The Lottery Corporation Limited

Good morning and thank you for joining. I'm Wayne Pickup, the CEO of the Lottery Corporation. With me today are our CFO, Adam Newman, and Chief Commercial Officer, Cullum Mulvihill. We'll run through the investor presentation lodged with the ASX and take any questions you have. I've now been with the business just under three months after relocating from Chicago. Let me firstly share with you some of the observations I've had so far on slide four. Many of these are the same things that attracted me to join the company in the first place. The Lottery Corporation is a global leader. We have exceptional assets, household brands millions of Australians engage with, and an unmatched licence portfolio. The balance sheet is strong. That gives us options and it has supported consistent shareholder returns. The culture is also strong. There's great people here, and that's not always a given. This is supported by capable leadership and teams that understand their business and their customers. I've spent time with our technology teams, our commercial teams, and our contact centre, listening to how we serve and interact with customers. I've spent time in lottery outlets across the eastern seaboard, from news agents in central Melbourne to pubs and clubs in regional Queensland. It's clear we have an engaged workforce and a strong retail network. So I'm starting from a position of strength but there is upside ahead and that's what energises me about the opportunity. Our strategy has served the company well but we can unlock more value and going forward we have three focus areas as outlined on slide five. The first is accelerating our evolution as a digital entertainment company. This is evolution, not revolution. It's about embedding technology across the enterprise, modernising platforms and creating seamless customer experiences. I want to be clear, this is not at the expense of retail. It's about choice and integration. In fact, online store syndicates show how retailers can engage with this digital shift. Many of our retailers, in fact about 80%, sell shares in their store syndicates through our online store syndicates platform. This is enabling lottery agents to earn revenue around the clock, extending well beyond the traditional shop front. We've just rolled out a major digital signage upgrade across 3,300 lottery outlets that enables more dynamic in-store advertising. It also unlocks the next phase of delivering data-driven, automated and API-enabled content into stores. This will improve our speed to market, promotional effectiveness and consistency across our network. Ultimately, we want customers to choose us for entertainment, not just for big jackpots. Technology enables personalized experiences at scale. That's what keeps customers coming back and engaged. The second theme is concentrating on our local, highly regulated markets. The Australian market is attractive. The licence structure is unique, generally decades long with staggered maturities. We've got a long history of growth through jackpot and economic cycles, underpinned by population growth and one of the highest spends per capita globally. There's broad acceptance of lotteries, Typically one in two Australian adults participate each year, but only half of them have registered and is outside there. So the focus will be on existing business and adjacent lottery opportunities. The third theme is focused execution. The fundamentals will maintain a straightforward, continued innovation and active management of our game portfolio. We will make strategic technology investments to maximise the digital opportunity and oversee disciplined capital and cost allocation to deliver strong returns on our shareholders' capital. We intend to detail more about our strategy at an investor day in the middle of this year. Now let me turn to the results on slide six, which demonstrates the business underlying strength. Firstly, jackpot activity was well below statistical averages. In fact, it was the leanest jackpot environment we've seen since listing. Despite this, we delivered solid financial outcomes. Strong free cash flow enabled us to maintain the dividend in line with the prior period. More than half our lotteries turnover typically comes from Pavel and Oslotto, so a lean jackpot run has impact. That flowed through to participation levels and also impacted digital share growth. Saturday lotto game change is delivered with high early retention of the recent price increase, albeit in a low jackpot environment. Kino continued to strengthen retail, capitalising on pub and club foot traffic. Our balance sheet gives us strategic flexibility few lottery businesses have globally. We remain mindful of balancing investment with generating returns to shareholders. I'll now hand over to Adam for the group financial overview.

