as much business as we can.

Clearly, the phasing of our marketing will align with our sort of product road map and scale over the course of this year. This quarter is more about sort of test and learn to understand how we optimize our spend and drive conversion. We expect to invest heavily in the second half of the year. And look, given the opportunity we see, we expect to be towards the top end of the figures. But I reserve the right to spend more if we find opportunities are bigger.

Your next question comes from the line of Bernie McTernan of Needham & Company.

This is Stefanos Crist calling in for Bernie. Just wanted to follow up on Arkansas. We understand there's the 51% revenue share. Just wanted to ask why launch now? And maybe why not do predicts instead of the traditional sportsbook?

Look, I'm happy to pick it up. And I think what we've seen in Missouri with our new state playbook, I think, is a really good example of when -- given customers or consumers the choice, the breadth of offering that you have in a traditional OSB together with the generosity playbook you can provide means it's a much more compelling offering. So look, we're super excited. That's what our sort of -- true north is for us in the business. We'd like to see more states passing regulation for OSB and, indeed, iGaming. Look, it's -- those 2 areas, we'd love to see more state pass. There are only 2 national players in the state. So we're excited to get our playbook going and see what we can do in the state.

Your next question comes from the line of Ben Shelley of UBS.

Do you expect U.S. online sports betting market share to stabilize in 2026? And more broadly, what's giving you confidence in sequential improvement in your competitive position through the year?

Ben, we are confident in the quality of the products that we have in the market. We're excited about the introduction of our loyalty program. There is more work we're doing around generosity. And as Rob mentioned on the question earlier, there are enhancements that we're making our products as well. So I'm very confident in our ability to execute. We have consistently done that. And I think that we will be able to hold our market share. And look, I'd like us to take more market share to the extent that we can get good returns on it, and we will spend that money.

Your next question comes from the line of Clark Lampen of BTIG.

My questions are related to the sportsbook loyalty program, I think, Peter, number one, just for clarification, I think you said that that was going to roll out in Q2. We wanted to make sure that they have that correct.

And then second, I wanted to see if you could give us a little bit of color around when you introduced the same offering for your iGaming business, what the immediate impact was. Is it the revenue driver? Did it [ skew ] with promo? I think that there have clearly been a bunch of questions on the call before around the direction of promo. So maybe with that as a reference point, was it helpful to promo? Was that a source of leverage, I guess, for iGaming when you introduced that? Any color that you can provide or reference points would be helpful.

Clark, I mean the perspective from our casino business, where our rewards program has been a really important part of the success of that business, we've got a record market share in Q4 with 28%. And we're still building the rewards program, right? There's still changes we're making. We're still integrating more of the generosity into the program. So we've been at it a long time in the casino business, and there's still a way to go. So it's a little bit like our parlay products. We're never done. There's always improvements and changes we can make.

So look, we will launch the loyalty program for our sportsbook. And I think one of the immediate benefits that we've seen in casino is that you get much better sort of saliency from your customers around the rewards that you're giving them. And I expect to see that happen in our sportsbook, and I mean there's -- we sometimes describe it sort of [indiscernible] labeling. And I think that's the immediate step-change we'd expect to see. And so I hope it will help drive increases in wallet share.

Your next question comes from the line of Ian Moore of Bernstein.

One on capital allocation. How would you rank, I guess, the different inputs you're weighing and deciding at what point you become more active on share repurchases through the year? And I guess any update you're willing to give on progress toward resolution of the FOX option?

Maybe I'll start with the capital allocation question, Ian. So as I mentioned in my prepared comments that the capital allocation framework remains consistent with what we outlined at our Investor Day in 2024, and we remain committed to the long-term policy of returning capital to our shareholders. As we often say, we are an [indiscernible] company, so we'll ensure our capital allocation decisions are balanced by the opportunities to invest for growth but also to optimize the leverage over time. And our current approach really provides us with the flexibility to respond effectively to evolving market conditions and emerging opportunities. And in 2026, we'll prioritize significant capital deployment across both the organic investment in our core business, which has historically yielded the highest returns, by the way, and strategic investment in the newly emerging prediction markets opportunity.

So there's a lot to go after. We continue to generate a lot of cash in this business, and we can and we'll delever quickly. But there's lots of interesting and exciting allocation opportunities ahead of us through 2026, which we want to get behind.

There's nothing to say, Ian, on the FOX option at this stage. .

Your next question comes from the line of Robert Fishman of MoffettNathanson.

Any more color you can provide, I think you said high-teens growth that you're expecting for the U.S. iGaming in 2026. Just how sustainable do you think that is as we think about the years ahead?

Well, if you think about the iGaming market in 2025, it grew around 26%, and our revenue growth was 33%. I think as the states mature, we'd expect some moderation of that growth. But we feel confident it's going to continue to be mid to high teens. Therefore, we do expect continued strong growth and are excited about the product road map that we've got in iGaming. There's definitely still a long way to go on the penetration rates in iGaming. If you look at what we set out, I think it's 9.5% at the Investor, about 6.5%, I think, as we stand today. So lots to still go after there, and we're incredibly pleased, as I said earlier, with our iGaming performance.

Your next question comes from the line of Joe Stauff of Susquehanna.

Peter, Rob, just sorry about it, but I wanted to ask a little bit more just on generosity investments and those returns in -- for FanDuel. So it certainly makes sense, right? In casino, you get higher return, you get more betting events, that makes sense. But do you get a return, does that -- that seems to me to be a unique customer, meaning that customer doesn't necessarily cross-promote into OSB. And so your generosity investments in OSB, at least for that, does cross-promote. Is that maybe part, I guess, of what we're trying to figure out what happened essentially in the third and fourth quarter with respect to like your approach? Because obviously, you're gunning on the iCasino, and it's worked. I was just wondering if that's part -- if that's a realistic understanding of kind of how you're allocating that capital and why the returns are lower.

