Lottomatica Group Aktie

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Lottomatica Group's 9 Months 2026 Results Conference Call.

[Operator Instructions]

At this time, I would like to turn the conference over to Mr. Mirko Senesi, Investor Relations Director of Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to the Lottomatica Q3 2026 Results Presentation.

I'm here today with our CEO, Guglielmo Angelozzi, and our CFO, Laurence Van Lancker. Now, the floor goes directly to Guglielmo for the presentation. Guglielmo, please.

Thank you, Mirko, and good morning. Let's start from Page #2 of the presentation. Another strong quarter.

Revenues are up 12% on a normalized basis, and EBITDA is up 17%. Of course, as you know, the quarter has seen unfavorable payouts across Europe. So the reported numbers are lower due to the impact of the payout.

But when we go and look at the dynamics by business, online is up a very strong 19% in terms of revenues. Sports franchise is in the same range.

Gaming franchise continues to be a very low single-digit decrease. And so this explains the total revenue dynamics. Please note that online is up 13% in any case, despite the unfavorable payout.

Next page in the deck, Page #3, you can see that when you open online in its components of iGaming, iSports, and then you also have a look at sports franchise.

The dynamics are the same for every subsegment. So, very healthy growth for each business line. And this goes together, goes along with Page #4 of the deck: very good performance in terms of market share.

We achieved a record-high market share in September on total online and also for sports, where we also scored the highest quarter ever. On page #5 of the deck, we continue to see the same dynamics in the competitive environment, with sales that continue to shrink.

This has been going on for a while. The dynamics are unchanged. And so this tells you that the results of the quarter are backed by very strong underlying business dynamics: the market is there, the performance is there, and the competitive environment continues to go in the same direction that we've seen in the last several quarters.

Now, going to page #6 of the presentation and also the following. There are a few slides that talk about Lottomatica, but you can also see a reference to SIS, as we presented the deal some time ago.

Page #6 is about our growth, our market share growth since we started really focusing on online. We started in 2016 with 1% market share. We were basically a fully retail operator at the time, almost all focused on gaming machines.

And the growth of the market share since then has been, for sure, due to our capacity to roll up the market, and you see the M&A component. We've put together brands, we've integrated them, and that's the M&A component.

But for every point of market share that we bought, we've achieved 1.3 points of market share in terms of organic improvements. So there's a lot that you can do in a fragmented market when you roll up, but also when you work on the right tech and on the right product and on the right digital marketing activities with the right tools to improve your competitive position.

The following 2 or 3 pages are -- so Page #7, 8, and 9 of the presentation; we are on Page #7 now. We usually put pages on tech and product because this is at the core of what we do, and it's one of the most important competitive levers that we have in online and sports.

Again, this is talking about what we do today in Lottomatica, but this also gives you a hint of what we want to do potentially in [CESTA] and what we are capable of doing.

Page #7 shows you what we do on sports betting on one of the most important assets that we have in sports betting, which is betting intelligence platform, which is our 100% proprietary technology asset, through which we basically control the entire value chain.

We make the pricing. We make the odds from the event to the odds; it says on the slide. Basically, it's the internalization of all the data, the models, the capacity to do smart pricing and to tailor the odds. And it's not working on a minor amount of our volumes.

In 2026, this has been on, give or take, half of our volumes and on the most important markets that we have. So we have the capacity to fully control the betting value chain, both for retail and online, and basically set the price and manage the risk.

You can see more detail on Page #8. What's the summary of that? There's a lot of information here. How does this compare with just buying the odds from a standard provider? You can find many good ones out there, and we integrate very good ones into our platforms.

But what's the difference of having this type of technology in-house? Well, the first point is that you can differentiate your offer and that you make the pricing on the basis of your data, which are a considerable part of the market.

So the pricing that you make is very much tailored to the consumer base that you target. This proprietary data gives you a great advantage in terms of competition.

Anyone can come up with smart models, but not everyone can train them on the data that we need them to operate on. So differentiate by working on the right data for our customers, because we paid 0 fees for this.

So the value is kept internally, and you are fast and strategically independent. This is not only a bottom-line lever, but it also doesn't just operate on cost. It operates on the top line.

Next, Page #9 of the presentation. We've talked several times about the Lottomatica core, this layer, which is above the basic gaming platforms. The concept is simplified here, and you have a few data points, which I think are also very interesting.

The whole target, the whole objective of that, is going from targeting everyone to targeting segments to customizing the offering and the way you propose the offer to the one, to the single player.

And we've talked at length about this in the past, but just a couple of data, the improvement in the click-through rate, more near to the economic drivers of the performance, you can see the impact that this has had in the last 2, 3 years on the ARPU as a percentage of our ARPU as compared to the market.

We've been able to work on the ARPU of the players much more effectively than the rest of the market. And why I'm referring to CESTA is because, as we discussed with many of you, this is going to be an important focus of our activities in the future down there.

Coming to CESTA, where do we stand? Integration. We want to be ready to start executing from day 1 of the closing, as we've always done. The integration work streams are already up and running with our colleagues in CESTA.

The chemistry is very good. The teams are working very well together. There are 4 work streams: the synergies, the cost synergies that we have to achieve, and the online boost, which is the core of our investment thesis.

Of course, the integration of the Italian component of the business is not the key of the deal. It's relatively small, but it's still something that we have to do. And then, of course, the corporate integration.

The teams are working together. We are actively planning every single detail that is possible to plan at this stage with respect to applicable laws. The target, again, is to be ready to start execution the day we close.

Also, because everything is going according to plan, financing has been secured, and regulatory approvals are in progress. We have our AGM on the 23rd, and CESTA called its AGM on November 30. And so we confirm that we expect to close in Q2 2027.

Now Laurence, the floor is yours.

Thank you, Guglielmo. Moving on to Page 12. So on the left-hand side, you can see revenues reaching EUR 1.7 billion. And in the third quarter, we have grown by 12% on a normalized basis and by 10% in the first 9 months.

On the right-hand side, total EBITDA reached EUR 665 million on a reported basis with a margin of 38.7%, up from 37.6% reported in the previous year for the same period.

This is thanks to the mix effect, more skewed towards online, which has higher margins, but also the sizing of the cost structure that has been undertaken this year.

Growth in EBITDA on a normalized basis is plus 19% for the first 9 months and plus 17% for Q3. Now, despite the payout headwind, we have still grown in the third quarter, as mentioned by Guglielmo earlier.

Moving on to Page 13 and looking at the financial performance by segment. So both online and sports franchise have grown double-digit on a normalized basis.

So it's plus 18% for online, plus 13% for sports franchise. And on an EBITDA basis, it's plus 24% and plus 28%, respectively. The Gaming Franchise has continued revenues in line with previous quarters, with revenues at minus 2% and EBITDA at minus 1% year-on-year.

Moving on to Page 14. Looking at the left-hand side, we can see recurring and Concession CapEx as a percentage of revenues remained broadly flat at 7% of revenues and totaled EUR 121 million.

On the right-hand side, you can see the growth of operating cash flow, which has been 8% on a reported basis. If we exclude the impact of the payout on a normalized basis, that growth would have been 22%.

Moving on to Page 15. We can see the evolution of the net financial debt. So, starting from the 30th of June 2026, we include the effect of the adjusted EBITDA of EUR 200 million, a negative impact of net working capital, which is in line with what we had last year, which reflects the seasonality of the gaming tax payments, notably the impost Talnica.

CapEx of EUR 49 million, which also includes growth and one-off bolt-ons for EUR 9 million. Financial expenses and leases of EUR 10 million, capital returns of EUR 92 million, and then other costs of EUR 22 million that include part of the CESTA transaction costs as well as the cost of the closure of the Multi branch.

On the 30th of September '26, we achieved a net financial debt of EUR 2.164 billion, which, with a cash balance of EUR 278 million, gives us a total net financial leverage of 2.4x.

On that note, we have concluded.

Thank you gentlemen, would you like to begin the Q&A session?

Yes, please.

[Operator Instructions]

The first question comes from Ed Young of Morgan Stanley.

I've got 3 questions, please. The first one: market-level growth for online casino has been decelerating through the second half of the year. It was only single-digit in October. I know there's some context there given online licensing in the comps, which perhaps you can touch on.

But more broadly, can you tell us what you're seeing in the underlying metrics from player days, engagement, session counts, and what market growth in the category you expect to see in 2027?

So, second question on the retail concessions. I wonder if you could perhaps touch on that given the news flow. The cost per machine has increased, but do you think you necessarily need the same number of machines?

And just given the category seeing, albeit small, revenue per machine declines at the moment, it does suggest the market is a bit oversupplied.

So how are you approaching the potential mitigation against the headline tax rate increase? And then third of all, Guillermo, you talked about online boost as part of CESTA being a key part of the thesis.

Can you give us some idea of what benefits you can put into the CESTA online business centrally, and how much will require specific market replatforming?

Just trying to get an idea of the phasing between, say, Spain and the Peru and Paraguay markets.

I can go on the first, and then Guglielmo will take number 2 and number 3. So for market-level growth, I mean, iGaming has grown in October year-on-year at 9%.

This brings us to a total growth year-to-date of 15% until October compared to 2026. So when we look at particularly in the fourth quarter of 2025, the level of promotional activity was significantly higher. This was driven by the fact that we were awarding a new concession was being awarded.

So there were a number of players exiting the market, and some small players were also more in defensive mode. So the level of promotional activity increased.

And also, after the summer in 2025, the RTP at the market level decreased more significantly last year versus the first half of last year, compared to -- when we look at it this year compared to the first half of this year.

So if you actually look at it on an NGR basis, we're actually growing very similarly, both in Q3 and in October. This year, if you look at an NGR basis, we're actually growing pretty much in line with how we were growing in '25 versus '24 because when you look at it on a GGR basis, of course, it also includes all the, let's say, bonusing that is included in the GGR.

So in that respect, frankly, we're not concerned. From a growth perspective for the market, if you look at it in online, we still continue to see a growth in double-digit growth in the online sector.

Now, how that will be split between sports and gaming, we will see, but we will continue to see iGaming growing faster than iSports. Then, at the appropriate time, we'll give guidance, but we continue to feel comfortable with a double-digit growth headline number in the market.

Yes. Ed, on the retail concession cost, well, yes, there's a price increase, but there are also 3 years of extension, which is a positive.

In general, as you know, we don't like to comment on budget law proposals at this stage, as everything is open and it's not the best thing to do from our perspective.

Also, to go on your point, what will we do? We decrease the size of our retail footprint to optimize. That's also hard for us to comment on at this stage, not because we don't know, but because it is a very sensitive topic from a competitive standpoint. That's why it's also touched on.

But let me comment on a statement on a question that you make: is there oversupply? Yes, there is oversupply. That's pretty clear. So I'll leave it at that.

On the third question, the online boost, what can we do? As you said, at the central level, I would rephrase it as something that is common for all of our future operations; there are 4 main areas.

One is the platforms, making sure that the platforms you have in place give you all the product features and the level of flexibility that you need. And so that's one point.

The second point is, and that's why it is in the pages that you've seen in this presentation, it's the sports betting, the risk management, and the pricing management, making sure that you have all the capabilities and the tools to properly manage the risk and to properly manage the pricing because that's not only about the margins that you make, but it's also about the appeal of the product that you present to your customers.

And that's a capability that has to be at the group level. The single operations of the group can benefit from that capability, let's put it this way. Then you have content, casino content, iGaming content.

The portfolio should be the best, the widest, and the best for every single jurisdiction without any type of constraint; what the consumer wants, the consumer should have.

Last but not least, and you have another example of this in the pages that I have presented, making sure that the digital marketing tools that we are able to use in our current operations, which produce the increase in the click-through rate or the increase in the ARPU and which work above the platforms in many respects, they are, to some extent, also independent from the platform, are available as soon as possible in every local operation that we have.

So these are the 4 main areas. And as to the implications of this in terms of cost savings, what I can tell you, we haven't disclosed the breakdown of the OpEx synergies.

But I can tell you that out of the EUR 101 million of total OpEx synergies at the 2025 volumes that we stated to the market, the largest chunk of that, the majority of that, pertains to our online business.

Of course, we're not providing at this stage the breakdown, the exact breakdown and what is platform, what is content, what is that, but that's the situation: the majority of the savings is coming from there.

The next question is from Karan Puri of JPMorgan.

This is Karan Puri on behalf of Estelle Weg. I've got 2 questions, if I may. The first one is a follow-up on Ed's question on the October iGaming data.

Just trying to understand better in terms of the setup for the upcoming months. Should we expect a similar tough comp setup for the remainder of the quarter and afterwards as well?

The second one is on guidance. We know you guide EBITDA on a normalized payout basis. But on a reported basis, when accounting for unfavorable payout, are you still sort of comfortable with the low end of the range?

Sure, I can take these. So it's a tough comp on a GGR basis, but it's not a tough comp on an NGR basis.

So actually, we're growing very much, which is what at the end of the day matters when you look at your impact on revenues and your impact on EBITDA.

So if you look at Q3, the growth of the NGR from 2025 to '26 is very similar to the growth that we've had in '24 and '25. Same thing for October. They very much align the numbers, the growth numbers.

So the bonus does affect the market level because, during certain periods, it can affect certain biannual events. It can be in relation to, in this case here, the concessions that were being renewed.

So in those periods, they can distort the growth rates upwards or downwards. So in this case here, we've continued to grow because the level of promotional activity has decreased.

So in this regard, we don't see this as a tough comp. So just to summarize this. On a GGR basis, yes, of course, it's a tough comp.

But what matters at the end of the day for our revenues and the bottom line is the NGR. On your second question for the guidance, we'll have to see how we close the year because, first of all, the guidance is always on a normalized basis, like we've done it for '25; we've shown you both sets of numbers.

We had a favorable payout. So it was the inverse of this year, obviously, not of the same magnitude. But last year, we had a favorable payout for the operators.

And therefore, we ended up with an EBITDA reported, which was higher than the EBITDA that is normalized. This year, we'll have to see how we end the year because the volatility of the results and the magnitude can be such that the reported numbers can move significantly.

So on a normalized basis, we continue to see exactly what we saw when we announced the numbers earlier this year. So that does not change. Clearly, the reported numbers will reflect what the ultimate payout will be in Q4.

The next question is from Clark Lampen of U.S. Bank BTIG.

I just had 2. Lawrence, you ran through sort of full-year guidance just a moment ago, I guess, for the preceding 2 questions. I just wanted to maybe clarify.

As we think about, I guess, double-digit growth in the online segment of your business for '27, I guess, maybe moving a little bit further forward than guidance, should we expect online growth in that range to have a similar impact on the offline sports and gaming franchises?

Or is there a reason maybe to think that the declines in, I guess, the respective pieces of the business could get a little bit maybe more intense next year?

And then you talked about volatility of results for 2026 performance. We've seen the iGaming data. Could you comment on October sports performance?

Have we seen any notable or standout positive or negative variance to begin the quarter?

Okay. So, in terms of double-digit growth, overall, the online market, we expect it to continue to grow double-digit.

The sports were more of a theme of '25. Now this year, the second half's theme is gaming, obviously, because we try to explain all the differences and nuances.

For iSports, if you break it down, iSports tends to be more subject to, let's say, transfers; it's more omnichannel, and therefore, you can have periods where sports and retail grow faster than what we originally expected, and iSports declines because demand moves more towards the retail channel.

But again, because the walls between the 2 channels are much more permeable in sports. So I'd say in the coming years, we continue to see overall double-digit growth. That's, I think, the key tenet.

Then iSports can fluctuate depending on -- it's very much a function of how sports retail works. And iGaming, and if you look at it on an NGR basis, I mean, it continues to grow, still double-digit.

So we don't see a slowdown. I mean, for the time being, we don't really see it, and we attribute the 9% in October, the fact that it's 9% entirely to the difference in promotional activity between the 2 periods.

So going forward, I repeat it for the third time, we continue to see double-digit growth. In terms of what we are seeing in volatility of events, we can't comment on October because the numbers haven't come out yet.

So when they come out, we'll be able to comment on them. But just remember that the volatility can have wild swings upwards and downwards. If you look at the first quarter of 2023 before we listed, it was extreme, extremely favorable.

The first half was very favorable, and the first quarter was probably the best quarter we've had in our history. And then obviously, it reversed in the second half.

