Flutter Entertainment plc Q1 FY2026 Earnings Call

Hello, everyone. Thank you for joining us and welcome to Flutter Entertainment Q1 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Paul Timms, Group Director of Investor Relations. Paul, please go ahead.

Hi everyone and welcome to Flutter's Q1 update call. With me today are Flutter's CEO Peter Jackson and CFO Rob Goldrake. After this short intro Peter will open with a summary of our operational progress and then Rob will go through our Q1 financials and our updated guidance for 2026. We will then open the lines for Q&A. Some of the information we are providing today including our 2026 guidance constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement except as required by law. Also, in our remarks or responses to questions we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today available in the Investors section of our website. I will now hand you over to Pete.

Thank you Paul. I'm pleased to share our Q1 results and update you on the progress made against the key strategic objectives we outlined in February. But first I wanted to address the management changes we've announced today. Amy Howe will be leading the business. I'd like to thank Amy for her contributions to Flutter and FanDuel and recognize the impact she's had on the business since joining in 2021. We wish her every success for the future. Looking forward, the US market and FanDuel's number one position within it represents one of the most significant growth opportunities in our industry and it is essential that we have the right structure and leadership in place to fully capitalize on it. Dan Taylor's track record of driving growth and executing on complex strategies, making him ideally suited for his expanded role. Christian Genetsky has proved to be an exceptional leader and has been instrumental in scaling the financial business to market leadership. These changes will sharpen our focus on the U.S. sports book, strengthen the connection between our U.S. and international divisions, and fully leverage the group's expertise, capital, and strategic ambition. I'm confident this gives us the right structure for long-term success and strengthens our ability to deliver sustained long-term growth now turning to the results in the quarter in the US we saw encouraging signs and underlying growth in Q1 overall amps were 1% behind last year and revenue grew 6% with headline KPIs improving as the quarter progressed as outlined in February overall sports book performance was adversely impacted by NFL trends observed in q4 where persistently high gross revenue margins negatively impacted customer activity leaving us with a smaller player base as we enter 2026. we outlined our sportsbook and generosity improvement plans to maintain our leadership position in these areas and we're now executing against them from a generosity perspective we're focused on delivering a truly customer first proposition examples include the launch of early win promotions during march madness and opportunistic pairs to capture the social side of betting which aided engagement met fans will know what i mean in april we began rolling out our sports for loyalty program which has had a very positive response from the initial payroll to customers to gain access to the program we also launched bet protect plus an industry first generosity mechanic allowing customers to ensure their bets for the full game for small fees the initial response has been excellent with adoption rates double our expectations and continuing to grow from a sportsbook perspective product enhancements in the quarter include the expansion of our popular path the leg feature to super bowl more personalized and simplified nba same game parlay building with betters again and full screen streaming for key sports and these changes are gaining traction with our customers underlying trends across our headline kpis have been positive with amps handle and structural revenue margin all improving through the quarter looking ahead we have a strong pipeline of improvements plan and we expect these positive trends to continue into q2 this includes significant expansion of our new loyalty program through q2 and q3 ahead of the full rollout for the nfl 2026 2027 season and new soccer product features ahead of the world cup in i gaming franjil delivered another strong growth of quarter another strong growth of growth another strong quarter of growth sorry with amps up 10 expansion of our direct casino player base coupled with improved frequency among high value cables for a revenue growth of 19% year-over-year. This was driven by enhanced rewards delivered through our Lottie program, including daily reward boxes and a continued rollout of new and exclusive content. At the start of April, we migrated PokerStars customers to the Fangio platform, unlocking improved product and cross-state liquidity for poker customers. Turning now to prediction markets. We continue to see limited cannibalization impacts on prediction market operators in our sportsbook growth. We believe this is attributable to the fundamental differences in product propositions between sportsbook and prediction market platforms, customer age profiles, and concentration of prediction market activity amongst entertainment-first and low-value users. However, we continue to monitor the impacts of prediction market operators in the broader sports betting ecosystem. second in terms of the opportunity we continue to view prediction markets as an attractive incremental customer acquisition opportunity ahead of sports betting regulations in new states the fast moving and complex regulatory environment has at times made product delivery timescale challenging however we are prioritizing new product rollouts and focus on building the operational flexibility required to deliver our ambitions in march and april we widened our range of sports markets and early testing of our generosity capabilities so encouraging returns with strong app downloads through March Madness. We launched the Fangio One app at the start of April dynamically serving customers sports betting in sportsbook states or prediction markets in non sportsbook states. Critically this now allows us to leverage Fangio's strong nationwide brand awareness by just one app delivers access to an increasingly compelling sports experience while q1 revenues were modest reflecting the early stage of the journey we are focused on delivering the improvements needed during 2026 to serve customers an exciting sports-led experience by q4 the 26-27 nfl season launch will be a major milestone with further improvements planned for FISA World Cup. We believe our world-class proprietary pricing capabilities can also unlock significant market-making opportunity. We began market-making services on a major third-party prediction market platform in April. Early indicators have been encouraging and we expect to launch the initial phase of our market-making platform in the coming months. Turning to our international segment, our performance in Italy has been extremely strong. We are the clear number one operator online outgrowing the market and our main competitors. This performance is even more remarkable given the drag from our SNI business which while in growth during the quarter had yet to benefit from the migration onto the SEA platform which successfully completed at the end of April transitioning around 2 million accounts. CSAL's market first my combo product saw excellent engagement with multi-leg bets contributing half of pre-matched soccer handle with over 30 percent of bets carrying five or more legs and this drove a significant step up in parlay penetration and structural margin in iGaming CSAL benefited from the continued rollout of exclusive content i'm very excited about the outlook for the rest of the year in italy with CSAL's ongoing exceptional performance and the unlocking of CSAIL's market leading product for SNI following the platform migration. In the UKI, strong double-digit iGaming revenue growth was delivered across Paddy Power, Tombola and Betfair, driven by new slots content and robust retention. Although Skybet's performance has been behind our expectations as customers adapted to the new user interface post migration, momentum has improved with its highest customer acquisition volumes in five years in January, an underlying sports port revenue returning to growth in March. Market competitiveness remains stable ahead of the UK iGaming tax increase of 40% on the 1st of April. We now expect less profitable operators to begin adjusting marketing and generosity strategies. As a leading UK operator, Flutter is well-placed to deliver material first-order mitigation as previously outlined, and to benefit from second-order market share gains over time. In Brazil, performance remained encouraging. We bet Nathaniel Amps over 40% higher year-over-year. We will soon integrate our proprietary pricing capabilities, unlocking a best-in-class parlay product and promotional improvements ahead of the FIFA World Cup in June. In APAC, we saw modest year-over-year growth in Sportsbook Amps and Handel. Racing, including greyhounds, who are still declining year over year, was ahead of our expectations. We also welcomed the advertising restrictions announced in April and believe Sportsbet is well-placed to build on its market-leading position. Overall, I'm pleased with how we've executed on our priorities across the group, and particularly in the U.S., we've made significant progress embedding the improvements discussed at Q4. Financial predicts is building momentum and I'm excited about our market making opportunity internationally our SNI and NSX integration is progressing well and we are investing with conviction in Brazil we now have the right organizational structure in place deliver against our strategic priorities giving me confidence in the outlook for the year and our ability to deliver sustainable shareholder long-term value finally I wanted to note our plans to review our London Stock Exchange listing as we consider streamlining the dual listing we expect this review to conclude during q2 and we'll update on our findings at that time i'll now hand you over to rob thanks peter and