Yes. Joe, I think there's 2 things going on, and I'd just make sure I understand your question. I think effectively, we did not deploy our generosity efficiently in Q4. I mean particularly when you think about the very long sequence of very high margins, particularly with some of those real peak weeks. We were not efficient and effective. We should have been deploying more generosity at those points there.

I think separately, we have had lots of success with deploying our loyalty or rewards program into casino. In all of our businesses, we deploy a lot of generosity to customers. And one of the advantages of bundling up that generosity within a loyalty program is consumers understand better what's been going on. And I actually think one of the issues for us in Q4 is a bit of a whipsaw way, generosity was on, it was off, it's on, it's off. And particularly at a time when margins were running very hot, I think we're probably causing a bit of confusion amongst our customers, and we're just not deploying it effectively. So that's what we're going to address, get to a more efficient and effective distribution of generosity. I think that's very important.

Your next question comes from the line of Chad Beynon of Macquarie Group.

With respect to the upcoming U.K. iGaming impact, has anything changed just in the current landscape in terms of how your competitors are maybe running their business, promos, marketing, et cetera? And could this potentially adjust how you're thinking about mitigation?

Chad, well, we obviously laid out our top level plans for mitigation when the changes were introduced in Q4 last year. And to this point, we're not seeing anything different to what we'd anticipated in terms of activity. But it's actually early days because the tax changes don't actually hit until April. And what we expect will happen is that people will start to moderate behavior from that point onwards.

If you think about the market share of iGaming in the U.K., there's a very long tail. So the circa 30% of the market share is in the long tail, with much inferior economics to us given our scale. And actually, we fully anticipate that there will be some changes in marketing and generosity and return to player dynamics as we move through the year. We were reasonably conservative in terms of our view, in terms of what we recapture versus the tax increase. And we still remain confident in [ that ].

Your next question comes from the line of John DeCree of CBRE.

Peter, I wanted to circle back to a comment you made in the prepared remarks of your sentiment, that we share as well, and that is prediction markets should accelerate OSB and iGaming regulation in the states. So curious if you could share any more color on that view and your perspective. You probably have as good of a view or better than anyone. And what kind of inputs help you feel confident or -- that that might come to fruition?

John, we have -- I think we're singing to the choir if you're in agreement with me, I think we do believe that the noise around prediction markets, and it is an opportunity for us to acquire customers in advance of states regulating. But we do think it will help hasten the regulation of iGaming and online sports betting. We've got an extensive team who focus on this, and we're having some very fruitful conversations at the moment. Look, we've just had some good news in Arkansas, who knows where else the next future drop will be. I'm excited to see some of our iGaming states coming on at some point soon. .

Your next question comes from the line of Monique Pollard of Citi.

Apologies if I missed it, but I couldn't see anywhere, if you could help clarify how much you spent on FanDuel Predicts in the fourth quarter. Just conscious that you didn't have -- it was only a handful of states during Q4 before the wider launch in January. And basically, the follow-up question to that is me just trying to understand how much of the guidance change in the FanDuel Predicts for 2026 to the upper end. Is it just a timing shift versus how much is it that you've seen something in the predict customers you've acquired so far that makes you think it's worth pushing more aggressively on that opportunity in 2026?

Yes. Monique, it's Rob here. We didn't actually confirm a number in the release, so you didn't miss anything. It is actually lower than the $4 million to $5 million that we guided at Q3, so ended up spending slightly less than that in the quarter. .

I think Peter outlined earlier on very well what our intentions are for 2026. So we've now said that we're going to be towards the top end of the range. What I would say is that, within that, we retain our right to have flexibility on that spend. It's a very fast-moving category, and our investment will ultimately be driven by the types of returns that we see. But ultimately, both of us would be delighted to be sitting here at the end of the year saying that we've actually invested at the top end or beyond that envelope because that will mean that we're really achieving traction in the prediction market space.

Your next question comes from the line of Ryan Sigdahl of Craig-Hallum.

Peter, I hear you on the NFL playoffs. I know we were all sad the Vikings didn't make it. The question is, given the more pronounced moderation in customer activity and the unfavorable recycling in the U.S., I guess, especially relative to your peers, curious how the company -- how you plan to maintain your structurally higher hold while also retaining share of players' wallets?

Ryan, yes, I mean, I think we've discussed some of these factors already. The key issue that we saw in Q4 wasn't that we had, over the course of this full season, the 19% margin, that was great. And you look at where the gross margin was for Q4 and we were in line with what we anticipated doing for 2027. The issue really was how we deployed our generosity. And that's something that we are addressing. I talked about that. .

We've got to make sure that our -- the generosity strategy reflects what we're seeing in the market. And those -- look, 10 out of 11 weeks with very high and sustained margins and then a number of weeks at 30%, those -- they really impacted our business. And the relationship around what we're doing with generosity with where margins are, the sort of hangover impact that you get for a couple of weeks after those very high margins is something we want to make sure that we address.

Personalized generosity is the way to deal with that. Because, of course, even when we're talking about very high margins, there's still averages and there's customers who've done well and customers who have done badly within that. And that's what the team have got a lot of experience of doing in Australia. We're learning from that and deploying it into the U.S. business.

So this isn't so much a matter of the issue of the high margins. It's more how we make sure that we spend generosity effectively, customers understand what's happening, and we don't have the sort of the situation where we're [ bidding consistent], and that is not helpful for customers, particularly for these consecutive high margins.

And your last question comes from the line of Richard Stuber of Deutsche Bank.

Just for me, a question on to credit cards. I did read somewhere that you now stopped taking credit card deposits. I was wondering, have these credit card deposits been largely offset by the same customers using alternative payment methods? Or have those credit card customers broadly left then? And is that sort of a similar thing which your competitors are doing in terms of credit cards? .

Yes. Richard, this is something that we know and have been anticipating, and obviously something that we've navigated in a number of our markets around the world. But we're actually anticipating a de minimis impact from this. It comes in at the start of March. It's within our plans. And we're not expecting it to have a material impact.

Okay. I think we are done with the questions. Thank you very much, everybody, for dialing in. Much appreciated.

