Aristocrat Leisure Limited

Good day and thank you for standing by. Welcome to Aristocrat's half-year 2026 result presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask questions during the session, you need to press star 1 and 1 on the telephone. You will then hear an automated message advising your hand is raised. This will advise that today's call is being recorded. I would now like to hand the conference over to James Coghill, General Manager, Investor Relations. Thank you. Please go ahead.

Good morning and thank you for joining Aristocrats off year 26 results presentation. I'm James Coghill, General Manager, Investor Relations. I'm joined by Trevor Croker, Chief Executive Officer and Managing Director and Sally Demby, Chief Financial Officer. Kerber will start by covering some key highlights from the first half and in each of our businesses. He will then discuss strategic progress and how we are strengthening aristocrats' foundations through AI deployment. Sally will then take you through the group's financial results and balance sheet in more detail and discuss our outlook. This will be followed by a Q&A session. Unless otherwise stated, all figures are presented in reported currency. Please note the usual disclaimer at the back of the presentation. With that I will now hand over to Trevor.

Thanks James and good morning everyone. The first half of FY26 was another period of clear progress for Aristocrat. We delivered a strong first half performance gaining market share across all key segments and setting us up well to deliver on our full year commitments and to continue to grow into the future. Our focus on active and disciplined capital management continued in the half, including accelerating our on-market share buyback program, and this morning we announced a further $1 billion increase to the current program and extension through 12 May 2027. We also continue to deploy our capital to support future growth, making several targeted strategic investments that support aristocrats' long-term growth and resilience, and improve our ability to service the evolving needs of customers and players. In interactive, momentum is building. The executive leadership changed last year and the recent addition of high-caliber talent has positioned us well to deliver on many growth opportunities. And I'm highly encouraged by the recent progress. While there is still work to be done, we remain focused on delivering our FY29 US $1 billion interactive revenue target. We look forward to sharing more details about interactive at our investor briefing on July 1. Across the group, we remain focused on delivering operating leverage and scale benefits by focusing on efficiency and operating as one aristocrat. To this end, we expect to realise $100 million in annualised savings during FY27, while continuing to invest in growth. Finally, our ongoing focus on embracing AI as a positive force for change across the company accelerated over the period, strengthening our foundations, enhancing our strategic advantages and opening up new opportunities with our customers. Slide 3 highlights our underlying results for the period in constant currency. Our risk-crack delivered a strong half-year result, achieving 19% EPSA growth driven by continued operational execution. This reflects strong underlying constant currency revenue growth across all three of our businesses, with over 70% recurring revenue across the group. We also achieved profit margin expansion at the group level, leading to 16% MPA growth or 8% in reported currency. During the period, we capitalised on market conditions, buying back almost $680 million of shares, and we retained significant capacity to continue returning capital to shareholders in the second half. Overall, we're pleased with our first half performance, particularly as several key product launches fall in the second half. Looking ahead, we see strong momentum in the business and expect to deliver MPA growth for the full year to 30 September 2026 on a constant currency basis. Let me provide some highlights of our divisional performance. Strong revenue growth across the group combined with continued cost discipline and gains from our successful IP defence led to a group EBITDA margin uplift of 220 basis points. In gaming, we achieved market share gains in all key regions with exceptional performances in outright sales in North America and ANZ. Gaming operations saw continued gains led by Buffalo Mega Stampede and our pipeline remains robust with high levels of customer interest and strong early performance in recently launched premium games such as Monopoly Big Board Bucks, Spooky Link Grand and Lightning 10 Year Storm. Margin remains strong with a small reduction reflecting product mix given the exceptional outright sales performance. Product maintenance delivered an impressive performance with continued share gains and profit margin expansion reflecting focused investment in user acquisition high-performing content and effective execution of our direct-to-consumer strategy. In interactive, iLottery and content delivered strong growth, partially offset by platforms, which was impacted by our decision to exit the white-level business in the year. Excluding this, revenue growth was 11%. Turning to an update on strategy. Our long-term strategy remains focused on delivering sustainable growth and superior shareholder returns. Over the past six months we've made meaningful progress strengthening our competitive position by continuing to invest in content and capabilities that will expand our global footprint, deepen customer engagement and underpin long-term value creation. Our content is recognised as the best in the industry. We are building on that strength through our global studio model, enabling an enterprise-wide approach to game development and accelerating distribution across channels and markets. We remain focused on improving our speed to market across platforms to enhance monetisation, as evidenced by our second half plans to launch Lightning Link in Interactive, as well as additional high-performing LAN-based games. At the same time, we are focused on expanding in under-penetrated markets, with a particular focus on North American adjacencies, the MEA and the opening of the UAE in 2027. Our platform strategy represents a critical enabler of future growth, presenting new distribution opportunities as well as integrating advanced analytics, mobile connectivity and real-time player engagement capabilities. These strategic technology investments will allow us to deliver more personalised, data-driven experiences to customers and players alike. Our recent acquisition of Awager provides a new platform through which to distribute our content. We also acquired Gaming Analytics earlier this year, a provider of AI-powered tools for real-time player analytics, slot optimisation and marketing automation, designed to operate on top of traditional casino management systems. As we grow, we expect to benefit from our water risk rate operating model, which drives greater alignment, scalability and decision-making effectiveness across the group, ultimately enhancing operating leverage and improving profitability. Aligned with our operating model is a deep commitment to sustainability and compliance necessary to support a vibrant industry. Meanwhile, our financial strength provides flexibility to execute our strategy through diverse environments. Further supporting our strategy are investments in organisational talent and AI. Over the reporting period, we've continued to lift capability and drive change across aristocrat in response to evolving strategic needs and opportunities. In February, we announced the appointment of Bob Sir, Chief Technology Officer, and Daphne