But ultimately, they balanced each other out. So, for the volatility of events, we will continue to see volatility of events. That's normal. The size of the impact is clearly on an absolute basis; it's larger because we are growing.

We're double the size that we were 3 years ago. But we continue to see normalized levels staying exactly where they were and where we said they were.

The next question is from Ben Shelley of UBS.

I've got 3, please. One on integration. We saw some revenue and market share volatility when PWO went through its replatforming.

As you think about CESTA, do you see a similar risk around the replatforming process and fully appreciate the transaction hasn't closed yet, but can you give us any broad sense of the timeline you envisage for migrating the business onto your technology stack?

My second question is on GGR to NGR conversion. GGR to NGR conversion looked notably better again this quarter, similar to what we saw in Q2. Could you talk through what's driving that improvement and how sustainable you think it is going forward?

And then my last question is on online EBITDA margins. Can you help us understand the year-on-year decline in online EBITDA margins? How much of that was simply the flow-through from sports results? And is there anything else in the Q3 cost base?

Yes. On the integration, Ben, it's a good occasion to provide some more clarity on the VW dynamics.

We saw some volatility, some negative impact on the integration of PWO around the migration and immediately before and after the migration, which is, by the way, not only the case of PWO because we have seen that also in the past.

And we can talk about it in a fairly relaxed manner because, as we mentioned last time, the market share, especially in terms of sport, has been completely recovered, and we are well above pre-migration levels when you look at the total retail sports and online sport, as PWO is very much omnichannel on this point.

But the point on PWO is why the effect was more visible than in other cases. The very same happened when we bought the assets from IGT, the Lottomatica perimeter in another migration. But the effect was more visible in the case of PWO simply because PWO was a decreasing brand.

If you take PWO 2 years before we bought it, 1 year before we bought it, when we bought it, and before the migration, PWO was going down, simple as that.

It was an asset that we not only had to do a replatforming, but we did a replatforming in the context of a turnaround, which is another story. So it was not that you had a flat brand or a growing brand that all of a sudden slowed down because we did a replatforming; you had a decreasing brand.

And so it's always very hard to say in the mix what was due to the fact that the brand was decreasing, how much it would have decreased if we didn't replatform, maybe even more than it has had in the short term.

Well, the good news is that it then stopped, and it moved the other way around. It was less visible in the case of the IGT assets, which, by the way, were decreasing also, but at a slower rate around the time when we bought them because you needed less of a turnaround.

The turnaround of the entire company was so deep in the case of PWO that, of course, you saw the effect. But then you do not have to consider only the effect on the market shares in the case of PWO because the net effect of that is that we doubled the EBITDA of the company in a time span of 1 year or so, 1.5 years or so.

So part of that was not good market share. I mean, it's not about volumes. It's also about the profitability and the sustainability of those volumes. Long story short, all replatformings bring some noise.

PWO is a case where, I would say, a big chunk of the noise was due to the fact that the brand was decreasing, and we had to do a turnaround that was extremely successful, probably the most successful of all the integrations we've managed.

In the case of SSA, who knows? Nobody knows until we start surgery. But the point is CESTA is not a decreasing brand, first of all. It doesn't need any turnaround.

It needs a boost. It needs support to accelerate, but it doesn't need a turnaround. So we are in a very different situation. And as for the timing of the replatforming, I would defer it to when we close replatforming or, in general, the integration.

Let's give it a broader view because there may be nuances to this. Let me defer this then to when we close the integration plan, and then we are able to disclose to the market a lot more details on the integration plan because currently, we are working on making sure that on the day of closing, we are able to start executing, and that comes from every possible detail on how we're going to perform the integration, but let me defer that.

But there's a very big difference in the case of PWO, which you have to consider.

So Ben, on your second question, I think, yes, as you pointed out, there's been a better conversion from GGR to NGR.

It's been sort of a good quarter. The previous one also was an improvement. I can't really give guidance on this point here because it's really a function of many different things, including, amongst other things, the events and the contingencies- the events that occur in specific quarters.

Last year, Q4 was an important quarter ahead of that, happening ahead of the award of the concession. It started already after the summer and followed through to the end of the year and partly at the beginning of the year.

So we kind of guide to a stable level. It will oscillate depending on specific contingencies. In terms of online EBITDA margins, we'd say that there are really 2 factors that affect the margin.

The first one is sports. The payout was 3 points higher in Q3. So it is quite material for online. And the second one is the fact that, anyway, the level of activity in the third quarter tends to be the lowest, similar to Q2, but the lowest in the year. So you have the negative effect of operating leverage in Q3.

Q4 tends to be better. And obviously, a normalized payout, you would be back to the levels which we indicated in the previous results presentation.

The next question comes from Adrien de Saint Hilaire of Bank of America.

A few questions, if you wouldn't mind. I know it's difficult to comment on the Italian budget law, but at a high level, Guglielmo.

Previously, you had stated that we should expect your CapEx levels to be growing in line with inflation. Is that still the right way to think about it? Or is that too early to say?

Secondly, maybe more for Laurence. I think your EBITDA guidance on a normalized payout basis implies about 12% to 16% growth in EBITDA for '26. I think you're on 19% after 9 months.

So is there anything specific happening for Q4 that we should be aware of? And then maybe for either of you on the normalized payout points. I think you've undershot normalized payouts in '23, '24, and '26. So do you think it's still fair to use 85.5% as the right base?

Or maybe has something changed?

Yes, Adrien. So, on the first point, clearly, the increase envisaged in this first proposal for the concession part is actually higher than inflation levels.

But you should also consider that it's a fixed amount for 3 years, which you should also compare to other situations where we had 1-year extensions or 2-year extensions. So that's one point just to consider in the math.

And the second point is I'm not going to comment on that right now, similarly to the previous question. But of course, we'll have to consider when you look at total CapEx, not only concession CapEx, what is the right level of optimization total CapEx that considering the picture in order to stay within the parameters that we mentioned.

So that's the answer I can give you now.

Adrien, on the second point, not much to say, frankly. I think we reiterate what we said earlier that for the full year, we expect to be at the high end of the guidance in the upper half of the high end.

So not much to read into the Q4 numbers. On the normalized payout, yes, if you look at the dynamics on '24 and '25, '24 was negative; '25 was positive. '23 actually had a phenomenal first half and a bad second half.

It depends really on when you start counting. If we were to count the months before the end of '22, we'd probably get to a great year for '23. But anyway, it is what it is. So '26 is a negative one. We'll see what '27 brings us.

But no, this is all to say that we still believe in the average of the averages that define the normalized payout, which is that we look at it on a rolling 3-year basis, and 85.5% and 80.5% are the numbers that still hold well for us.

Remember that the volatility of online tends to be significantly lower than the one in retail. So retail tends to be much more volatile as a result of the higher share of accumulators. So there's much more volatility there.

Q3 was quite particular in terms of online, as they have been. We have had a more pronounced impact in online as a result of, again, volatility of results and the number of scores that were done, which were much higher than the average that we've seen in previous seasons.

But I would say, so far, we believe these parameters hold true.

The next question is from Charlie Muir-Sands of BNP Paribas.

I just have one question. Going back to your Slide 4 on the ICE Sports market share evolution.

I note your comments around being disciplined for marketing in the World Cup when you saw your market share dip by a couple of percent, but it's obviously far exceeded recovering that in August and September.

I just wondered whether you felt that, that was a temporary adjustment by your competitors, whether you think that, that is a point of sustained share gain based upon the actions that you and Abe have taken.

Yes. No, I mean the comment is referring to something that we've reiterated several times.

We focus on profitable growth in general. And so that also applies to market share. We focus on profitable and sustainable market share. It's in line with the comment I made on part of the market share of PWO.

I mean, GGR is nice, but if you start paying the consumers to stick to you too much, then that's a problem. It's not a healthy GGR on a healthy market share.

So we thought we had a good strategy for that period of time, considering what the level of stickiness is of the clients that you acquire on those occasions, different types of quality of new clients that you acquire.

There are some that you just move for a while because of high bonuses, and then they leave you the month after. There are clients that maybe you acquire because you have the occasion of the event, you have the news flow, you don't need particularly high bonuses, and they stick with you.

So we try to manage also this type of aspect. We not just focus on growth, but on profitable growth, and that applies to the market share. So we think we did the right thing, as actually August and September clearly show during the World Cup.

But in terms of the behavior of your competitors, have you seen that being sustained into the rest of Q4?

No, no, that's why the comment. I mean, the comment is that we've all had different strategies for the period of the World Cup.

There are operators who have pushed more during the period, and operators who have pushed less. What the comment is about is the fact that there was an additional increase in push, which was related to the event, and then you went back to the previous levels.

Yes. August, September, compared with, let's say, March, April, May, you're ahead. So not just a recovery from the June, July levels. Is that due to better risk management, for example, do you think?

Yes. But look, you have to look at the -- I mean, it's a trend. There's a slow trend. I mean, given the level where we are, you don't increase by 1 point or a point per quarter. But there is a trend of constant increase.

You may have 1 month that you slow down for specific events or topics that you have done. But the important point is the trend. So we are up, but also, if you go back to '25, we are up compared to '25. And then if you go back, we are up compared to the previous period.

So it's a slow trend, which may have been due to slightly better management, risk management. The point is that when you continue to do well on the product, well on the marketing activities, improving the offer, you keep on eroding market share from competition slowly but consistently.

So I wouldn't just focus on -- we had just like a better payout or a better risk management. In part, it is that clearly, I mean, just to be clear, and we said it also the other times this happened when you go on sports, so let's move from the total online graph to the sports graph.

When you go to 37%, starting from 31% or the average of 33% that we had before, there is clearly a bunch of payout there, a bunch of better risk management. That is not a new level.

You don't jump 4 points in terms of market share in a few months. So I'm not saying that 37% is at all a new level for us. I was considering the total online market share, where you should look at the trend. iSports, you have more volatility.

So the question is, do you get to 37% from 33% in sports also because of better payout management in that location? The answer is yes. If the question is more general on the online, what is the reason why you are at 32.4%, and you were less 31%, 32% in March, April, May? It's because there is a slight but constant improvement driven by the overall positioning of the group vis-a-vis the competition.

The next question is from Domenico Ghilotti of Equita.

The first question is on the bolt-on opportunities. I wonder, given the level of consolidation that you have reached, particularly in online, I wonder if we have to assume that bolt-on will be maybe reallocated to new geographies post-combination with CESTA or if you still see opportunities in the domestic market?

And second, well, just a question on -- I have seen the tax rate on adjusted net profit going up. If you can comment on the cash taxes that you are expecting for the full year and also on the trend that we have seen, if this is structural or more temporary?

Yes, I'll take the first one, Domenico. On bolt-ons, I do not exclude that there are small things to be done here and there. But the focus is certainly not going to be Italy.

Italy still has lots of room to grow organically, but we also have to be mindful of concentration limits when you get to bolt-ons. We are not there. We're not at the limit yet.

We think we're still distant from the limit, even after the deal. But clearly, the room is that the strategic focus is less than before. So we will put a lot of focus on the new geographies starting from Spain, but not only.

So that's what I think is the answer without going into too much detail. There's a lot of focus that we currently have for the Italian market on organic growth.

Many of the slides that I presented and the things that we commented on in terms of market shares are all about how you can continue to slowly but consistently increase a profitable market share by leveraging risk management, pricing on the sports, the digital marketing activities that we do, the ARPU, and all this stuff.

So this will be the focus in Italy. We'll be very mindful of how we deploy capital from now on, also for the box.

On the tax cash costs, as you know so on the cash cost, as you know, it was in June, we pay the balance for the previous year. And then we pay the first account for the current year.

On top of this, you also have to factor and take into account that we pay every time you upstream, given our level of capital returns we've carried out so far, we've increased all the dividend distributions from the opcos up to the holdco.

I think so far, we've spent about in terms of cash taxes, about EUR 75 million, which is what you see in the first 9 months. That amount, obviously, there's a bulk of taxes that gets paid in the end of November, and we should get to roughly around EUR 140 million of cash taxes this year.

The next question is from Andrea Bonfa of Banca Akros.

Most of my questions have been answered, but I got some, let's say, left one.

The first one: I know you don't want to comment much on CESTA integration. But is it right to assume that the quick fix or the quick synergies will be in Italy, with the gaming machine and the online market share of CESTA, which is 5%, 6%?

And then, is it possible to know how you will proceed? Will continuing the integration be the first focus, and then the rest of the world, or can you comment on this point?

The second one is that nobody mentioned the increase in the minimum bet for the IPs from EUR 1 to EUR 2; although it's a declining business, we know that will not be a helpful component in order to offset the higher? That's the second question.

And the third one is a minor one. Flat is exiting the Betfair Exchange. The betting exchange is a minor business for the industry, but will be a small positive contribution for you going forward.

Yes. Andrea, so I mean, Italy is going to be the integration of the Italian operation; it's going to be a quick fix in terms of clear cost opportunity because you streamline operations.

On the online, and this also answers the second part of your question, on the online boost, we're going to be very much focused on Spain as a starting point. So that is going to be the priority of the group.

Clearly, if there are things that we can do in Italy, and there are, we'll take care of them. But strategically, the integration plan will be focused on delivering results as soon as possible in integration as soon as possible in Spain.

On the question of the changes to the AWP product, are those positive changes? Yes, they are. And can they help offset? Yes, they can. That's the short answer. So there's a balance there.

Clearly, there's a product improvement that you should consider. And on the question of the flat in the betting exchange, I mean, that's a minor business.

We commented on this several times: in such a mature market, peer-to-peer type of products in sports betting are not particularly interesting because you're simply not able to propose the type of products that more evolved customer sports betting look for.

So it's a tiny segment. I wouldn't put much focus on this thing. I don't think this changes much for us.

The next question, gentlemen, is from Chiara Pampurini at Intermonte.

I have 2 questions. The first one is on the Italian market and on the operators. So, a slide in the presentation.

My question is you see further space for reduction in the number of smaller operators in the next month and maybe also after February when the new system will start operation?

And the second one is on the one-off cost you saw in third quarter from transaction, if you expect additional one-off impacts in the fourth quarter and if you already have some sort of estimate?

Yes, Chiara, so on what we call the tails, clearly, there is a lot of pressure there. But it was the pressure Chiara was there, as you can appreciate from the graph also before the new concession system.

Clearly, the new concession system has added more pressure, and you can see that. But I mean, the decrease was inevitable and was visible also before; you need tech, you need product, you need processes, you need a proper cost position in order to compete.

So, I mean, there's been an acceleration and additional pressure with the new concession system, but the trend was already -- it's a trend that you see pretty much in most of the markets out there.

So I think it's been very clear in the last 3 years.

In terms of cash costs, there will be a bit, and I would say, in the single digits in the fourth quarter. The bulk of the transaction costs will materialize in the first half, depending also on when we close.

But in total, they will amount to roughly about EUR 30 million, maybe a little bit north of that. It depends on also how long it will take and the amount of additional effort from signing to closing. That's on the one-off for stress.

Mr. Senesi, there are no more questions registered at this time, sir. Back to you for any closing remarks.

Yes. Thank you, operator, and thank you all for participating. I think we can close the call.

Thank you. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your devices.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Lottomatica Group's H1 2026 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Mirko Senesi, Head of IR of Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to Lottomatica Q2 2026 results presentation. I'm here today with our CEO, Guglielmo Angelozzi; and our CFO, Laurence Van Lancker.

Now the floor directly to Guglielmo for the presentation. Guglielmo, please.

Thanks, Mirko, and good morning to everybody. Let's go up Page 2 of the deck. Another very good quarter and another very good semester. We increased EBITDA 14% reported, 17% on a normalized basis in the quarter, which means 10% for the semester on a reported basis, recovering a chunk of the payout issue that the market had in Q1 and 20% increase on a normalized basis for the entire semester. Even better for the online, of course, which is growing 21% in the semester at a reported level and 24% for the quarter and 25% at a normalized level. So very strong results in terms of EBITDA. Even more so in terms of margins, which increased 2 points in the semester at group level from 37% to 39% and mainly driven by the increase -- consistent increase in the online profitability from 54% to 58%.

Page #3 of the presentation, what are the drivers of this growth, the same which we've had in the last 10 years, basically. Strong market growth, 12% in overall online. June peaks at 19%. Of course, very strong iGaming performance, but also sports has been very strong on the bets because we -- the market has suffered in Q1 for the payout. We continue to increase market share when you look at the trend line, both on a year-to-year comparison and on a quarter-to-quarter comparison in iSports, iGaming and overall online. So let's draw -- let's try to draw a conclusion out of these strong results.