Thanks, Wayne. Hi, everyone. Thanks for taking the time to join us here this morning. Let's move to slide number eight. As Wayne has covered, at first half 26 was a period of lean jackpot activity with Division 1 offers for jackpot games down 14% on the PCP. Despite this, the group delivered a resilient financial performance, reaffirming the strength of our business model. Group revenue was $1.8 billion, demonstrating the value of our diversified portfolio and helping to cushion jackpot variability. OPEC's growth remained tightly controlled at 2.9%, consistent with our disciplined approach to managing costs. Libida was $367 million, down just 0.7%, with Keno's record performance partly offsetting jackpot-related impacts. Interest expense rose 2% due to both lower average cash balances and lower average rates. We remain materially insulated from movements and interest rates given around 85% of our debt is fixed or hedged against foreign exchange movements. And we earn significant income on our cash balances. And while net profit after tax declined 1.4%, the directors determined to pay an 8 cent per share fully franked interim dividend in line with the first half of 2025. And this represents 103% of net profit for the half. We turn now to slide number nine. Our performance reflects the underlying strength of the portfolio, despite the jackpot headwinds that adversely impacted EBITDA by approximately $26 million versus the prior period. Several drivers demonstrate the business resilience. Base games performed strongly, with Saturday Lotto and Lucky Lotteries being the standouts. Instant Scratchits continued their momentum, supported by new products and pricing, where Keno delivered another record half, with strong retail visitation and venue partner initiatives, sustaining growth and mirroring the themes that we saw in FY25. Importantly, digital turnover continued to grow, reinforcing what we highlighted at the full year results, that digital penetration is a structural margin driver which represents significant long-term opportunity for us. In summary, these elements enabled the business to manage short-term jackpot volatility, with diversification across our portfolio of games, channels and customer segments continuing to provide stability. We can now move to slide number 10. And as we've stressed previously, we manage our business for the long term with the strong fundamentals in mind and our cost and capital discipline is not unduly influenced by short-term jackpot outcomes. OPEX for the half was $146 million and this was an increase of $4 million or 2.9%. and reflected the timing of Powerball product changes and increased employee costs. At FY26 OPEX target is $310 to $320 million, and consistent with prior periods, our OPEX is expected to skew to the second half, and this is predominantly due to advertising and promotion expenditure, technology and project-related costs. will continue to seek to manage costs tightly, maintaining the aim of keeping annual OPEX growth below normalised revenue growth over time. CapEx for the half is $34 million and is expected to ramp up through the second half, with digital and core transformation and retail terminal upgrades continuing. We are targeting FY26 capex of between $90 and $100 million, consistent with the investment profile for the next three years that we described at the full year results release. This is a resilient business that generates strong and predictable cash flows with low capex and a highly variable cost base. We allocate capital in order to drive long-term shareholder value and our balance sheet provides us with flexibility to maximise shareholder returns. Net debt to EBITDA is at the bottom end of our targeted leverage range at three times. We have $560 million of available liquidity and a four and a half year average debt tenor, preserving flexibility for disciplined investment and returns. The Board remains committed to the three to four times leverage target, and we continue to explore opportunities to deploy capital to deliver long-term growth that's in line with our strategy, which includes licence enhancements. We'll always exercise discretion and make pragmatic risk-based assessments of any near-term investment requirements, and ultimately we'll seek to return any excess funds to shareholders in the most tax-efficient manner. So in conclusion, the strong cash flow is a robust balance sheet and continued focus on our costs as well as digital transformation that's driving both margin expansion and improving the customer experience. We remain well placed to deliver long-term value to our shareholders. Thank you and I'll hand back to Wayne.