Goussard, Chief Operating Officer, EMEA, to the executive leadership team. Bob previously held senior roles at Microsoft, Amazon, and Double Down Interactive. He brings deep expertise in AI, emerging technologies, and delivery of enterprise-level innovation, helping us to significantly accelerate our technology agenda and AI implementations. Daphne was most recently COO at Entain and has decades of commercial and operational leadership experience across multiple global consumer industries. She brings dedicated focus to our growth strategy in EMEA and AI implementation experience. At the same time, we've consolidated marketing as a global function under the leadership of Barry French to optimise impact and efficiency across our brand of portfolios aligned with our One Risk-Cred strategy. As previously announced, we also appointed Dylan Slaney, the CEO of Risk Red Interactive. Dylan is a proven iGaming executive with over 10 years of global leadership experience in the sector and a track record of driving operational excellence and a customer-first approach that delivers transformative growth. We continue to focus on developing and recruiting leadership capability with diverse experience to support the delivery of our strategic objectives. In summary, we believe our strategy and scale positions us well to deliver on our ambitions to continue to gain market share across the business and our $1 billion US interactive revenue target. Combined with our disciplined approach to managing costs across the group, we are well-placed to deliver margin expansion and ultimately long-term shareholder value. While the macro environment remains volatile, historical trends demonstrate that gaming is resilient during periods of economic uncertainty. This pattern is evident in current performance with North American DGR growth in the first half remaining stable overall. Some softness has been observed in destination markets, which are typically more sensitive to discretionary travel and high-end spending. However, these represent around 5% of our North American revenues and have been more than offset by steady performance in regional markets, which benefit from a more consistent local player base. At the same time, operators continue to express a positive outlook, with capital expenditure plans remaining intact, signalling confidence in the sector's medium-term growth trajectory. This resilience is further reinforced by RiskCrest's diversified product portfolio that allows us to serve players wherever they choose to play. We operate in over 65% of regulated gaming markets across North America, but we have market-leading positions, including exposure to several of the industry's fastest-growing segments. Notably, we have a higher weighting toward regional and tribal markets, which historically demonstrate greater stability when destination markets face pressure. In addition, our digital businesses across both our lottery and product landers provide complementary growth with revenues largely driven by microtransactions. These digital revenue streams tend to outperform during periods when broader consumer spending is constrained. Our confidence in Aristocrat's sustained growth and consistent strategic execution stems from a set of unique differentiators that form a powerful ecosystem providing resilience across business cycles. These strategic advantages have enabled the group to navigate challenges from COVID to geopolitical volatility while continuing to outperform and strengthen our market positions. At the core is our market leading portfolio of content, brands and proprietary IP built through discipline and sustained investment in design and development. Our deep library of proven game mechanics and iconic titles have driven consistent market share gains over time. This strategic advantage is reinforced by a globally integrated network of creative studios and world-class talent. Further, Aristocrat is able to truly leverage its content and IP across multiple established distribution channels, enabling us to service a wide range of land-based and digital operators, consumers and governments. Ongoing technology investments to streamline cross-channel porting will strengthen this edge, further supporting our scale and long-term customer partnerships. RiskCraft's deep regulatory expertise also represents a critical advantage. We operate in highly regulated markets, maintaining over 350 licenses globally, a substantial pillar of the ecosystem that limits disruption. Further, our proven compliance capabilities, governance standards and most of all trust of regulators, customers and players built up over decades as a meaningful differentiator and reinforces the company's social license to operate. This trust has forged long-standing customer partnerships which are amplified by our scaled commercialisation capabilities and global sales and distribution network, resulting in superior customer service and consistent share gains across markets. This is further supported by global-scale product delivery capabilities and an extensive network of local service technicians. Sustainability and responsible gameplay have been all these benefits. A strong focus on governance, empowering safer play and community impact enhances resilience and reputation. Looking ahead, AI deployment represents a significant opportunity to further strengthen each of these differentiators, positioning Aristocrat to compete from an even stronger vantage point. AI implementation is rapidly becoming the expected standard across the technology and gaming sectors. Aristocrat's advantage lies in how we apply AI to enhance our core strengths and evolve to drive compounding returns across the business. While we see benefits throughout the organisation, we are focused on three key areas. First, enhancing creativity. AI is significantly improving the productivity of our creative and engineering teams through improvements in process, faster prototyping and creation of base level artwork and animations. Our studios are able to test consumer insights and adapt art packages almost in real time. This is building capacity to focus on high value concept development innovation. Importantly, our differentiation remains grounded in proven game mechanics, creative instinct, deep player understanding and exceptional commercialisation capabilities. Capabilities AI cannot replicate easily. The impact is already evident, where, for example, at Product Madness, we've more than doubled creative productivity, enhancing live ops development and personalisation without headcount growth. Second, we're improving velocity to market. AI is reducing time spent across prototyping, testing, quality assurance and cross-channel porting. This is enabling faster product delivery and increased output across jurisdictions. Some examples are our code conversion platform which has reduced conversion from 16 weeks to one week and regulatory automation which has cut product preparation time in certain processes from eight weeks to three weeks. Third, advancing AI-powered insights and optimisation. We are leveraging extensive data sets across land-based and digital to drive growth and enhance player experiences. For instance, Gaming Analytics is a customer-focused AI business delivering real-time reporting and insights to support decision-making to operators, strengthening our long-term partnerships. We expect to see further benefits across the group as we integrate these differentiated capabilities. AI is becoming a core capability enhancing performance today and improving enterprise process into the future, which will ultimately benefit both our top line and profitability. I'll now hand over to Sally, who will take us through a summary of the group results and outlook.