This concludes today's conference call. You may now disconnect.

Ladies and gentlemen, good afternoon. I would like to welcome everyone to Flutter Entertainment's Third Quarter 2025 Update Call.

[Operator Instructions] And I would now like to turn the conference over to Paul Tymms, Group Director of Investor Relations. You may begin.

Hi, everyone, and welcome to Flutter's Q3 update call. With me today [indiscernible] CEO, Peter Jackson; and CFO, Rob Coldrake. After the short intro, Peter will open with a summary of our operational progress, and then Rob will go through the Q3 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 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 statement, 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 pleased to report a good third quarter, the continued momentum in both our U.S. and international businesses. During Q3, we saw over 14 million average monthly players engaging with our products. driving revenue 17% ahead year-over-year and adjusted EBITDA 6% higher. While we reported a net loss for the quarter, this is driven by the noncash impairment charge following the regulatory changes in India and the previously communicated payment support for improved U.S. market access terms.

Customer friendly sports results in September and October, which is that we've previously outlined our transitory in nature mean we are reducing our full year outlook for 2025 by $280 million in adjusted EBITDA, but the underlying business is performing well. and I'm really pleased with the strong positioning of Flutter core business as we continue to execute in the final quarter of the year. Before I provide an update on the Q3 performance of the U.S. and international businesses, I'd like to share how we're strategically positioning FanDuel to capture the emerging prediction markets opportunity. I'm very excited to announce our expansion into this market with the launch of [indiscernible] in December. We will immediately unlock significant incremental addressable market by offering a compelling sports product with a vast majority of the U.S. adult population and those states currently without sports betting. Entertainment on financial production markets will also be available.

[indiscernible] is exceptionally well positioned to capitalize on this opportunity through our strategic partnership with CME Group combined with [indiscernible] nationwide brand customers, market-leading sports betting expertise and 2 decades of our own experience operating the beta Exchange. [indiscernible] will also accelerate acquisition of customers into the facial ecosystem ahead of the state legalization of false betting.

Furthermore, the strength of our world-class pricing and risk management capabilities that market-making opportunities which we continue to assess. We believe the sports collection market opportunity lies solely and misstates currently with our sports betting access as we can clearly see prediction markets are having a negligible impact in the state where FanDuel sportsbook is already available to customers. The opportunity to extend the FanDuel footprint into these new states is significant and our aspiration to be the clear market leader. Our investment will therefore be meaningful while maintaining the disciplined approach has served us so well since the inception of the sports betting in the U.S. In summary, we believe this is a hugely exciting opportunity for [indiscernible] and one that we will seize.

We have successfully demonstrated that we have the capabilities to win in force betting and iGaming and I firmly believe this will also be the case for production markets. This is all in addition to our existing regulated business. And the long term, we firmly believe that it is state regulated sports betting and iGaming that remains the most valuable long-term opportunity in the U.S. The importance of having the best quality sports betting product combined with the ability to price increasingly complex sports products accurately cannot be overstated. These are both areas where Flutter and [indiscernible].

And as demonstrated by International President, long-term success in the U.S. gaming sector to be achieved by those operators with score positions and the highest quality sports betting follow-up. Turning now to our existing business in the U.S. We maintained our clear position as the #1 online operator in both Sportsbook and iGaming. And growth of 8% year-over-year is encouraging, driven by strong iGaming AMP growth of 30% and accelerating sportsbook and growth of 5%. From a revenue perspective, we delivered growth of 9% and led by exceptional iGaming performance, where our revenue was up 44% year-over-year, delivering 27% GGR market share in Q3.

We added over 500 new slots titles during the quarter with our proprietary flatter gaming platform, enabling faster content delivery. The exclusive concept continues to drive customer engagement, including new [indiscernible] and Samurai titles and the latest huff-and-puff installment, tough and lots of tough with our most successful game launch to date, has seen record engagement in GGR levels. With population penetration currently well below long-term expectations. We see significant runway for growth in the existing states with further safe utilization of further incremental opportunity.

In sportsbook, while September and October have been impacted by customer-funded NFL sports results, we are clear that this is just the normal ebb and flow of sports outcome, and we maintain our absolute conviction in our pricing accuracy. The NFL is a very concentrated schedule, and this drives intense customer engagement and a small number of events. [indiscernible] and an NFL game is typically 5x asset an NBA gain increasing to more than 10x for standalone games. This can result in greater variability in the short term as we have seen in recent history, but we are confident that our reported margin will refer to expectations in the longer term. The start of the NFL season consistently sees heightened levels of competition in the market. In Q3 of this year was even more pronounced than in previous years, with September characterized by exceptionally high level for competitor generosity. These dynamics temporarily impacted Sanjel's NFL handle growth and [indiscernible] penetration in the opening weeks of the season as we deliberately chose to not match these uneconomic offers.

This disciplined approach helped deliver an NGR market share of 47% in September. While market competitive intensity has moderated from the NFL season start, it still remains elevated levels. Fang scale as the #1 operator in the U.S. has subsequently enabled us to take action to strengthen our market leadership. We responded in a strong but disciplined way at the start of Q4 with increased investment in customer acquisition and retention and we've been very pleased with the momentum that this has driven. The NBA season launched in late October, and we're off to a good start. Customer Engagement handle and same game parlay penetration are all tracking strongly in the early weeks of the season giving us confidence that growth this season is shaping up well. We're also excited to see what our new strategic NBA partnership Amazon Prime can unlock, including a range of merchandising product integrations. Our International division delivered a good performance with revenue 21% higher year-over-year, including the benefit of our SNI and Beta acquisitions. We delivered organic in gaming growth of 10% and with strong performance in Turkey and CCL's Italian online business. Organic Sportsbook performance was encouraging against a strong prior year Sportsbook performance, which benefited from the euros and more favorable sports

results.

