Flutter Entertainment (FLUT) Q2 2026 earnings call transcript

Thank you for standing by, my name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Flutter Entertainment Q2-26 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad once again, star one.

And if you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Paul Kim's Group Director of Investor Relations. Paul?

Hi everyone, and welcome to Flutter's Q2 Update call. With me today are Flutter CEO Peter Jackson and CFO Rob Coltrate. After this short intro, Peter will open with a summary of our operational progress and then Rob will go through our Q2 financials and our updated guidance for 2026. We will then open the lines for Q&A. Some of the information we are providing today, including our 2026 guidance, constitutes forward-looking statements that involve risks, uncertainties, and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement except as required by law.

Also, in our remarks or responses to questions, we will discuss non-gap financial measures. Reconciliations are included in the results materials we have released today, available in the Investors section of our website. I will now hand you over to Peter.

Thank you Paul. Good morning everyone, and thank you for joining us. Before we get into the results, I wanted to say a few words about the announcement we made this morning. After nearly nine years of CO, this is the right time to hand over to Dan, and I will be stepping down at the end of September. It has been an enormous privilege to lead this business, and I do so with tremendous confidence in Flutter's future, in the team we have built, and in Dan's leadership.

One thing I have always tried to do throughout my time as CO is to take a long-term view of how we create value for shareholders. There are some times meant making decisions that weren't universally welcomed in the moment, because we believe there was strength in the business over the long-term. In 2019 and 2020, for example, we continue to invest heavily in financial at a time when many questioned those decisions, because of the impact on near-term earnings.

Looking back, those investments proved to be the right thing to do. They strengthened our competitive position and laid the foundations for the business we have today, and were making the same type of decision again today. We see a significant opportunity to invest behind our leadership in U. S. sports betting and eye gaming, strengthening our proposition and positioning the business for future growth.

We recognize that this weighs on near-term earnings, though a convince is the right thing to do to maximize long-term shareholder value.

With that, let me turn to our results. We've delivered an encouraging quarter relative to our expectations, and I'm pleased with the progress we're making across the business. In the U. S. , we've implemented our new leadership structure, made good progress on our sports book improvement plan, and further expanded our prediction market offering and capabilities.

The H2 will be delivering an improved value proposition for our customers, and move, we believe, is critical to strengthening our number one position in the highly competitive U. S. market, aligns with our new customer-first strategy, and better positioning the business for market share gains in 2027 and beyond.

During Q2, U. S. revenue was 6% lower year over year, reflecting a 6 percentage point growth impact from customer-friendly sports results, as the next legendary win in June put some cash back in our customer's wallet in time for the World Cup.

Customer engagement was excellent throughout the NBA Finals and the FIFA World Cup, and even when you just for these marquee events, underlying sports book trends when aligned with our expectations as our sports book improvement plan continues to deliver. We continue to see a limited cannibalization impact from prediction markets on our existing customer base in regulated sports book states, and we believe Fangel's operational execution and air performance, both in recent state launches and during key marquee events, confirms the strong demand for traditional sports betting products when sports content is compelling.

We expanded our loyalty program to 70% of customers this quarter, which has helped with engagement metrics, with 82% of customers surveyed saying the Rewards Club improved their experience and more than half saying it lists their betting activity.

We also introduced Back Protect Plus, our best-in-market injury protection feature, and enhanced our stock offering for the World Cup, leveraging the Flutter Edge to offer unique features such as SuperSub.

And while Fangel trends have been encouraging, the market continues to be subdued, and we estimate that the market grew by around 5% in H1.

Although we continue to closely monitor the implications of the growth in prediction markets on the broader online sports betting market, we believe the market is yet to rebound from the disappointing NFL performance experience in Q4 2025.

We firmly believe market growth will ultimately return to higher levels, with more compelling content driving stronger customer engagement. There are forecasts prudently assume market growth rates in H2 will be broadly consistent with those seen in the first half.

The U. S. leadership changes we recently implemented are working, and we are well positioned to deliver improved performance through a more competitive customer-led proposition.

In fact, the encouraging underlying signs we're seeing give us the confidence to increase generosity to customers and improve our value proposition.

And while this proactive action will result in a reduction in near-term profitability, investing behind customer momentum is an approach that has consistently served this wealth.