Thanks Adam. Turning to the business results, starting with lotteries on slide 12. The strong underlying performance given jackpots were well short of statistical norms, making it the least favourable half of jackpots since our ASX listing in 2022. The net result being a circa 400 million unfavourable impact on turnover versus circa 200 million unfavourable impacts in the first half of 25. That said, the changes to our two largest games, Powerball and Saturday Lotto, are resonating. Saturday Lotto's 6 million core offer is generating good incremental revenue every draw. Early signs on Powerball pricing are positive. If we turn to slide 13, it shows digital share of turnover grew to 41.2% of Lottery's turnover in the half. Big jackpots stimulate participation. You can see the impact their absence had on active customer numbers during the half. We've got a slide 14, shows our portfolio diversification at work. Base game growth largely offset the unusually low jackpot games, with Saturday Lotto being the standout. Instants were also particularly successful. A refreshed range and a use of higher price points, such as $30, sold through well, especially in key gifting periods such as Christmas, where we had sales up 8.5% over last year. Lucky Lotteries was up over 60% driven by the Mega Jackpot, which reached $21 million at period end and now sits at just over $24 million. If we turn to slide 16, it shows our success refreshing the game portfolio. The new $6 million Division 1 offer and price increase for Saturday Lotto in May won immediate acceptance. The early price retention of 103% is well above expectations. The context that surpasses the retention of prior Saturday Lotto price increases, including during COVID when the Division 1 offer went to $5 million. The full effects of the powerful price change introduced in November are expected to become evident with a return to statistically normalised jackpot levels over time. Set for Life will be our next game refresh, which we want to implement in September 2026, subject to the necessary regulatory approvals. The changes are backed by research. Customers are saying they'd like more upfront prizes and promotional draws. So, with that in mind, we'll introduce an extra $200,000 up front for Division 1 winners, and a subscription price increase from $0.60 to $0.70 is going to enable more promotional offers. Moving to slides 17 and 18 on Keno, which continued its strong performance. Turnover was up 7%, growing above historical trend. This performance was valuable given the softness in jackpot games and a reminder of why having Kino in the portfolio matters. Promotional initiatives and venues and the clear positioning of Kino is a fun social game as part of the growth story amid strong visitation in pubs and clubs. We've prioritised making sure our in-venue assets, terminal screens, marketing collateral are set up for maximum impact. The online channel returned to growth post the introduction of spend limits in FY25 with turnover up 3.5% and a half. That's positive as we look to build the online keynote opportunity going forward. Slide 20 sets out our priority areas for the next 12 months. First, the digital experience. We're growing digital, but we can capture growth faster. Digital-first customers expect seamless experiences, instant gratification and personalisation. There's an opportunity to better embed data and AI across the enterprise, so we use technology to understand what each customer enjoys and just simply show them more of it. On short-term initiatives to drive registered customer sign-ups, Check and Collect will let customers scan their ticket and claim their prize immediately via our app. We're rolling out QR codes in our retail outlets to simplify customer registration and help acquire customers. These are practical steps that remove friction. On product, Set for Life is next for refresh, but as we think about the portfolio, we'll increasingly test opportunities beyond traditional lotteries. The focus is on customer entertainment, not just jackpot anticipation. We're reviewing how we position and market our products. The evidence tells us customers choose by game first. They play Powerball or Saturday Lotto or Oz Lotto, not lottery as a category. There's an opportunity to lean into that insight, making our hero products the stars and building stronger entertainment experiences around them. This is about amplifying what already works. We have strong product brands and we will make them more central about how we go to market. Keynote also fits into this evolution. It's entertainment beyond the jackpot cycle and we'll continue to invest in it. There's more keynote growth to capture, including online where we are underrepresented. On the operating model, we'll structure for the speed and agility required in a competitive digital market. Finally, we'll prioritise protecting and enhancing our licence portfolio. We hold incredibly valuable and unique licences These carry rigorous regulatory obligations and in return generate material lottery duty revenue that funds state services and community programs, as well as supporting thousands of small businesses. This is a social compact we take very seriously. But the competitive landscape is evolving. Operators licensed in the Northern Territory offer foreign-matched lottery products that sit outside the broader established state-based regulatory frameworks. They contribute no lottery duty to Australian governments other than the NT and operate under lighter regulatory obligations than we do. The Federal Government continues to review these products. The issue should be more fully addressed. We'll continue to advocate for consistent regulation that upholds the integrity of Australian lotteries and preserves the value of our licences. Where opportunity exists to extend or enhance our licences, we'll do so prudently deploying shareholders' capital. Now let me wrap up with slide 21. The first half shows the core business remains resilient and the fundamentals are sound. The changes to games like Saturday Lotto are delivering as intended. Looking forward, there's upside. We have the assets, market position and financial strength to unlock more value, be more relevant and position the business around digital entertainment. That's the business we'll be building, not just a steward of licences, but a company that earns its market position every day. We intend to detail the strategy further at an investor day in the middle of the year. I look forward to taking you through our plans in more depth then. We'll now open up for questions and Adam and Cullen will join me.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2 and if you're on a speakerphone, please pick up the handset to ask your questions. In the interest of time, we do ask that participants limit themselves to asking two questions at a time. And if you wish to ask further questions, you may rejoin the queue. Your first question comes from Rowan Sundren from MST Financial. Please go ahead.