Thanks, Trevor, and good morning, everyone. I'm starting on slide 10 of our group results summary. Aristocrat delivered MPAEV close to $800 million over the heart, an increase of 8% or 16% in constant currency. Revenues and segment profit has increased by 6% and 7% in constant currency, respectively. While operational performance was the key driver of our empathic growth, I would like to call out some other items further down the panel. D&D expense increased 7% on a constant currency basis, in line with our mid-single-digit full-year guidance. As we continue to invest in content and technology to enable future growth, including increased investment related to recent acquisitions. Corporate costs benefited from a $45 million legal cost recovery relating to the Light and Wonder settlement, as well as ongoing cost discipline and other benefits. Net interest expense benefited from lower average debt balances, partially offset by lower interest income, mainly due to the buyback. And the effective tax rate was 27% in line with our annual guidance. EPSA increased close to 11% or 19% in constant currency, reflecting the solid operational performance and accretion from our share buyback program. Finally, the directors have authorized an unfranked interim dividend of 50 cents per share for the half year ended 31st of March, 2026, representing a payout ratio of 38.8%. Turning to our profit reconciliation, The uplift in MPA compared to first half 2015 mainly reflects the strong operating performance in gaming, as well as product madness, partially offset by Interactive, which was impacted by the reclass of D&D expenses noted at our full year results, and the investments in recent acquisitions noted at the AGM. Improved corporate costs was driven by the legal cost recovery, and the stringent Australian dollar was a key detractor. Turn into further detail on our divisional operations. Gaming delivered strong growth, with revenue increased in 12% and profit up 10% in constant currency. This performance was driven by exceptional execution and share games in North American and Australian outright sales, alongside continued momentum in gaming operations. Growth was underpinned by strong demand for the barren cabinet across all regions, supported by our industry-leading contents. In North America, performance was led by an outstanding outright sales contribution. Unit sales increased 15%, average selling prices rose 6%, and ship share reached 31%, up 260 basis points year over year. This was driven by a sustained demand for Spooky Link on the Barron Portrait Cabinet. Adjacencies also performed well, supported by an ongoing expansion in Georgia Co-op. Gaming Operations added over 2,000 units during the half, increasing market share to over 43%, up 70 basis points sequentially, with Buffalo Mega Stampede, Dragon Link, and Phoenix Link being the main drivers. FIFA Day remained stable during the half, with sequential improvement expected in the second half, supported by the strong product pipeline, including Lightning 10-Year Storm, Spooky Link Brand, and Monopoly Big Board Book. We remain confident in our ability to add 45,000 net units for the full year and now expect net unit growth at the upper end of this range. The modest decline in North American margins reflects a higher mix of outright sales in the period. In the rest of the world segment, performance was supported by sustained recovery in Australia. Strong demand for the barren upright and key titles such as Fabulous Hold and Spin Jackpot, Heaven and Air, Jackpot Kills and Cash Horns drove ship shares to approximately 48% for the half. The Barron Portrait Cabinet, with compelling content, is scheduled to launch in Australia in the second half, exclusively on the hybrid model, with strong customer interest. Software performance outside ANZ primarily affects timing with the Barron rollout plans for the second half. Product Madness delivered another strong half, with social casino revenue increasing 5%, in a market that declined 11%, resulting in share gains of 240 basis points. Growth was driven by continued investment in content, player-first innovation, live operations and features, further enhanced by increased use of AI. User acquisition investment increased from 18% to 20% of revenue, with targeted investment to support bookings worth and share gains. Margins expanded by 240 basis points, primarily reflecting the exit of the lower-margin Big Fish business and the continued migration to direct-to-consumer channels, partially offset by higher user acquisition investments. DTC penetration reached 24% of social casino revenue. Excluding Big Fish, margins increased by 100 basis points to 46.7%. Interactive delivered strong performance in iLottery and content, partially offset by platforms, which was impacted by the previously announced exit from the white label business. Total revenue, including their iLottery JV, increased 7%. Margins declined 530 basis points year over year, impacted by acquisition-related investment and the reclassification of technology operation costs from D&D expenses into Interactive. Adjusting to these factors, margins would have increased by 280 basis points. iLottery grew 14% including the JV, driven by continued strong performances in North Carolina and Virginia. Focus remains on the upcoming Massachusetts launch in July, the largest US retail lottery on a per capita basis and the third largest globally. Michigan will also transition to an exclusive interactive contract in July. Contract revenue increased 25% supported by expanded market access and new launches with major operators. The business is now live in six of seven US-regulated iGaming states, with Rhode Island expected to launch in the second half. Market share increased 190 basis points to 3.7%, driven by strong performance from land-based franchises such as Mermamee and Baozhou Baofu. The launch of Lightning Link in July is expected to be a key growth catalyst. As noted at the AGM earlier this year, content growth has been slower than expected, With foundational technology investments largely complete and new leadership in place, performance is expected to improve. Platform performance reflects the exit of the low-margin white-label business. Excluding white-label, revenue is broadly flat, with stable casino assistance performance and continued traction with the PAM platform. White-label revenues contributed about US$6 million in FY25, with the exit expected to be complete in the second half of the year. We continue to make encouraging progress in Interactive and have full confidence in our plans. We intend to unpack Interactive during our July 1st investor briefing and plan to provide further details on the pathway to $1 billion, as well as our recent investments. Moving to slide 15, operating cash flow generation remains strong, reflecting continued operating momentum partially offset by effects. Acquisitions and divestments reflect the acquisition of a wager, a new digital distribution channel for our land-based content, and gaming analytics. I will touch on CapEx and shareholder returns over the next two slides. Aristocrat allocates capital to support our long-term growth strategy and optimise shareholder returns. We prioritise consistent investment in D&D, CapEx and UA to drive organic growth, alongside a disciplined approach to strategic M&A. We remain committed and focused on returning excess capital to shareholders via on-market share buybacks and dividends. Last month, Aristocrat announced the refinancing of its debt facilities. The new facilities were issued at attractive rates, reflecting our investment-grade credit profiles. The US$1 billion revolving credit facility in the new structure significantly enhances our flexibility to manage capital while continuing to invest in long-term growth. During the half, Aristocrat returned almost US$680 million to shareholders through on-market share buybacks, and today we announced a US$1 billion increase in extension to our existing program, taking the total authorization to US$2.5 billion, of which we have executed almost $1.3 billion to date. The program runs through to May 2027. In total, $981 million were returned to shareholders through share buybacks and dividends over the half, with $5.1 billion returned over the last five years, all whilst investing for growth. We remain committed to returning capital to shareholders to optimize total shareholder returns. Investments in organic growth remain pivotal to drive long-term revenue and share gains. Total organic investment is generally tracked at around 24% to 27% of group revenues, with flexibility to adjust in response to business needs and opportunities. CapEx largely reflects expansion of our gaming operations install base, a high return investment. This fluctuates based on variances in gross installs. As previously discussed, US spend increased to support business momentum while maintaining a clear focus on efficiency and return on marketing investment. D&D expense remains our single most important driver of long-term growth. As previously noted, D&D is now reported across two discrete categories, products and technology, rather than by division. This is aligned with our one aristocrat strategy, whereby D&D is now being coordinated to ensure better strategic alignment and content leverage across the entire group. During the half, Aristocrat invested $407 million in D&D, representing a 7% increase over the PCP on a constant currency basis, in line with our full-year, mid-single-digits growth guidance. We remain in an investment cycle as we continue to position the business for future opportunities. In interactive, this includes technology and product investment in our lottery, with Michigan and Massachusetts going live in July. Investment in distribution and capabilities included A-Wager and gaming analytics. These businesses are currently early phase startups which require investment to scale and extend our product offerings, strengthening our customer partnerships and service capabilities. Turning to operating leverage. Margin expansion remains a focus as we continue to scale the business. Aristocrat has delivered consistent improvement in both segment profit and EVA margins over time across the portfolio, reflecting the trends of our operating model, scale benefits, and a focus on efficiency. As the business grows and we implement our one Aristocrat operating model and deploy AI, we see continued opportunities to proactively manage costs across the group. Our ongoing cost optimization efforts are expected to achieve approximately $100 million of savings during FY27. Discipline cost management combined with strong operating cash flow continues to create capacity for strategic reinvestment across the business. Turning to our outlook on slide 19, Aristocrat continues to expect to deliver MPA growth over the full year to September 2026 on a constant currency basis, noting that in gaming We now expect net unit growth at the upper end of the 45,000 unit target range in gaming operations, with no other material change to our other divisional comments or modeling inputs. We look forward to providing greater detail on our strategy and opportunities, our investor briefing on the 1st of July. Overall, we are pleased with our first half results and confident in the momentum we see for the second half. I will now hand back to the moderator to start the Q&A.

