Lottomatica Group Aktie

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.

.

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.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining Lottomatica Group's First Half 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 at Lottomatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to Lottomatica Q2 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, everybody. So let's start comment in this -- the very good results of this quarter from Page 2 of the deck. The first comment is on the market, which grows 9%. There's, of course, the effect of the Euro Cup, which you had last year, you don't have this year. If you net that from that effect that would have been a solid 12%, which when you look at the entire semester, again since the mid-single -- mid double-digit growth.

We continue to outperform the market significantly. When you look at the reported number, the 9% of the market compares with a 16% growth of Lottomatica and net of the Euro Cup effect, the 16% becomes a 19%. We have reached a very solid result in terms of market share in June, 30.7% on total online, and you will see the dynamics within the brands in a few pages. This reflects nicely into revenues, which grew 10% quarter-over-quarter. I mean, Q2 '25 over Q2 '24 , and even better, of course, because of the synergies on EBITDA, which grows 20% without the effect of the Euro Cup. If you net that, that would have been 3 points higher, so 23%, pretty much in line with the delta with the difference in GGR increase. So this is a very good quarter, also considering with and without the Euro Cup in both cases, which allows us to confirm the '25 guidance.

Let's now go on the key areas of development, Page #3 of the deck. There is very significant progress on all key areas, starting from PWO integration. The very good news is that we have completed the migration, which is always the most complex part of an integration, both the online and the retail platform have been fully migrated. The process was even smoother than previous integrations, previous migrations. We are seeing a very good conversion rate higher than the past, stronger retention than the past and a stronger satisfaction level of the customers that we've acquired to monitor the progress of the migration than the previous integrations.

So so far, a very good result also in relative terms compared to our previous experiences. This also reflects on the very good progress on synergies, 85% of the synergies of the increased synergies of EUR 87 million by '26 are already secured. So we can say that we are on in the final stages of the PWO integration. We're basically collecting the results of a very successful project.

Now the second area of -- hot area is the online market developments as a consequence of the new concession framework. You may have read that there has been a slight postponement of the start of the utilization from September 17 to November 12. I mean it's a tiny change. The good thing about this that the process is confirmed to be completed this year in November. Everything is on track. And going to the opportunities that we have to consolidate to roll up the tails, very good news is that we've already secured 2% of market share for future exploitation.

Securing 2% means that this is a mix of commercial agreements, which will fall under the Totosì brand some transactions that we have done, but the end of the story is that we have put a hat on already even before the redistribution of the market shares, which will happen in -- starting from November 12, we've put are hat on a pretty significant portion of the market share that we think will be available up for grabs due to the new construction framework. And we confirm the rest, the potential of the rest between 7% and 10%, potentially available after November. So very good progress here.

Bolt-ons. The run rate of the 2024 bolt-ons is confirmed, and there are additional bolt-ons in the world, which we will complete this year with a run rate impact expected next year. And then you have the buyback. As you know, the program has started June 18, and we've already acquired as of yesterday, 0.53% of the share capital.

Now Page #4, focusing on the dynamics of the online share by segment. iGaming grows very nicely at market level 16%, and we do better than the market, growing 23% in Q2. iSports is, of course, a bit softer because of the lack of the Euro Cup. The market shows a 7% and we do more than double that number at 15%. But of course, there is the -- there is -- you have to average this out on H1, which will stand at 12%. So the main difference you will notice basically in June because the year-to-date in May would have been 18%. So that's all the effect of the -- basically the calendar mix of payouts.

Other online continues to grow lower than the other 2 segments that still grows nicely. So this results into the numbers that we've seen before, 12% for the market and 19% for Lottomatica excluding the impact of the Euro Cup. I'm not mentioning the positive impact of the World Cup, which has also been excluded World Cup because that is tiny. It's absolutely material.