good afternoon everyone group delivered 17 revenue growth in q1 2026 with adjusted ebitda up to this reflected contributions from our snide and better national acquisitions and a positive year-over-year swing in sports results. Performance included 10% sportsbook revenue growth with excellent underlying momentum in SEA and the US, showing encouraging signs of improvement, as Peter outlined. We also delivered continued strong iGaming performance across the US, SEA and UKI, with total iGaming revenue growth of 28%. Net income of $209 million declined 126 million year-over-year driven by a $71 million increase in interest expense and a $122 million increase in depreciation and amortisation. These were partially offset by an $88 million non-cash year-over-year benefit from the Fox option fair value adjustment. Earnings per share and adjusted earnings per share declined to $1.23 and $1.22 respectively, reflecting the factors mentioned above and a 61 million dollar year-over-year non-controlling interest benefit as we lapped the prior period. This included an expense reflecting Boyd's 5% ownership of the century. Net cash provided by operating activities increased by 142 million dollars or 76% year-over-year, primarily driven by a positive year-over-year swing in player funds of 153 million dollars from an outflow in the prior year related to a sisal lottery payout to an inflow in the current quarter this more than offset higher tax interest payments and a super pack contribution in the period to support our u.s advocacy initiatives capital expenditure was higher year-over-year due to lower prior year phasing in the quarter as a result free cash flow including financing capex and excluding player funds declined by 46 percent there is no change to our full year 2026 capital expenditure guidance our discipline castle allocation policy provides flexibility to respond effectively to evolving market conditions and emerging opportunities we continue to prioritize organic investment in our core business and strategic investment including emerging opportunities such as prediction markets which we continue to view as an optionality driven investment within a defined cost envelope. While deleveraging is now priority, buybacks also remain an important part of our capital allocation policy. At our Q4 earnings in February we communicated our plan to return $250 million to shareholders commencing in H1. This tranche began in Q1 and remains ongoing. As of May 1st, $190 million has been returned to shareholders. Consistent with our flexible approach, we will continue to evaluate the buyback programme as we progress through the year. From a leverage perspective, we ended Q1 with a leverage of 3.7 times. We expect leverage to decrease by the end of 2026, initially increasing through Q2 and Q3, reflecting the profitability profile of the business before reducing in Q4 and moving us towards our target ratio of two to two and a half times over the medium tap. We also continue to drive efficiencies across the business and have already embedded significant cost savings through our ongoing cost transformation programs. In International we are on track to deliver the full $300 million run rate from our cost efficiency program by the year-end with most major milestones already achieved we are now actively defining the next phase of cost transformation into 2027 and beyond with a clear emphasis on sustained cost discipline and operating leverage in the us we are equally focused on cost efficiency with 2026 savings realized across initiatives including payment provider efficiencies improved supplier rates and overall process optimisation. This includes the closure of our Fangio TV Racing Network and Fangio PIGS products in 2026 in order to optimise costs and ensure investment is directed towards the highest return areas. Moving to our 2026 outlook, we are pleased with the trading momentum in April and our full year guidance is unchanged on an underlying basis, adjusting only for unfavourable q1 sports results in the u.s and international and large costs in arkansas not previously included guidance also reflects the internal transfer of management of our pokestars north america business from our international business to the u.s group revenue is now expected to be 18.3 billion dollars at midpoint with adjusted ebit dark 2.865 billion dollars for the year representing 12 percent one percent euro year growth respectively additional detail and guidance is available in today's release to reiterate peter's comments i'm encouraged by the positive operational signals we are seeing which give me conviction in our full year outlook peter and i are now happy to take your questions i'll hand back to samantha to manage the call we will now begin the question and answer session please limit yourself to two questions if you would like to ask a question please press star 1 to raise your hand.