This momentum and the current market dynamics mean now is the right time to move from a focus on margin growth to prioritizing amps and growing arping. This will position as well to extend our leadership in the U. S. market and capture further share in 2027, turning now to prediction markets.

We view prediction markets as an attractive opportunity, and while we are closely monitoring their impact on the broader online sports betting market, we continue to see prediction markets as incremental to sports betting and eye gaming, growing the overall market by capturing new demand.

Our own prediction market offering, Phangel predicts, allows us to acquire customers ahead of sports betting regulation in new states, while delivering incremental economics in the meantime.

And while operational progress in H1 was slower than planned, we are gaining traction and have a clear roadmap for improvement.

The integration of the Crypto. com exchange to expand our sports offering ahead of the FIFA World Cup has significantly enhanced our product proposition.

And in coordination with CME, we have agreed that all Phangel predicts sports and novelty contracts will now be moved to Crypto. com while continuing to provide our customers access to CME's extensive financial markets.

This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season's start. Our one-app offering is also enabling us to leverage Phangel's nationwide brand equity, driving both accelerated penetration and marketing efficiencies. We believe we also uniquely positioned to provide liquidity for combination markets across different prediction market platforms with a market making offering that can scale rapidly and at low incremental investment.

It is very early days, but we would expect to generate approximately $50 million of revenue from market making this year, demonstrating both the good progress made so far and the potential opportunity.

Turning there to international. We've made good progress in the quarter, we strengthened our market leading position earthly and leveraged the power of the flutter edge to drive record engagement during the World Cup.

As a result, revenue grew 10%, including the benefits of us and I and betting us in our acquisitions. And growth in the quarter was impacted by the closure of our India business last year.

Italy continues to deliver exceptional levels of growth across both sports book and eye gaming and our revenue performance continues to outpace the market as we extend our market leadership.

This was despite the short-term impact from the sky migration, which we successfully completed back in April. As expected, the migration resulted in a brief period of share loss, but performance recovered strongly in June as customers embraced a significantly expanded product offering without increasing 30% in June and strong pilot penetration during the World Cup.

SEAI gaming revenues were up 34%, driven by new and exclusive content initially and an expanded product offer in Turkey. The post-migration that cover in SNI and the strength of our first-heart performance in both Italy and Turkey give us confidence in sustaining this strong growth in the second half.

In the UKI, Skybeck customers are adapting well to the new highly rated user interface, driving a sequential improvement in Skybeck performance, while overall eye gaming growth in the UKI remains robust at 7%. The increase in UKI gaming tags became effective in April. As the leading operator in the market, we are confident in the delivery of our first-order cost savings and in our ability to gain share as other operators begin to react to this increase.

In Brazil, good operational progress, including the integration of Flutter's product and piping capabilities into our local platform, was offset by more challenging market conditions driven by government social economic measures. This resulted in Flutter Brazil organic revenue, defining year over year, in line with the market.

We will continue to enhance our sports book product offering with further product rollouts enabled by the integration and improve eye gaming generosity mechanics in the second half of the year.

Brazil remains an attractive long-term opportunity, and we are focused on building a market-leading platform that scales our customer base and delivers strong returns.

Our performance in APAC was broadly in line with expectations. With positive performance in key sports, offsetting continued softness in racing.

And while excellent execution in CEE saw us gain market share in all of our main markets. And finally, we have also announced today that we have initiated the next phase of Flutter's cost transformation, reshaping our cost base to fund our next stage of growth. Rob will cover this in more detail shortly.

To close, I'm encouraged by the progress we've made in Q2. In the US, we're delivering continued sequential improvement in key sports book metrics alongside sustained eye gaming growth. The new US leadership team is driving a renewed customer-first approach, and our proactive investment will help place us in the best possible position for growth in 2027.

Within International, we are executing at pace, and Flutter-edge-enabled product improvements are driving our momentum in the second half. Unconfident that the choices we're making today from investing in the US to expanding our town with tangible predicts and market making, strengthening our international businesses and advancing the next phase of cost transformation will deliver sustainable long-term value for our shoulders.

And with that, I hand over to Rob.