Hi, Wayne, Adam and team. Thanks for that. Just the one from me. Thanks for the summary and thanks for the strategic insight. In light of that, Wayne, and with regards to the slides in the pack, which opportunities excite you the most and why? Where do you perceive the best use of capital for the group?

Thanks. Thanks for the question. I'm not sure I want to rank opportunities and we're still sort of actively evaluating. But there's – look, I think there's a lot of upside on digital that we can deliver in the business and simply make the games more engaging to customers, whether that's through retail or whether that's through app or online. But I think I wouldn't go as far to say it's low-hanging fruit, but it's certainly where a lot of short-term focus will be applied.

Okay, thank you, Ian.

Thank you. Your next question comes from Justin Barrett from CLSA. Please go ahead.

Hi, guys. Thanks very much for your time. I also wanted to just look at the strategic opportunities, sorry, priorities for 26. And, Wayne, your comment in the presentation around exploring new product opportunities, and I guess expanding on that in your prepared remarks, increasingly test opportunities beyond the traditional lotteries. I was just wondering if you could share any more details around those opportunities and what you've potentially seen in other markets that you think could work here in Australia.

Thanks. Sure. I mean at the moment we're sort of actively evaluating those. I think there's opportunities in terms of just the way we present the product and the front end and making that more engaging. It's almost like a product in front of a product in some regards. So making the user journey just far more engaging and fun. Then there's certainly room in the portfolio for new product, but that takes time. It takes time to build. It takes time to gain regulatory approvals. So these are all under active consideration and I'm not able to get into specifics today, but certainly at the investor day that we will schedule around the middle of the year, I'll be able to sort of get into more details then.

Great, thanks for that. My follow-up question, just on... On Saturday, Lotto clearly had very strong retention to that game change last year. But I just wanted to get your expectations on how much that retention has benefited from the weaker Powerball and Oslotto jackpot run recently, and I guess whether you still... Or do you think that it will... that retention will normalise to that sort of 50% to 75% range in time.

That's a good question. I'll pass over to Kalim, who can provide more historical reference than I can.

Thanks, Wayne. Thanks, Justin. I think probably a good frame of reference is the last change, which was during a COVID period, which I think we experienced about an 80% retention early on from eight weeks pre and eight weeks post. And then we had a real COVID environment to the cloud of that one. This one's probably surprised on the upside. To be holding 103% after 29 weeks is impressive to say the least. It's probably surpassed expectations. And I think we settled, I think that one back in 2000, we settled at about 50%. So early days it was 80% and settled at 50%. So this is certainly surprised on the upside. And I think back in that jackpot environment it was highly varied back in 2000 as well.

Thank you.

Thank you. The next question comes from Kai Ehrman from Jefferies. Please go ahead.

Thanks guys. You've obviously shown pretty strong pricing momentum across the last two Powerball increases, the most recent Saturday increases. How are you guys thinking about pricing going forward? Do you still think it's sort of every two to three year cadence or do you think you can sort of get into an annual price rise kind of cadence given the momentum that you've shown to date?

Wayne, I can take that. It's something that the business has done extremely well over time and it will certainly continue to be one of our levers, but not the only lever that we look to pull. So I won't go much further than that just now, other than, again, like I don't want this to be my stock answer, but it's under active consideration. It will certainly be one. levers that we have in the toolkit going forward. And as you probably know, with these lottery products, that price increase correlates through to bigger jackpots, bigger prizes. So there's an immediate upside for customers, for our retail partners as well through commissions. So it's certainly something that we'll continue to look at or continue to utilise and we're also, you know, the frequency of those is under active consideration.