In Italy, we launched. My combo and CCL, the only 4 [indiscernible] products available in the market in time for the start of the Italian softer season. Customer engagement has been strong. with over half of sports customers placing a my combo bet to the [indiscernible] season. The integration of FutterStudios into the FDA Italian online platform has enabled in-house content to be offered to our Italian customers with a strong pipeline of future content. The SNI integration has also been progressing well. We've enhanced the iGaming proposition optimize retail gaming machines and commission structures and increased customer acquisition volumes by deploying CSL's proven retail [indiscernible] program.

The migration of [indiscernible] customers to the FCA online platform remains on track for H1 2026, keeping us well on course to deliver our synergy targets while bringing our leading platform capabilities for my customers. In the U.K. and Ireland, the successful migration of SkyBet onto our shared flutter U.K. platform has enabled delivery of new products and improvements for our SkyBet customers. This included the launch of our highly popular Super sub offering and the new Square back proposition powered by our next-generation pricing capability. There's been much speculation around potential gaming tax increases in the upcoming U.K. budget. We remain engaged with policymakers and expect decisions to be based on economic merit taking into account the industry's substantial contribution to U.K. tax revenues and employment. We await the outcome in the budget later this month. However, should taxes increase Flutter unmatched scale and market-leading position will help to mitigate the impact as we have demonstrated historically. In Brazil, an expanding portfolio of games and pro generosity delivered record eGaming revenues.

On sportsbook, we remain focused on integrating Flutter's in-house pricing capabilities and generosity functionality to materially elevate the overall customer proposition ahead of the World Cup next year. Outside our performance during the quarter, the southern regulatory change in India was extremely disappointing. Clutter has invested significantly in India over the last number of years, responsibly delivering innovative skill-based games to Indian customers.

Generally, we now only offer free-to-play content as we assess our medium-term options in the market. Looking ahead, I'm extremely excited about expanding our U.S. portfolio to include FanDuel [indiscernible] and I'm confident that our market leadership and diversified international business positions us well for the remainder of the year and into 2026. I'll now hand you over to Rob to take you through the financials.

Thanks, Peter. Group revenue increased by 17%, adjusted EBITDA grew 6% in the quarter, driven by excellent organic iGaming growth and the benefits of our recent acquisitions. Group net loss was $789 million for the quarter compared to $114 million in the prior year. This was primarily due to 3 significant off items. First, a noncash impairment charge of $556 million related to our [indiscernible] business following the legislative change in India and then we had to cease real-money operations there. Second, the previously communicated $205 million payment to Boyd for revised U.S. market access terms, which will deliver approximately $65 million in annual savings going forward. And third, increased amortization costs related to our recent acquisitions and business transformation. These were partly offset by $247 million year-over-year benefit from the FOX option fair value adjustments. Adjusted earnings per share grew 29% while loss per share increased $3.91 from $0.58 in Q3 2024 due to the impact of the mainly noncash items I have just outlined.

Turning to the U.S. Revenue was 9% higher with exceptional iGaming growth of 44%, offsetting a sportsbook revenue decline of 5%. This led to adjusted EBITDA of $51 million compared with $58 million in the prior year. Sportsbook performance reflected the competitive dynamics Peter mentioned with customer-friendly sports results and heightened competitor generosity for the NFL season starts. We are pleased with the momentum in the business at the start of Q4.

Handle [indiscernible] growth has been strong and the NBA season to start positively. In International, revenue of $2.4 billion reflected growth of 21% of our acquisitions contributing 18 percentage points of this increase. On an organic basis, iGaming performance was very strong, particularly in Turkey and Italy, with sportsbook performance reflecting tough prior year comparatives from the European championships. Adjusted EBITDA increased by 10% year-over-year to $505 million, demonstrating the resilience of our diversified portfolio. I'm really pleased with the progress we're making across our $300 million cost transformation program, and we continue to identify further efficiencies beyond our original targets.

The delivery of the UKI technology replatforming, the redesign of our UK organizational structure and the excellent progress we are making on the SNI inspiration are all good examples of our disciplined approach to driving incremental efficiencies. Operating cash flow reduced by $81 million and free cash flow reduced by $87 million year-over-year. reflecting the bond payment for improved U.S. market access terms. Our leverage ratio was 4x or 3.7x, including SNI on a pro forma basis. and we remain committed to our medium-term target 2 to 2.5x. We continued returning capital to shareholders with share repurchases of $225 million in the third quarter. a further $245 million repurchased in the fourth quarter. This completed our authorized program for 2025, bringing the total cash return to shareholders to $1.12 billion since inception, representing 2% of our issued share capital.

The program will continue into 2026, with the Q1 2026 repurchase of up to $250 million as we make good progress towards our total commitment to return $5 billion over the coming years. Moving now to the outlook for 2025. Q4 has started very well is in line with our expectations on an underlying basis. We have seen an impact from customer-friendly sports results in the initial weeks of the quarter, and we're therefore updating our full year guidance to reflect the following factors: First, trading performance in Q3. Second, the impact of sports results in Q3 and Q4 to date across both our U.S. and international businesses. Third, increased Q4 investment in U.S. sportsbook, which has already strengthened our leadership position. Fourth, our strategic investment of FanDuel predicts as we launch this exciting new product. Fifth, the cessation of real money gaming in India; and finally, tax costs associated with the Illinois wage fee. In aggregate, for the group, this represents a decrease of $570 million of revenue or $880 million adjusted EBITDA with group revenue and adjusted EBITDA now expected to be $16.69 billion and $2.95 billion, respectively, at the midpoint, representing 19% and 24% year-over-year growth. Additional information on 2025 guidance is available in today's release, including additional income statement and cash flow items.

Finally, as Peter outlined, we are very excited about the production markets opportunity. and plan to invest meaningfully to harness the growth we believe that this can deliver. At this early stage, we had to spend incremental EBITDA cost $40 million to $50 million in Q4 2025 and and between $200 million to $300 million in 2026. We will closely monitor returns with a priority on building value for the future while also maintaining the flexibility to accelerate investment where performance warrants. With that, Peter, are happy to take your questions, and I'll hand back to [indiscernible] to manage the call.