A conclusion on the results. There is consistency of growth in adjusted EBITDA. We are on Page 4 of the presentation. We've been growing every -- I mean, quarter over the same quarter of the previous year, every single quarter in the last 10 years, of course, except during the COVID restrictions. So consistently looks like an appropriate word for this.

Page #5, consistency again in results. We've consistently grown in margins. This company started a little more than 10 years ago with 12% margin. We have transformed this company in a 39% margin, mix efficiencies, all sort of levers that you can use in this type of cases. And of course, the online also has been a key driver, not only in terms of mix, but also in terms of internal efficiencies because the very first profitability of online was 21% back in 2017 and today is 58%.

Also, when you look at the latest quarters, that you can see on the graph on the right, you can see that notwithstanding the fact that we have consolidated assets with a much lower -- structurally lower profitability like PWO, we've offset that. So we've been able to fully integrate these assets. This is the example of PWO, but there are others also within the business model of the group and consistently recover the profitability and bring that to the level of the group. So this was about consistency of results, which has been driven by the consistency of the drivers underlying these results.

Page #6 the first driver and the most important of all, of course, is the market. The market -- the online market has been growing consistently in the last 10 years. And after COVID is pretty stable in the mid-double-digit range. At the same time, on a competitive basis, we've been increasing our market share. There have been periods where the market share has been growing faster, others where it has been growing slightly slower, but the trend line is very clear. In a mix of organic growth and M&A, we've gone from a marginal operator to the nominal to the largest operator in the market.

This is also true, as you see in Page #7 in the latest quarters when you reduce the granularity and look at it on a month or quarterly basis, so on a smaller -- on a shorter period. You can see, of course, ups and downs, glitches, especially in sports, where you also have the payout, which is impacting the market share depending on the brand and on the business model, but the trend line is also very clear.

Page #8, an update on PWO. It continues to go the direction we've mentioned in the previous quarter. Sport is not only recovered, but is above the previous levels before migration. And we're doing -- also, we're also -- we also continue to work on the iGaming. The important point is that we've been focusing on a proper balance between market share and growth and profitability.

Market share has to be sustainable. We've cleaned up part of our customer base, limiting abuses, optimizing the bonuses, shutting down unprofitable bonuses campaigns. And that's why we basically doubled the company -- the brand is very healthy. Has done a good journey from the migration and it's doing double the EBITDA. That's pretty much the story.

When we go to the other important trend of this last couple of years, Page #9, the consolidation of the tails, this continues. It continues on an organic basis, and it continues because we consolidate some of the smaller operators, but this happens also because we offer a very compelling environment for them to continue to grow as entrepreneurs more than they would do on a stand-alone basis.

Last but not least, Page #10, the recap of how this all works. Now this is all about compounding returns. We have a yield of our free cash flow, which if you measure that basically from IPO to today, has been on average 8%. On top of this, the company has been growing. So the growth rate of this levered free cash flow has been in the same period, 26% CAG, talking about CAG. So basically, you get an excess of -- well in excess of 30% of total returns on average CAG in that 30%, sorry, in that period of time.

How did we also use that 8%? We gave it back to our shareholders through distributions. Even more that then -- that 8%, you can see the example of the last year. On average, we have generated 8%, but we've given back in the last year more than 10% between dividends and buybacks because we could do more buyback because of the 26% growth, which gave us incremental leverage capacity. So strong compounding returns and use of the returns to provide enhanced distributions to our shareholders.

Now I'll leave the floor to Laurence for the second part of the presentation. Thank you.

Thank you, Guglielmo. Moving on to Page 12, the group financial highlights. You can see on the left-hand side how revenues have grown plus 5% in the first half. And in Q2, on a reported basis, plus 6% and plus 8% on a normalized basis. On the right-hand side, you see how overall EBITDA has grown plus 10% in the first half, also taking into account -- on a reported basis, taking into account the impact of the sports payout. And in Q2, we've grown at plus 14% on a reported basis and plus 17% on a normalized basis with normalized payout.

Also, looking at EBITDA margin, it has increased over at the group level by almost 2%, by 2 percentage points. And this has been driven by the online -- by mix effect, given online has -- at a higher margin has grown faster than the other 2 segments. It's the effect of the run rate synergies that we completed last year. And finally, also the effect of the cost efficiencies realized in the first half of this year.

On Page 13, on the left-hand side, you'll see how online continues to remain our engine of growth with growth in revenues on a normalized basis of 17%. Sports game -- Sports Franchise continues to grow very nicely on a normalized basis of plus 9% and when you look at it on an adjusted EBITDA basis, you'll see that on a normalized basis, online has grown at plus 27% and Sports Franchise at plus 18%, while gaming has been broadly flat. In terms of margins, now online is now hovering at 58% in the first half, with Sports Franchise at around 25.5% and Gaming Franchise at 24%.

Going on to Page 14. On the left-hand side, you can see the total amount of CapEx spent, both recurring and concession, amounting to EUR 80 million, broadly in line with what we spent last year, circa 7% of total revenues. And on the right-hand side, operating cash flow, which achieved a growth of plus 12%, slightly higher than EBITDA growth given the leverage effect on CapEx.

If you look at Page 15, you can see the net leverage that has stayed broadly constant at 2.3 turns. And this is -- so when you go through the bridge, you start from EUR 2.051 billion of net financial debt as at 31st of March. You have the -- other than adjusted EBITDA, you have a positive effect of the net working capital then taxes paid of EUR 75 million. CapEx, which include also the one-off CapEx and growth CapEx of including also bolt-ons of EUR 16 million that amounted in total to EUR 57 million.

Financial expenses and leases that include also the cost of refinancing that we've done in the second quarter a total of EUR 65 million. We've bought back EUR 58 million in shares and paid a dividend of EUR 101 million. And then other costs that primarily include the extraordinary items in relation to the closure of the Serbian branch as well as the bolt-on -- the minority acquisitions and puts that were exercised in the second quarter. This is in total to achieve a net financial debt of EUR 2.11 billion with taking into account the cash amount of EUR 366 million gets a net financial leverage of 2.3x, so in line with Q1.

And with that, we've completed the presentation.

Would you like to begin the Q&A session? [Operator Instructions] The first question comes from Ed Young of Morgan Stanley.

I've got 3, if that's okay. The first is on the World Cup. You've not really isolated it during the presentation, but wonder if you could talk about the impact on the business and where it came versus your expectations for acquisition, player engagement and mix on the business. Second of all, in online, your GGR revenue conversion was noticeably strong in the quarter and perhaps a little bit counterintuitive given the World Cup I just mentioned. So can you talk perhaps a little bit about your promotional strategy and more broadly about the competitive intensity in the market that you're seeing?

And then finally, online EBITDA margins obviously stepped up and you mentioned Serbia. You presented it today as this continuous long-term improvement in margins. So should we be thinking about this as a new normal level with scope to improve? Or is it something that could end up being lower in other quarters as you retain flexibility to invest in the business? Just trying to think about the operational gearing, how you think about the target for the -- in online.

Sure. Ed, I'll take this. On the World Cup, it's been in line -- ultimately in line with expectations. This was also included in the guidance that we've given in the -- for the full year. So we -- the numbers that we've done in the second quarter are pretty bang, I would say, pretty bang in line with what we expected. As we said also in other -- I think in other forms, it doesn't really move too much the needle at an EBITDA level. And it's anyway factored in the -- it was factored in the guidance range.

Online GGR, I mean, in here, we've -- I think we also mentioned it on the slide with Planetwin. We've been -- we've continued to maintain good discipline in our promotional activity. So we are focused on, obviously, on growth, but also especially on profitable growth. And so this -- the results that you see reflect also this approach. Thirdly, I think on online margin, I'd say we are -- we've probably gone a little bit faster in terms of, in terms of margin growth than we originally anticipated. This is because a number of things happened in the meantime. We've made our structure more cost, let's say, more efficient.

In terms of -- I think in terms of guidance, I'd say that probably mid-50s is probably won't hold. As we mentioned earlier, we'll be a notch above that. There may be quarters -- as you know, there is always some volatility due to payout. So there may be quarters we may be lower on EBITDA margins. But I think we are trending in a direction which is in line with what we're seeing now. So it is -- it reflects the, let's say, a rebased cost structure that is sustainable in the medium term.

Just to come back on the promotional intensity point, it was quite a big step-up sequentially. So I understand the commentary there is around profitable growth. But is that sort of ongoing mindset for here? Or is there other noise in the quarter that we should be aware of, whether it's tax mix or anything else that could have affected that number?

So when you talk about the numbers, which number are you referring to exactly, Ed?

Online GGR to revenue conversion.

Yes. No, no, no. It's -- we have had -- if you look at it, remember, in the -- we have been -- we had done also some also additional cleanups as we mentioned, from a -- so we are a bit more -- not a bit more, but we have always maintained discipline. We have had a number of cleanups as well during the quarter. So I don't necessarily think that we'll stay at these levels, but it is sort of an indication that we want to remain disciplined on all the promotional activity.

Maybe a quick comment, a quick additional integration to this. These big events are good acquisition tools, as we always said. But you have to distinguish between acquiring clients which are then there to stay and acquiring clients that disappear immediately after. You not necessarily want to deploy a lot of money on the second group, which is about discipline. So that's another point I'd like to stress.

The next question comes from Estelle Weingrod of JPMorgan.

I've got a couple of questions as well. The first one on online margins, just to come back to Ed's question. I mean what are the key drivers of further improvement from here? And how much of that is like structural cost efficiency versus operating gearing? And another one on the retail concession framework. Is it still the case that an agreement could happen in August? And if so, when do you see the earliest cash outflow, please?

So I can take the first. I mean, I think, Estelle, we've always been, as you know, a bit cautious always in guiding to further improvements. I think the levels which we are now is, let's say, level we're comfortable with going forward. But I would not bake in further margin improvements for the time being. Do we have operating leverage? Yes. Are there any further cost efficiencies potentially materializing in the future? Possibly. But if those were to materialize, we'll talk about them when we do them. But I think that we are, I would say, relatively comfortable with the levels we've achieved now.

Yes, Estelle on the retail concessions, look, it's very hard to say. The reality is that whether they -- whether you have an agreement or not, basically nothing changes. The outcome is exactly the same in the next 2 to 3 years, which I think answers to the second part of your questions because the reality is whether you don't have the framework, the agreement or you have it tomorrow morning, you will need, in any case, to have an extension of the current concessions for a couple of years, maybe 3 now, depending on how you want to phase it. But that's a bare minimum that you need to go from -- that you need to bridge from an agreement tomorrow morning and the awarding and so the payment of the of the next concessions.

So long story short, whether you have that tomorrow or you don't have it, what happens in the next couple of years, 3 years probably is going to be exactly the same. Just think about the reform of the online. You had the law in March '24, and you got the concession in November '25. So for one product, pretty easy, straightforward like the online, it took 18 months. And these are 2, not to say 3 because you also have bingos there, complex tenders. And with the involvement of local regulation for the distribution, it's going to take much more than that. So one way or the other, what happens tomorrow and for the next 2 to 3 years before you get to the new concession is going to look exactly the same in the 2 scenarios.

The next question comes from Pravin Gondhale of Barclays.

Firstly, can you comment on current trading trends into July and whether the momentum has remained broadly consistent with Q2? And then secondly, on the sort of proportion of market share there, which is -- in online, which is up for grab, has there any sort of change in your views that what could ultimately come -- become available following the sort of concessions here given the intensity that you have seen in the World Cup and then the progress of BW market share wins here?

So Pravin, I think this current trading in July, there's -- obviously, the numbers haven't come out, but the trends continue to remain solid. So there's nothing to note there. So far, so good. On the market share, is your question is do we have -- I think from our perspective, the views in terms of what is up for grabs has not changed. So it remains consistent with what we said in the past. In addition to that, as Guglielmo pointed also earlier, we're focused on growth and especially profitable growth. So we will remain disciplined in how we continue to grow.

The next question is from Charlie Muir-Sands of BNP Paribas.

I have 2, please. Firstly, just with respect to the buyback, I saw in the bridge that the spend in the quarter was only about EUR 58 million down on the acceleration that we saw at the beginning of the year. I just wondered, given where the share price is and the leverage, what your considerations were with respect to the pace of execution of the capital return program?

And secondly, just with respect to some of your recent small bolt-ons, eGaming and Sportbet, can you just remind us now where they sit within your statutory and adjusted revenues, EBITDA, net income?

Sure. I can take them both. On the buyback, the EUR 58 million is -- reflects the fact that we had to stop the buyback for, I think, around 3 weeks because we had to wait for the new -- for the new approval -- the approval from the EGM. So technically, in order to be able to extend the buyback beyond the original limit and to the new limit that we've approved in the latest EGM, you have to stop. So it's not a sort of conscious slowdown because we want to spend less.

And this is a -- the buyback is executed based on an amount that we give to the bank and the bank does it autonomously. But we reiterate that we will -- that the same message we said in the previous results presentations, which is we are planning to buy back up to EUR 700 million this year and next year.

From -- in terms of bolt-ons right now, so in the statutory accounts, you will not see anything other than an investment. So it's an equity investment. And -- but in the adjusted EBITDA, we've shown -- we've added the contribution of Sportbet today. And it's still -- I mean, it is immaterial to our numbers.

The next question is from Clark Lampen of BTIG.

Maybe first, I wanted to follow up on the question that was asked, I think, sort of 2 previously around share. If we were to look at the iGaming business, I think you've been running steady in the sort of low 30s, maybe 32% this quarter and last. Was there any impact from the World Cup and players wagering more on competitor platforms or with your sports business more than iGaming this quarter that might have impacted those numbers? Or did you see market-wide that the same trends were fairly uniform for your competitors?

And then second question is a little bigger picture. When we think about AI integration and impact to your business, I'm curious, as we look at the back half of the year, specifically, do you see just sort of very high level, more opportunity on the revenue side of the business for optimization? Or is there more near-term optimization opportunity on the cost side?

Clark, I'll take this. So well, the pocket of the player is a certain amount, and there's a lot of overlap between sports and iGaming, especially in moments where there is occasional gaming like in the big events. So clearly, if sport flies, iGaming is impacted. And it depends on why sport flies, sports flies on occasional events and you focus a lot on occasional players, then clearly, that has an impact.

But as you could see iGaming growth remain pretty much the same. And so the fundamentals of sports growth in some of retail and online. So short answer in the very short term, yes, because there is a correlation. You will find that mathematically. And -- but it's like basically short-term dynamics, which do not alter the trend, which we continue to see exactly the way we have represented it so far.

On the second point, which is AI integration, we think that the -- by far, the largest impact of this will be on the revenue side. We have a huge number of projects and already active agents that are working on the top line side and get improved release after release. We mentioned several times talking about risk management and better acceptance, talking about the casino presentation offer and pricing, talking about the communication, automation of communication to -- and promotions to players, the intensity of the bonuses, so much stuff, which is related to the top line.

But clearly, across -- and this is to the business, across the entire company, there's a lot also around productivity, which is also very important and can be very material on the cost side. And -- but I wouldn't say one is long term, the other is short term. Also the agents and the applications on the top line are already up and running. It's not that one is -- revenues is long term, the other. It's -- we're working on both, and there are other opportunities will come on the content side from AI, which clearly work both on the cost side, how much you pay the content, how much content costs to us and how much -- and what's the quality of the content, so the top line driven by that content. So there's a long list. But clearly, the revenue side is more sexy and potentially larger. That is in a nutshell. We haven't provided a number yet on this topic because we want to accumulate experience and data points, but this is clearly something relevant, very relevant.

The next question is from Ben Shelley of UBS.

I would like to go back to the online GGR to revenue conversion topic and potentially link it with this theme around AI. Are the tools and infrastructure you have around bonusing, are they improving? Is that sort of a big part of the driver here? Just love to hear more thoughts on that. And then on PWO, can you talk more about the market share development on the iGaming side? Where is that versus pre-migration levels? And how is that progressing?

Yes. On the first point, as I said, we have tools which are up and running, but I wouldn't like to get on to the actual impact on that on that type of, the GGR to revenues conversion because, as I said, we want to have large and consistent set of data points before giving numbers and KPIs. It's already up and running, but I don't think we are at the point yet that we can disclose an impact or give a guidance on that. So I would prefer to confirm that it's there and it's relevant, but not to get into the -- early to get into the numbers. So PWO, maybe you want to comment, Laurence?