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star 11 again. One moment for the first question. Our first question comes from the line of Matt Ryan from Barenjoy. Please go ahead.

Thank you. I just had a question on the four-year guidance. I think previously you were talking about a second-half performance skew, which doesn't appear to be sort of called out anymore. So just interested if you could get some colour on whether you're assuming, I guess, more of a 50-50 weighting now, and then just digging into that, you know, we'd expect that gaming ops and interactive have a stronger second half. So if you could just comment on what sort of offsets within the divisions or corporate costs might work against you in the second half.

Yeah, thanks, Matt. Appreciate the question. Certainly, when you look at the momentum in the gaming business, with Lightning League 10-year and Buffalo Omega continuing to perform in the back half of the... the back part of the first half, and then the launch of Spooky League Grands and also Monopoly Big 4 Bucks, certainly the pipeline and the performance of those games is very pleasing for us, and so we see them running into the second half. Likewise in the ANZ business, We showed a strong portfolio of games at AHG in March and the performance to date in the market of Crash Laundry and other new games gives us confidence around the release of those products into the second half of the A&Z business and we are at the G2E Asia today launching Barron and new content into the Asian market which we see running in for a strong second half for the gaming business. On an interactive, the key story in interactive is the pending launch of Lightning Link which is on track for launch in July this year. So Lightning Link interactive is just going live in North America and then the opening of the Massachusetts and the Michigan lotteries are scaling through those in the second half of this second half, so the last quarter of the year. So overall our confidence around the second RCU comes from the operational momentum we're carrying into the half. And we can see strong pipelines and good performance behind the products that are driving that as well.

Great. Anything working against you in the second half? Just any comments on corporate costs?

Yeah, obviously the corporate costs benefited from the legal settlement in the first half. As you're aware, Matt, we always see some phasing across corporate costs between the halves. We think without the litigation costs going forward, our win rate is circa 150 mil, and so you can expect, you know, circa 75 mil for the half will be elevated from that a little bit.