[Operator Instructions] Our first question comes from the line of Jeff Stantial with Stifel.

Maybe just starting off on the $200 million to $300 million of planned investment next year for Fan predict, Peter, could you just maybe talk a little bit more on the return algorithm for this product, meaning are you planning to acquire users with similar payback thresholds that core to Casino or just to reflect some of the higher uncertainty for this product. And then when you think about LTVs and return on that spend, the strategic positioning ahead of eventual traditional sports betting regulation and cross-sell opportunity factor into that calculation? Or are you restricting just to gross profit from the production rate it?

Jeff. Look, we're very excited about FanDuel [indiscernible]. The ability to take their sports product into the half of America that you can't currently avail the sporting products, I think is something which is tremendously exciting. And the ability to partner with CME and leverage all of the expertise we have and built over the years of the [indiscernible], I think means going to be a very able better. And we have to put money behind it. Now from a customer acquisition perspective, we are going to maintain a very disciplined approach as we always have done since operating in the U.S. And we will be carefully monitoring the [indiscernible] dynamics. Ultimately, we do want to see as many states passing legislation to introduce sports betting as possible, and then we'll be able to migrate those customers on to [indiscernible] study. But look, I think it is important that we put strong investment behind this. I think we've got an incredible brand. We're going to have a great product and the launches in December, and I think we'll have the market leading product by the time we get to Q2 next year.

That's great for Peter. Maybe shifting gears over to some of the higher, I think you call it a rational competitor generosity that you saw early on and in the NFL season has moderated, both still elevated here. Just, I guess, can you add a little bit more color? How widespread was this across multiple operators? What do you see as sort of the rationale from some of your peers on raising spend this year, specifically? And then thematically, I guess, how do you think about the risk that the broader industry maybe starts to drift more irrational in a type of prisoner's dilemma-type exercise following some of the [indiscernible]

Yes. We've historically seen a lot of generosity at the beginning of the season when customers are trying to reactivate their customer bases and get them back onto the platform. And look, this year, we saw a heightened level. And there was a lot of irrational behavior. It's not the first time we've seen it. We've not called out the difference of competitors in the past have spend a lot of money trying to acquire customers what's most important is to have the best products in the business. And that's what we have with best pricing for customers. And so, look, when we look at the performance into Q4, we're very comfortable with the level of customers we've got on the platform. We're comfortable with the level of Singapore penetration that we're seeing as well. And so people are having -- they spend a lot of money, but they haven't really managed to sort of move the needle for themselves. At some point, people will realize that it's not worth pursuing these offers because it doesn't deliver for them.

And our next question comes from the line of Paul Ruddy with Davy.

Just if you would mind would you be able to give us just a little bit more color on trading in September and into Q4 in the U.S., please. And then just secondly, on prediction markets, just on the investment next year. Would you expect it's a tricky question because you don't have a full oversight maybe but would you expect that investment to be the entire investment, i.e., you'll do all the unregulated states within that next year.

Yes. I'll pick up on the first part of the question, maybe Pete will pick up the bridge market investments. So as Peter mentioned, we did see a lot of competitive action that to start the new NFL season, with some very uneconomic offers in the market, we maintained our discipline, our investment posture as we tend to do so that -- there was some handle and SGP share that we lost in the first couple of weeks of September, but we were pleased with the way that we managed through September and subsequently our performance into October. If you look at September share data, we actually took 47% of the NGL share in September, I think, which reflects maybe some of the value that office we're getting for some of the investment that they made. We have seen a moderation of that competitive intensity, but it still remains a little elevated, I would say, from normal levels. But we're really pleased with our momentum into Q4. We've got a record number of apps on the platform. We've got double-digit handle growth, and we've got a really strong sports and bet mix with the NBA season starting well. So we're quite pleased with our momentum.

Paul, with regards to the sort of investment levels around production markets, we'll know a lot more next month when we launch the product and we see how much traction we gain I'm excited to think about all of that marketing that currently lands nationally for customers who can't avail the sports betting product suddenly they get a bit of download and predicts and finally, they've got access whether statin California or wherever they are. We think that the figures that we created for investment next year be more of back-end loaded towards the launch of the football season. But as we've done historically, we're going to be prepared to invest levels whilst we continue to see great returns and paybacks. And we'll know a lot more in the first couple of quarters next year, once we get some traction and see what the LTVs look like handicap with our experience operating before globally. And I think that will really help inform how hard we can push.

And our next question comes from the line of Ed Young with Morgan Stanley.

My first question is on prediction markets as well. You've talked in the release about extensive engagement with regulators and tribes, travelings being [indiscernible] and also they're not offering the product should the state regulate. I think it's probably further along than many expected to be able to get access to the whole U.S. in one form or another. Could you perhaps give a little bit of color to the extent you can on the nature of those conversations and how they developed? And does it give you any more optimism in terms of the liberalization path for other states to regulate sports betting going forward? And then second of all, just to get a bit more color perhaps on the -- you talked about Amazon, but that's clearly a forward-looking but you've talked about much better engagement. You see much more happy with the performance this year. Can you just give a little bit of color on what lies below that. Is that the the nature of the sort of games and the leagues this year in terms of unpredictability or is it product upgrades that have driven that change in performance related to last year?

Ed, let me take the additional market one, and then Rob will talk a little bit about NBA. We have obviously been having extensive engagement with stakeholders as we get close to launching the petition Markets product, as you well know, sitting in the U.K. Yes. So production market is not in the same ballpark as a fully fledged sports betting product. The breadth of product offering, generosity, a bunch of other things are just nowhere near as good. pragmatically, look, this is -- the [indiscernible] been very exciting for the half of America who can't currently access sportsbet if you're saving a state and you're getting close to passing legislation, you don't want to miss out on the tax dollars. So look, we hope that this does accelerate some of the legalization states that were previously in the pipeline for launching sports betting because ultimately, that's what we like to see as many states having that as possible because I think that means consumers will get a much better offer.