Yes. I mean PWO has performed extremely well on the -- particularly on the sports side, they're continuing to grow market share. So we're very happy with that, that went definitely beyond expectations. So we've gained 0.2 percentage market share pre -- compared to pre-migration levels. In iGaming, it's a journey. We had recovered half of what we had lost. We probably have another 0.5 percentage points to recover. So we're still hovering around those levels.

Again -- and we tried sort of to stress this also on the slide, which shows the performance of PWO. We want to continue to grow market share profitably. So we're still on that journey, and we think the potential is there. But again, it is -- we'll see how long it takes. But when -- but whilst we do it, we care about the bottom line.

The next question is from Domenico Ghilotti of Equita.

A few questions. The first is on the Serbian branch restructuring. If you can provide some additional color on, first of all, if you have already booked all the cost in Q2 or you have some additional cost to be booked? And if the contribution -- the positive contribution was already, say, fully on stream in the second quarter if we have additional upside in the next quarters?

Second question, well, just a clarification. So that the normalized tax rate was a bit higher in the semester. If you can reconfirm the expectation for the full year and next year?

Okay. I can take those 2 quickly. So Serb, yes, the restructuring costs have been fully loaded in Q2. And then the numbers are -- also the benefits are already baked in EBITDA. With regards to taxation, this -- it's just a matter also of timing for the year. The full year taxation costs are broadly in line with consensus.

The next question is from Chiara Pampurini of Intermonte.

I had a question. The first one is on the second half of the year. The guidance for the full year, again implies EBITDA growth above 10%. What are the main factors you expect to support growth in the second half? And if you still expect further synergies and efficiencies to come through in the second half of the year from [ PWO ]? And the second question is on the one-off CapEx. If you can give us some color on what are the main items that are included in the number of the second quarter?

Sure. On the second half of the year, there is -- I mean, we -- there's not really much to say other than it support -- our estimates support the fact that we will have achieved sort of the upper part of the guidance. So we don't have any other sort of further efficiencies baked in other than what we've already done. If there will be something, we'll include it. But otherwise, there's nothing else in that. It's clear that H2 also is a stronger half than H1, given the seasonality of the business and how strong than Q4 is. So you have to factor in as well when you look at the seasonality of the business. In terms of one-off CapEx, they're predominantly bolt-ons and other investments we had to do in relation to the concession. These are the main items.

The next question is from Richard Stuber of Deutsche Bank.

Two, please, both on cash. The first is, I think you did EUR 385 million of operating free cash flow in the first half. It appears during the presentation that your priority is largely about shareholder returns. I know you did about EUR 110 million share buybacks, EUR 100 million of dividends. But what I'd like to know is a bit more about your appetite for using cash for M&A, particularly outside of Italy and if you've got any sort of thoughts there?

And the second question on cash. I think Q2, you did EUR 114 million working capital inflow, which seems quite a lot. Can you just remind us what that relates to and whether that's sustainable and what your guidance for working capital is for the full year?

Sure. Listen, so in terms of cash for M&A, I mean, we -- as I mentioned earlier to Chiara, we do -- we have a pipeline of bolt-ons, but they are domestic, where we have significantly value accretion deriving from the sort of the multiples at which we acquire businesses, which are below where we are trading today. So the -- internationally, we've -- I think we've said a number of times, whilst we do -- whilst we look at international opportunities, we're always focused on returns. And so far, we've -- the best returns have been achieved via buybacks. And so there's no change in view on that.

With regards to second question on the working capital, the EUR 114 million, it reflects also the -- it reflects the seasonality of the business. Q2 tends to be a quarter which has very positive inflow due to change in working capital. That's because of how -- because we received back the 0.5% from the ADM and then we accumulate the gaming taxes of Imposta Unica. This then reverses in Q3 and which tends to be negative. And then in Q4, it's broadly flat, slightly negative. If you look at the history of our working capital movements, this is the Q3 -- Q2, sorry, is the quarter with the strongest cash inflow. And then you see reversals in the other quarters. So it is a seasonality effect.

Gentlemen, the last question is from Andrea Bonfa of Akros.

I hope you can hear me. Very quickly, I would like to have, let's say, your, let's say, general view on the residual market share of tailwinds operator. Do you expect that to gain market share from those operators is going to be more difficult or it's going to be standard or less difficult than what you already achieved so far? I mean, are these stronger operators, the one left today or they are even weaker than the one you already gained market share. Just if you can share your view with us.

I think, Andrea, there's a couple of points here. The point is not only acquire market share, but acquiring quality market share at a sustainable cost. So that's the key point, which is true both if you do that organically and if you do that through deals. When you do that through deals, the main driver is the quality of the counterpart. You want to do a deal with a counterpart, which has good quality and you can do -- so you have betting, you can do a journey for the long term.

And when you do that organically, it's mainly about what type of customer base are you acquiring? Is that good bets or bad bets and what do you have to spend for that. So it's not -- I wouldn't say the difference is on the strength of the operator. I would say that is not the topic. The topic is more on the quality of the operator when you want to partner and the quality of the customer base when you want to acquire and the discipline at which you do that. So that's the real driver of the decisions more than the strength of the competitor.

This is not about the strength of the competition. This is about the -- what you want to get. I hope this clarifies. That's the balance. It's more like an art more than a rule. But that's a very important point. I agree with you, but it depends on that.

Thank you, operator. I think we are done with the question.

Perfect. Thank you, gentlemen. Ladies and gentlemen, the conference is now over, and you may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining Lottomatica Group's First Quarter 2026 Results Conference Call.

[Operator Instructions] At this time, I would like to turn the conference over to Mr. Mirko Senesi, Head of IR at Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to Lottomatica Q1 2026 Results Presentation. I'm here today with our CEO, Guglielmo Angelozzi; and our CFO, Laurence Van Lancker.

Now the floor directly to Guglielmo for the presentation. Guglielmo, please.

Thanks, Mirko, and good morning, everybody. We can start with Page 2 of the presentation. Very happy to share with you another very good quarter. EBITDA continues to grow double digit on a normalized level and also revenues. And we have a positive 7% EBITDA also on a reported basis, notwithstanding the negative Sports payout in the quarter. This is on the back of a very strong market.

As you can appreciate from the 2 graphs on the below part of the slide, Online has continued to grow mid-double digit in terms of bets and so Total Sports, meaning Online and retail. And at the same time, we've performed well in competitive terms, as you will appreciate in a few minutes.

Let's go to Page #3. Well, this is the list of the main items that we think is relevant to comment for the quarter. As I said, the market has been strong. Tail operators have continued to lose market share, particularly in iGaming. No issue from prediction market, notwithstanding recent sponsorship. They continue to be legal. The product consumer mismatch continues to be strong. We don't believe there is any market space. And at the same time, sponsorship have basically no impact in enhancing local brands.

Very good news on PWO market shares. iGaming, we've recovered half of the share that we lost through the migration. And we're a bit behind in terms of iSports, but this is explained by the market trend on overall Sports, meaning Online plus Franchise, which you know franchise has been particularly strong in the last few quarters, and so it is the case also for us.

And so if you look at Total Sports, we have recovered to pre-migration levels at 9%, and we'll see more detail in a few minutes. There's been a refinancing done with the important raising more capital, more debt, EUR 765 million. EUR 400 million was a refi and additional capital for general corporate purposes, including buyback and bolt-on acquisition. The overall consequence of this is that we lower our cost of debt from 5.3% to 4.9%.

Page #4, all that I have said leads to strong confidence on us being at the top end of the guidance for 2016 and also in being able to confirm our strong commitment on capital returns with up to EUR 1 billion to be returned to shareholders in '26 and '27, including dividends. So the key words are continued growth and continued returns to shareholders.

Now let's go quickly page by page to see the items, the relevant items that I mentioned a couple of minutes ago. Market; strong market momentum. You see the details here. iGaming grows mid-double digit. iSports grows mid-double digit. And Sports Retail shy of that, of course, in terms of bet, because that's the only thing you can look at given the payout dynamic in the quarter.

Page #6, you can appreciate the details of the tail operators' progression and our progression in terms of market share. This is on iGaming on the tail operators, you continue to see the sharp decrease trend starting from -- well, it was progressing throughout the year, and it was an overall trend, but it has accelerated starting from the new concession. From 2024, 4.4 points, which is roughly 25% of the total market share that this cluster had has been lost.

We continue to grow market share. The 32.2% that you see there is including an additional bolt-on that we've made after Sportbet, we've done another deal with Bgame. So this is pro forma for that. So very good performance, both organically and with our deals that allow us to quicker consolidate, take advantage of the erosion of the tail.

Page #7, I'd -- superfast, so as basically I just commented a few minutes ago on prediction markets, there's a bunch of data points here that you can look at and that show why this continues. This is not at all an issue for us.

I think we can go directly to Page #8, which is the progression on PWO. We have separated from iGaming and Sports. iGaming, half of the market share, which had been lost due to the migration has been recovered, and there's a consistent path. So it's not really -- there's not really volatility in the progression.

And Page #9 is the same trend for Sports. You can see in the graph. Sports as a total completely recovered. And then the detail and the breakdown between iSports and Sports Franchise. There is still room to go in iSports, but this has been compensated by a more than favorable trend on Sports Franchise. This is the consequence of the trend that we have observed at an overall level in the market and also, as it was mentioned before, by the fact that the -- actually, the retail recovery -- the retail transition, the retail recovery was structurally faster. But as you know, our GGR to profitability to EBITDA contribution from the 2 segments is pretty much about the same. So actually, this is very good news.

Page #10, is basically a summary. We wanted to recap and make sure we were on the same page -- we're on the same page, and we fully appreciate the model, the business model of Lottomatica, the overall framework and setup. So, on one side, you have a very strong and resilient business model because of a bunch of reasons, including omnichannel, product tech, AI leverage, which results into top line growth, cost control and scalability and M&A -- demonstrated M&A and integration capabilities, and that's the core business part.

Then we believe we have a very robust and steady capital structure. And as you've seen, we continue to optimize our financing costs, our balance sheet and through that, the financing costs. And we believe we have a smart capital allocation, meaning a good balance between organic growth compared to M&A and compared to direct shareholder remuneration.

This results into growth and returns, which is the first page and the last page of this section of the presentation. And we wanted to do an interesting exercise, I believe. We took all European listed companies with market cap above EUR 5 billion. We went to filter those which have grown at least 10% with EBITDA, then those who have at least 30% EBITDA margin, then those who have at least 75% of cash flow conversion. So really cutting the parameters at the top end of the range.

And then you are left -- and then those which have total shareholder returns of at least 100% in 2 years. And then you're left with 3 companies, which is, of course, less than 1% over the almost 400 companies that we started with. And that's basically the result of the model that you see on the left, growth and returns.

So I leave the floor to Laurence.

Thank you, Guglielmo. On Page 12, you can see that on a normalized basis, our revenues are up plus 10% and EBITDA plus 22%. On a reported basis, despite the payout headwinds, revenues were up plus 3% and EBITDA plus 7%. Just as a reminder, we are comparing a Q1 '26 with a very unfavorable payout to a Q1 '25 with a very favorable payout. Lastly, I'd say our EBITDA margin has hit 39% due to the higher weight of Online in this quarter.

Moving on to Page 13. Here again, we see on a normalized basis how we have continued to see good growth for both Online and Sports, still in double-digit territory. We are plus 17% for revenues Online, plus 11% for Sports Franchise and on an EBITDA level, plus 29% and plus 21%, respectively, for Online and Sports.

Now when you look at it on a reported basis, you can see the impact of the payout affecting mainly the Sports franchise segment. Whilst despite the unfavorable payout, Online EBITDA has still grown by 18%. Gaming franchise is flat at a revenue level and slightly up, so plus 4% in Q1, partly due to bolt-ons and distribution in-sourcing and also some timing of costs, which we will reverse throughout -- during the course of the year.

Page 14; on the left-hand side, you can see the total CapEx, including recurring and concession amounted to EUR 39 million, of which EUR 25 million is recurring, slightly higher than the previous year and the EUR 14 million concession CapEx in line with previous year. On the right-hand side, you can see that operating cash flow reached EUR 196 million, so up plus 6% from last year. And this growth number, if we had normalized both '26 and '25, Q1 for payout would have been plus 25%.

Page 15. We closed the quarter here with a net financial leverage of 2.3 turns and the cash of EUR 119 million. So looking at the bridge from the net debt as at the 31st of December '25, you have EBITDA, then a negative working capital absorption in Q1, reflecting the typical seasonality of the business, CapEx, financial expenses and leases, and then we acquired EUR 56 million worth of stock in Q1.

Then other, which also include extraordinary items in relation to the closure of our Serbian branch, which leads us to a net debt of EUR 2.052 billion in -- on the 31st of March 2026, equivalent to a net leverage, as I said earlier, of 2.3 turns.

And that's it on our side.

Thank you, operator. I think we can open up for the questions.

[Operator Instructions] The first question is from Ben Shelley with UBS.

I've got 2, please. First, I hear you on the opening remarks, but could you expand a bit more on EBITDA margins in the quarter, specifically Online EBITDA margins? Any color on the drivers there would be much appreciated. And then my second question on Online bet growth of 15%. Could you talk about exactly what's behind that, particularly in iSports, where I don't think we've seen double-digit volume growth for some time?

Sure. Listen, on the EBITDA margin in Online, it's 57.5% this quarter. Q1 has been a good quarter in terms of volumes. So that is one factor that contributes to the favorable margins. And also, we are seeing the full impact now of the synergies Q1 '26 versus Q1 '25 of the synergies that we've realized in -- for PWO. So these are the main drivers.

So in terms of bet growth in iSports, we have seen -- first of all, we're also comparing 2 periods with different payouts. Q1 was very favorable to us and this Q1 '26 was very unfavorable to us. So there is some payout dynamic also that impacts the bet growth. But I would say that we have seen this continued growth since the beginning of the year. And there's no real other reason than some of the payout dynamics, but we continue to see -- continue to believe that this segment in aggregate will continue to grow at a -- in the midterm at around 8%.

The next question comes from Estelle Weingrod with JPMorgan.

Just again on the Online margins, you mentioned in the past the level in the mid-50s would make sense longer term. Is it still the case? Or should we be looking at something a bit higher, high 50s or something? And I have another question on the PWO market share evolution. May I ask why is iSports lagging the Sports Franchise in terms of the recovery versus pre-migration level, please?

I can take both. So, on the Online margin, we have had 1 quarter of good margins. I would still say that we're in the mid-50s. Maybe in the midterm, we're a bit at the high end of the mid-50s. So we have scope definitely to potentially make -- do a little bit better than that. But anyway, let's see how things progress also over the course of the year.

On the PWO and the market share, Planet is one of the -- our most omnichannel brands of the whole portfolio. And as you know, the shift between online and retail is much more -- between channels is much more permeable. And therefore, the demand has moved in the past few quarters more on the retail side than on the online side. I'd say, but it happens in -- particularly in omnichannel, especially for highly omnichannel brands.

We've continued to see this as well at the beginning of this year, where retail was very, very strong and online was doing well, but not as well as retail. We might see a reversal of this going forward. We'll see. But just as a reminder, as you already know, Estelle, it doesn't really matter to us from a profitability standpoint because when GGR moves from retail to online and vice versa, the contribution margin is very, very similar. So we're quite indifferent to this shift.

The next question comes from Fabio Pavan with Mediobanca.

I have one on the -- on your decision to update the full year guidance given your prudent approach, I think this is probably best news we have today. I was wondering if this is mainly driven by stronger-than-expected market dynamics or higher increase in market share, better margins or a mix of these 3 elements.

Thanks, Fabio. It's really a combination of all these factors. I'd say that volumes have been extremely strong in this first quarter, and we're seeing a continued growth after that. And that gave us -- it's definitely one of the elements that gave us confidence to put us at the high end of the guidance. The other element more on the cost side is, we see some of -- some impact also from the closure of the Serbian branch, which has moved -- which has contributed from a cost standpoint to increase the range of the -- increase the -- position ourselves at the high end of the guidance. I think the -- I think these are the main drivers. But I would say that probably the one of the determining factors has been this very strong market growth.

The next question is from Clark Lampen with BTIG.