To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jordan Bender with Citizens. Jordan, your line is open.

Please go ahead. everyone uh good afternoon and thanks for the question i do want to start i guess the management changes over the last couple of months but but including today from you know from our perspective and ideas just some of the questions we're getting like how should we be viewing kind of these changes in real time is this an effort to kind of get back to where we were maybe to start the nfl season with christian dan or is this kind of a change in strategy on what you're trying to do including maybe like willingness to spend on generosities. And then the second question, Robert, Peter, your 2Q EBITDA, about 104 million by my math. Can you maybe just help us with some of the inputs too? You have a lot of moving pieces in the quarter, just kind of how we get to that number. Thank you.

Hi, Jordan. I'll take the first question. I think Robert will probably pick up the 2Q EBITDA one. In terms of the management changes, now's the right time for us to put in place new leadership um in in the business um you know i'm you know i'm excited to uh see what you know christian and dan i can do that you know we're getting onto the front and foot um as a business the sports book improvement plan is uh is working we started to see some of those sequential uh benefits of it in in the quarter and look i'm excited to see what we can do with our loyalty program as it's about launches and rolls out through the course of the year um yeah i think we've been trading the business harder you know i mentioned that the stuff we've been doing with the mets and you know some other things i think the team have been doing to get on the front foot which is working and i'm pleased with the progress we're making with uh with that protect so look there's no change in our strategy or posture in the business just picking up on your q2 question Jordan in terms of where we are.

So there's no change in our expectations for Q2 from where we were briefly and actually if you look at our trading at the moment we're trading in line with our expectations and actually seeing some slightly favourable sports results in recent weeks. I think if you look at consensus there's potentially some adjustments that need to be made to the phasing within that where it's slightly too high in Q2 and too low later in the year instead of in the year on year bridge one thank you very much

your next question comes from the line of barry jonas with truest barry your line is open please go ahead great thank you hey guys uh the prediction legal environment remains uh pretty active i'd say curious to hear your expectations for how you think this plays out in the courts and does that weigh into how you think about your investment and spend going into next year and beyond.