Yes. So picking up on the second part of your question around the. There's a few things that we're finding very positive and excite. I mean, 1 is we're definitely seeing an enhanced handle from where we were at this point last year and as I alluded to kind of double-digit growth in the season so far it would also update the new television deals that are out there are getting good traction. And that's some data showing that the viewing figures are up, our new partnership with Amazon Prime. We're very excited about the integrations that like they're working well for us. From a financial perspective, we've seen significant improvement in the NBA Parlay handle mix year-on-year. So looking over 1,100 basis points improvement year-on-year, which is flowing through into a healthy product mix as well. I think the other thing as well is just engagement with the products. I think at 1 point last year, there was potentially less engagement with the MBA product. That seems to be excellent engagement with the NBA this year. And I think as the the 100 or 80 to 100 matches so far as we yesterday that half of them have gone down. There's been 5 points between them in the last kind of few minutes of the game. So has some really good engagement around it, which is good to see.

And our next question comes from the line of Jordan Bender with Citizens.

You still have the 27 targets out there and prediction markets obviously weren't in those numbers when you provided it. So as we start to layer in the prediction market and the capital outlay that's going to happen over the medium term, is there any kind of sense on your end, do you feel any worse or better about the EBITDA and margins that you laid out during your Investor Day? And I guess my follow-up for the second question here. Would you look to get FanDuel [indiscernible] involved in prediction markets? And I guess does this present an opportunity just given the volume that you're seeing?

Let me pick up on the 2027 guidance point Jordan and then Steve will pick up the second point. So we're actually not providing any updated guidance for 2027. Building on what Pete said about production markets, we're incredibly excited about the additional TAM that, that same thing up for us. we need to see how the investment next year plays through. But from my perspective, it will be a very good scenario if we invest more than we planned because that will be demonstrating that we're seeing good returns on that investment spend. So we're quite excited about where that can go. A couple of other things probably just to bear in mind, we've done the Boyd deal this year, which delivers some cost of sales savings through to $27 million we finished 2024 with a larger business, but also had some tax increases. So there's a number of things in the mix. But if you take a step back from the detail, probably the thing that I'm most excited about is the prediction market opportunity.

And Jordan, in terms of being a market maker or prediction markets, there's a lot of complexity to be a market maker on a CFTC-regulated DC. I think -- but if you look at what's required for that, I mean the ability to price complex correlated outcomes accurately is something that we do every day in our core business. So look, it is something that we're actively evaluating. But in the immediate term, our focus is the B2C launch of [indiscernible] next month.

[Operator Instructions] Our next question comes from the line of Jason Tilchen with Canaccord Genuity.

[indiscernible] one on prediction markets. I'm just curious from a product perspective, how you're viewing the ability to take learnings from Betfair operations overseas versus maybe what you're plan to do differently based on some of the different product features that have resonated in the U.S. market with prediction markets to date?

Jason, look, fortunately, we were able to get a bunch of the team who've been working on the best Exchange for years involved in developing the products we have we'll be launching in December for Angelic. So we can take the learnings and expertise from Betfair. We can clearly -- we have a very good understanding of what U.S. consumers want through the expense of Fanello, we'll be launching an exciting product next month. And we've got some fast follower features we'll be bringing, and I'm very confident by Q2 next year, we'll have the leading product in the market.

And our next question comes from the line of Shaun Kelley with Bank of America.

Peter, whoever wants to take it, just Wondering if you could give us a little bit more color on how you're underwriting the revenue side of the prediction market formula. I think we all know there's going to be some J curve and early investment involved. But just how are you thinking about the fee structures here? Is that that environment seems like it's very dynamic in the U.S. So how price sensitive do you think customers are going to be? And just how are you kind of thinking about the top line function and maybe your cost structure that sits underneath it obviously should be much better given the lack of state level taxes, obviously.

Well, so one of the nice things about offering production markets as we see with the [indiscernible]. You're not subject to the very agrees of sports results. You're right, it is a commission-based structure. So look, we're launching in December. We'll get an early indications of how our customers are behaving. But we're excited to see how we can build out the our lifetime buying models, and that will make sure that we can maintain a disciplined approach to acquisition in the market.

And our next question comes from the line of Bernie McTernan with Needham & Company.

Great. Just a follow-up, Peter, twice, you mentioned that you expect the product to improve and by 2Q you have a market-leading product. So just wanted to get some more specificity there in terms of what kind of product you're launching with and then the major improvements we should expect in the coming months.

Well, Ben, I don't want to tell my competitors everything we've got planned, right? But look, we're very confident in our abilities to deliver a winning proposition I mean I think in the short term, we'll have a great product offering available to consumers we're obviously -- we're not going to be ready for the -- we're not -- it was not ready for the start of the NFL this season, but we're really focused on making sure that when we get to 2026 NFL season, we'll have a very compelling offer to customers. And look, I think we've been able to increment and deliver exciting features on our sports book, and I think we'll be able to do the same for [indiscernible]. But we've got a clear road map and some of the stuff that people love like the player props and things that they see in the sports book will be available next year.

And our next question comes from the line of Barry Jonas with Truist Securities.

Nevada just put out a notice saying you've surrendered your gaming license in the state due to FanDuel [indiscernible]. Can you talk about the ramifications here -- and are there further risk we should monitor for current or future state gaming licenses now? Or was it about really the main risk?

As I stated, we have had conversations with different stakeholders over time and Nevada was amongst that. And we did have a license in Nevada, but we did have -- we didn't have any retail B2C operations there. We were supporting for as part of our legacy arrangements. So look, once we're sad to have to surrender the license, I mean that's what we've done. Nevada of protecting their interest. We need to protect our interests and fend predicts will allow us to go after the half of the market that we haven't previously been able to go after.

And our next question comes from the line of Clark Lapin with BTIG.

Maybe for the sake of variety, I'll switch it up and ask a question about iGaming. Your growth accelerated a little bit this quarter at 45% in the U.S. Just curious how you guys think about product differentiation beyond what you've already done with exclusives and the rewards framework? And then maybe bigger picture, where do you think about whether it's U.S. or for the full business, iGaming revenue mix going.