I have 2 quick ones, if I may. On the Online margin trajectory over the balance of the year, just curious if you could share any perspective around the phasing and I guess, sort of time line for margin improvement over the balance of the year? Just curious if there are either comparison headwinds that we should be aware of in the '25 time frame or any lumpiness on the network side or with fixed costs this year, maybe beyond, I guess, what you just mentioned with Serbia.

And then another, I guess, sort of clarification with volume growth over the balance of the year. I think if I heard you right before, Laurence, in the first answer, you mentioned that we should think about 8% over the balance of the year. Is that the right way of thinking about the embedded growth assumptions for the Online business? And if so, is there anything meaningful factored in, in either 2Q or 3Q for World Cup tailwinds?

Clark, so on the Online margin, if you look at the evolution over the quarters, obviously, assuming that all else being equal, the Q1 and Q4 are the strongest quarters of the year. And Q2, Q3 tend to be the, let's say, the weakest quarters of the year. So you have a seasonality dimension there to take into account.

The second thing I'd say is that because in Q1, you were comparing Q1 '26, where you have the full run rate effect of the synergies with a Q1 '25, where we were still in the process of implementing synergies, there's an element there that has -- that compares favorably when you look at the -- when you compare the 2 quarters.

In terms of volume growth, 8% is our sort of midterm view of the overall Sports segment, including retail and Online. And we'll -- this year, obviously, we have our projections, which is what is ultimately reflected in the guidance, but we do have some tailwind from the World Cup that helps as well.

The next question is from Domenico Ghilotti of Equita.

Two questions. One is on the synergies. I was trying to understand if we have to assume that the Q1 is at full run rate because you are mentioning the Serbian branch closure. So I'm trying to understand if it was already driving results in Q1 or something that will be left and in case how much we can expect from this action?

And second, on the current trading, you made reference to a very supportive trend also beyond Q1. I haven't seen data so far. So if you can share a little bit what's going on.

Yes. On the Serbian part, I'd say that it already reflects -- it's all run rated. I would just assume that it's already run rated in Q1. And for the second question, for the -- we have to wait for Agimeg data that comes out. But I would not -- there's nothing surprising in the information. I think we continue to see very, very solid volume growth throughout April and very encouraging results already in May.

The next question comes from Pravin Gondhale with Barclays.

Firstly, can you chat about the Gaming Franchisee EBITDA margin drivers this year? I mean EBITDA margins were really strong in Q1 this year. What are your sort of outlook for rest of the year from here? And then secondly, any update on retail transition tender you have to share?

I'll take the first one. So on the Gaming Franchise, it's due to 2 impacts. One is the impact of the distribution and sourcing that improves our margins. As you know, we've been -- we've continued to carry out that activity throughout '25 and in early '26. So you see the benefit of that. But there's also an element of timing of costs when you budget for the year, some costs may move between quarters and this quarter has been a bit lighter on costs. So you should assume that on the margin level, we continue to see at margin levels between 23% and 24%.

Yes. Pravin, I'll take the one on the retail concession. No updates compared to last time. As you know, there is a very solid framework, which has been prepared by the regulator. And -- but it's very hard to say what's going to be the -- if it's going to be approved and when it's going to be approved as you need the agreement with the regions in the end. But I think there is -- everybody is highly committed to that, but very hard to make a forecast.

What we can say is basically 2 things. It's very robust, balanced and constructive framework, as you all know. And second point, you'll need in any case, time to implement that and to execute upon that because really, it's a complicated process, so it takes time. But the framework is there and it's very good.

The next question comes from Chiara Pampurini with Intermonte.

I got a question about bolt-on acquisition. You said the proceeds of new bond issued are also for bolt-on M&A. So my question is. if you have set some targets, are you seeing some targets other than Bgame? And about Bgame, if you can share with us the market share gain you expect from this acquisition? And if the operation was similar to that of Sportbet or another structure?

Yes. I mean when we talk about bolt-ons, we have an active pipeline that we continue to work on across the different segments. So we look at Gaming Franchise, Sports Franchise as well as Online. We -- so that has not changed in the sense that, as you can imagine, we won't have capacity to buy more than EUR 350 million of bolt-ons.

It's -- we're talking about tens of millions that we can actually implement in maintaining price discipline. So, we -- this is basically in continuity with the bolt-on activity that we've been carrying out for the last -- over the last 2 to 3 -- the last few years, sorry. With regards to Bgame, so it's around 0.7% of market share.

The next question is from Andrea Bonfa of Banca Akros.

I got just one clarification on your EBITDA guidance. Does it implicitly assume that in order to reach the top part of the EBITDA that you count on a payout, which will be lower than you've been budgeting for in order to compensate the Q1 negative payout? Or are you counting more on the mix side or on some lower cost side?

Listen, it's a combination of both really. We -- I would say, we have faster top line growth that puts us at the high end of the guidance as we said earlier and also some better cost efficiencies as well as we're reaping some of the benefits of some operating leverage as well.

The next question is from Richard Stuber of Deutsche Bank.

Just 2 for me. First, just a clarification again on your guidance. I think you've guided to the top of the EBITDA range of EUR 940 million to EUR 980 million. Is it fair to assume that you're also guiding to the top end of your revenue range as well, the EUR 2,390 million to EUR 2,460 million?

And my second question is on the share buyback. I think you did EUR 56 million in the first quarter. So you're guiding towards about EUR 700 million over the next 2 years. Could you give us some sort of guidance in terms of how quickly that will ramp up? Any sort of guidance in terms of what sort of buyback you expect to do in the next few quarters?

Sure. Listen, on -- we're comfortable on the EBITDA guidance at the high end. On the revenue side, we'll see. It depends on ultimately where we'll end up because at an EBITDA, you have the confluence of both revenue growth as well as operating leverage and cost efficiencies. So for now, we just maintain the high end of EBITDA guidance and not of revenue guidance. And for the buyback, we will do a bit less than -- we'll do less than half this year and more than half next year.

The next question is from Andrew Tam with Rothschild & Co Redburn.

You included Sportbet and Bgame in your market share statistics. Can I just clarify whether those are fully consolidated into your revenue and EBITDA? And if not, if you did fully consolidate that, what that would add to your revenue and EBITDA growth?

Sure. So we consolidate them in the market share. We don't -- we will start consolidating them at some point. But it's -- for now, they're not in. I would say that if you look at the impact that it has on our EBITDA growth, it's -- at this point, I would say it's not material.

Okay. Operator, I think we are done with the questions, so we can close the call.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Lottomatica Group's Full Year 2025 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Mirko Senesi, Head of Investor Relations of Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to Lottomatica full year results presentation. I'm here today with our CEO, Guglielmo Angelozzi; and our CFO, Laurence Van Lancker. Now the floor directly to Guglielmo for the presentation. Guglielmo, please?

Thank you, Mirko. Good morning to everybody. We start from Page 3 of the deck. Very happy to share with you that we had another very solid print for 2025. EBITDA growth 21% year-on-year and adjusted net profit 45%. We have returned a significant amount of capital to our shareholders, underpinned by our solid cash flow generation and our balance sheet capacity, EUR 375 million or EUR 1.6 per share divided between dividends and buyback. The net leverage is at 2.4x, in line with 2024 because we use them well within our financial policy as we've used, as I said, our cash flow generation, balance sheet capacity to -- for the buyback. Without the buyback, this would have been at 2x, so at the very low end of the financial policy.

Page #4, what are the key milestones that we've achieved in 2025. The PWO integration, first of all, it's been successfully completed. We've implemented shy of EUR 90 million synergies, 34% more than what originally announced. The full rate will be in effect in 2026. And PWO has gone back to growth after reaching, as we said, the lowest peak at the end of the migration. Very good on the market shares also. We gained 1.2 points as a group, including historical brands and PWO, which you will see is more than 50% of the shares lost by the tail, and we reached 31.3% in Q4 2024, and we think there is more room to go in 2026.

The process for the renewal of the new online concession has been completed, new concession are active since November 13. There's a few more important steps. So the certification of the new systems and the go-live of the new full -- the new regulation on compliance, which is expected to happen in the summer of '26, but everything is on track.

We optimized our cost of debt with a successful refinancing in April. More than 50% of our debt was refinanced at the time with EUR 24 million per annum in savings in interest costs. And now we stand at 5.3% total cost of debt, which is 240 bps lower than IPO. Also in terms of governance, as since June, we are 100% float. We've entered the FTSE MIB in September. Liquidity including all sources is now above EUR 50 million per day, so 15x more than the IPO level. And also the independence of the Board has been strengthened. And today, with the new members that have joined after the exit of Apollo, we have 73% of independent directors and have appointed a Lead Independent Director in July.

So let's go at Page #4 of the presentation. This is focused on the market shares. On the left, you can find the legacy brands. The graph -- legacy brands means basically everything except PWO, the Planetwin brand. The graph starts in 2022 because that is the year when we acquired the last asset, which is the last asset before PWO, which is Betflag.

So you can see there's been a constant growth of market share in the -- on the historical brands, on the legacy brands and shy of 2 points also this year. As we had commented in the past on the right graph, you can see the trend line for PWO. So 7.1% at the acquisition, 7.1% at the start of the migration. Lowest value at the end of the migration as it is usual and it's already happened in the past, 6% and then relaunch progressing well, 6.3% at the end of -- for Q4 2025. So overall, a very good performance, notwithstanding the factoring in the pressure on market share on PWO because of the migration.

Let's go to look at some of the competitive dynamics closer. We are at Page #5 of the deck. So as you can see from the graph on the left, this is the market share of the so-called tail operators, the smaller operators, they were at 16.6% in 2023, and lost a bit of market share, less than 1 point in '24. That's pretty natural trend. But then they lose 2.1 points in 2025 with an acceleration in the last quarter of the year. And as I commented before, we take 1, 2 points, which means basically more than 50% of the loss of basically more than the fair share, which would have been 30%, around 30%.

We are on Page 6 of the presentation. I've commented on EBITDA growth, and this goes along with a significant adjusted net profit growth through the years. You can see that on the left -- the graph on the left. We have more than doubled in the last 4 years, the adjusted net profit and which has grown also in the last year, '24 to '25 of 45%. But even more important than these are the drivers behind this growth that you can find on the right graph of the page.

3/4 of the growth has come from organic growth and optimization projects. So organic growth, meaning the baseline growth of the EBITDA, EUR 86 million, then you have EBITDA revenues and -- then you have EUR 20 million of the -- coming from the optimization of the financing structure and EUR 48 million coming from the projects that we've executed on extracting synergies from the M&A. Only EUR 53 million. So 1/4 comes from EBITDA that actually we've paid for. So the accretion is very not only relevant, but it's also very healthy in its composition.

Page #7 of the deck, let's get to the guidance for 2026. We guide towards revenues of EUR 2.390 billion to EUR 2.460 billion for 2026. EBITDA will be in the range of EUR 940 million to EUR 980 million. And CapEx are in line with basically the previous -- pretty much in line with the previous year. So recurring CapEx between EUR 85 million and EUR 90 million and concession CapEx coming from the mathematics of the concession schemes at EUR 78 million per year.

In terms of capital returns, the dividend proposal is just basically follows -- strictly follows our dividend policy, 30% of adjusted net profit, which is EUR 0.44 per share or EUR 111 million. And we are going to ask the Board is requesting an authorization to the AGM to buy back an additional 12.5% of the share capital in the next 18 months, which at the current prices correspond to circa EUR 700 million in the period 2026, '27, including the shares that we will have bought by the date of the AGM with the share buyback, which is currently in progress.

So with this, I leave the floor to Laurence. Laurence, please?

Thank you, Guglielmo. Moving on to Page 9. You can see on the left-hand side, our revenue growth has been plus 12% on a reported basis. And on the right-hand side, EBITDA has grown by 21% with Q4 growing double digit on a normalized basis. So in 2025, we closed the year at EUR 156 million of EBITDA with a 38% margin, which has grown from 35% in 2024, thanks to the higher margin of online that grows at a faster pace than the other 2 segments and the realization of synergies.

Moving on to Page 10. So in line with previous quarters here, we can see that the online has continued to be the main growth engine of growth. So with revenues up 22% and EBITDA up 26%. Sports franchise has also grown very nicely, both in terms of revenues, up 14%. And in terms of EBITDA, plus 31%, thanks also to the favorable payout that we've experienced in the year. So very favorable in H1, less favorable in H2.

Gaming Franchise has been broadly flat, plus 1% revenues with EBITDA plus 3%.

Page 11, when you look at the -- on our left-hand side, the CapEx, you can see the recurring CapEx are broadly stable. They're slightly lower than what we see in 2024, which is a testament to the scalability of our model. Look at concession CapEx, the EUR 113 million versus EUR 63 million the previous year. This is predominantly due to the upfront payment of the online CapEx for the tender of the new online concession that we paid in November 2025.

Growth CapEx and one-off CapEx, they are predominantly related to integration with EUR 24 million paid throughout the year, which we will not see in 2026 and then carryover from bolt-ons that we had guided at the beginning of the year in -- for the activities carried out in 2024. Finally, if you look at the right-hand side, you can see the operating cash flow growth of plus 18%, and this is also including the increase in concession CapEx. If we didn't include the upfront payment for the online concession CapEx, we would have had a growth of 24%.

Page 12, you can see the path from net debt from the 30th of September '25 to the 31st of December 2025. In addition to adjusted EBITDA, you have a net negative effect of net working capital as is typical given the seasonality of the business. Taxes paid of EUR 48 million. This is what we've paid the second installment for the taxes for the 2025 period that we paid end of October. CapEx of EUR 96 million. That includes also the payment of the concession CapEx also for the EUR 35 million of online.

Financial expenses and leases of EUR 51 million, and then you have EUR 236 million of buyback that we actually implemented in the fourth quarter. That brings us to a total net financial debt at the end of the year of EUR 2.1 billion, which equates to a net leverage of 2.4. Had we not done the buyback this year, we would have had, as Guglielmo mentioned earlier, a net leverage of 2 turns. So we continue to remain within our financial policy of 2 to 2.5 turns of leverage.

With that, we can conclude.

We can open up to the Q&A, operator. Thank you.

[Operator Instructions] The first question is from Clark Lampen of BTIG.

I have 2 questions, if I may. The first is on the share capture discussion that we had, and you guys laid out very helpfully on Slides 3 to 5. I'm curious, when I strip out the PWO contribution, it looks like you guys took about 43% of the long-tail share that was available. Could you help us understand how much of that growth was a function of Totosi relative to deals? And now that we've had a few months to better understand the landscape, should we view this as sort of a sustainable rate of share capture on a go-forward basis?

Second question that I have is on shareholder buybacks and M&A in relation to one another. You typically talked about those as sort of competing for the same excess cash supply. Should we interpret today's decision to allocate more capital towards repurchase as a signal that maybe throughout the concession process and following U.K. tax adjustments that there's perhaps been less opportunity than you would have expected so far and the priority is shifting to buybacks? Or is that still sort of to be determined at this point?

Yes, Clark, this is Guglielmo. On the first question, well, the only thing in terms of, say, nonorganic that you have in the growth of the market share, let's say, in Q4 is the Sportbet contribution. So you can -- roughly, it's like half and half. That is the picture. Not sure why you get to 43% because the -- compared to the beginning of the year, the contribution of PWO is actually negative. So I'm not sure on the legacy brands, the increase is -- or what is that, 1.8 points because you had a decrease on Planet. So the total share that we take, including PWO is 1.2 points over 2.1, which is more than 50%.

But maybe I got it wrong, so please correct me if I'm wrong.

But to the core of your -- to the key point of your question, you have only Sportbet there, so it's kind of half and half. And the other important part is this a trend. Yes, we think it's a trend because we think there is -- of course, there is more to come on the say, bolt-ons or this type of deals with minority with part to control, which we've explained last time. But also there is a possibility of continuing organic growth. The environment is pretty constructive under this point of view.

Now we don't take -- as you know, we don't take a commitment on the market share because it's always very hard to guide on that, how the organic -- the market share will go. But to give you a tendency, so a flavor of the competitive environment, we think that there will be more pressure on tail operators in general, and we are very well positioned to continue to capture market share.

Maybe on the second point, Clark, so the -- for the buyback, listen, the rationale -- I mean, we've increased the size of the buyback to 12.5% of the share capital because our cash flow generation is accelerating. We're delevering quite fast. And so we -- the natural -- so it comes natural for us if you look at our cash flow generation profile that the buyback follows suit. And we're basically following the same, let's say, capital allocation framework that we've been saying for some time. So the excess cash goes to buybacks and which competes with M&A. As we've said also, the bar is pretty high. I wouldn't read any signal in that other than the fact that we continue to follow exactly the same approach as we've done historically.