Sorry. Well, you're certainly right that there's a lot of noise around the legal positions concerning the different markets. I think it's important that we remember a few things. First of all, I think the team has made good progress recently. I think launching the market-making capabilities, the OneApp, which allows consumers, wherever they are across America, to access sports on Fangio, I think is important progress. And I think we demonstrated the strength of our brand, some of the stuff we did around March Madness. So I'm excited about the incremental opportunity this presents for us. Until we get through and understand ultimately what the Supreme Court say, I think we're going to live with this uncertainty. But I think in the meantime, we're going to continue to invest in the market making. I think we're really pleased with the early indications we're seeing from that. I think it's a good opportunity for us to monetize this business. And then from the core products, ultimately we want to acquire as many sports customers as we can ultimately onto our, you know, regulated OSB products. And that's what our real focus is. And so, you know, that's, you know, our intention is to build a great sports experience for customers wherever they are in America. And that's what we're going to do with the One App.

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

Yeah, let me pick that one up, Barry. So, ultimately, we still see a very compelling pathway to growth in the short to medium term, obviously, from the targets that we set out at the capital markets day in 2024. It's right to assume that things have moved out to the right slightly, given some of the underlying changes in the business since that time. but if you think about some of the key structural foundations that we set out at the invest today we retain confidence of those we we retain confidence in our ability to be able to increase structural margin we continue to see higher penetration we continue to see a move into new new states in terms of regulated osb we said that would be two percent a year and we've broadly seen that since. We said one UI gaming stake in the next three years, we're actually seeing some encouraging conversations and hopefully the music moving in the right direction there. So we're still feeling very confident about the longer-term plans. We need to trade through the next couple of quarters and see where we're exiting 2026, and we'll be able to give a bit more color at that point.

Perfect. Thank you. your next question comes from jed kelly with oppenheimer jed your line is open please go ahead hey great uh thanks for taking my question just just going back to the market making and as you're able to integrate that into your product can you talk about does that just give you the ability to merchandise that product better either through customer credits or other things you can do to drive engagement. Can you just talk about the importance of putting market-making behind that?

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

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

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

Thank you.

Your next question comes from Trey Bowers with Wells Fargo. Trey, your line is open. Please go ahead.

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

Yeah, let me pick that up, Tracy. So first of all, I'd say that we set this out with our initial guidance with Q4 a couple of months ago, but we said we anticipated sequential improvement as we moved through the year on the top line, and that's something that we're starting to see already. I think the best way to look at this simplistically is to view the year in two halves, and in H1, broadly a continuation of the trends that we're seeing. As you said, we exited 2025 with a slightly smaller customer base, and we're seeing handles slightly down year-on-year-old with some improvement in Q2, quite immense to structural margin impacted by the sports mix. With the new launches in Arkansas in July and the World Cup, we'll also see a slightly higher generosity in the first.

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

Trey, we're not upping the level of investment, but I think what I'd say around what we're doing with prediction markets is there's opportunity to monetize this category through our market making capabilities, particularly in combos, and that's something else. And then I think we are focused on delivery of lines and leverage. Wherever you are, you can open the FANJOR and access either regulated OSB, if you hear products national marketing that we already have angel brand resonates very well we're building out improving the quality of our um you know predicts experience for customers we know appreciate the question guys thanks your next question comes from jeffrey stanchel of stifle

jeffrey your line is open please go ahead hi can you hi can you hear me yes we can Yeah.

Two from us. First, Peter, you mentioned in the release some challenges shipping product for prediction markets just at the velocity you would have expected or consistent with sports given some regulatory constraints. Can you just talk about or clarify sort of where this bottleneck is most pronounced? Is this sort of a function of the JV partnership? Is this more the lack of guardrails that you're seeing from the CFTC, just sort of what explains this restriction to product development pacing? And then second, just a clarifying question, the release does note revenues were about $90 million ahead of your guidance in Q1 if you exclude the $45 million of hold impact. Can you just clarify, where does this $90 million come from? Is this sort of core sports, core casinos, is this Arkansas or prediction markets? And then the decision not to sort of flush this through to the guide. That's all.