Now a quick comment on the evolution of the online market segments on Page 5, this is all known stuff, but when you see that in a graph is very telling. Of course, iGaming is more -- is less volatile than iSports its progression because it doesn't depend much on payout, and it doesn't depend much -- well, it doesn't depend at all calendar of sports events. So you can observe more easily the underlying trend, which is very clean. And so if you average that in the last 6 months, that is a solid plus 17%.

When you go to iSports, you have historically high volatility the GGR of the market because that is impacted by payout, as we all know, and by the sort of the volatility of results in a nutshell and by the calendar of sports events. And of course, by some level of cross-sell with the iGaming -- with the iGaming vertical. But again, if you average this out on a 6 months basis, this is a plus 12%. So bang in line with our estimates for the iSports component. This brings to a total of which I mentioned before, 14% in the last 6 months of overall online GGR evolution with a level of volatility, which, of course, is in between that of iGaming and that of iSports, there's a very solid mid-double-digit slope of the overall online GGR curve.

Now going into our market share and how that relates to Page #6 to the migration of PlanetWin, this is a very interesting set of graphs on the historical brands, so all brands without the last acquisition, PWO, there is a continuous growth for the quarters and the years. Actually, you can see the 23.7% of Q2 '25, which is materially higher than 1.5 year ago, which is the starting point of the graph.

And if you look at June 2025, it's even higher. And so those are the historical brands. It's a clean graph because you don't have any migration or any integration activity on those brands. Those have been clean. It's a clean story in this -- in this 1 year now. When then you look into PWO, you can see that at the start of the migration in April, we had 7.2% of market share. Then of course, in June, at the peak of the migration, we are at 6.3%, which is pretty much the same thing, which has happened in the other big migration that we did some time ago, which is the -- was the Lottomatica and better migration. It was 7.2% at the start of the migration in May 2022, and 6.2% in August 2022 at the peak of the migration. But then it grew back and basically 1 quarter was the completion of the migration, it was higher down where it was at the beginning of the migration. So we expect that the full potential of the PWO brand will materialize in the next few months within the year, now that we have the migration accomplished, completed so that we can exploit the full potential of the group platform and product. Also considering that we have seen better KPIs, as I was mentioning, and a smoother process in the PWO re-platforming. So we feel optimistic about this.

So with this, I'll leave the floor to Laurence. Thank you.

Thank you, Guglielmo. Moving on to Page 8. Here, we can see how we closed the first half with yet another quarter of strong growth. On the left-hand side, you can see how revenues are up 21%, and on the right-hand side, you can see the EBITDA is up 33% in H1. So -- and if you look at in Q2, EBITDA is up 20% on a reported basis. Margins in -- EBITDA margins in H1 2025 totaled 37.4%. And the improvement is a result from the previous year as a result of the shift of the business mix towards online and the delivery of synergies.

Page 9, when we look at the financials by segment, we see that online continues to be the main driver of growth with 33% growth in revenues and 41% growth in EBITDA in H1 '25. And sports franchise also has experienced strong growth, 31% in revenues and almost 60% in -- 60% in EBITDA, clearly helped by the payout. Just to give you the measure also for Q2. Q2 reported growth has been 15%.

Gaming franchise in the low single-digit growth so plus 2% year-on-year, and this reflects the impact of the bolt-ons that have more than offset the market softness in gaming retail.

Moving on to Page 10. When we look at operating cash flows, we see on the left-hand side, CapEx, recurring CapEx of EUR 47 million in in H1 2025 versus EUR 42 million in H1 '24. Here, we're in line with guidance, which we had said that we would reach EUR 85 million by year-end. Concession CapEx of EUR 31 million, again versus EUR 48 million, this is a timing of the concession payments again here, similarly, this is in line with guidance.

Then when we look at the items in growth CapEx or one-off CapEx, these include what we had indicated in the guidance earlier this year. This is a carryover of bolt-ons of 2024 of EUR 20 million out of 2027 for the full year. Deferred considerations for previous bolt-ons of EUR 8 million out of the EUR 11 million for the total year and the integration CapEx of EUR 17 million.