Now the only thing to read in this, I think, is the increase is just a function of the acceleration of our cash flow generation and deleverage.

That's very helpful. I appreciate the comments. Certainly no corrections to offer on our end. I think we just bucketed the PWO sequential share capture in the wrong place.

The next question is from Estelle Weingrod of JPMorgan.

I got a first question also on capital allocation. I mean in the context of M&A opportunities out there. I wanted to ask if Evoke Italy was an option and if you were looking at it, if it would make sense to you? And a second question on the retail concession. Is there any progress you've seen or heard of on the government discussions with the regions on finding a potential agreement?

Estelle, I think I'll answer the first question. We won't comment on specific names. I think the -- as you know, we monitor all potential targets within the framework that we've mentioned, which is across Europe. And of course, that includes Italy as well. But we're not going to comment on specific names.

Yes, Estelle. This is Guglielmo. So on the retail concession, the government is still working on the decree. As I commented a few times before, it's a very solid and constructive setup. So it is still on the -- the ball is still on the government's court in order to come up with and approve a proposal that then will have to be discussed in the so-called conferencicata, which is the joint conference of the regions and the government. So we stand pretty much in the same place as the last time we spoke, except there's been more work done in refining the decree on the government side, really working on the details and things and talking to the industry, the association, it's really very much about that, but nothing more than that, I would say.

The next question is from Ed Young, Morgan Stanley.

Two for me as well, please. First of all, on the World Cup, obviously, it's a revenue and an EBITDA opportunity, but it's also an opportunity to engage players and grow actives. How have you treated the potential of Italy being successful in the March play in tournament or not and within your guidance? And could you perhaps give some color of the level of engagement you'd expect for Lottomatica if Italy were or weren't to make the tournament, how vital is that? Or what's the kind of level of difference? And how is that treated in the guidance?

And then second of all, on the buyback, I guess, chiming in on Clark's comment. Could you perhaps give a little bit of color on the cadence of what we should expect for buybacks, how we should perhaps think about what you might do in '26 and '27 within your leverage framework?

Okay. So on the World Cup, I would say that it doesn't really move the needle as much. I mean, as you say, it's a very -- it's an important period for us to acquire customers. It's a very important one. But I mean, the guidance already includes the outcome whether Italy is in the World Cup or not, and it doesn't really move the needle as much.

On the pace and the cadence of the buyback, we will -- I mean, we will continue to do the buyback basically at the same pace that we've been doing so far. I think if you run the numbers and you look at where we stay at constant leverage, say we'll probably do a bit more next year and a bit less this year. But we'll see as we move along. I mean, as you know, we give the mandate to a bank who carried -- who executes the buyback and then we may or may not adjust the pace as we go along. But we don't make those adjustments often, frankly. As you know, we've made one last year in November through an acceleration. But I mean, our plan is, all other things being equal, that we will carry out the full -- up to the full amount for '26 and '27.

The next question is from Ben Shelley, UBS.

I've got 2. One, I guess the implied EBITDA margin guide is quite a bit ahead of consensus. Can you elaborate on the underlying drivers supporting that margin outlook, especially in online?

And my second question is about the consolidation opportunity. Do you think the technical testing to be completed in the summer of 2026 can offer more market share opportunity?

I'll take the first one. If you look at the margin -- the implied margin expansion for '26, it's predominantly driven by mix. It's online growing significantly faster than the other segments. And given the margins of -- we're seeing margins, if you look at the margins for the year, 2025, they're in the mid-50s, if you assume a similar margin for '26, you get to an implied margin that is -- for the year that is higher that you get to around the 39% if you look at the midpoint. So the online is the main driver. Of course, you also have some effect of synergies that are coming in because whilst we've completed everything we had to do for the integration of PWO, there is still a run rate effect that you haven't seen all in 2025. We've got another EUR 24 million of synergy, a run rate effect in 2026 that flows through the P&L.

Ben, so on the consolidation related to the Phase 2 of the concessions. So the, call it, technical testing and full compliance. A part of the activities will be carried out by May 13 as originally planned. Another part will most likely be postponed. There's still probably a question mark of whether it's, I don't know, it's August, September because of just technical reasons. So -- but it really doesn't move the needle. It doesn't change the fact that this is clearly another opportunity to make this market more robust, easy to manage, clear to understand. And so of course, whenever you have this kind of transitions, it may happen that well-equipped operators are in a better position like we are.

So can this be an opportunity? Yes, the more we go towards the final model, the better it is. So this will happen. Some things will happen in May. Some things will be most likely pushed. I don't know, still to be decided whether it's November or around that. But short answer, yes.

The next question is from Fabio Pavan, Mediobanca.

The first one is if you can help us in building up expectation for cash flow generation in '26. So we will have EUR 100 million higher EBITDA, but also optimization in interest cost, cash costs. And my question is, we should still assume some bolt-on acquisition for this year or not?

And the second question is on product evolution, my view is that clearly, your market share gain is also driven by your tech platform and your ability to launch new products. So I was wondering if you can share with us some update on this.

Yes. I'll take the first one on cash flows, yes, so the -- it's a bit more than EUR 100 million of EBITDA if you take the midpoint. From a CapEx perspective, the recurring CapEx are not moving very much because they are driven by the size of our retail footprint and then -- and it includes also technology spend in there that is very scalable. And those don't really -- those costs don't really increase. So the CapEx level really stays the same at the recurring level. Concession CapEx is pretty much -- is known with EUR 78 million. So that will not move. So with that, really, the drop through is pretty material.

Then if you -- once you look at what -- sorry, the interest costs are on a run rate basis, I think you know that we are running at around EUR 105 million of pretax interest costs per annum. Add to that another EUR 15 million between RCF and guarantees, you get to EUR 120 million. That's not moving. So it's the same as it's lower than last year. And then, of course, we've got taxes. I mean, leases are around EUR 29 million per annum. So there's not -- there are no really -- again, it's a pretty scalable business now that we're seeing and online is accelerating. So it really -- all the incremental EBITDA really drops down through cash net of taxes.

And in terms of bolt-ons, I think this is -- so when we look at the levered free cash flow generation, so our framework has been 30% of the adjusted net profit goes to dividends. That's pretty easy to model. And then the rest is basically bolt-ons and buybacks. And on the size of the bolt-ons, we'll look at this. We're working on the pipeline. It's definitely been at lower levels than what we've seen in 2024. We don't guide on that because it really depends on how we execute on that pipeline when maintaining price discipline. And then the rest is predominantly -- the rest is buybacks.

So 2026 is, as I think as a number of you have pointed out, it's an inflection point in terms of cash flow generation as we've seen that also in the graph that Guglielmo showed earlier, showing the adjusted net profit evolution over time. And 2026, we'll see fewer extraordinaries given that also we've completed the integration of PWO. So a big chunk of extraordinaries basically will disappear.

Fabio, on the product, you're perfectly right. That is one of the key drivers of the growth of the market share. And of course, that goes with the technology. What I can say is that we have a very healthy pipeline, especially on the part of the -- what we call the Lottomatica Core. So the martech infrastructure that you have above the gaming platforms, which allows to optimize the digital marketing and all its aspects to improve the risk management, all the things that are in Lottomatica Core are a key component of -- key differentiating component and a key part of our road map.

Just a note of -- small note, the technical certification of the systems at a certain point will require for the entire market a slowdown of the new products launched on the market because basically, you need to somehow freeze the product while it's been certified. So that's in the first part of the -- in the first half, ideally if the dates are confirmed. But that's for the entire market.

But as an overall, in 2026, the road map is, on the product side, is really strong. And again, I think we put some focus in the past earnings call and the presentation of the Lottomatica Core. That is a key area because you always think that you work on the product, of course, you get new games for casino, you present them better, you improve the user experience, you present new bets. Then it's super important how you deliver that to your clients, to which clients you deliver them, how efficient and what's the level of efficacy of your digital marketing activities. So that's really a component which will become more and more important in the future. So that's the picture.

The next question is from Chiara Pampurini, Intermonte.

You already gave us some information on how the consolidation process is progressing. You've taken the stake in Sportbet. If I may ask, could you give us some color on how this is going on and if you're closing similar deals? And also on Totosi, if you're seeing an increase in your market share?

Yes. You want to go? You go. Okay. Sorry.

Yes. I mean if you look at sort of the Sportbet, we've taken a 20% stake. As you know, we have a positive control over the period of the -- to get to 100% throughout the concession period. So that's how the deal structure works. We've taken a minority, and we're very happy that the shareholders are staying in to continue to drive the business in a complementary way with ours.

Are there any other deals like this? Yes, we look at them. We're in discussion for other potential deals. And as soon as we'll close them, we'll announce them.

I think in terms of Totosi, there's nothing really major to report. I think the market share has proven to be quite stable over the past few months. So there's nothing to report on that side.

The next question is from Andrew Tam, Rothschild & Co Redburn.

Just a quick clarification question on Slide -- Page 4, just on the market share. I know you said you haven't -- you don't guide to the market share per se. But I guess the question is just in terms of the legacy brands, the current, I guess, annual trajectory of the market share gains, would you say in 2026, are there reasons for that to continue? Or do you believe that not to be the case given the new online concession model?

And then just in terms of PWO, is the target there to recapture that 1 percentage point of share loss pre the migration? And is there -- are there any strategies or initiatives in play at the moment to recapture that?

Yes. Andrew, this is Guglielmo. So of course, we don't guide. But yes, the short answer is, yes, we do believe that the legacy brands have still room to grow also in 2026. On the specific point of PWO, what's our target. The target is to recover the entire 1%. So that's pretty much as it happened at the time for the Lottomatica/Better brand when we did the acquisition of the assets from IGT. And it's pretty much the same strategy, so refined through time.

So when we finish, it's already in execution when we finished the migration with the new product in place, we started reactivation campaigns of customers who had disappeared or reduced the frequency or amount because of the noise of the migration with specific campaigns. Then we've extended the reactivation campaigns to customers that we had in the database and that had not been playing for a long time even before the migration to try to recover share also from that side because we could go and present to them a new product, which we believe was better than the previous one. And so that's another important campaign.

So that's basically if you move aside the better quality of the product and of the offer in terms of what are the tools, you basically run dedicated campaign to these key clusters. So customers who have stopped playing during the migration, customers who have decreased frequency during the migration, customers who have decreased spend during the migrations and customers who were lost before the migration, but can be contacted again on the basis of a better offer.

Then, of course, there are tons of ways to get there. Not getting to the details, but you use all the digital marketing levers to get there. But that's basically the principle. And it started basically at the end of the migration that we'll continue.

Got it. And just a follow-up on -- you mentioned the comment capturing more than 50% of the share losses from the tails. Do you expect that to continue into 2026 in terms of more of the same or even potentially for that to accelerate?

Again, it's hard to get into detail because otherwise, we would be guiding. But we gave a total size of the opportunity from the states, which can be 7% to 10%, saying that we had already captured, signed 2 points. And of course, you would aspire to do at least the fair share of that total pool at the end of the game, at least the fair share. We started better than that because we did more than the fair share, more than 50%. But that's the framework. And then that's the data points. Then, of course, any other information would be a guidance.

The next question is from Pravin Gondhale of Barclays.

Firstly, on online sports. So previously, you talked about both retail and online combined GGR in sports growing at sort of sustainable high single digit. But online has been a bit softer in 2025. Could you please talk about what are -- are you taking any sort of additional steps to drive that online growth in sports?

And then secondly, on Sportbet, you suggested that there are similar sort of deals in your M&A pipeline there. Could you talk about the size and potential valuation levels of those deals?

Okay. I'll take it. Listen, I think -- so if you look at the data in January for online sports, we've actually seen very good growth, not only in terms of GGR, but also in terms of handle. So if you look at the -- I mean, we've -- I think the handle has grown roughly about 14%. We're talking about -- if you look at our numbers that are disclosed if you look at the market shares and at the GGR level, it's grown 15%. So it's been -- it's a pretty healthy market, and we're continuing to see this trend even at a handle level.

So I think this reflects the fact -- and at the same time, sorry, retail, on the retail side, the sports retail business is growing faster than we had expected. So both at a handle level and at the GGR level. So on a combined basis, we're double digit in January, both at a handle level as well at the GGR level. So this just gives you also the comfort that it continues to remain a very healthy market, a very healthy segment. And we're continuing to see this also even after January.

So it is definitely continuing to be a market that will continue to remain volatile by nature, if you look at the GGR because you have volatility of results and you have different schedules of games that are being played between the peers that you compare. And as we've mentioned several times, if you look at the monthly GGR on a combined basis, it shows you that there's a very clear trend line for the sports business across both channels. And then the difference between the 2, as we mentioned earlier, iSports historically had grown faster. Last year, it wasn't the case. At the beginning of this year, it looks like iSports is growing faster as the previous years. As we had said from a contribution margin perspective, when GGR moves from one channel to the other, it doesn't really make much of a difference. It's very -- the contribution margin at iSports is very similar.

So it is -- we continue to believe that these are the right assumptions that we have a growth of around 7% to 8% at a combined level for sports. And then the relative growth, naturally iSports grew a little bit higher. As we've seen this year, actually, iSports has been growing double digit. So in that sense, we confirm our thesis on this segment.

In terms of size, when we talk about Sportbet, we're talking about similar sizes, meaning they're small. Just to answer very shortly the question, very -- the small businesses, they're sub-1% market share. So they're small businesses and the valuation is definitely highly accretive to our business.

This is really helpful. And congratulations on the results.

The next question is from Domenico Ghilotti, Equita.

A few questions. First of all, on the buyback, should we assume that you -- so how is the approach if there is a retail tender? So I'm trying to understand if this will affect your -- the pace of the buyback? And second, I have a question -- well, on 2025 numbers. So if I look back at your original guidance, you ended something like EUR 100 million lower in terms of sales. So I'm trying to understand what has been performing differently compared to your initial expectation while EBITDA has been back in line?

And third, on the 2026 guidance, if you can give us some sense of the trend that you are expecting on gaming franchise and maybe even Sport Franchise. So I'm trying to understand if growth is coming only from online.

Okay. I can take this. Listen, the buyback will continue for as long as we continue to remain within our financial policy. We're quite mindful of that. So to the extent there will be a tender, we will look at the numbers, see whether -- see how the leverage is impacted and we'll act accordingly. I mean it's pretty much a function of that.

The -- from our guidance in '25, if you compare it to the original guidance, I think as we mentioned in the third quarter results, it's pretty much the result of PWO sort of being integrated earlier. So we realized the synergies earlier at the cost level, and therefore, we had the impact at the revenue level earlier during the year. So throughout the year, we've seen a higher -- or more of an unfavorable impact on revenues, but a more favorable impact at the cost level, thanks to the, let's say, acceleration of the implementation of the synergies.

For 2026, I'd say online is really more of the same. We've been already -- I think it's been quite a number of quarters, we've been sort of seeing exactly the same trends. Online will continue to remain the growth engine. And retail, if you look at sports, sports retail, we continue to see there mid-single-digit growth. We've seen better so far since the beginning of this year, but obviously, you have to factor in the volatility of the results, but it's been exceeding the expectations there. And for gaming retail, it depends on the level of bolt-ons that we will see throughout the course of this year. Because if you don't do any bolt-ons, it's a business that will naturally decline sort of low to mid-single digits.

The next question is from Andrea Bonfa of Banca Akros.

Most of my questions have been answered. So if I may, just a further clarification on the -- let's say, on your guidance, let's say, framework, if it's possible for you to specifically comment on the potential -- on the expectation, on the growth rate expectation for gaming, is that high teens, mid-teens or low teens? And the second one is a clarification in your press release, you mentioned EUR 300 million of buyback and your NFP buildup, you mentioned EUR 236 million. If you can just comment on that.

Sure. I'll answer the second question first. No, we've done EUR 300 million in 2025. The numbers you're referring to is what we've done in Q3 -- Q4, sorry. So in Q4, we've done EUR 236 million. So the balance was done since we started the -- it was done in Q3. As you know, we started towards the end of June. And so the remaining part was done before, was done in Q3. So that gives us -- we've done all in all, EUR 300 million of buybacks in 2025.