Thanks, Peter, and good morning, everyone. Q2 performance was ahead of expectations with revenue growth of 3%, reflecting the benefit of M&A and excellent engagement during the FIFA World Cup across the US and international. This was partly offset by an adverse swing in US sports results year over year.

The increase in UK gaming taxes planned investments in both prediction markets and World Cup marketing resulted in adjusted EBITDA, declining 45%. And that loss of $296 million for the quarter versus a net income of $37 million in Q2 2025 was primarily driven by the reduction in segment profitability and one-off historical tax costs of $95 million.

These were partially offset by an improvement of $81 million and $171 million in other income expense and taxation respectively.

Loss per share and adjusted loss per share declined to $1.57 or $0.49 respectively, reflecting these profitability factors and a non-controlling interest benefit.

Net cash provided by operating activities increased by $4 million, with the increased net loss in the quarter offset by the benefit of an increase in other current liabilities, including the impact of UK gaming tax increase, historical tax cost provisions, and a positive swing in player deposit liabilities.

As a result, three cash flows including financing capex and excluding player funds reduced by 56% year over year. We ended Q2 with a leverage ratio of 4.4 times.

We expect our second half cash generation will drive a reduction in leverage by the end of 2026. We continue to prioritize organic investment in our core business and strategic initiatives, including emerging opportunities such as prediction markets, while also maintaining a clear focus on deleveraging the balance sheet.

We expect to return to our target leverage range of 2 to 2.5 times in the medium term, consistent with our stated policy, with exact timing dependent on the cadence of our strategic investments, moving now to our group-wide cost transformation program.

Phase one of our program is delivering ahead of expectations. We are on track to deliver in excess of the previously guided $300 million savings by 2027, and $200 million of additional cost savings that were announced as part of our UK gaming tax mitigation plans, also expected to be delivered in 2027.

Building on this significant progress, we have initiated the next phase of Flutter's cost transformation. Phase two reflects a broader program to reshape our cost base, build a more efficient, resilient cost structure for the long term, and protect profitability.

Through removing duplication, delivering technology efficiencies, and leveraging AI, this cost action will reflect an evolution in how Flutter operates. Leveraging our global scale while still maintaining a fundamental local focus on the customer.

We expect phase two to deliver an additional $500 million of gross savings by 2029, providing the headroom to absorb inflationary pressures and known tax headwinds, whilst freeing up capacity to invest in revenue-generating initiatives.

In the US, we believe that this will ensure the business is well positioned for its next stage of growth.

In international, we expect that the benefits will underpin our 5-10% revenue growth algorithm by both protecting adjusted EBITDA margins in more mature markets and enabling investment in growth areas.

These actions are also expected to drive a meaningful improvement in cash generation. Our plans are progressing well, and we will be in a position to share more details for our key three results in November.

Moving now to our 2026 outlook, early Q3 trading was ahead of expectations, reflecting good engagement in the knockout stages of the FIFA World Cup and slightly favorable sports results. Full-year guidance is therefore updated to reflect positive impacts of Q2 trading in US and international. Expected market-making revenue and adjusted EBITDA benefit at $50 million. Additional operating costs savings of $45 million delivered through our efficiency programme in the US.

The impact of confirmed one-week delay to the 2026, 2027 NFL season start, not previously capturing guidance of $75 million revenue and $50 million adjusted EBITDA. Investment to strength in our proposition and accelerate Daniel's sports momentum, as Peter outlined earlier, and forward FX rates in international.

These movements result in a reduction to our four-year group revenue guidance of $395 million to $17.91 billion at the midpoint, and a reduction of our adjusted EBITDA guidance of $210 million to $2.655 billion at the midpoint.

We have also improved our capital expenditure guidance to $815 million to reflect incremental project efficiencies, also resulting in a reduction in depreciation and amortization guidance to $730 million.

Additionally, group transaction restructuring and integration costs will be approximately $500 million, reflecting an increase of approximately $200 million from our previous expectations. Primarily due to the initial cost to implement our 2026 cost efficiency programmes and tax revisions of $95 million relating to historical India and US sales and use tax exposures.

Additional detail on our guidance is available in today's release. Before I close, I'd like to acknowledge and thank Peter. His leadership over the past nine years has been instrumental in building flutter into the global leader it is today. On a personal note, I've greatly valued his support and advice since becoming CFO, and I'm incredibly grateful for his partnership.