Okay, great. And just to be one aristocrat, $100 million cost out, just trying to sort of think through how we might factor that in. So just interested in how incremental... that that cost out is, because I think on slide 18, you have sort of highlighted a few different areas like DTC and sort of interactive. So are we sort of to assume that that's an incremental $100 million above and beyond what we might have already expected from those sorts of trends from those things on that slide?

The way that I would think about it is really about cost optimization that will drive from segment profit, D&D, and corporate costs, really focusing on how we execute more effectively. We will... probably reinvest a portion of that to continue to support the organic growth, but it's really just an ongoing momentum on our focus on the scaling of the organisation and driving more efficiency. It doesn't really play into things like D2C. It's more about the actual cost base of the organisation.

Okay. Thank you. Thank you for the question. Thanks, Bert. One moment for the next question. Our next question comes from Mark Wilson from RBC. Please go ahead.

Thanks very much, Trevor and Sally. Look, just looking at the operating efficiency targets there, I guess, you know, are there any programs that are different from what you are currently undertaking to drive that amount, or is this just a continuation of what we have seen over the last 12 to 18 months.

It's a continuation, but with a focus on a very specific target. I'm really looking at driving the efficiency across the organisation, so looking at how we execute, looking at our organisation. We spent a chunk of last year looking at our operating model. This is now really ramping up to drive the scale and efficiency from that one aristocrat operating model.

Okay, thanks. And then just on... In relation to Product Madness and Interactive, it looks as though both units were impacted by either recently divested or exited businesses. I know you did give some indication of the revenue impact of the exit in Interactive, but just in terms of an earnings impact, approximately what do you think that was in the half?

I think what I'd say for both of the businesses, both Big Fish and White Label, which were the businesses that you were referring to as exits, their bottom line contribution was negligible. It's more a revenue top line impact.

Okay, thanks. Thanks very much.

Thank you for the questions. One moment for the next question. Our next question comes from Andre from UBS. Please go ahead.

Thank you. Good morning. I just want to ask about in the ops business the drivers of fee per day. I think in previous results you sort of talked about how much has been mix and pricing and other things. And in particular, I'm fascinated by Class 2 install base was another six-month period of marginally negative. So interested in sort of why that's showing up in Class 2 and the role that it's played on the FIFA day.

Yeah, so thanks, Andre. Just on the FIFA Day piece, you know, FIFA Day is a mix of the in-store base and the continue-to-grow in-store base in the half and see us now heading towards the top end of the $4,000 to $5,000 for the full year. I'm very confident around the shape of that. As far as FIFA Day goes, we continue to manage FIFA Day, which is the air patrol, so looking at the products that are now coming to market, such as Spooky and Grand, Buffalo Mega, The NFL games coming in time plus 10-year Lightning League and Monopoly are all priced above our current pricing. So again, higher performing games on higher performing cabinets are seeing that price per fee per day increase. So we continue to see the ability to improve our fee per day over time but it is across a large install base and I feel confident that the releases and the structure of the portfolio is taking proactive steps towards managing fee per day going forward. As far as the Class 2 goes, that was really due to a decline in a Class 2 to a Class 3 conversion within a property. So I would call it... Yes, it was down but it was only down a couple of hundred units and that is really just conversions of Class 2 to Class 3. Install base and floor space remains the same from the company's perspective and we still see opportunity to place more Class 2 product going forward. So from my perspective, it's just a case of moving from Class 2 to Class 3. Overall, their installs have gone up and we're confident we'll be at the top end of that $4,000 to $5,000 at the end of the year as well.

Okay, and then if you don't mind, I was just going to ask about Interactive as well. I mean, you've reiterated the $1 billion US revenue target today, but that's been in the market for a little while now. Is it fair to say that progress to date has probably been behind plan and what gives you that confidence that, you can catch up in the remaining years before FY29?

Yeah, that's a good question. I think we've owned it in the last six months or so that we were behind where we wanted to be on the target for interactive where we remained convicted to it. I think the things that have been slower than we anticipated was the rate of the US market opening, some of the regulatory changes in the UK market, and also some of the execution, the time it's taken us to execute through the portfolio, both from a technology and games approval perspective. But what we do feel confident about is that we do see scaling of land-based franchises in the digital, and we've seen that already with some of the land-based games, and we're obviously excited about Lightning Link coming through. We're also focusing on, as these markets open, being ready to open with them. So we are in all markets except for Rhode Island at this stage, but we expect to see Rhode Island and Maine At the same time, we're now at 94% access to the market and we feel that we've built the leadership team under Dylan and other executives we've brought in. They're bringing in the capacity to drive towards that $1 billion. So your comment is fair. We're behind where we wanted to be and we own that. But we also believe that between the content work that's going on, plus our lottery business, So Michigan coming online in July, Colorado which is an open RFP at the moment and continue to scale those businesses. We see those as great ways to drive towards the $1 billion target. The Blackpools business, it's a good stable business but adding in incremental capabilities such as gaming analytics we see as a way to enhance that business and to create more momentum towards that $1 billion. In summary, now we've got a sharpened focus on this, we've recruited the right talent execution, we've organised our commercial teams, and we've got line of sight on the things that we know we can control to get towards that target.

OK, thank you. Thank you for the questions. Our next question comes from Adrian Lamy from Citigroup. Please go ahead.

Morning, Trevor and Sally. Just firstly, are you able to give a bit more colour around this exit in white label in iGaming? What was it about? What drove that decision, please?