In terms of guidance, so if we think about the guidance, so we will continue to see sort of online growth in the teens. And iGaming, it is -- what we've seen in January and February so far, we've grown at 19%. I mean the market has grown 19%. We've grown a bit faster than that. We expect to see here anywhere between mid- to high teens of growth in this segment. Hopefully, that helps frame it.

Congratulations for the results and the guidance.

The last question is from Richard Stuber, Deutsche Bank.

Most of my questions have been already asked. And just one final one, a more general one on AI, if that's okay. Presumably, you use it across most of your businesses. Could you say where it has been most impactful? And so is gaming content now sort of generally quicker and easier to make?

Yes. Richard, this is Guglielmo. I'll take this one. Look, the impact of AI, I would say, is -- when you look at the business, then it has impacts on many other aspects of the company. It's mainly on the online business for the moment being. It doesn't matter whether it's sports or it's iGaming or it's digital marketing in general. Then of course, you have impact also on logistics. You have impacts on a bunch of internal processes. You have impact on customer care, which are across the businesses.

You will have impact in the future on the production of games, I believe, also for the retail gaming machines. But when you look at the core impact in terms of revenue potential, today, you see that on all the segments of the online business. And spanning from risk management. So the agents that manage the risk basically to communication, production of communication campaigns to affiliate management to content proposition on the casino. So there's really a ton of things.

Then you specifically asked about one point, which is will AI make the production of games, I assume you're referring to iGaming, so to casino basically, easier. Of course, yes, which is not our part of business. We are -- it's a small part because we have some studios inside, mostly we buy from outside providers, which we believe is a very good thing because if you -- that's a very competitive environment. We have more than 100 providers giving us thousands of games. If these providers are able to design and launch new games, which are better in a sense, more effective and at a cheaper cost, then it's just good news for us and for the market because you can have access basically at better content at cheaper price, given the fact that this is a very competitive environment.

So for that specific use, the answer is yes, and it's very good use for the ecosystem in general. But really, the use of AI is not really limited to that. It really, as I mentioned to you, some cases, some use cases, spans from every single angle of the company. We haven't really done an exercise or shared an exercise of showing what's been the impact of what we've done so far because we're approaching this with a clear road map in mind, but from use cases, which are coming bottom up. So what can be done is spread as knowledge throughout the company, the architecture allowing for that is there. But then everybody would ask for a specific use case. And if it makes sense, then it's developed. Otherwise, if it doesn't make sense, the investment case, it's not developed, but it's really already a very wide penetration across the board.

I think we are done with the Q&A, operator, so we can close the call. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Lottomatica Group's 9 Months 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Mirko Senesi, Head of IR at Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to Lottomatica Q3 results presentation. I'm here today with our CEO, Guglielmo Angelozzi; and our CFO, Laurence Van Lancker.

Now the floor directly to Guglielmo for the presentation. Guglielmo, please?

Thanks, Mirko, and good morning to everybody. Happy to announce another very strong quarter. We are on Page #2 of the presentation. The quarter has been very robust both in financial terms and in competitive terms. EBITDA is up 18%, in line with the increase that we had in Q2.

Market share is at a record high on the entire portfolio. This is driven by the performance of the historical brands, which reached the peak of 24.8%. So we achieved a record high on the entire portfolio notwithstanding the migration of PWO. PWO is at its lowest during the quarter but, of course, because we completed the migration during the quarter. But of course, it's on the path to recovery, and we already see very encouraging and strong sign. So very good quarter.

Page #3 of the presentation. And this is not the end, of course, because there's more to come, we believe. With the PWO integration completed, I do plan with a lot more product and tech innovation, which has been done during the quarter and having a positive online regulatory backdrop. We think that there is room for further organic growth. This will generate, of course, additional cash flow, and so discipline on capital allocation and focus on shareholders' return will remain key.

Now let me focus on a few points that we have highlighted in this slide, namely the PWO integration, the completion of the PWO integration and the implication of this, all the job that we've done in terms of product and tech innovation and how this will reflect potential into additional market share gains and then, of course, on capital allocation.

Now to start with PWO integration, Page #4 of the presentation. You can see here quarter-by-quarter what I was mentioning before. So the strong -- very strong track record of the historical brands, which gained 3.2 points of market share compared to quarter 1 of 2024. We're having a look, give or take, here in the slide to the last 2 years quarter-by-quarter.

PWO, as you can see, has been pretty stable until the beginning of the migration. At the completion of the migration in Q3, it reached its negative peak, but then restarted to go up after the migration was completed. Of course, this happens because during migration -- pre-migration and during the migration, you freeze the product implementation and all the innovation on the old platform. There's very limited CRM activities that you can do. And also when you execute the more technical migration, you actually freeze the customer base in order to migrate clients.

But then, of course, when the customer base, when the brand is onboarded on the new platform, on the group platform, you can restart all CRM activities. You do a bunch of targeting to do reactivation of the customers, which have been impacted in migration. You can do much more effective CRM. You have a better product, of course. And in the case of PWO onboarding, the group's platform, we have the availability of Lottomatica Core, which is our proprietary martech platform, which is going to be a very strong lever for the competitiveness of PWO.

So on Page #5, we see a little more in detail what the anticipation of the migration as implied. Of course, on the negative, higher impact -- a negative impact on the revenues in general and compared to historical brands in the year 2025. Because, of course, with the migration, with all the slowdowns that I just mentioned, revenues also slowed down. So there's been higher impact in 2025. But on the other side, you have an anticipation of the synergies. So you see more synergies in 2025 actually than planned.

This results in basically no effect on the group's EBITDA that we estimate at circa EUR 860 million for the year, assuming the year-to-date to September and assuming a normalized payout for Q4 revenues that we expect to be at EUR 2.27 billion for the year.

Now going on to the second block. So PWO is completed, no impact on EBITDA, in the mix of revenues and anticipation of synergies. And the second block is product innovation. As I mentioned, we've done a lot of product innovation in this quarter, especially in iGaming.

As you can appreciate from the slide, there's been a constant progression in terms of new content launch through the years. It's important to innovate and make available new products to player to give them opportunities to choose. And then, of course, you have to present these opportunities in the best possible ways to your apps and websites. But we've continued to increase the throughput of new games through the years and also in 2025.

Another key point here is that we focus more and more on exclusive content. Exclusive content means content that, for agreements with the top providers, we get on time-based exclusivity. So we have an advantage towards the market. And you can appreciate from the slide that this is 10x the amount that we had in 2021. So we're focusing a lot on this. The concept here is providing more content, innovation and differentiation in terms of content for exclusivity. The time exclusivity is not enough. So lately, we've been focusing on another concept, which is bespoke, tailor-made exclusive content.

Now we have a lot of experience and know-how in B2C online. We have know-how in omnichannel, which means in terms of product games with a very good payout. And we have our own studios so also we know how to build the products. This allows us to be able to ask for specific products which are designed on purpose for us by top third-party providers. And of course, we have full exclusivity, not time based on these products. This increases the distinctiveness of the offer and also improves the product portfolio life cycle.

There's a couple of data points here. Of course, this has not been going for long but it looks to be very promising. We've tripled the life cycle of the games with these bespoke exclusive content. And there's a couple of examples here of a couple of games, one that we launched, the first experiment in this -- 1 year ago, which has shown a massive premium in terms of turnover compared to the other launches that we've done in the same period, 18x more. And another game that we recently launched which is currently in our top 10 of most played content. So innovation, lots of new content, exclusivity -- time exclusivity and tailor-made content.

Another point in terms of offer is the onboarding of PWO on Lottomatica Core, our martech platform. This means having available for PWO lots more data, behavioral and business-driven personalization, data that allow us to improve the customer journey and a much more effective SEO engine basically. So this is another important improvement that we get from the migration of PWO on the group's platform.

All of these, we are on Page 9 of the presentation, results into additional opportunities for market share, additional market share gains in the future. We tried to outline this brand-by-brand in this slide. Of course, there are things which are common to every brand, namely the distribution of the long tail of the operators, which we believe will start to happen with the new concession scheme and throughout 2026, but also the improvements coming from the Lottomatica Core. But there are others which are specific to each brand.

Planetwin, I already mentioned, the recovery post migration and the exploitation of the functionalities of the group's platform. Betflag, which is doing much better in iSports but still has unexpressed potential compared to its position in iGaming. GoldBet and Better can focus even more on omnichannel experience and cross-sell. And of course, Totosì, which will benefit from additional commercial agreements and on the work that we are doing and going to do on the profitability improvement in the mid-term.

As I mentioned in the beginning, we are Page #10, this will result -- has already resulted in cash flow -- operating cash flow improvement and potentially even more in the future which brings us to the point of managing these in a wise manner. So going back to our capital allocation principle, we have our dividend policy. We have our financial policy. And then all the excess cash available is deployed to basically currently the buyback, which is doing fine, very well. It's -- we've bought back 2% of the share capital. It's been driving compounding returns. Or alternative, it could be deployed in M&A but with discipline.

Page #11. This is just to remind a key point. M&A, we've always been doing it. We're pretty good at doing it. But we want to keep a disciplined approach and measure that on value creation and benchmark that vis-a-vis the share buybacks. In the last 5 years, we've not been slipping. We've assessed 57 targets. We've fully due diligenced 14 but we pressed the button only on 3 of them and all in Italy because we have a very selective approach which is focused, as I said, on value creation and shareholders' returns. And we are committed to keeping that.

So good news on the current business momentum, opportunities on additional market share growth in the future on the various brands, very strong operating cash flow generation and potentially also better in the future, discipline in capital allocation.

So I give the floor now to Laurence. Laurence, please?

Thank you, Guglielmo. Move on to Page 13 when we look at the group results. The company achieved EUR 1.64 billion revenues in the first 9 months of the year, recording an overall growth of plus 16%. Looking at adjusted EBITDA on a reported basis, we've recorded EUR 617 million of EBITDA, equivalent to a growth of plus 28% versus the previous year. In Q3, we've recorded EUR 511 million of revenues and adjusted EBITDA of EUR 195 million, which is equivalent to an 18% growth compared to the previous year.

When we look at the margins, clearly, there has been an improvement since last year. We've recorded 37.6% of adjusted EBITDA margins, and this is thanks to a mix effect where online with a higher margin is growing faster, and secondly, because of the synergies that have come in the 9 months and also ahead of schedule, as Guglielmo mentioned earlier.

On Page 14, when we look at by segment, we see that on the left-hand side that online continues to remain the main growth engine of the group, recording a growth on a reported basis of plus 27%. And this is followed by Sports Franchise with plus 22% for revenue growth. And this has also been supported by the favorable payout in Q1. And then Gaming Franchise recording low single-digit growth in the first 9 months.

On an adjusted EBITDA basis, the effects, taking into account also the effects of the synergies, growth has been faster with Online recording 33% growth; Sports Franchise, 51% growth; and Gaming Franchise, plus 5% growth, also thanks to the effect of the bolt-ons that are coming into the P&L.

On Page 15, when you look at the operating cash flow, on the left-hand side, with CapEx, we see that recurring CapEx of EUR 67 million in the first 9 months, which is pretty much in -- which is in line with what we spent last year. We have EUR 46 million spent on concession CapEx. And here in the call out, you could see what we expect to spend for the full year, which is EUR 77 million for the retail concessions during our prorogation regime and then EUR 35 million for the upfront CapEx for the online concession. It will all be paid in 2025.

And then EUR 52 million of one-off growth CapEx, which includes the deferred component and carryover from the 2024 bolt-ons that we had indicated at the beginning of this year of EUR 32 million as well as the integration CapEx related to PWO of EUR 20 million.

This brings us on the right-hand side to an operating cash flow, defined as EBITDA minus CapEx of recurring and concession, of EUR 504 million, which is compared to EUR 353 million in the 9 months of 2024.

On Page 16, we see the net financial debt bridge from 30th of June '25 to 30th of September '25. So in addition to EBITDA, you have a negative impact of net working capital. This is negative by EUR 87 million due to the payment of the Imposta Unica tax, which is typical for Q3 given that is a large payment that is done in the month of August, and this reflects the normal typical seasonality that we have where Q3 has the highest cash absorption due to working capital. Followed by CapEx of EUR 46 million, financial expenses leases of EUR 15 million and then a buyback of EUR 64 million, which is the amount that we spent just in Q3.

Just as a reminder, the total amount that we've spent to date is EUR 117 million, equivalent to EUR 5 billion shares or 2% of the total share capital issued. And then other of EUR 30 million, which includes integration costs of EUR 13 million. And this brings us to a net financial debt as of the 30th of September of EUR 1.856 billion, including EUR 221 million of cash and a net leverage of 2.1x, which continues to remain at the low end of our financial guidance.

That said, we are completed.

[Operator Instructions] First question is from Ed Young, Morgan Stanley.

I've got three, please. First of all, on the concession license, obviously, we're now close to the time that's going to be coming into effect. Can you give us an updated view on how much you think is sort of up for grabs and addressable? And how quickly we might be able to see that, do you think, in your financial results? The second is online margins were very strong in the quarter. I guess that's the benefit of PWO as well. Is the Q3 online margin the right expectation for that going forward? Or is the 9-month number closer to what we should model? And then finally, on M&A, thank you for the detail on the sort of discipline you're applying to your M&A lens.

You've also spoken a lot about the technology plans, both integrating PWO and all of the other sort of product improvements you're making in technology. If we take a step back and think about your M&A lens, if you were to do something outside of Italy, do you have in your minds eye view of how large you would like an acquisition to be ideally? And in your minds eye, is that also a deal that you would be synergizing, i.e., putting on to its -- onto your platform? Or would you potentially be running a multi-platform strategy? I just wonder if you have any view from those 14 deals you've looked at, what you'd ideally like to achieve?

Yes, Guglielmo. I'll take one and three. So on the concession, yes, I mean, we stick to the estimate that we've given so far. So we estimate that the potential area for -- the potential grab is for the market is 7 to 8 -- sorry, 7% to 10%. That is basically done by the 3% which has already opted out and is actually going out of business on November 13, plus the remaining part, which is based on business model, which are not compliant with the new concession anymore. It could be anything between 7% and 10% at market level.

How fast that happens, there's probably going to be some -- which happens around the start of the new concession, meaning November and December, because that's the part you will see the effect of those who have opted out. Then for the rest, it will take more time, so we go into 2026, because part of that is going to be driven by the new technical and compliance rules, which require technical upgrades, which will take until May 2026. So it will be spread during 2026.

In terms of impact on our P&L, we have a strategy which we discussed which we shared in the last earnings call, which is trying to maximize the reach, say, how much customer base out of this redistribution we can address, we can grab. And then several of these cases come at much lower profitability than our historical brands for lots of reasons. It's longer value chain.

And we will have to work on profitability in the mid-term. So first, its customer base and market share starting from the new concession into 2026 and then work on profitability, which is a mix of basically supplier conditions and improvement of the margins alongside the value chain. So it's not coming immediately. It's taking time, but it will come, hopefully.

On M&A, and then I'll leave point number 2 to Laurence. We don't think that going international with bolt-ons will be at this stage particularly meaningful. You don't achieve diversification and at the same time,you make the story more complex. If we do something international, it will have to be something meaningful and it will have to be an industrial rationale, so it will have to come with synergies.

Now for sure, the synergies will be around strategic suppliers. We all buy from the same content suppliers, the same -- we all buy the same business services all around Europe at least. So there's a synergy potential with that which may be significant. And it's not different from putting together two in-country online assets and doing international M&A. It's the same type of providers, counterparts and things that you have to do. So this is the baseline.

Then it will depend on the asset. You may have -- we're not -- there's not a prescription here. I mean it's -- you may have an asset which is very sizable in a country, which is already doing very well, which is a very good product, and it makes no sense to do a replatforming of the gaming platform, absolutely no sense, and it's going to be very risky, and you don't see why you should do that.

But at the same time, you can integrate that, you can provide to that the layer above that, which is the martech layer. It's the Lottomatica Core, which is functionalities, which can be linked to the platform without changing the gaming platform, which is the risky business. And it's on top of that. And still, you can create a lot of value, especially on all the digital marketing activities and that doesn't require replatforming.

On the other side, there may be assets where the trade-off between the risk of a replatforming and the benefit of providing a better product, not necessarily the same product for all the countries, but a better product can be worth the effort. So it will be a decision which will be made on an asset-by-asset basis.