Having worked closely with Dan over the past six years, I'm equally confident that we have the right leader for the next phase of flutter's journey.

He knows our business exceptionally well and has played a central role in shaping our strategy. It's ideally placed to lead the company as we can continue to execute our strategy and deliver a sustainable long-term shareholder value.

In closing, I'm really encouraged by the momentum we've built through H1 and in particular during the FIFA World Cup, which gives me confidence in delivering our second half guidance. Peter and I are now happy to tell you questions.

Thank you. And at this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad once again, star one. In the interest of time, we ask that you please limit yourself to two questions. And we will pause just a moment to compile the Q&A roster.

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

Thanks, Ed. No, I think what we have to focus on is the sports book improvement plan and the great progress we're seeing on that at the moment in financials. If I think about the growth we saw in handles around the NBA finals, where up 40% year over year per game, actors up 25% year over year, 2.3 million customers engaged in the World Cup, a third of which had been reactivated. And in recent trading, I think we've seen record weeks from an MLB perspective. So, I feel like we've got good momentum in financial. The sports book improvement plan is working.

The changes have made to loyalty. There's a generosity posture from a product perspective. I think, like, you know, that protects, of course, we've brought super sub here in fragile around all of that. So, there's good momentum in this. I think, you know, what we've always found before is that when we've got, you know, great content, great product, we've invested behind it. It's helped build a big out business for the future. And that's what we're intending to do. We want to invest behind the momentum of a seat at the moment. Robert, do you want to pick up on the specifics?

Yeah, a couple of points. I mean, this is an investment in generosity. So, it's a different investment decision. It's been made really good progress with the sports book improvement plan. In the last course, we were really encouraged by the customer response that we're seeing. We're also seeing really good returns on our marketing spend, both on sports and in casino.

And that's been boosted by the World Cup. But, you know, the paybacks that we're seeing at the moment are excellent. This is a proactive decision that we're making around the longer term U. S. opportunity. You know, we're really seeing an opportunity to lean in at the moment. It's working well. We intend to continue that in H2 and exit 2026 with the strongest business possible.

Thank you.

And on the international versus U. S. investment? Well, look, I think we've always been very focused on investing behind organic opportunities across the business. If I look at the progress that we're making in Italy, in Turkey, in essentially New York, the sequential improvements we're seeing in the U. K. , these are all benefiting from the investments we're making behind the business. And so, you know, I think we are focused on delivering, you know, the funds, driving growth in international and in the U. S. market. You know, I think as Rob mentioned, we see good returns from the investments we're seeing here in the U. S. and international. And that's why we're getting back in my own basis.

Okay. Thank you very much.

All right. Thank you, Ed. And our next question comes from the line of Barry Jonas with True Securities. Barry, please go ahead.

Hi, Barry. Yeah. I think we, if we look at the success of the, you know, the NBA finals and the world where, you know, with exciting content, we've seen really good engagement from our customer perspective. You know, I just, you know, I mentioned that, you know, the 2.3 million customers, you know, sort of those that were sort of reactivated going into the World Cup. They're seeing active numbers up 26% year over year on our NBA finals games.

You know, we're seeing, you know, very good content from a big marquee event. So I think it's, you know, it's helping drive engagement from a customer perspective. Clearly, you know, parlay is a very popular for us. So we've made a bunch of changes to, you know, enable us to drive some improvements from a parlay penetration perspective through things like the World Cup and the NBA, which, you know, we delivered on. Yeah.

I think for me, you know, the question around sort of, you know, cannibalization. You know, we have seen, you know, as we, you know, stated before, you know, low single-digit impacts of the business. I look at this as incremental town. You know, these are the opportunities for us to go and acquire, you know, customers in advance of sports, but regulation passing in, you know, frankly, this is half of America that we can't currently operate in. And then there's the opportunity for us to leverage our pricing and risk management capabilities through market making on a national basis. You know, both of those things are incremental town to us. You know, we are going to deliver a step change in our, uh, uh, uh, position market product as we go into the football season.

The launch of the, the one app, which is going to enable customers nationally to access the, you know, tremendous user experience that we have currently available in our regulated state is going to be important. But we're going to see a really, you know, big step change in the, so the catalog that's available to customers through the integration and movement of all of our sports contracts to crypto. com.