Okay, I'll pick up the PIVX product question, first of all. I think we have made some good progress in the first quarter. I referenced that. I think the fact that we are now aligned with our unified or one app is important and I think is a great step for us when we're still up to the market-making capabilities. I think, you know, we are working hard to improve the breadth of sports coverage we have, particularly around sort of combat. And there have been some, as I said in the release, some challenges around that. I think it's principally around our ability to access the range of content on our, rather than a product front end issue. and I'm confident that you know our teams have the capability to deliver great user experience and products for for our customers if you look at the you know actually the Betfair predicts product which you know is live in the UK I think it's a fantastic example of what the teams can can deliver I know that there's a lot of work going on to make sure that we can expand the range of but I particularly from a combo perspective onto our own platforms. And we will make sure that we adapt as we need to in order to win in sports.

Picking up on your question around the underlying B, yes, there were a couple of factors that we certainly saw some strong NBA handle in the quarter, which helps us offset the impacts of the slightly unfavourable sports results and the Arkansas launch. thinking about the years as we set out our guidance a couple of months ago we did say that you know we're taking a sensible and measured view to the guidance it's early in the year encouragingly we are seeing some early signs that our plans are gaining traction but given it is early in the year we're not going to be updating the guidance at this stage aside from the technical factors mentioned in the release our next question comes from the line of bernie mcturnan with needham

and company. Bernie, your line is open. Please go ahead.

Great. Thanks for taking the questions. First, just wanted to follow up on the continued theme on the second half ramp. Just maybe any building blocks you can give in terms of how you think you're going to get back to year-over-year handle growth in the second half of the year. And just by the response of the last question, it sounds like MBA is trending positively.

Would it be possible to see if any sort of quarter-to-date trends on handle just so we can compare versus the one key results and then i have a follow-up yeah so as i mentioned bernie we're pleased with the momentum that we're seeing at the moment we're seeing some positive year-on-year handle trends in mba as we talked about many times before on this school we're not obsessively looking at handle as the one metric and that's that's one of the factors and building blocks for the full year but we don't actually need to see a huge incremental improvement from where we are in the year-on-year handle variance for us to hit the targets that we set out and the guidance that we set out. We're also anticipating a small amount of structural margin expansion as we move into the second half of the year which should be helped by the mix of sports and as I said for the overall generosity envelope for the full year we're expecting that to be broadly in line but I'd say in the short term we're seeing some encouraging trends and it's absolutely in line with our expectations and the phasing that we did certainly set out when we look at our guidance.

Bernie, I think when I look at the Sportsbook Improvement Plan and the changes that we're delivering and the benefits we're seeing through things like loyalty already, the perception data that I'm seeing clearly demonstrates the benefits we're getting from the very early cohorts onto the program. Excited to see what happens when we roll that out for the full year. The debt protect stuff, I think, is getting real traction. So there's a lot of good things coming down the track, which I think we see the benefits of already. And as we get to the back half of the year, I think we'll see those in full rollout and we'll get the full benefits of them.

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

Yeah, there's a couple of facts. I mean, one would be the tax increases that we've seen year-on-year from a state perspective. We have New Jersey, Illinois, Louisiana, a couple of others, which is approximately 220 basis points in totals. That's probably the main moving part. And, of course, when you look at this year on year, there's sports results impact to take into account. We're making great progress, as we've said before, on things like payment and fraud costs. And we've really got, you know, cost of sales in our crosshairs in terms of how we make more efficiencies as we move forward. But the main movement, margin-wise, year on year, will be down to the tax changes. Got it. Thank you very much.

Your next question comes from the line of Ben Shelley with UBS. Ben, your line is open. Please go ahead.

Hi. Good afternoon. Good evening, guys. Thanks for taking my questions. I've just got two. One on U.S. promotions. I'd like to understand more about how U.S. online sports betting promotions in the quarter, excluding state launches, how did they fare on a same state basis? And then with regards to prediction markets and CAC inflation, can you comment on whether you're seeing any inflationary impact on customer acquisition costs from prediction market related marketing spend? Thank you.

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

Yeah when you look at the generosity year on year you have to take in probably about 50 basis points from the new states. I think our focus at the moment is on how do we get the biggest bang for our buck from our generosity lay down across our customer base. And as Peter outlined earlier, I think we've seen some really encouraging response so far from the changes that we've made. And the customer feedback has been incredibly positive from the early days of the new loyalty scheme and sports generosity envelope for the full year we answer this line with.

Thank you, guys.

Your next question comes from the line of Brant Montour with Barclays. Brant, your line is open. Please go ahead.