Nevertheless, you can have top line synergies relevant and not only top line because the martech will also help you on the cost side, on the cost of managing affiliation programs, on the cost of managing bonuses and promotions. So you can have synergies on the tech side without a replatforming of the gaming system, but with adding the Lottomatica Core to martech layer. I hope I answered your questions.

Maybe on the second one, I'd say that Q3 has been a strong quarter in terms of margins. which has been helped by the acceleration of the synergy realization. But there's also some timing of costs. So I would not take this as a normal run rate margin. We're more looking at for online in particular the mid-50s, so which is pretty much in line with what we've seen in the first 9 months.

Next question is from Clark Lampen, BTIG.

I wanted to follow up on PWO first and maybe see if there's a target for market share, I guess, beyond just solely recapturing what's been lost over the past couple of quarters with migration. And as we're looking at the synergy target that you guys provided in the slide deck, is that primarily revenue synergies as we're thinking about 2026?

Maybe second question, sort of following on Ed's questions with regard to relicensing, as we think about maybe the sort of medium-term state of the market a couple of years as we sort of flow through the re-licensing, do you expect something as the market sort of concentrates and coalesces around a smaller number of operators? Could market share start to eventually resemble what we're seeing off-line? Or sort of if not, why should we expect maybe to sort of settle out in a different way?

So Clark, I think at least on the market share for PWO, I mean, we're now at around 6% of total online. We were at 7% pre -- a bit north of 7% pre-migration. I think it's fair to say that our objective is to at least recoup that level -- that amount. And then the rest is to be seen. Of course, I don't think we would be happy stopping there, but it's always hard to predict or give any guidance on that.

I think on the synergy target, what you'll see is of the total amount, there's only -- it's -- you can see the split between CapEx and OpEx. You'll see the revenue and OpEx of EUR 77 million run rate, EUR 10 million of that is revenues, the rest is OpEx. And then there's an additional EUR 10 million of cash costs that bridges the EUR 77 million to EUR 87 million, which is -- which includes CapEx synergies as well as synergies on the guaranteed costs that we've already achieved.

Clark, on the re-licensing and the market in 2 years' time, yes, it will be more concentrated. Most likely it will be more concentrated. That's where all the forces are -- the direction of the forces are pushing. Will it be as concentrated as much as off-line? Probably a little less because in offline, you always -- things are more sticky because you have a physical network and you just don't wake up and have a physical network and change the market share. It's for sure more sticky business.

So once you are concentrated because of the size and quality of your network, that pretty much stays unless you do something very, very bad, but -- or very good on the other side. But that's a tendency, yes. It will be for sure. We believe that there's all reasons to think that it will be -- offline can be a benchmark, not probably the final ending point, but yes.

Next question is from Pravin Gondhale, Barclays.

So firstly, on the retail concessions. Do we have any update there? And then secondly, you sort of talked about synergies and timing of some cost benefiting the Q3 margins. Could you help us quantify the timing of those costs? And what sort of -- what's the nature of those costs that helped the Q3 margins?

So I'll go on retail concessions. So where do we stand with retail concession? I mean, the government continues to work on the overall reform of the retail, which also -- and part of that, of course, will be the renewal of the concessions, because you have the reform and then you can launch the concession tenders and award the new concessions. I think we're all aware since a few months of the new scheme -- new proposed scheme for the reform of the sector, which is pretty constructive. We commented on that in the past.

Now the government continues to discuss with the regions to find an agreement. I don't think there is any update on that side, except that there is -- there looks to be a strong focus and a strong commitment this time in achieving an agreement. And the basis for that are, as I said, very solid and constructive. So hopefully, they'll make it.

Next question is from Estelle...

No, maybe -- apologies, there was maybe -- there was a second point. I was on mute responding to a third or second question. I think in terms of what synergies were brought forward, I mean, we brought forward a number of -- a certain amount of synergies in the year because we completed the tasks of the integration just earlier. And they primarily relate to the network of franchisees.

We talked about one of -- there were two items in particular, which is, one is the replacement of the point of sales, the lower productive points of sales that went ahead of plan; and secondly, the contract renegotiation with the points of sales. That was going to be carried out over the course of the year has been completed ahead of schedule. So these are the main drivers.

Next question is from Estelle Weingrod, JPMorgan.

The first one, with respect to your targeted market share gains following the new online concession regime, you're proceeding with two structures from what we understand. The first one is via Totosì and the second one via direct deals, whereby you take a minority stake. How should we think about the longer-term market share potential across the two? And also I have a question on the payout within iSports. We only got the one for the Sports Franchise for Q3, I think.

Yes. Estelle, so on the structure, yes, there are actually two structures, I mean, there's three ways to gain market share. One is because redistribution happens, you are on the market and you gain market share without just doing the work that you always do because you're able to attract the clients. And there's nothing specific around that except that you continue doing what you do.

Then there are two specific initiatives. One is commercial deals. Usually, these commercial deals will be related to Totosì as you -- there will be deals basically for the migration of the customer, the usual structure we discussed. And then there is the latest addition to the toolkit, which is the one that we discussed in the last earnings call, which is these deals with the minority deals with a part to control, which they might relate to Totosì or two other things. It's going to be decided on a case by case.

But this is not particularly important. So the important thing is not where the gain shows up in terms of the brands that we have today. It's more than -- we have 3 options. One is being competitive and benefit from the re-distribution. The other one is doing this on the customer base. And the third is doing deals with operators who want to find, who want to onboard a larger project.

How much is going to be of each of these categories? It's very hard to say today. It's almost impossible to make a plan on how much will come from each of this flow. It's something that we'll have to comment once it's done, unfortunately. But all of the 3 are active, that I can say. And we're actively working on all of them.

On the second question regarding the payout. And so in Q3, we had for the retail was 81.5% and so -- and for online, 86.1%. So they're both -- sort of they are below -- sorry, above the normalized levels. So in terms of payout benefit, clearly, what we were carrying in the first half as payout benefit has been slightly eroded in the Q3 result of the higher payout.

Could you perhaps just quantify the adverse impact of PWO and the online NGR growth in Q3 specifically, if you have it?

You mean the impact of what, at the revenue level?

Yes.

Well, so we don't break it down. But I would say that the impact of PWO is the primary -- sort of the negative impact is the primary driver for, let's say, for the lower growth that we've experienced to date. That's the main driver. We're not disclosing precisely the split yet.

Next question is from Ben Shelley, UBS.

I've got two. I wanted to come back to capital allocation and M&A and the narrative you've outlined in the presentation. Would it be fair to conclude the core message you're giving today is that given the attractiveness of the Italian market under propensity for shareholder returns, the bar is very high for transformational international M&A?

And my second question is you've got a notable free cash flow conversion improvement in 2025. I wanted to get your thoughts on what areas or cash outflows you think you continue to gain leverage over or improve on in 2026.

It's Guglielmo. I'll take the first one on capital allocation. Yes, the bar is very high, definitely. The bar is very high. This doesn't mean it's out of reach. But for sure, it's very high. Right conclusion.

On the second point, it's actually a good point because it's true this year has been -- there's been a good improvement. But next year, I'd say, in addition to EBITDA growth, obviously, if you start looking at the various components like you have sort of concession CapEx, we know that recurring CapEx are quite scalable, given they're primarily driven by the size of the footprint, which doesn't change and the spend -- the CapEx in tech that is highly scalable. So that is the recurring CapEx are a very scalable item.

Concession CapEx is, we know what we'll pay. Next year, we will not have -- we will have the recurring -- sorry, the concession CapEx for retail, which we know already the amount. The -- and online will have 0 because we'll have paid everything this year. And then in terms of other, let's say, extraordinary items, you'll see that basically the line items will almost disappear. We'll have significantly fewer non-recurring, we would expect because the PWO integration is substantially complete now by the end of the year will be practically done.

So you will not have these -- or you have much way fewer nonrecurring items. But also at a -- we don't -- it's also cleaner when you look at the earn-outs and deferred considerations that we've had in the last couple of years, the payment of the Betflag earn-out is just not there anymore. That's done. GoldBet, most of it is practically done. So it's a much cleaner cash flow profile.

Then when you look at the financial expenses, obviously, we've entirely -- we've refinanced half of our capital structure a bit more in earlier this year, and that has driven the average cost of debt down. So you'll see the full year benefit. You only see half year benefit this year. Next year, you'll see the full benefit of it. So that's another item. Then the other items like leases are pretty stable and then you're really only left with cash taxes. So all of this to say that you have fewer extraordinary items, we would expect more scalable CapEx and lower financing costs. So it looks, let's say, also neither from a cash flow generation perspective.

Next question is from Hugo Paternoster, Kepler Cheuvreux.

I would have two follow-ups, if I may. The first one is on the online concession rollout. And regarding the data that you mentioned, the 7% to 10% data suggest that the cake to be redistributed maybe smaller than initially thought, I would say, like 6 or 1 years ago -- 6 months or 1 year ago. How does this change your expectation for competitive dynamics of the Italian online market? You mentioned that on the medium term, you expect further rationalization. Would it go through organic rationalization or those M&A still an option in this market?

And the second question remains on the M&A, the M&A road. You have mentioned that you are evaluating a lot of opportunities in international. Could you elaborate, give us a bit on an update on your M&A strategy there? And specifically in the context of a recent move in Germany, a French company acquiring a German one. Would you have a look at this company since it, I would say, featured a lot of what could fit your strategy, sports franchise, both on the online and retail? Is this something that you considered? Was it too big? Any color on this, I would say, would be helpful.

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Yes. I'll go on the first one. Look, no, I wouldn't say the assessment is smaller. I think we've always said it was around 10% because you started from a 15% of the tail, then you had to take out all the aggregations and consortiums and then you had to take out those who were absolutely stable within the cluster. And so you ended up around 10%. Today, we can say it's between 7% and 10%, which is not -- of course, you have a lower end, but I don't think we are talking about different numbers than originally envisaged.

And, no, I don't think that there's going to be -- we're not thinking about -- this is already a significant change. There's going to be pressure on that part of the operators of the tails to consolidate in the coming months and coming couple of years as we commented. And part of this is happening fully organically, part is happening through commercial deal, part is happening through the small deals that I mentioned to you. There may be some bolt-ons also in the market. We -- they might come up. But -- so it's a mix of things.

I think all options are open in the next couple of years. I think the key point is that clearly, there is a push towards some additional consolidation. How you get there, and that was also a question, we're going to see. It's very hard to say how much is going to be coming from bolt-ons, how much is coming from commercial agreements, how much is coming from organic redistribution. But it's going to be a mix and the end game is a more consolidated market.

Maybe for your second question, I think the recent wave is a testament that the industry is currently going a phase of consolidation. I think for what we can comment, I think these are -- we appreciated the move that took place. I mean, on the face of it, they are very good assets. We can't comment on the deal other than say that they are -- both assets are sort of high quality.

And I don't think we can really say much on the size, really whether something is too big or too small. We have all the levers to be able to do a deal of a similar size. And we have both the financial capacity, balance sheet capacity as well as the ability to issue equity to do transformational deals. So that doesn't -- I don't think that, that size necessarily is a hindrance to any potential M&A.

Next question is from Domenico Ghilotti, Equita.

A few questions. First, to have your updated assessment of market trends moving into 2026. So if anything has changed compared to your previous comments on market expectations.

Second is a clarification on the synergies. I'd like to understand, how much has really gone through already in 2025 P&L? Just to understand what is, let's say, the balance that we can also count on for 2026. And then if you want, give us quick comment on the current trading. We have already seen a very stronger iGaming market trend, not yet on iSports. So if you can just comment on that.

Yes. I'll take them. Listen, I think in terms of market trends, the broad strokes, we don't -- we hold a similar views that we've originally said. What you may see is some movement of the demand, particularly in sports between the online channel and the retail channel. So what you'll see is -- if you look at the online -- if you look at online in iGaming, we'll continue to see these -- we expect to continue to see these mid- to high-teens growth. And that I think there are really structural tailwinds that continue to support it.

In iSports is more towards the sort of low double-digit type of growth. Obviously, this -- you have to take -- given that it's an heavily omnichannel market, you will see that growth in -- sometimes -- so demand can move more towards the retail end. And in fact, if you look at the growth for this year in sports franchise, it has been significantly stronger than we've had originally expected. It's just some of the masses have moved more towards the retail.

But in aggregate, you'll see that the sports segment when you combine retail and online, has been growing consistently between 8% and 9% per annum. And then we'd expect to continue to see iSports growing faster. You may have periods where it grows -- it doesn't grow -- it grows a bit less fast and retail grows faster than the original expectation that we had set of mid-single digit. And then gaming franchise, I mean, we'll continue to see the decline of mid-single digit that I think is our expectation.

On the synergies for -- that we've already seen in our P&L, I mean, for this year, we'll see circa EUR 50 million in the whole for the full year. I think for the -- what we've seen already in the last 12 months ending 30th of September, we see around a bit more than EUR 40 million already in our last 12 months. So the remaining, so we'll get to -- as we get into the full year, that EUR 40-plus million will go into EUR 50 million. Then Domenico, remind me, the last question [indiscernible] for October.

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No, it was -- yes, it was on iSports or sports in general also.

Sports in general, I think it continues to be -- I mean, we'll have to wait until we can publish the data that comes from -- that will be published in the coming days. But in that, sports continues to remain -- continues the similar trends that we've seen. If you look at the trend line has continued to be pretty strong at the same levels. I mean, October particularly will comment on when the numbers come out.

But I would say that in general, if I take a step back particularly on this segment, it is important to note that when you -- particularly if you put GGR of the whole sports segment, the trend line is pretty clear. Then you have peers where you're above the trend line, peers where you're below the trend line. And more recently, we're in a period where it's below trend line. But we'd expect the trend line to continue to remain valid going forward. And so we'll see. But on October, I reserve until we see judgment, until we see what the outcome of the home market is.

Next question is from Chiara Pampurini, Intermonte.

I have a couple of questions. The first one is on the Game Franchising division. That is third quarter, you posted a very strong EBITDA, 11% growth. And which is supported by bolt-on and performance a one-off or some of this positive performance will be possible to see in the next quarters? And the second question [indiscernible] particularly in the U.K., we see increasing negative headlines about [indiscernible] towards the end of the...

Chiara, apologies, if I interrupt. We can really barely hear you. It's very muffled. Do you mind -- we tried to get the first one, but do you mind restarting if you...

The first one?

Yes, yes. I think we probably got it, but we want to make sure now that we got it right. Yes.

Okay. Now it's better?

A little bit better, yes.

Okay, Okay. Sorry. So the first one is about the Gaming Franchise division. In the third quarter, we see a stronger EBITDA with 11% growth in the division. And I like to know if it was supported by bolt-on, if this was a one-off or if some of this positive performance that will be possible also in the next quarters.

The second one is on the regulation, it's [ obviously ] looking abroad [indiscernible] United Kingdom. We have seen pretty negative headlines about regulation towards the end of the year. And so far, we haven't seen any concrete negative development in Italy as change regulation is ongoing. I want to know from you if you see a risk of war extending news over the next 2 months. Hope you heard better.

Okay. I'll take the first one. The performance of the Gaming Franchise business in Q3 is -- the growth is entirely driven by the bolt-on activity that we've carried out. So the growth is entirely -- it has more than offset the decline in the of -- the market decline of retail gaming.

Yes. On the second one, I mean there's nothing in the current draft of the budget law and there's no discussion around that. So I think that's the short answer to that.

The last question is from Andrea Bonfa, Banca Akros.

Very quickly, I got two curiosities, if you can allow me. First of all, if it's possible to know if you are on a due diligence phase on your M&A scouting abroad. And the second one is, I calculated more or less you spent just over EUR 50 million on the share buyback in the month of October. Is this a level that we might consider normal at this price level of your share?

Andrea, if you don't mind on the first one, we very politely pass whether we're in due diligence phase. And the second one on -- yes, we -- I mean, the spend that you see for the buyback, the reality is it's algorithmic. It's not something sort of that we give the total amount to spend and then the bank carries it out. But I think the -- what we had ultimately said is that we would -- we have authorization for up to circa EUR 500 million. And we got now -- since mid-June, we spent almost EUR 120 million.

I think you should look at how it averages out per month, and I think that's a fair proxy. But it's hard for us even to forecast it because it's -- the buyback is done really with an automatic tool.

Thanks, operator. I think we are done with the Q&A. So thank you all for joining. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.