I think I just add as well that you look at the recent World Cup sort of it. And when you've got really good concept, it really kind of reaffirms the demand that there is out there for traditional online sports betting products. So in June and July, in the US, we had our highest respective active months ever. And we're carrying that momentum through now. It's a slightly lower point of the sports in calendar from a facing perspective, the big, really strong volumes through into that. And which is really encouraging.

Of course, still early days in two, three, and whilst that momentum is really encouraging. Ultimately, performance in the course or second half will be determined by the football season.

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

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

Thank you. All right. Thank you, Barry. And our next question comes from the line of Brandt Montour with Barclays. Brandt, please go ahead.

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

And we see that as a really attractive and fine margin segment for us. Of course, it's still early days. I think the volumes that we're achieving in the second half of the year are encouraging. And we think this has got a potential to become a meaningful revenue stream for us. But we see how we trade through the second half of the year, and then we'll update full cost in 2020.

The delayed start is really just a technicality brand that's sort of around the timing of the season and where late the day falls, and this can move from one year to the next. We're not actually changing our investment posture at all here. The start of the NFL season is something that will lean into. It's really important for us in terms of re-engaging customers.

What I would say is that during the World Cup we actually reactivated a bunch more customers than we were anticipated, which was really encouraging for us to actually starting in a stronger position. We're also clearly focused on college football and staff, which is a key opportunity for us to get behind some customer initiatives as we start the NFL. But from a posture perspective, we're not going to be changing our approach massively.

Having the rewards club and life for all customers, this year is also going to be really important. So we've already rolled it out to 70% of customers. By the start of the NFL, that's going to be available for all of our customers we're seeing. Really detraction behind that. So with the college football staff in the week before, that's a great opportunity to prime customer, while it's we hope to see a running start to the NFL season.

Okay, so the NFL schedule delay was not previously in guidance and is today, but this is an NFL schedule, not a flutter schedule. Correct. This is NFL judgment, which was appreciated in college, and we've updated our guidance for it.

Perfect. Thanks, everyone. Thanks, Brent. And our next question comes from the line of Jordan Bender with citizens. Jordan, please go ahead.

Okay. Thank you, Jordan. Picking up on the gaming, we clearly harness the World Cup opportunity to increase the football relevant content, or soccer relevant content during the World Cup, which obviously helped drive the reactivations and cost activation in the tournament. But you've got to remember that the main focus and push for us from an iGaming perspective is around acquiring those direct casino customers. The Love Island unlocked launch we had in June.

There are new brand ambassador and brand ambassador Ariana Maddox. We've seen some really good success from that, the monopoly live exclusive launch. There's been a lot of great content that we've got supporting iGaming. Clearly, the smaller sports betting business we had coming into the year did impact cross-out, but as Walt mentioned, we've got a bigger base. I think we're feeling good about the prospects for the iGaming business.

You question around market growth. We have seen this strong performance through Q2. We have seen the strong NBA finals. We've been very pleased with the engagement we see around the World Cup. We are pleased with how we started in Q3. The football season was tough last year. We think a bunch of that was down to the content, which wasn't as engaging for consumers.

There was also some execution issue from our perspective around generosity. We're planning some great campaigns this year. We're hoping for some very compelling matchups and content. I think we'll see what happens. But our four paths have seen some prudent views around market growth in the second half. I hope we find that the market outperforms that, but we've got it as the right thing to take. We saw it in the first half and used that for the second half.

The other point to mention on iGaming is that clearly the success of our casino business has been built on direct acquisition, which remains very strong. The cross-cell piece we've been really pleased with during the World Cup, where the cross-cell actors were actually slightly ahead of our expectations. If you compare Q4 this year versus Q4 last year, the cross-cell was actually slightly lower than we'd anticipated last year because of some of these excuse issues. It's also Q4, which means we've got optimistic about how the cross-cell will perform as we move to Q4 this year as well.

Thanks, and Peter, thanks for your help over the years. Thank you.

All right. Thank you, Jordan. All right, ladies and gentlemen, just one more reminder. If you'd like to ask a question, once again, star one on your telephone keypad, once again, star one. And we do have a lot of callers in the queue and limited time. So from this point forward, we do ask that you please limit yourself to one question.