So the decision on white label, there's a couple of things. First of all, we continue to look at the portfolio on where we are allocating capital, where we're allocating resources to businesses and we look at the returns profiles on that. When you look at some of the changes that have happened in the white label market, particularly in the UK with game structure, taxes, operating regimes, we deemed that that was not a good investment for our company and we've So it was a choice to actually refocus our investment around the areas that are important to us and where we have a good opportunity to win and to lead.

Thank you. And could I just ask a question on legal costs? Obviously, nice to see the cost recovery come through. But the legal costs, are they going to stay somewhat elevated now as new AI-generated content is put out by competitors, which has the potential to infringe on your IP?

I think we've always defended our IP and that's not going to change. We have processes and protocols in place to do that. I would expect legal fees to come down with the litigation behind us. But obviously this year there's a little bit of a hangover as we go into the second half as we close out some of the settlement matters. But we're not at this point anticipating elevated legal costs specifically to address AI and IP infringement.

Thank you, Stella.

Thank you for the questions.

Thank you.

One moment for the next question. Our next question comes from Kai Ehrman from Jefferies. Please go ahead.

Thanks for taking my questions, guys. Just one on gaming margins, just looking at the reported gaming margin, particularly in North America and this result. Can you talk about some of the drivers of that? Was that impacted by the mix from a strong outright sale result? Were there any other sort of factors driving that margin result?

No, you've exactly hit it on there Kai. It's really just an over-skewing of the outright performance which was an exceptional performance at over 13,000 units after 31 month chip share for the half. So it is really just a mix piece and I'm very proud of the results the team has achieved in four sales for units through the half as well.

And then thinking into the second half, given expectation is this in three-per-day growth, you've obviously flagged some of the high-performing games you guys have released and the resulting gaming ops. Is it natural to assume that Margin should sort of step up in gaming into the second half?

My view is when you're sitting at a profit margin in the 56, 57s, I would guide to the fact that that's a strong profit margin and we're comfortable we can maintain that sort of level. I wouldn't be factoring in growth in profit margins where there's still opportunity out there to take share and also to place products. So I feel very comfortable with the margins of the companies returning in North America and also feel that we're able to hold that margin while we continue to grow the business.

Sorry, when you're looking directly at where it's at, it does stay between that 56, 58 kind of range, and it is highly dependent on the average sales volume in any one period, including adjacencies, which are at a lower margin.

Okay, thank you. Thank you for the questions. One moment for the next questions. Our next question comes from Justin Barrett from CLSA. Please go ahead.

Hey Sally, hey Trevor. Just wanted to follow up maybe on Kai's question around outright sales. Obviously another very, very strong half for you guys. And then when we look at, I guess, some data that we all have access to for purchasing intentions for Aristocrat Look to be continued to be quite strong or elevated. I just wanted to see, you've given some guidance I guess around how we should frame and that adds expectations for the full year. But how should we think about outright sales? Can this sort of momentum continue into the second half?

Yeah, thanks, Justin. We've now put together two halves between the... The last half and this half have around 13,000 units in full sale. So there's a mix in that which is adjacencies, and that sits somewhere between 21% and 25% of that market, and that can be somewhat volatile, as we've spoken to in the past. What I would guide you to is the outright sales strength in the actual replacements and new openings, and we're seeing strong momentum there, which the team have converted on in this half. We've got a portfolio of games coming through in the second half, but we see both hardware and games as the potential to continue to take share in the second half. So you're right, the anticipated share is strong for Istocrat, and we feel confident we've got the portfolio, the hardware, to come through in the second half and continue to have very strong outright sales numbers.

Fantastic. And then, sorry to come back to it, but just on the one aristocratic program, I just wanted to, I guess, see if you could talk somewhat segmentally about where you think you're going to drive the benefits from that program. I guess you just called out interactive and DTCIE product madness specifically as beneficiaries potentially of that program. But is it sort of across the board or should we expect to see the benefits in certain segments more than others?

It's across the board, Justin. It's really an enterprise-wide initiative looking at our one aristocrat operating model and how we drive efficiency from our growing business so that we work as effectively as possible in delivering the outcomes that we deliver to the customers and obviously to the market as well. So it's not one targeted area. It's a holistic approach to our organization and how we actually execute as an organization.

Great. And if I just square one more in, just noting for you, Sally, that the capital allocation framework, at least the presentation of that framework, has changed slightly versus the FY25 result. I just wanted to see if there's anything that we should be thinking about in relation to that change in presentation. Have there been any sort of subtle changes to that allocation framework that we should be aware of?

No changes to our allocation framework at all. I guess what we were trying to focus on is that we have simplified, so you would see some of the tables have gone now into the appendix. and really focusing on how we allocate our capital and also the elevated shareholder returns that we've been able to achieve over the last five years. But nothing has changed in the way we think about capital and capital allocation across the organisation.

Fantastic. Thanks, Sally. Thank you for the question.

Thank you.

Please hold for the next question. Our next question comes from David Falbury from Macquarie. Please go ahead.

Good morning, Trevor. Good morning, Sally. To start off with, can you help us better understand the GamingOps commercialisation strategy? Like, we know you target revenue growth, and I assume that you're making commercial decisions on fee-per-day versus installs, because we're constantly hearing from your customers around discounts on legacy products, promos on new products, tribal compact changes. So I'm curious, realistically, can you grow the installs and get fee-per-day growth sustainably going forward? Or do we need to think about this being one or the other and not both?