Understood. And just for follow-up, you mentioned in your sort of earlier remarks around balance sheet optionality given you guys are sort of at three times leverage. Would you be able to give any clarity on what some of those options might be?

Adam, do you want to take that?

I'll take that, Kai. Kai, I'll just go back to my earlier prepared comments. I think my speech at the end of the day is we can't get overly specific and the board remains committed to that three to four times leverage target. And obviously, we're looking at things on a risk-adjusted basis within our strategy, of which licence enhancements form an important part of that. And, you know, to the extent that the board determines that we've got excess funds, then we'll seek to return them back to shareholders in the most tax-efficient manner. Thanks.

I'll pass it on, Matt. Thank you. Your next question comes from David from Macquarie. Please go ahead.

Oh, hi, Wayne. Hi, Adam. Just with my first question, you made some comments around the ability to maybe extend existing licences. Can we talk through that Vic licence, which expires in 28? I mean, if we think about Victoria, they did open up the Kino licence to multiple operators back in 2022. Should we be worried about what Victoria might do with this lottery licence?

Sorry, David. Adam, I'll take that again. It's a hard question for us to answer. Obviously, we're in discussions with governments on a number of different jurisdictions across the time. But ultimately, you know, you need scale in these lottery businesses at the end of the day. So opening up to multiple participants is not necessarily readily, easily to do. And I think you'll just have to see how that process opens up. Obviously, 28 is a fair couple of years away yet. And we'll just have to see how it plans out at the end of the day.

Yeah, got it. Understood. And the next question, just appreciate the prepared remarks around operating costs, but can you clarify whether first half 26 benefited from the low jackpot activity on marketing spend? And to kind of dovetail that, if we look at where OPEX is trapped in the first half over the last couple of years and at the midpoint of guidance, it kind of suggests a 46% first half weighting. I know you haven't provided FY27 guidance, but under the premise of normalised jackpot activity, the fact you're launching new games in the first half of innovation, call it Set for Life in September, which probably requires increased spend, will that phasing change or should we really think about cost for your business agnostic to volumes and it kind of tracks around or below inflation?

Yeah, you covered a lot of topics there. So maybe I'll just step back a little bit and say the first half, second half split that we're seeing this year is pretty consistent with what we're seeing pretty much every year since we've demerged to start with. And I think we've talked about in the past that 50% of our costs are people. We do have some ebb and flow in relation to advertising and promotion spend subject to jackpot outcomes. And it would probably be fair to say that the first half maybe benefited from sort of low to mid single digits. from an advertising and promotion spend. I say benefited, but spend that wasn't forthcoming because we didn't have the revenue opportunity. And so if you look forward to the second half, a large proportion of that second half step up that you're seeing does relate to advertising and promotion spend. of which some of that relates to an expectation that you'll get some potential mean reversion in the second half. Not all, because it does, you know, we've got an Oslotto brand refresh going on at the end of the day. So it does depend upon certain timing of different campaigns and programs, but it's not completely dependent upon that. We haven't given guidance to look forward for FY27. Obviously, we've given it for FY26. All I can say is we spend a lot of time on our OPEX cost base, come through separation at the end of the day, and as I mentioned in the prepared remarks, we're continuing to focus to keep our OPEX at or below normalised revenue growth over time.

Yeah, OK, but I guess under the premise of normalised volumes in first half 27, which is how we forecast, you'd expect a pretty significant step up in optics commensurate with jackpot activity and marketing.

I don't want to get in prediction to FY27. I'm not sure that necessarily holds what you just said.

OK, that's fair. Thank you very much.

Thank you. Your next question comes from Sam Bradshaw from Evans and Partners. Please go ahead.