Thanks for understanding. Please go ahead.

Yeah, let me pick that one up. One hundred million of EBITDA Q4, which is down from $700 million in our previous guidance. So if you roll through the factors that the generosity facing in terms of the increased investment that we're making, you've got the NFL schedule effects, which is in you free only. There's also some state launch costs playing into that where we've got the continued Arkansas investment this year. We've see had Missouri launching last year, which was previously in the guidance. The other thing to call out is we've got some operating costs savings coming through as part of the plan in the U. S. We've got about $45 million operating costs savings in the second half.

So those are the key moving parts for Q3 and Q4.

Thank you. Great. Thank you. Great. And our next question comes from the line of Jed Kelly with Oppenheimer. Jed, please go ahead.

Jed, we've seen some improvements as we come into Q2 around our structural margin. I think I know there have been some questions on that. I think we would expect to continue to see growth in structural margin. I think we are seeing strong momentum in the business at the moment. I think we're feeling confident that the sports book improvement plan is working. We'll have the loyalty scheme rolled out to an entire customer base when we go into the football season.

I think we've started making better customer focused and customer first decisions in the business. And I think as we've done in the past, it's time to invest behind that and make sure that as we move into 27, we have a bigger business and a better trajectory for the business. And a bigger business means we can invest in having better products and a customer perspective. And I think we can also make sure that we're growing after as well a dance. And that's something that's really important for us as we look to grow and expand the business. A medium to long term. We've been very clear path to that margin expansion as we've talked about previously. We've been very piloting penetration, also improved the product next time.

We think that's meaningful opportunity to do that in the US.

Thank you. Good luck, Peter. Thank you. Thanks, Jeff. And our next question comes from the line of Ryan Cignol with Craig Hallem Capital Group. Ryan, please go ahead.

Ryan, we are excited about extending the sports and novelties catalog that will have available for our customers. As a result of switching to this new venue for those products and we will keep our existing financial markets with CME. The economics for the financial markets with CME stay broadly as they were. I think it's probably a slight positive for us in moving towards crypto. com. It's a modest economic benefit. But the really important thing here is the step change we're going to see in the catalog for customers and together with the enhanced sports board proposition. Look and feel of the one up. I think we're going to have a very valid proposition available for consumers nationwide.

That's a lot, Peter. Thank you.

Thanks, Ryan. And our next question comes from the line of Clark Lampen with BTI G. Clark, please go ahead.

Yeah. Hi, Clark. So let me pick up the, the, I gaming questions. So, you know, we, we've always subset in our guides that we expect the I gaming business to grow at high teams for the year. And we expect that it's slightly lower in age one than an age two, given the base of the sports book numbers coming into the year.

I think that we're really pleased with the momentum that we've got in the I gaming business, you know, in the World Cup. The cross cell actors were higher than we anticipated. I think from a content perspective, we've, we're actually going through the plan with the team last week, but we've got exclusive content launches every month from now until the end of the year. And the path like half and half and that the one can say to us, so we're really pleased with where I gaming is. And we've reiterated our guidance as I said was the cross cell piece earlier as well in key for anticipating a slightly.

That's a cross cell before it's in key for them. And with last year.

And look, we can, we can see that Clark in, as you say, the difference between the table games and slots, we can see a very clear distinction there. You know, the direct casino. So the slots growing very strongly. And, you know, as we said a few times on the call, we don't come into the year with the smallest force base impacted table games. But, you know, I think as we've gone through the World Cup, seen that big step up in performance. NBA finals and all the plans we've got for the football season. We excited to see what we can do in a second on.

Thank you. All right. Thank you, Clark. And our next question comes from the line of Joe Stauff with Susquehanna. Joe, please go ahead.

Yeah, there are. Yeah, this is a very fast moving space. And, you know, there's been news in the last few days around some of the complexities of market making. If you own some of the exchange components. So we just got to be full for the position ourselves as well as we can. And I think we're happy with the strategy that we have. As I said, the one app is going to deliver a real step change in performance from a customer perspective.

And in terms of the traveling app, if you have opened the contract up when you're in California and you're here in New York, you will be able to close that contract down. That is something that will be available. So if that's what you mean by yes, we will have it available for customers. Rob, do you want to talk about the volumes?