And when you look at on the right-hand side, the operating cash flows defined as EBITDA minus recurring concession CapEx, we have seen an increase from EUR 228 million to EUR 344 million, so an increase overall of EUR 116 million year-on-year.

Going to Page 11. You have the bridge for the net financial debt from end of March to end of June. So in addition to EBITDA, you have clearly a positive inflow from net working capital, which reflects the seasonality of our business where Q2 tends to be positive. Taxes paid of EUR 46 million. This is what we paid in end of June. CapEx of EUR 58 million. This is the -- these are CapEx for Q2.

Goldbet consideration of EUR 11 million. So this is -- we are almost complete with the payment of the deferred charges that we owed to the Goldbet shareholders. So we had EUR 10 million now with EUR 11 million in Q2, we reached EUR 21 million overall, of which the remaining EUR 7 million will be paid in due course.

Financial expenses and lease of EUR 54 million and then clearly, the dividend paid of EUR 76 million and we paid in May and then other items include the refinancing costs that we've done for the refinancing that we've done in April and integration costs of EUR 14 million. All in all, this brings us to a net cash balance of EUR 271 million, which establishes our net financial debt at 2.1x, which is at the low end of our financial policy.

And this is it.

Operator, we're done on our side. I think we can open up to the Q&A.

[Operator Instructions] The first question is from Ed Young with Morgan Stanley.

I've got 3 questions, please. So on Slide 2, you detailed the 16% online revenue growth ex TWO, so it seems like that's been a relatively significant drag, at least a few points there. Given the migration is now over and the Lottomatica case study, should be expecting a decent H2 acceleration in online growth?

Second of all, the 3% of operators you haven't applied for renewal is probably a bit smaller number than it was initially expected. Why do you think more fringe operators have gone in for licenses in the first case? Do you think there are others out there who would be looking to be acquired or brought into commercial arrangements as you have done? And on that note, are you looking to do any more of those?

And then third, your NGR, GGR conversion online improved for the second quarter in a row sequentially. How should we think about the trends there? And what can we make of the bonus in promotional environment to expect into Q4 around the online licensing event?

Sure. Let me -- I'll take them in order. So if we look at the PWO for the market share, listen, I think -- so we completed now the migration to the platform. Obviously, we can't give the guidance on the performance in terms of market share, but we -- the expectation from our perspective is that we will see a benefit in terms of -- from PWO, an improvement in the market share for PWO.

Now probably we'll see this, yes, in the -- from now on, that's what we're clearly working on. We're not going to give a specific guidance on that, but we do expect an improvement in the remaining part of the year.

For the third point on the NGR, so on the conversion from GGR to revenues, yes, so there has been an improvement in Q2 versus Q1. We will see -- we'll have to play a bit by a year here as well. We don't expect necessarily a deterioration. We may see some further promotional activity as we continue to do the sort of -- now we need to take care of all the relaunching the business of PWO on the new platform as well as opportunistically taking -- looking at the sort of market conditions once the new online concession is awarded.

Yes. And so let me answer to the second question. So yes, probably the 3%, we would have probably expected slightly higher direct opt out than the 3%. When you look at the total number, that doesn't change the size of opportunity in the end because when you look at the other 7%, as we commented, and you go and look at the business model of the operators who are in the pipeline who are -- we have applied for the concession, then you discovered that give or take off of that market share is based on a skin model, which basically it's potentially up for distribution.

So you pretty much get to the same numbers with the different dynamics, different mix of upfront opt-out and potential distribution afterwards because of the scheme model. Why has the immediate opt out been smaller than expected most likely because some of these operators have given the trends to maybe to do deals. They know their financials are super stretched, but probably applying for the concession allows them to negotiate a deal in a couple of cases, that's what we've done. And we continue to explore the opportunity. We adapt our tools to the change in condition. We don't think the size of the opportunity has materially changed. So that's the point.