Well, I don't think we should underestimate how important some of those pieces are as exclusivity of content and looking and I think the third installment in the [indiscernible] series was the most successful one we've had to date, and we're very excited about sales. the reward programs, which have been key for us in other markets, and I think we're demonstrating how important is in the U.S. market and also the work we've done from a Jackpot perspective. So some of [indiscernible] really hard to replicate, right? And so the team has done a brilliant job executing. And there's loads more improvements and changes to deliver. And it's not just in the U.S. market as well. We're taking our capabilities. I know that the team here in the U.S. are spending time with our colleagues in Italy and in Central and Eastern Europe. So we're sharing best practices around the world, and that's what's allowing us to stay ahead of our competitors.

And our next question comes from the line of Jed Kelly with Oppenheimer.

Just as we look out to next year, obviously, the prediction markets, but has anything changed in the underlying earnings power that you see ex prediction markets over into next year? Anything with promotional velocity, taxes that you just sort of touch on [indiscernible]

Yes. Let me pick up on this, [indiscernible] as we mentioned earlier, we've got some really good momentum in the business at the moment. And our focus is on exiting 2025 with the strongest business possible. we've got a real level of confidence that we'll continue to grow into 2026, both in the U.S. and internationally, we're not talked on this call much about our international business yet, but we're really confident about the growth profile that we've got there next year, especially from an EBITDA perspective with some of the transformation initiatives that we're delivering. So there's not anything that is particularly front of mind. Obviously, the predictions investment will be incremental to what we've previously looked at. But as we've said earlier, we're very excited about that and what that will potentially mean for us in 2027 and beyond. So no significant changes to [indiscernible]

And our next question comes from the line of Brandt Montour with Barclays.

So my question is on the fourth quarter sort of sportsbook investment. Could you give us a sense for if that's all NFL or if that was NFL and NBA. And I think the more important point would be if you do see good returns on that investment would you be looking to sort of keep that going? Or is your #1 priority to sort of get back to the levels that you were at prior?

Thanks, Brandt. I mean -- the point I would say is we've got flexibility and agility around where we invest particularly from a generosity perspective. And we can tweak and be agile with that as we move from week to week depending on what we see in the market. As we've said on a number of occasions previously, we've got disciplines of economic parameters that we invest to in terms of paybacks, ROI and CAC and that model has worked very well for us consistently, and that's not something that we're going to materially diverge from. As we said earlier, at the start of Q4, we've seen some very compelling opportunities to invest and lean in and potentially where some others went in very hard early in September, they retraced a bit. But as we said, we are seeing some elevated levels of generosity in the market. So we're very confident with our posture and what that will deliver in the size of the business that we will exit 2025. We do anticipate, as Peter said earlier, that in the medium to longer term, the generosity of the market will moderate, and that's what we've experienced in many other markets around the world historically. So that's what we'll see at some point in time. And in the meantime, we're very confident with our generosity Boston.

And our next question comes from the line of Ben Shelley with UBS.

Could you share any early learnings from the measures you took in Illinois and the impact on player behavior there? And how does this guide your response to strategy on potential tax hikes going forward?

Yes, Ben, I can pick up on Illinois. So obviously, with the structure that was introduced in Illinois, as you'd expect with seeing a reduction in the number of bets there, but increasing handle per that. When we look to the September date, Illinois is definitely behaving in line with other states. So we saw no impact on our Q3 numbers. However, we do still kind of monitor this very closely, and we're looking at the market data closely at the start of Q4 and what that may or may not mean. When you take a step back and approach this higher level, we definitely feel that this is another lever or talk that we've got in our armory, but to potentially mitigate taxes in high tax jurisdictions. Moving forward, we're hopeful that the regulatory landscape potentially accelerates with some of the prediction developments as well as as we discussed earlier. But yes, it is certainly something that we'll have in our talk moving forward and we'll consider elsewhere where appropriate.

And our next question comes from the line of Ryan Sigdahl with Craig-Hallum.

Curious if you're willing to comment kind of on the initial product launch and predictions, if that will include parlays, your largest competitor in the U.S. that's forthcoming also in prediction markets said they're going to have some prepackaged stuff just to help on the liquidity side, but curious if you're willing to comment on what offerings you're going to have on the Parlay side.

Ryan, look, we are not going to launch pales next month when the -- when we launched FanDuel [indiscernible] you can expect us to fast follow with this early next year.

And our next question comes from the line of John DeCree with CBRE.

Another one on iGaming. It's probably harder to discern. But Curious if you've seen any more competitive, aggressive behaviors in the promotional environment for iGaming in the U.S. probably easier to see during NFL season, but curious had great results in the quarter. But is that equally as competitive as sports betting? John, we -- you don't quite see the same to externalities living high gaming as you do sports, where obviously, you have seasonal launches and big games and stuff like that we heard a lot of assets about how focusing particularly on the direct casino space, which is something that we've been focused on for a while. The team have been focused on what they can control, which is things like or exclusive content, which we're very excited about. It's not just [indiscernible]. We've got [indiscernible] titles. We've got Vegas Mat Blackjack in Q3. So there's lots of stuff that we focus on. I think we've got 500 new titles in the border. If I look at the business, we've got [indiscernible] 30% year-over-year. So I think people are trying to focus on this, but I think the team has got really good momentum in the business. And I think there's exciting plans in the pipeline.

And our next question comes from the line of Robert Fishman with MoffettNathanson.

Back to the competitive landscape in the U.S., do you think the new partnership with ESPN and DraftKings will change any future competitive dynamics? And are you looking to pursue any other media partnerships, including -- any update would be welcome with your FOX relationship and the equity stake there.

Robert, yes, as you'd expect, I mean, I don't think there are many partnerships that emerge in the U.S. market that we haven't looked at. And as a scale player, if we want to do these deals, we've got the resources to make them happen. We've been very pleased with our Amazon partnership, the tip off of the [indiscernible] and the odds integration and stuff that you can do from a consumer perspective and also on the screen, I think worked really well and going to resonate very well. But ESPN struggled to get that product to work. We've seen a number of these media deals struggle because of the quality of the product we have the best product in the market, and we think that sort of stands us in in best regard in terms of continuing to grow and be #1 in America.