Hey, everybody. Thanks for taking my questions. The first one's on prediction markets. How do you think about the cadence of the spend on prediction markets, 2Q, 3Q, 4Q, in light of the fact that I assume that the one app is not not necessarily where you want it to eventually be in terms of the product level, but then also the sports calendar, you know, do you need to be there in a big way for world cup? Do you want to wait and save dry powder for NFL? And how do you sort of balance that sports calendar as well against that?

Yeah. Let me pick up on that brand in terms of how we're, we're currently thinking about that. So starting off in Q1, that was really about testing and learning for us really in terms of, generosity and marketing around our predict products and demonstrating our ability to be able to acquire customers and actually establish some presence in the category. We spend circa $40 million in Q1. As I said in my previous answer, it's pretty early days, but actually we've always said consistently that we anticipate the majority of our spend on this to be in the second half of the year and our views not changed so we will invest behind the world cup and we expect to ramp our spend slightly from where we've been in q1 in q2 but we also you know retain the right to to flex that as i mentioned earlier because we're going to closely be looking at the the returns that we're getting on a on a caps and ltv basis on the on the prediction customers that come into our ecosystem and then you know we really want to get behind the start of the nfl season in the second half of the year but we need to make sure that we've got the right products in place to do that and you know we'll be looking at the prediction investment envelope alongside what we're doing in our core sports book as well and as we've always said of our capital allocation framework we'll be investing where we see the best returns in business but we don't see the overall envelope changing from where we were previously at, which predicts at this point in time, but it's an evolving picture. And as I said earlier, it would be great to be here at the end of the year saying we're actually spending more because, you know, it's really taking off behind AFL in the second half of the year.

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

We were really pleased with the iGaming performance in Q1. You know, AMPs were up 10 percent, Revenue was up 19%, revenue growth from the direct casino customers was even higher. So to some extent, our performance was impacted by the fact we came into the year with a smaller sports business. I think the focus we've had on our rewards club, and this is the second year we've had the program, the focus on market exclusive content relationships we have with us you know the key influences has been really important for the for the business and i think the team are doing a great job executing yeah as it relates to market you know growth the market can't keep growing at the same percentage rates right because it becomes you know as the market grows you inevitably see some slow down but when i look at the market penetration levels there's still a long way to go um so you know i think the team are executing well we've got the leading position in eye gaming and we're performing

well great thanks everyone we now ask that each analyst limit themselves to one question our next question comes from the line of joe stoff from susquehanna joe your line is open please go ahead.

Thanks. I wanted to ask on your generosity investment, reinvestment in FanDuel OSB. Is it fair to say that, you know, that largely started in March and wondering if ants grew in April?

Do you have a second question, Joe? Are you just taking one?

Yeah, sure.

For the World Cup, Peter you had mentioned another exchange that you could plug into will will you be plugged into that you know more than the CME going into the World Cup let me take the I'll take the World Cup question and then follow up on your first question we we want to make sure that we have as compelling a sports offering for our uh customers as we can you know we um yeah have got a very exciting set of products that brings through our regulated osb and leveraging the you know the flutter edge and the global expertise

we have in soccer so you know we're excited about that opportunity to bring customers onto the platform yeah i think from a products you know we we do have the right to connect up with other venues it's something we are focused on and yeah the you know the timing of it is tight but we'll see where we can get to in terms of that for the world cup yeah from on your first question joe from a from an apps and general perspective so as we've said we're laying down a number of new initiatives which we're very pleased with with some of the traction that we're getting and we are seeing sequential improvement in a in a number of our kpis from from q1 into q2 and we're not getting overly hung up on any one metric but across the board we're seeing a lot of green up on the dashboard which which is helpful we we also have some noise we said we'd see this around march madness where we had a very customer friendly period in the prior year and you always get some noise around handle and amps as you move through that period but actually we'd be taking the March Madness that we had this year over over last year and the day of the week so we're we're quite pleased with the way that that played through for us and we're pleased with the momentum that we're now our next question comes from the line of Ed Young with Morgan Stanley