The next question is from Fabio Pavan with Mediobanca.

The first one is a follow-up on online. I was wondering if you may help us in understanding that the impact that this potentially increasing market share, I may have when GGR grow for line over time? And my second question is on M&A. I was wondering if you are still scouting external growth opportunities, if there is any color you can share with us on this point?

Yes, Fabio. So on the first question was the impact of this deals of this 2%. Well, you can look at it as a step up -- potential step-up of 6% compared our GGR pool because that's what the 2% represents out of the 31%, 30.7%, so that could be seen as a 6% give or take uplift. And then there's no reason why the dynamics of this 2% should be different than that of the market. So that should be probably be growing afterwards at the same rate of the market.

Then a different story is when that fully reflects into our contribution margin and how that reflects into our contribution margin because that depends on the type of the deal. It depends on whether we migrate those customers onto which brand onto which model. So probably there is an opportunity there compared to the deal at the moment -- we signed the deal to optimize the profitability of this market share working on the cost structure, working on the model, working on the brand, there's a bunch of things that can be done. But potentially, it's an expansion of a step-up of the GGR of 6 points and then that going with the same growth dynamics of the rest of the market.

As for M&A, we still consider it. As we said, the framework is always the same. It's -- I won't repeat it, it's Europe, B2C and all the things that we've always shared with the market. As we said, we're in no rush. The point of the discipline is key for us. We are doing very well, and we think this is in the Italian market, and we think which is a great market, both for the consumer dynamics and the regulation we think this trend is a long-term trend will continue for a very long time. So we have a lot of growth -- organic growth in front of us and then bolt-on opportunities.

So -- and we're doing the buyback, which is a way of reinvesting in this market. So the benchmark is high. We will look at every opportunity having this in mind, having no rush and maintaining full discipline. That's it. So no changes in the strategy, a confirmation of the discipline through which we look at opportunities, which have to make sense, of course.

The next question is from Hugo Paternoster with Kepler Cheuvreux.

Yes. I may I have 2, if I may. The first one is a little bit of follow-up on the online concession market. Just wanted to know if you could share some light about the economics of the 2% market share that you have already secured, I believe that part of it is under the Totosì brand? Yes, could you provide a little bit of more detail about what the level of negotiation are you engaged the level of profitability that you expect to derive from those 2% market share? This would be the first question.

And the second question would be on your guidance. You have achieved, I would say, a high level of profitability in H1 and looking at your profitability guidance for the year. It seems to be a little bit conservative. I just wanted to have your thought on it, please.

So on the economics of this Hugo, we won't be able to say much at this stage we wanted to share because we've been asked, of course, we wanted to share the -- where we stand to give a sense, but we don't want to get in too much details because this is a very competitive element at this stage as we are continuing to do these things, so we don't want to get into too much detail, but I can tell you 2 things.

The first one is that these are deals transaction, which are clearly accretive. So you -- we do this deal just for the sake of growing the market share, but also to provide returns. The second point, which I somehow mentioned in the previous question is that we start with something but then we have room to work on the profitability of these initiatives. There's probably room for cost optimization, value chain optimization, brand optimization, but they start as accretive, clearly accretive. We'll be more specific on these ones. The -- once we think it's not a competitive topic anymore. So we'll dig into that.

On the profitability point, isn't the first half, we've had margins in sports franchise and in online that are slightly also higher, reflecting better sort of higher -- better payout, more favorable for us. So on a normalized basis, clearly, you would see sports franchise more in the mid-20s and the online slightly lower also for the -- even though the payout impact is lower. So that's pretty much a function of the payout, what you've seen in H1. So on a normalized basis, this come down a little bit.

Okay. Got it. And you don't assume any improvement from the PWO synergies or you are not assuming the improvement from of the migration of this PWO in your plan going forward?