Good morning Wayne, Adam McKellen. Wayne, you mentioned that you believe you're underrepresented in online keynote and there's currently an ongoing review of online keynote and foreign match lotteries. Are you able to give us any colour on the status of the review and how it translates to your strategy?

No, I can't give you much more colour than probably what you already are aware of. It's, you know, coming into this market from the US, it's, frankly, it's a bit of an anomaly as it relates to the foreign match lotteries out of the ENT. I know, again, coming out of the US, the US regulators and lotteries don't particularly like it. The fact that we have these sort of courier services operating through the US and then reselling into international markets. But what I'll say is that we are strongly in favour of fair regulated markets with transparent revenue arrangements of governments. and we'll continue to lobby for those arrangements vigorously.

Great. Thanks, Wayne.

Thank you. Your next question comes from Andre from UBS. Please go ahead.

Thank you. Good morning. Just wanted to ask the first question about the health of the Powerball game and the underlying demand there. I guess you've called out a negative like-for-like year-on-year for Powerball, but at the same time, you know, 61% retention of the 17% price increase. So I'm wondering, firstly, how you can reconcile that 10% growth that you call out in the retention calc with the like-for-like environment, but also is it just too hard to judge in a period where you haven't seen major jackpots?

Maybe I'll kick off and then hand over to Adam and Callum to sort of put more, you know, sort of being the new guy on the block, I can only sort of contribute so much. It's always challenging when you sort of bookend a period with a game like Powerball. I see the same thing with the Powerball product in the US. Coming in, it's still somewhat an outside-in view. It is a very healthy product. It has millions of customers. It's a brand that Aussies love. And so if you look at it sort of big picture... It's gone through, as these things do from time to time, it's gone through a statistically lean time that will regress to the mean. But it's certainly one of our hero products and one that we'll continue to invest in, continue to more with. has a very, very strong, loyal customer following. Callum or Adam, if you want to add to that.

Yeah, look, if I can build off that, Andre, I mean it's incredibly, echo what Wayne said, incredibly strong product. It is our leading product. We've priced that product on its strength. It's now the premium priced product in the portfolio. Yes, it's had a leaner run, statistically driven, but I think the retention is bang on where we would have expected it to be. It's far too short a period. Retention jumps around quite a bit from the low end to the high end. I think sitting in that 60% range at this point is exactly where we'd like to see it and it's an incredibly strong product and it is our leading product in the portfolio.

And it performs extremely well on digital as well.

And the portfolio, as you would have seen previously, it feeds off its momentum and obviously the momentum that's had in the last half has been lower, but we know the customer recovers. And in the meantime, and we've seen people playing Saturday Lotto and that's changed to be really well accepted. So it's a pretty dynamic environment but there's no issues with the health of Powerball.

Great, thanks. My other question is specifically on the digital mix. We've seen it up year on year for the half, but down a bit on the second half of 25. So how much of that is also relating to the lack of major jackpots? Or is there some seasonality there? And I guess the question is, how much of a, you know, there's several mentions of digital as a strategic priority in the presentation today, but is that something, because of the margin benefits, that we're going to see more actively pushed up over the next few years?

Yeah, Wayne here, I can start again, and if Colm or Adam want to contribute. We'll, I mean, I guess firstly we'll just sort of follow where the consumer goes. And, yeah, the large jackpots certainly bring in, yeah, they're a strong acquisition tool for us in digital channels. So when you get an event like a 200 million or, you know, a powerful jackpot, you're getting, I mean, it's just common sense, right? You're getting a whole lot of customers that come in that will play once, you know, in one or two years and then drop out again. What we want to do is obviously retain them. So the job isn't just around sort of acquisition, it's around giving them reasons to come back. And as I said at the start, this is why we sort of look that there is opportunity in the portfolio. So overall, you know, I look at it and I think digital's plateaued a bit, largely because of, as a derivative of the Powerball, particularly the Powerball jackpot environment. But there's opportunity there, a lot of opportunity there to do more with it. I don't know, Callum or Adam, if you want to add anything.