Yeah, the volumes are significantly up but on quite a small base. So we're making really good progress. The predict numbers are consolidated within our reported financial results. But we're not separately disclosing the volumes at this point. So I think the catalyst for higher volumes we anticipate will be the launch of the one app. Peter and I were with the team a couple of weeks ago. It looks really slick. I think we're quite excited about the impact that that will happen. It will be relatively seamless if you're traveling from New York to California. The wallet's all separate, but it's very easy to switch between. So I think the product experience is going to be significantly enhanced from where it was.

The key for us is that we're going to have much more liquidity than we previously have. It's going to be much for the catalogue. I think that's going to be a real benefit to us as we go into the new football and basketball season.

Thank you. Thanks, Joe. And our next question comes from the line of Dan Pollitzer with JP Morgan. Dan, please go ahead.

Yes, you're right. On the market, may kick down as I said earlier, we're quite excited about that opportunity and that's definitely increased a bit from where we were previously. We regard to the investment on predict. What we've done as a business in the last couple of courses is really integrate predicts with the sports book opposition. So we're no longer breaking out the investment separately.

If you think about the cadence over the course of this year, I'll focus as we said, a Q1 was leading more into making sure that we've got the right product experience, which we really feel like we're doing with the one up and some of the changes that we've made. With crypto. com being plugged in from a cost perspective, then this gives us this synergistic benefit that we've been looking for across the sports book and predicts what we feel that we can really get national scale and leverage on our marketing expense, which is very helpful for us in terms of the economics of how that then hangs back over time. That remains relatively consistent with how we've previously described them.

We need to see how the new product lands in second half of the year and the traction that we get on one act before we determine what the investment profile will be into the next year. But the synergistic benefits that we will get from having a broader sports book proposition, we think will stand us in very good state.

Donna, thanks so much and Peter. Best of luck.

Thanks, Dan. Thank you, Dan. And they are next question comes from the line of Monique Pollard with City. Monique, please go ahead.

Yes, so let me start on the numbers, but we won't get the 7 off. And we'd say that's a general student in the second half of the year.

We are, we are increasing in terms of our overall position. So because it's a 6%, that's an increase in where we were last year. We previously anticipated that the profile would be slightly more as we got traction around the rewards club, et cetera. But as we've said, you know, this is a deliberate investment decision based on sports, but momentum that we're currently got in business. A lot of that has been generated by this approach that we've taken in Q2, where we've been leaning in a bit more, you know, we could have delivered higher e-bit dial this year by investing less. But we don't think that's the right thing to maximize, but a long-term shareholder value.

We're seeing great opportunity to invest behind the customer proposition. And that's coming through in current momentum. So even if you look at the last couple of weeks trading across an organic last week, we've had our record week ever in MLB, we've got a huge number of reactivated customers on the platform. We're really happy with the apps that we've got the ecosystem as we head towards NFL. So the investment is a proactive one. It puts us slightly ahead of where we were last year in terms of customer generosity as a percentage of handle. And, you know, we will review the spending as we always do as we go next year. We're constantly looking at paybacks and the ROI that we get in.

But if you look at those returns that we're getting at the moment, they are, you know, looking very attractive and will continue to lead in.

Money, the one thing I decided, you know, we know we didn't execute on our generosity strategy as well as we could have done last year. And, you know, I think we're in a much better place now. I think with this investment, with a better execution, with the loyalty ban, you know, we are seeing improvements around our ability to drive and grow our food. And, you know, that has an important focus first alongside those with the AMP growth as well.

That's very clear. Thank you. And thanks for everything over the year, Peter. Thanks, Bonnie.

And our next question comes from the line of Charlie Muir Sands with B&P Parabas. Charlie, please go ahead.

Hey, sorry. Let me start with the cost investment and how we think about it. And maybe Peter can pick up on the second part of your question. So a couple of things to mention. Firstly, from our initial cost transformation program that we launched in 2024 is important over actually tracking ahead of that. So we've delivered all of the key component parts largely in terms of the activities. We've got the new UKI operating model in place.

The sky that migrations complete the postiles transformations going really well. And it's in its final stages and the sky migration went really well earlier this year. So really close with that. With regards to the incremental $500 million that we're talking about today. This really builds on that progress that we've made and reflects the next phase of how we intend to operate. This is about simplifying the organization. It's about leveraging our global scale more.