Yes. No, listen, we're seeing a bit -- clearly, we're seeing the synergies come in, right? And that's why you're seeing overall margins improving. And there's more to come because we're still not seeing all the full benefit of the synergies in our P&L -- so that should -- that would also come in, in the second -- in the -- some of it will come in the second half and the remaining part will come in 2026.

But so you'll see some improvement there, of course, due to in relation to synergies. But I would say that the major swings that you've seen in the first half are particularly in sports franchise predominantly driven by payout.

The next question is from [ Clark Laden ] with BTIG.

I have 2. Maybe first, I'll follow up on Hugo's question on the synergies. Laurence, is it fair to think that the remaining sort of EUR 12 million or so of the EUR 87 million you've identified and sort of guided for is related to sort of identifiable cost synergies? And then if so, as we're thinking about the opportunity in sort of '26, is there any way of either qualitatively or quantitatively framing for us one, either the time line for realizing revenue synergies or, I guess, some way of thinking about the significance, whether maybe with better, I guess, if that's still a reasonable corollary to use for benchmarking, how much you achieved there?

Second question I have is sort of going back to the 7% to 10% licensing opportunity. Is it right to think that the sort of 2% at Totosì is already secured is included within the 7% to 10%? And then if so, maybe you could frame for us for the 7% to 10%, is that an initial estimate of the opportunity? And then if so -- is this more broadly an opportunity that's going to be addressable in phase, i.e., could that number go up over time as certain cohorts become -- you wait through the skin opportunity and then maybe those consortiums beyond that? Any framework for that would be appreciated.

Sure. Listen, on the synergies, maybe going back to the 2 items you mentioned on the cost synergies of the EUR 12.5 million that we increased -- the increase that we've had in that we have announced previously this year. The -- those prominently related to the -- those are identifiable, absolutely. And we are executing on those. And that relates to the renegotiation of the contracts with the franchisee network of PWO. So that's in process.

So we will see that will roll in as we complete the renegotiation of all the contracts. With regards to revenue synergies, I would say that we have EUR 10 million of revenue synergies as an impact on EBITDA, that's how we quantified it. We will see that is what we estimate based on sort of how we think PWO can perform basically on the new platform. As we've -- with all the new features, it's clear that at some point in time, you have to drop the synergies and then they're going to be called growth, right? There is definitely an uplift that we've quantified initially in EUR 10 million. And then after that, we would hope that PWO can reach its full potential, leveraging our tech platform as well as all the -- as well as the product features that we have and the new product that we will have in the -- for the PlanetWin brand. But there comes a point, I think, where we'll -- they're not going to be cost synergies anymore, and there will be recently called growth in our stand-alone growth of the Off-PlanetWin. That opportunity we don't feel at this point in time to sort of give a higher guidance that we have already included on the EUR 10 million related to revenue synergies.

It's clearly -- but -- and I don't -- we're not -- I don't think that will ultimately change that will be called growth from there on in 2026.

So on the second point, Clark, yes, the 2% is part of the 10%. So especially as we have secured a part of the -- already a part of the the pool before, let's say, the redistribution, which basically happens with the switch off of the current concessions. As for consortiums, they're out of the 10%. So there's been a couple of notable examples of all players who have teamed up but these are not included in the 10%. So that is already a net figure. So the 7% to 10% is really the opt out, the 3% opt out plus the guys who have applied, we think have a significant stretch in a sustainable -- have a significant financial stretch. So the position is either not sustainable because of the business model. So see the presence of the skin model in 50% of the business or the sustainability of the economics. So they will have to find another solution. That's how we -- that is composed.

So the consortium, we think they are at least in the short term, they are stable. So there's no reason to think differently and to include them in the 7%, 10%. How this plays out. So how much more we can preempt and what will be the distribution we'll quickly the -- how the skin model will exit the market will be a distributor, it's all variable all moving parts. And as we said, we will see that basically as the current concessions expire. But we continue to work to preempt as much as possible of good market share within that basket before the distribution happens.