Yeah, look, thanks, David. Appreciate that. I think what we look at is we look at growing our gaming ops revenue opportunity in the organisation, so that can come through both install-based and fee-per-day. What we've been addressing over the last 18 months is the mix within the product portfolio and bringing forward high-performing cabinets and games. but we do still see an install base out there that is high performing and very high performing versus competitor FIFA days. So the way we think about it is how do we think about the incremental revenue we can generate through gaming operations each year and that will come as a mix between both FIFA day and install base and we see opportunity in both of those metrics to grow the business going forward and therefore grow revenue as a whole for us.

A few questions just on AI. Have you set up a dedicated hub or how have you structured that across the business?

No, we haven't set up a dedicated hub, but as we spoke earlier, Bob Sir, who has joined us from Microsoft most recently, has come on board and is leading the implementation of AI. We have been working with AI for a number of years and we've been looking at it in various aspects of how it benefits and enhances our products and our business and our operations. But Bob is really the guy that brings practical application of that. Daphne also comes to us with a proven track record in AI implementation in global matrix organisations. So we are using both the internal knowledge of our capability, also our own skills and capability, but also those externals and those new leaders to help us develop AI as a core capability across the organisation. We see it sitting, as we said earlier, about enhancing creativity, improving the velocity and the speed to market, and then powering insights and optimisation as the real drivers for AI at Aristocrat. There are obviously going to be other areas that are more organisational, but they're the key drivers for us within Aristocrat for AI.

Yeah, that's helpful, because if I'm then thinking about the $100 million cost benefit program, Is AI supported in 27 or will we really see that to support cost in 28?

We don't link AI and cost. We see it as two separate things. We see one as productivity and one as efficiencies and you can maybe find that differently if you'd like but the way we think of AI is it's about enhancing an ecosystem and ecosystems strong customers, important brand and IP, great talent and innovation at pace and we believe that that ecosystem is an important ecosystem to advance and grow our organisation and also to create better games, better experiences for our players and our operators. We don't link the two together. There will be opportunity to improve our efficiencies but the productivity program that we're talking about is actually around our organisational model and the way we operate as Sally said earlier.

Got it. Sorry, one last question from me. Just on the buyback, can you clarify when you can be back in the market? I recall that the last result there was a nuance that stopped you getting in pretty quickly.

we can be in the buyback from tomorrow.

Okay, thank you. Thank you for the questions. One moment for the next question. Our next question comes from the line of Angus Howitt from Morningstar. Please go ahead.

Hi, I've just got a follow-up question on AI, and I appreciate the slide you had there on the opportunity you see, but could you touch on how you view the threat? We're seeing competitors invest in AI, and you're enjoying cost efficiencies already, but do these efficiencies narrow the gap you have over competitors, particularly in D&D, effectively elevating weaker competitors? Thanks.

Yeah, thanks, Angus. I guess the way we look at this is that, as I said, it's a bit about an ecosystem, and that ecosystem includes, you know, a strong regulatory framework where regulatory environment actually requires certain levels of compliance and structure that are in place. Obviously, customers are having strong and good relations to their customers, continuing to be customer-centric. Our brand and our IP is that, you know, the brand and portfolio at Aristocrat is the best brand and portfolio in the gaming industry and the IP behind that is the best performing IP as well. The talent, our talent has embraced AI as a way to enhance the way that they make games, as we said, enhancing creativity. and then the innovation is continuing to be at an innovative pace. So we see that aristocrat is well positioned to be a leader in AI in the gaming industry, and also we don't see it as a way that is going to diminish our competitiveness. In fact, we see it by embracing it as a way to become more competitive and continue to lead in the greatest content delivery.

Got it. Thank you. Thank you for the question. One moment for the next question. The next question comes from the line of Rohan Sundaram of MSD Financial. Please go ahead.

Thank you. Hi, Trevor and Sally. Just one for me regarding your North America or even your global land-based business. How would you describe your forward order visibility at present in terms of, say, weeks or months? And has it improved over time?

Our visibility is very good. I'm very comfortable with what we can see in our pipeline both from a product delivery point of view, customer opportunity, manufacturing and supply chain. We've invented a lot of systems across the group globally now that gives us greater visibility about performance. So I feel confident, or we feel confident sitting here talking to you about how we see the half-year, the full-year finishing. And that confidence comes from a good ability to see gains, hardware and product being released into markets and the visibility of the pipelines. We're comfortable about it.

Thanks, Trevor.

Thank you for the questions. One moment for the next questioner. Next question comes from Leanne Robertson of Tarbin. Please go ahead.

Oh, thanks. Morning, Tim. Just one quick one on the cost savings. Just interested if you're expecting to see any of the second half of 26, just conscious on what the run rate needs to look like as we exit this financial year to deliver those savings into 27.

Thanks. Probably there will be an element in the second half, but there will be actions that we need to take that may also actually draft some costs. So it's really a focus on FY207.

Okay, great. Thanks. And then just quickly, I'm going to follow up on... North American market, clearly really strong performance in the outright sales, both units and ASP. Just interested in how, I guess, dependable that ASP growth is into the second half of 26. Thanks.

A couple of things there, Liam, from an ASP point of view. First of all, I think performance is what drives premium ASP, so both hardware and game performance, and we've got a strong portfolio of games that are performing well released in the second half which we expect to see perform well. I think the other part there is you've probably seen some of the commentary about the One Big Beautiful Bills around the way that that has been considered by some of the operators. We don't see that as a negative but see it as a positive for gaming placement in the ability to expense capital costs straight away. So from our perspective, performance, hardware will drive ASB. in both of those.