Our next question. It comes from the line of Joe Stauff with Susquehanna.

Peter, I was wondering if you could comment on the viability of the Parlay product on [indiscernible] and whether or not you guys expect to use it to hedge maybe any of the local concentrated bets that you might have in your sports book.

Joe, we're excited about the launch of Predix. I think as I stated, we're going to make the product available early next year. I don't think you should underwater quite how hard it is to run pales to life on these platforms, and they can only really be delivered in a prepackaged way. You're never going to get the same degree of choice or depth of markets. And that's one of the challenges and why the production markets are not in the same ballpark as a small selling product. I don't think that there will be the right type of depth of market for us to be hedging, and I'm not sure it's something we necessarily want to do either. We've got real confidence in our pricing on our platform. And that's not something that I'd be anticipating us doing [indiscernible]

[indiscernible] question comes from the line of Stauff with Macquarie Group.

Wanted to ask about, I guess, the Swift message or decision in India in the season of that market? I know you've seen openings and closings in different markets in your time. does it feel like the parliament is vainly against this industry? Or are they just looking to better protect the consumer. And if we see movement to the black market, maybe something opens up in the next couple of years, that's just more in line with what they want. Chad, I can give you a bit of a perspective on this. Look, we were frustrated at the speed with which the bill that emerged came into [indiscernible]-- and I would hope that in that sort of time frame you talk about, we might get some more legal clarity around the extent to which some of these gains still may be able to come back. They had had 70 years' worth of constitutional protection in India. It's not that long ago that we saw Black Friday in America and where we are today.

Yes. Look, we're going to maintain the Jungle product on a free-to-play basis, and we'll see what happens. We're doing all the lobbying and legal challenges that you'd expect us to.

And.

Our next question comes from the line of [indiscernible] with JPMorgan.

I've got one question on the U.K., please. How do you see the underlying market at the moment? I mean sportsbook revenue remains negative year-on-year. Clearly, you're lapping some tough comps there. plus the euro-related comps, but iGaming also slowed this quarter to a low single-digit number, FX. How should we look at the quarters ahead for both sports and iGaming, assuming broadly normalized both results.

Yes, it's [indiscernible]. I think in summary, we're pleased with the momentum that we've got in the U.K. as you said torso, there's quite a lot of results in the mix because we had a very favorable in Q3 last year, which is impacting the comps on the sports book revenue. In gaming, we were 7% up. We've got some good new concept there. we've lapped some of the pricing initiatives that we had in last year. But we're feeling really confident we've completed the migration of our Sky back platform now onto our UKI platform. when we did a similar transition with Paddy Power a few years ago, they really benefited the business and it acted as a real capitalist for growth in that business moving forward. So we're hoping and anticipating the same will happen with Skybet. They've already been able to launch a number of new products into Skybet season. We've got super subproducts on sports but now -- we've also got [indiscernible] in there, which is something that's being powered off of our outcome-based pricing. So we're really encouraged. We're the market leader in the U.K. We've got an exceptionally strong business and we're very confident about what 2026 will bring.

And our final question comes from the line of Monique Pollard with Citigroup.

It was just one on the commentary that you gave in the quarter about the lower-than-anticipated pale mix at the start of the NFL season. if you could comment, please, on sort of what was going on there. As you said, it was transitory in nature. And related to that, how the our-way product is going?

Yes, Monique. Let me start on the [indiscernible] start question maybe Pete pick up on your award what we're doing around outcome-based pricing. But Yes. As we've mentioned on a couple of occasions at the stock season, there were a lot of quite uneconomic offers in the market of promotion spend and a number of those were same game Parley based offers. We won't name them by name, but I think people are aware of some of the very generous offers that were in the market. As I mentioned earlier, these handle driving measures don't always convert to revenue. And I think that transpired to be the case for some of our competitors that have these offers in the market at the start season, we did see a moderation of that later into September and also into October. And actually, when we look at our pale mix now in NFL and in MDA, we're really pleased with it and I alluded to the numbers earlier. So I think we're in a good position, and we're very pleased with our product mix.

Yes. [indiscernible], from a sort of your way perspective, look, it's now available for all of our customers this season, including those in in Canada. And the more sophisticated approach we have to pricing is helping improve an increase in bets cash out year-to-date, which is making a big difference. You've got to remember, it's a very fundamental to rewrite. So there's now a certain matrix of that price. It's a major of every eventuality that can occur. And so as the game is progressing, it means we've got a much broader array and set of products that consumers can select for and it even means that whilst the game is playing, we're updating and changing the old of which team we think is going to win the Super Bowl. If you think about what that's requiring on a Sunday, when you got a full slate of games going on that that's very, very complex. And so there's a bunch of sort of things we can do around daily specials, which should be an automated way. big improvements around sort of cash out and reductions in suspension. So it's improving speed of pricing updates, it's reducing latency. So we're excited. And of course, there's also other trials we've been doing around AI-powered conversation or so. So look, there's a lot of excited around where that will take us. So I think we've reached the end of the questions, and thank you very much, everybody, for joining the call. We spend a lot of time talking about production markets today. We've put a lot of effort into getting to this position where we're going to be able to launch this product next month. huge thanks to the team we've worked on is particularly to those folks who have been involved in the very constructive dialogue with lots of our regulators. We've always said that we would never do anything to damage our existing businesses. Nevada is a little bit different. We do have the B2C operation there. But we're very, very excited about the launch our prediction markets product next month, and we're excited about what we've got in coming down the line from a product perspective. But of course, it's not just what we're seeing with the production markets, and I'm very bullish about the existing business we have in the U.S., strong growth in iGaming and of course, benefiting from the diversification we have internationally. So a lot to be excited about into Q4 and going into 2026.

So thank you very much, everyone.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.