Ed your line is open please go ahead uh good evening um in your uh shared letter Peter you said that you've got a clear plan of improvement for the sportsbook and you've laid out a lot of the uh product and kind of iterations that are coming but i wonder if you could sort of help us take a step back and give a bit more of the diagnosis of what you think has um gone wrong within the business obviously you've made some changes and it's you know good to see some decisiveness there but on a bigger picture level you know where has business not been doing what it should have been doing and are there any kind of you know beyond organizational changes any kind of macro changed in terms of how Fangio needs to approach the market in terms of you know

competitive intensity or promotional intensity it doesn't sound like that's what you're saying but you're also saying that you know Dan Taylor's coming in to sort of review and oversee the business so complete is your diagnosis and perhaps could you share some of it with us today thanks evening well evening your time Ed um we I think we've been pretty clear around um what the issues are for us from a sports perspective in the US. And I would describe the intentions of the team as being one where we're just getting back to focus on the customer first approach. And we've seen that with the way in which we've been trading the business in this last quarter, where I mentioned in my remarks the stuff we've been doing around and the Mets, I think there's been some good justice refunds the team have been doing and I think it's engaging and it gets you on the front foot from a social perspective and that's important to do and I think it's something which we do around the world. I think the Met Protect product was important as we needed to deal with the issue of injuries which has been a real challenge for us in the market. And I think we've got a great solution in place. As I mentioned, we've seen twice the levels of engagement that we had expected with that product already. And there's certainly plenty of ways in which you can see us evolving it in time. And clearly one way we can evolve it is now with the launch of the loyalty or reward program. There may be tiers of it, for example, where we can give customers access to feedback protect. And so the integration of all of the different aspects of the product is something which is going to be really important for us to make sure that we're offering great value to our customers. So this isn't about a fundamental change in posture of margin and generosity or anything like that. I think we know what we need to do around loyalty. We know what we need to do around the injury stuff. We are getting better on the front foot from a trading perspective. And I think we're making lots of progress there. I think the two other things I'd call out from a product perspective is we have superior structural growth rate margins in comparison with everyone else in the market. And that's something which doesn't happen by accident. I think it's as a result of the quality of our and accuracy of our pricing. And that's something that's really important and it's something that we intend to continue to invest behind and sustain. And I think, you know, that is a feature that you see from us in all of our markets. And the other aspect I pick on is there's a lot we're doing from a sort of core product hygiene perspective, you know, and it, you know, it's, it sounds like, you know, these are simple things, you know, the iOS launch time is now less than two seconds, some of our same game parlay buildings, and you can track five bets on the lock screen. So the cadence of delivery of this stuff, it's really exciting to see to be, I think we've got clarity, I think we're back on the front thing to see the sequential.

Okay, thank you.

Your next question comes from the line of Estelle Weingrod with J.P. Morgan. Estelle, your line is open. Please go ahead.

Hi, good evening, and thanks for taking my question. I've got one on the U.K. Sports handle was a negative 5%. You mentioned in your remarks an improving momentum in March. Could you elaborate on the actions you are taking in the UK in that segment and all these improvements confirmed and sustained in April and May?

The biggest drag on performance in the UK is Skybet. But we are in an area where we're seeing now sequential improvements coming as time passes by since the migration. We've seen a big step change if we look at revenues up 9% on a normalised basis in March, which is compared with a flat for the Q1 period as a whole. Good sequential improvements in sports, and I think from a gaming perspective, we're also making progress. And if I look at the leading indicators, you know, we've had the highest customer acquisition volumes for five years, you know, onto the brand. Sky Gaming has now got more than a million customers, which is the first time ever. That happened in March. And actually the iLiz and CryoCheck, you know, rank the app second. So, you know, there's been a big step up in how that's perceived from a customer perspective and it's, you know, number one for betting interface and aesthetics. So there's been a strong challenge and lots of other metrics we could talk about. I think from my perspective it just feels very similar to the experience we had post the Paddy Power migration, where there was a first year sort of reset and then we've obviously seen very strong performance from Paddy Subscore. We've now got great products for the Sky customers, we've addressed some of the issues that we've seen post-migration and I think we're starting to see some of the green shoes come through thank you your next question comes from the line of paul ruddy with davy paul your line is open please go ahead hi good evening guys just one follow-up on the u.s uh generosity and customer acquisition journey just regarding paybacks um on the state launches and i suppose the customers are trying to read oh we've lost you sam are you still there

yes we will move on to the next question and reconnect paul when we can our next question comes from chad baynen with mccrory chad your line is open please go ahead hi hi thank you uh very much um just one for me just given your previous success in in acquiring brands most of which had podium positions. Given the stock dislocation right now in our sector, whether it's B2C, B2B, sports data affiliate, what's your appetite to maybe do another deal at this time given depressed valuations in the market?

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

Thanks, Peter.

Your next question comes from the line of Ryan Sigdahl with Craig Hallam. Ryan, your line is open. Please go ahead.