Great. And then just last one on AI. I mean, appreciate the colleague provided today. Just maybe on the improving velocity to market, are there any hard metrics or proof points that I guess you can provide us with? I mean, what I'm really interested in maybe is, you know, around the gaming business, the historical cadence of new game releases and, you know, what was that through the half? Has that already improved? And, you know, where do you think you can get that to? Thank you.

Yeah, so we've referenced the fact that we are doing game conversions now, which is an original game into an alternate market. We've reduced that from 16 weeks down to one. Now AI won't increase the regulatory approval timeframes but it will improve in the migration from market to market. It also will improve testing and prototyping as far as speed goes. So we are seeing that starting to flow through the organisation now and we see that as an opportunity to be able to move games into adjacent markets quicker. and that's where our focus is from an AI perspective, is building that capability within our organisation, noting that the regulatory framework is largely unchanged around testing and approvals from that point of view.

Right. Thank you. Thank you for the questions. One moment for the next questions. Our next question comes from the line of Sam Bradshaw from Edwin & Partners. Please go ahead.

Hey, morning, Trevor and Sally. Just wondering if you can give us a bit of colour on the international outright sales cadence. Obviously, the first half appears to be a little bit out of cycle. Wondering if you can give us a bit more colour on what we should expect in the second half and now potentially in the FY27 as well.

The international is a little bit more volatile, Sam, to be honest with you. It's a smaller part of our business and tends to be a little bit more volatile, largely driven by new openings from the international perspective. So what we saw in the first half was basically no new openings and we saw the same in the first half of last year from a Europe's point of view. When we look at second half, obviously we're looking towards expectations around what might happen with the wind rack opening, but that has somewhat been delayed at the moment. But we do see in FY27 a number of markets in Europe that are seeing expansion and that we will be ready to participate in those expansions. So in the rest of the world, there was effectively next to no new openings in the first half. We do expect to see some in the second half in Asia. We're not clear on what's going to happen with Wynn at the moment. We are ready and capable to do that, but we're waiting to see what happens with the opening of the property.

Great. And if I can, can I just ask how Monopoly is going? It's been one of the most hyped games that I can remember in my time. I'm wondering if you've got any early feedback for us on that game.

Yeah it's going really well thanks. We're very happy with the performance of Monopoly. It's come out of the blocks very strong on the floors. Certainly looking like about a three times floor but we're very happy with the way that it's come to market. We're also very excited about not just the performance of the game but the pipeline that's behind it. We've got a very solid pipeline supporting that. the social media and interest around the game on casino floors has been very well received as well. So Monopoly is very happy with that. Similarly, Buffalo Mega Stampede has been the number one game, new game now for six months, probably seven months next week. Continues to have very strong performance. It's been a great game for us in the first half, driving a lot of our momentum as well. And then Lightning Link, 10 years, and also Spooky Link are both performing well from our perspective. So overall portfolio performance is very, very happy with it at the moment.

Great. Thanks, Trevor. Thank you for the questions. In the interest of time, we will now take the last question. The last question comes from Shiha Singh from Bank of America. Please go ahead.

Yeah, hey Trevor, hey Sally. A couple of questions for me. One, can we, is there a realistic chance of you exceeding the 5,000 gaming ops net ads for 2026? And where we are coming from is you've added 2,000 machines in the first half. You're about to enter a new product cycle. You dominated April new premium game rankings and you can probably add 1,000 machines on Monopoly in the second half which is just starting. So, Is there an element that may prevent you from not adding 3,000 machines in second half?

Yeah, thanks Raj. A nice question for today. All I would say is when you see the Eilish report, which will come out very soon, you'll see that we've had a very strong April and we feel very If we are looking like we're going to change or go beyond that number, we'll naturally update you but we feel confident in saying that we're at the top end of the $4,000 to $5,000 and we have confidence around the portfolio, the commercialisation, the customer relationships to deliver that.

Awesome, that's great. Second question, a little bit more long term. around your 1 billion iGaming revenue target. And could we talk a little bit about the European iGaming content opportunity? And I think the U.S. opportunity is pretty well understood, but Europe is something we talk less about. But the TAM is three to four times bigger. You've got minimal market share there or content share there. Is that part of your $1 billion revenue scale-up, and can you get to high single-digit content share in European iGaming in three to four years? Thanks.

Yeah, thanks, Suresh. I think, first of all, when you have the opportunities that we have in front of us in iGaming, it's important to stay focused. We're really focused on The North American market, the Canadian market and the UK market. Your hypothesis around Europe is right. There are some moving pieces in Europe around the way the tax regimes in various countries are changing. Some of the access is changing as well. But we do believe that our land-based concept will resonate in iGaming and we've seen that initially and we expect to see that be very confidently reinforced when we launch Lightning Link later this year. So we do see Europe as part of that. We are focused on getting our roleful share in North America and Canada, which are close to our core markets and continue to build in Europe, both from our land-based gaming business point of view, where we hold sort of 22 share of install base, to getting a stronger position in high gaming in the markets where we can compete effectively. So it is part of our geographical opportunity in the 1 billion, yes.

Thank you. Thank you for that. Thank you for the questions. That concludes the Q&A session. I'd like to hand the call back to Trevor for closing remarks.

Thank you. I just wanted to reinforce to all of you that the team at Aristocrat remain focused on delivering high-quality growth for shareholders. We're focused on continuous and sustainable market share growth and also shareholder returns. Thank you for your ongoing interest in Aristocrat and we remain committed to delivering high performance and high quality for you as shareholders. Have a great day and we appreciate your time.

That concludes today's conference call. Thank you for your participating. You may now disconnect. Goodbye.