The only thing that I would add to that is it is a long-term structural trend that sustains many, many periods and it has some short-term volatile sort of fluctuations around the macro factors like jackpots. But we're also investing in, as Wayne said, we bring them into the funnel and how do you make them stick and how do you make people register and give them reasons to register with us and convert them through the digital funnel. So there's investment in that space but it does rely on some of those bigger macro factors like the game offers. Thank you.

Thank you. Your next question comes from Matt Ryan from Baron Joey. Please go ahead.

Thank you. Hi, guys. I just wanted to ask a question around slide 27 where you've sort of shown a pretty long-term chart of how resilient the lottery sector is, and I guess just more specifically the past years. post-2020 where it looks like the growth rate is a bit elevated relative to history. Just curious on your thoughts on what's driven that. Obviously, the jackpots have been there. And as a result of that, just trying to get, I guess, some colour on where to from here. I know you've talked about a $400 million headwind and a half, which is pretty elevated. But I guess we're all just looking for confidence that you know, the reversal of that comes out rather than perhaps, I guess, an unwind of those years, which look to have grown quite a lot more than normal after that 2020 period. Any thoughts be good?

Yeah, well, maybe again, I'll start. Wayne here. Hey, Matt. The... Look, I'm not going to predict what comes out of the Powerball machine, but these are just simple probabilities. So if we run those, we've got to assume that we're going to revert back to a mean and have jackpots throughout the year of $100 million plus on a relatively regular basis. But again, I can't predict, unfortunately, what balls get drawn on a Thursday evening or Tuesday evening. Part of the strategy, and we'll sort of get into this more into the investor day, middle of the year, But we also want to give, when I look at the portfolio, we want to give people more reason to engage with us beyond that jackpot anticipation. So it's, you know, I hadn't sort of quite looked at the chart the same way as you have, but I understand where you're going. But I'm certainly not concerned that we can't continue to drive sort of more growth, more engagement with what we have and with more innovation and product going forward.

I'm sorry Matt, I was just going to add one other thing, it's Adam here, that we look at that chart from another lens is that we saw a lot of acceleration into the category as a consequence of COVID. Everyone was sitting at home with nothing else to do. One pleasing thing that we've often referred to internally is that we've been able to lock in those benefits. So there was a new high water mark that came out of the COVID period for us in addition to the game changes that we were able to make during that period as well.

Thanks, Adam. I'll pick up probably on slide 31, Matt. I mean, so what we can control in that environment, I mean, clearly we couldn't control COVID. We really couldn't control the 200 mil event in 24. But what are the activities that we're putting in market to continue to capture the market as it evolves? I've always liked this chart because it does show an underlying Long-term CAGR, we have been able to accelerate it, even if you back out the noise of COVID and a statistical one-off. So we've got activity to capture the market and keep growing the market. Kino sits on top there and just continues to grow steadily to add some diversification as well. So for me, this chart shows the resilience of this business. And then what can we control within that market is really page 31 and beyond.

Thank you. Yeah, I guess that's all really helpful. I'm just also curious as a follow-up whether the volatility in earnings and cash flows poses any negatives to you guys. And I guess the context is that you're clearly showing what is a very defensive long-term chart, the share price. appears to me at least to be trading more like a cyclical industrial around shorter-term events. But, you know, taking that out of it, you know, are there ways, I guess, to reduce that volatility over time or is it something that isn't a real priority for you guys?

Yeah, I mean 50% of our turnover comes from jackpot games. So there is going to always be a period of volatility depending upon where those balls come out of the barrel. I don't think we can get away from that. the extent of how maybe you can smooth some of the volatility or grow. We've seen with satellite auto game change, for example, which is the second largest game, we've been able to grow that game from a base game perspective. I don't think from... We take a... I mean, it was interesting that you raised that chart on 27 because we do try to take a medium to long-term view of the business and the decisions that we make. So I don't think... One of your questions was, does the volatility cause us concerns? I don't think it does internally in the way we manage the business and the way we look at, run and make decisions. And then I think our balance sheet strengths just gives us the overall flexibility to deal with some of this volatility as well.