The next question is from Pravin Gondhale with Barclays.

You talked about the online margin strength in Q2 and the drivers behind that. But is there anything else outside the synergies and favorable payouts there that drove that margin strength in second quarter, given it is expected to be a seasonally softer quarter on margins?

And then secondly, how should we then be thinking about the margin trajectory in medium term, given the strength that we have just seen and the PWO synergies coming through? And then finally, on PWO, I realize this is -- these are very early days. But if you can talk about the PWO user behavior, how does that look on app users frequency spending behavior, any update, et cetera, on the new platform compared to the legacy platform?

Can you hear me?

Yes.

In the first half, there have been favorable impacted by payout. So you'll see them slightly lower probably in H2 in -- but that's -- I would say that's the -- there may be some timing of costs as well. But I would say that lower margins -- slightly lower margins in H2 is reasonable.

In the medium term, listen, we'll see. Okay. We've always said, so probably they will come in not to dissimilar to where we are today, maybe some further improvements, we'll see them over time. And as we had said previously sort of going -- trending towards the mid-50s in the medium term, also benefiting from operating leverage.

Yes. So on the -- Pravin, on the PWO migration, I mean, the -- we can summarize that it's very early still. But we can summarize the good signs, positive signs basically in a higher and faster activations of the courts, which have been migrated compared to the previous experiences. So in a shorten time, we have more people who have completed the journey and played which is a very solid indicator of the fact that the migration is going in the right direction.

Leave aside the customer surveys, the customer satisfaction. That's a hard indicator of -- so these are reflected in a higher GGR in the same period of time of the courts who have been migrated compared to the courts who have not been migrated. Now this is a rolling process. So you cannot make a super clean comparison, but it is another strong indicator -- positive strong indicator. Now it's very early on. So we're not giving numbers on this. We will have to see but it's a bunch of -- when you compare it basically with previous migrations, which is the first KPI that I mentioned to you. And when you compare that within the same migration the courts that have not migrated and the courts who have migrated. Those converge to positive. So this is -- again, I'm not commenting on the numbers, what's the delta in GGR and so forth. But both vis-a-vis the previous migration and within the current migration migrated and non migrated, the signs are going in the same direction, which is positive.

So this is the situation. We'll have to see that in the numbers now. We have all the retail and all the online customer base, which is on the new tech and the new product. We basically see that in the coming weeks as the championship restarts. That's going to be the real test. But so far, so good.

The next question is from Domenico Ghilotti with Equita.

Three questions on my side. So the first is a follow-up on the online margin. So if I look at Q2 alone, so not -- the payout actually was quite normal, and you were very close to 55%. So I'm trying to understand, there was some particular positive cost situation? Or if really this can be with a normalized payout and normalized seasonality, sustainable level with the upside coming from the synergies?

Second is a clarification on the bolt-on that you are mentioning in terms of new targets that you are looking for. Are you referring to the online? Or is still mostly the gaming franchise, just to understand if you are changing a little bit also the targets in terms of opportunities?

And last question is on the gaming franchise, we have seen a further decline in GGR. Should we assume that the decline will continue? Do you see the trend deteriorating, stabilizing? So what is your view on trend for the market?

Domenico, I think is, on the online margin, half of the benefit of the payout in Q2 is attributable to online. So it's not insignificant. And then there's always timing of costs throughout the quarters that we need to factor in. As we said, H2 would probably expect margins slightly lower in online.

For -- with regards to the second question for bolt-ons, when we talk about bolt-ons there, we're talking predominantly in the game, we talk about gaming franchise. So the other transactions that we've done in that account for the 2%, these fall outside of the bolt-on and the scope of what we call the bolt-ons. And those are the separate ones.