It's about accelerating the use of technology and AI and continuing to remove duplication across the group. If you look at our SDI guidance for this year, we've got 100 million of cost badged against this, which is in conjunction with the US and the start of this program will broadly cross the grid. Of course, there'll be some additional one of costs into 27 and 28. Typically, when we look at big restructuring programs, you look at a dollar of costs for a dollar of run rate savings, which you think it will be lower on this because of the nature of the savings and the fact that a lot of them will be taken AI driven. So we think the cost will be lower.

But yes, there will be some incremental costs in 27 and 28.

Charlie, in terms of your question around Dan and strategy, Dan has been very involved in all of the strategies, work that we've done as a group over the years and execution of the funds and the business. It's clearly very important to have all the stuff that we're announcing today as well. So, yeah, I think you'd expect to see a consideration of the strategy and the execution against it. He picks up the range from the first of October.

Thanks, Charlie. And our next question comes from the line of Ian Moore with Bernstein. Ian, please go ahead.

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

We are investing more as we go into the second half. I think it's the right thing to do to take advantage of the momentum we have in the business. The test for us will be, as we come into 2027, do we have a bigger business with a better trajectory than we had anticipated? That's what we're trying for.

And we know that if we go back to the momentum, if our revenues in the business, it enables us to invest more behind delivering great product experiences for customers. We'll be able to really take advantage of the loyalty program and other features and offerings for them.

Thanks, Ian. And our next question comes from the line of Chad Beynon with McQuarrie Group. Chad, please go ahead.

Chad, when we talked to the capital markets day, we said we would, you know, hope to have one UI gaming state by 27, you know, by the end of 27. I think we're optimistic.

Virginia has probably got furthest of any of our target states. I think there's some interesting opportunities around D. C. , but there's a bunch of them where we're hoping to build traction, whether it's higher or other places you can mention. So look, we think it's going to happen, and there's a little pent up demand for us to deliver the income and public experience to customers in those states.

Thanks, Chad. And our next question comes from the line of Paul Reddy with baby. Paul, please go ahead.

Thank you, Paul. Now, I think at a full point that we flag as the sequential improvement we're seeing in sky gaming, you know, I think, you know, customers have adapted to the new interface post migration and look, you know, we've had a very strong World Cup for all of our brands in the UK. Look, I think, you know, we're, you know, we've obviously guided to our first-order Michigan in the market. And I think we're adapting, you know, our approach around that probably taking a little bit more focus on headcount savings rather than marketing, because we want to maintain our sort of posture in the market.

We do think we're beginning to see some of our competitors pulling back as we anticipated. And so, look, I think the second order of Michigan is going to be significant and will be well-positioned to capitalize on those. You know, in Brazil, Paul is already excited about our potential in this marketplace. There's a number of improvements that we've implemented across the first half of the year. We've got our products and pricing capabilities now, including that builder in Brazil. And the uptake on that has been very strong. We've improved the eye gaming proposition and improved the generosity metrics around that. So, yes, we've been quite confident about our products and how we set up in the 27.

You know, that there is quite a moving face with regards to the regulatory backdrop in Brazil and that that's somewhat stifling overall market growth. But within the context of that market, I think we're happy with our performance. And we're still encouraged about the medium-to-long-term opportunity there.

Thanks, Paul.

Thank you, Paul. And our next question comes from the line of John Decree with CBRE. John, please go ahead.

Well, John, if we look at the UK or other markets like Italy or Brazil where the better exchange coexist with other sports books, we find that the exchange has a pretty small market share. And that's primarily because of the inability to offer generosity through an exchange platform. Of course, the person who needs to provide the generosity of the factory with the market maker, and they can't be confident that they'll get the next back from a customer if they've offered them some generosity back. I don't see that structure being any significantly different here in America, so I think the extent to which you have predicts coexisting with regulated OSP, I'd expect to see the regulated OSP contribute to take the vast majority of the business.

Clearly, there are some niche areas, shops and stuff like that where they will be more likely to take their volumes to the predicts type platforms. But as we know, they're not things which the traditional book makers can make money from any work.

Thanks, John.

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

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

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