And so Matt I'll pick up that as well, less about cash flow volatility but more about the volatility in the portfolio and a slight correction, my page 31 is your page 16 just on the product actions that we've taken over the period. We do sequence the investment in our portfolio around the core base offers and Saturday is an incredibly important investment. The fact that that's stuck after 29 weeks, I mean I can't overemphasise that that provides stability in that core repeat behaviour. And to Adam's point, you really can't do much about the noise and the volatility in those jackpot games when they deliver. It's fantastic, but in short periods, they can go away a little bit.

That's great. I appreciate all those comments. Thank you.

Thank you. Your next question comes from Adrian Lin from Citi. Please go ahead.

Hi, good morning, Wayne and Adam. Just in terms of the... simplification of the org structure. Do you expect this to lead to any material savings in FY27 or do you expect any savings to be reinvested into digital or other areas please?

We're actively looking at the org structure at the moment. It's more around sort of getting clearer lines of accountability and I think we're underinvested in some areas and maybe The counter is true, but it's too early to tell whether we expect any material savings. But we do anticipate some changes.

Maybe I'll just add, as you've heard us talk a bit before about keeping our OPEX growth below our normalised revenue growth over time and the benefit that you get in this business in terms of high degree of our costs are variable and the ability to grow your top line is very beneficial in terms of the way we've levered to the bottom line at the end of the day as well. So reinvesting some of those OPEC savings back into growing the top line is something that we actively seek to do as well.

Thank you.

Thank you. Once again, if you wish to ask a question, please press star 1. Your next question comes from Liam Robertson from Jardin. Please go ahead.

Morning, team. Just two from me. First one just on active customers. Appreciate the jackpot weakness, but with that number falling to 8.6 mil, is there anything you can tell us about genuine churn versus jackpot-driven lapses? Anything you can quantify for us there?

Would you mind sort of just asking the question again or maybe just slightly rephrasing it? I'm not sure I follow.

Okay. Sorry, I've just jumped on the cause on a conflicting circle. So I'm just interested in, I mean, you know, half on half looks like customer numbers in total or active customers have fallen to 8.6%. I'm just interested if there's anything maybe in the digital cohort that you can tell us about actual underlying genuine churn in active customers as opposed to, you know, what has just been driven by that jackpot weakness.

It's predominantly driven by jackpot. We've got the loyal sort of registered, particularly the registered customer base. There's a very strong registered customer base that is omnichannel that sort of play both in digital and retail. I mean, what you find is you... When you get these sort of big spikes, these one-off jackpots, people just come in for those one-time events and then back out. The job to be done is for us to retain them. But in terms of the data that I see coming into the business, there's no structural issues in terms of the core player base.

Okay, perfect. Makes sense. And then, I mean, conscious of the comments you just made to the previous question around OPEX, you know, you've given out, you wanted to, you know, looking to automate a bunch of your processes, conscious that 50% of your OPEX base is currently labour. So I'm just conscious, you know, how we should potentially think about composition moving forward, you know, conscious that you might need to invest short term but long term if there's sort of anything that might change in the composition of your OpEx base.

Adam, if you want to add to that. But I don't see any sort of major deviations from, you know, we will continue to be prudent in terms of the way we operate the business. We're probably under-invested in some areas around AI at the moment, and we can find savings elsewhere to sort of offset those. But this is sort of an active analysis at the moment. But what I would say, it's a balancing act. You're definitely not going to see OpEx go up outside of target ranges, that's for sure.

Perfect, thank you.

Thank you. There are no further questions at this time. I'll now hand back to Mr Pickup for closing remarks.

Look, well, just thanks for joining my first earnings call at CLC and I appreciate you all following the business. Just to finish on, this is an incredibly healthy business. We've got millions of loyal customers throughout Australia, brands Australians love, and I'm looking forward to contributing and this opportunity to do more. So thanks. Look forward to further engagements and you can get on to your next call now. Thank you guys. Bye.