Then number three, this on gaming franchise, we continue to see the same trend, right, on the mid-single-digit decline. It's around to date, we have GGR decreases around 6% faster in AWPs and a slower decline in VLTs and we expect that trend to continue.

The next question is from Estelle Weingrod with JPMorgan.

Just 2 questions, please. The first one is the usual question on your progress regarding the retail concessions and where we stand at the moment? And the second question I want you to check on the potential removal of the full ad ban, if this was to happen, how do we expect this will impact the competitive environment and Lottomatica as positioning, please?

Estelle, so on the retail concessions, there is -- I think we commented on that. There is a draft coming from the government side, which will have to be discussed with the regions. The government has extended -- actually the parliament has extended on request of the government today the duration of the vehicle of the legal vehicle to do this with other things, which was set to expire August this year. Actually, it has been explained, give or take 1 year.

So this will take additional talks between the government and the regions also because now the deadline allows for that. My comment is the same. I mean the framework is very balanced is in line with the same principles that we've seen in the online reform. It's a very well structured bill, very well structural reform. Now it has to be agreed with -- between the government and the region. That's basically the topic. So that's where we stand. But it's very comprehensive. So it has -- as you may have seen, it does everything inside it as the distribution rules, it has the product rules, it has the tender rules. So it has everything.

The stability of the taxation -- but of course, it requires an agreement with the regions. Now the removal of the advertising ban, it's not a topic we're particularly -- which we think is particularly relevant to us. We remain of the same opinion. We simply don't care. This is not going to change anything in the competitive dynamics I mean whether they do that or not, it's totally irrelevant. We think to the market to our competitive position -- just to be clear, the omnichannel model is not working because of the advertising ban that was a few years ago. It's working because of a bunch of other reasons that we have discussed with the market based on for the advertising -- the advertising ban is also because we can -- I mean there's plenty of ways to reach customers that the market already uses. So I mean we'll see what happens, but not a particularly relevant topic for us strategically.

The next question is from Andrea Bonfa with Banca Akros.

Most of my questions have already been answered. Just a detail, if I may. The 2% that you bought on the online is initially a minority. What's the time frame before you start consolidating those assets and to see an impact on your P&L?

No, it's not a minority. It's a mix of things. There's a couple of commercial deals so that will flow into Totosì even, I think, before the start of the new concession. There's control -- straight control solutions, which then -- which will then also be relevant to some of our brands. And then there are path to control so minority then along the way turning into something else that depends pretty much for -- by the way, for every of these noncommercial transactions, we'll have to wait -- you remember there is the awarding of the concession, the start of the new concession and then there is a period of time for the migration of the systems. Of course, we will wait for that. You don't want to mess up that process. That is at least 6 months after the awarding of the new concession. So this is something that falls into basically next year.

But there's ways to to potentially regulate the speed at which these transactions that's already provisioned to regulate for the speeds at which these transactions and the minority or majority components basically, that will depend on what we decide to do along the way. But the key point here is I think the fact that, that profit pool is kind of secured. So as I said, we put a hat on it, then we'll have to -- from case to case, we have to decide whether we migrate to -- that on Totosì onto another brand and how we optimize the cost structure. So there's a lot of value to be extracted from these deals on top of the just playing acquisition on of the target, let's put it this way so.

The next question is from Chiara Pampurini with Intermonte.

I have a question about the gaming franchise performance in the second quarter because we have seen that GGR was still down 4% on the same trend of first quarter, but in the second quarter, we saw higher revenue, 3% higher year-on-year and adjusted EBITDA up 6% year-on-year, while in first quarter, it was quite flat or slightly lower. If you can explain the reason for this performance in the second quarter with respect to first.

Sure. That's the bolt-ons, in a nutshell. It's because some of the transactions that we've finally closed in the beginning of this year, you're seeing the results then in Q2. So that's the short answer.

Gentlemen, there are no more questions registered at this time.

Thank you, operator. So I think thank you all for participating. We can close the call. Thank you very much.