Hey, good afternoon. This is Will on for Ryan. Just wanted to ask on sort of some of the portfolio optimization we've seen lately. You shuttered FanDuel picks last month. FanDuel TV racing is shutting down. I think Betfair in Mexico has also ceased operations.

Just curious if there's an increased focus on sort of portfolio and resource optimization and if there are any other products and or markets that are being considered thanks yeah I will I mean this is a constant focus for us in terms of optimization and efficiencies and the decisions that we took around and you'll TV and it's relatively easy for us in terms of where we want our focus to be in in the u.s. with Fangio at the name and actually in particular with Fangio TV that that delivers some some good cost efficiency for us. I think with regards to the the broader portfolio across the group you know we will continually review but as we sit here today at the moment the majority of our brands are performing extremely well for us and yeah that's not not a problem that we have in the near term And so, you know, we'll continue to focus on costs and where opportunities present themselves will lean into that.

Thanks, guys.

Our next question comes from the line of Sean Kelly with Bank of America. Sean, your line is open. Please go ahead.

Good evening, everyone. Thanks for taking my question. So, Peter and Rob, just maybe super high level, we noticed that there was an application for a direct FCM license recently. just wondering if any of the management changes made allow for a bigger or slightly bigger rethink on strategy in your approach to vertical integration in prediction markets and then Rob if we could just get a little color for the second half on sort of your thoughts around revenue contribution and what's baked into the guide directionally obviously not solid numbers but directionally for prediction markets in terms of contribution in the second half thanks Sean, we'll be very brief because you've asked two questions.

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

And on the prediction market revenue contribution, we're not guiding in detail at this stage. I think that the best indication that you can take, Sean, is what I mentioned earlier in the sense that we intend to step up the spend as we move through the year. So we'll see some uptick in Q2, and then we'll intend to do more behind the NFL in Q3 in a bit more detail at the time. Thank you.

Your next question comes from the line of John Decree with CBRE. John, your line is open. Please go ahead.

Sure. Thank you. Thanks, Peter and Rob, for taking all of our questions. Maybe an easy one. I think there was a comment about reduced cross-sell from Sportsbook to iCasino in the U.S. Obviously, good iGaming results kind of offset that. But, you know, we kind of assume that might just be the lower AMPs in the sports platform in the quarter. But curious if there was any change in behavior among cross-sell.

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

And we continue to be the top brand for awareness and preference on direct casino customers, so we'll continue to harness that.

Right. Thanks for clarifying. Appreciate it, guys.

Your next question comes from the line of Monique Pollard with Citi. Monique, your line is open. Please go ahead.

Hi. Afternoon, everyone. Thank you for taking my question. I just had a question on this market-making capability in the U.S. around prediction markets. Obviously, you're trialing it, and then you're going to be launching it later in the year. it feels to me like potentially that could be quite a material opportunity so just trying to understand if you think it can be quite material over time and whether in that second half US adjusted EBITDA guidance anything is baked in for that market making capability as it ramps up through the year.

Hi Monique, I've spent time with the team who are doing this market making it's I'm excited about it. It's great. We're making money today from offering this capability, particularly focused on combos and leveraging the pricing expertise we have. It's small scale at the moment. We will launch our own platform in the coming months, and I think we'll then step up the volumes that we're doing. The only bit that's attracted into our guide at the moment is the investment and you know look we need to wait and see how successful we are and then we can talk to you about the revenues that we're generating but i think you know we're you know i think we've got some conviction around our ability to offer a very compelling service in this area you know leveraging the surprising expertise that we have okay thank you your next question comes from the line of robert fishman with moffett nathanson Robert, your line is open.

Please go ahead.

Hi, good afternoon. I'm just curious, how did Calci and Polymarket striking partnerships with the major U.S. sports leagues impact how you plan to partner or approach the leagues going forward? Thank you.

I think from our business perspective, we have relationships with lots of leagues and sports bodies and teams you know uh across the country um you know we want to be the you know we are the number one um place for people to go for you know for regulated online sports betting and i think we want to be the premier destination for the sports whether that's through um you know osb or the prediction market rails and i think you know our one app allows us to do that dynamically So, you know, wherever you travel across America, you better access our product and capability. And I think, you know, we can leverage our national advertising as a consequence of that. And I think there will be some interesting questions and conversations for us to have with those leagues and supporting bodies and other relationships. OK, I think we have no further questions now. So I'd like to thank everybody for dialing in and asking us all the questions. Much appreciated. If you have any follow-ups or other questions, please let us know afterwards. Thank you.

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