Playtech plc

Good morning, everyone. Thank you all for attending today. It's good to see a lot of familiar faces here. So on to slide two. I'll begin with the highlights before handing over to Chris, who will take you through the financials and the outlook. I'll then update you on our progress against our strategic priorities. Turning now to slide three. I'm pleased to report a strong performance in the first half, with adjusted EBITDA of 92 million euros, consistent with the upgraded expectations communicated in last month's trading statement. The overall performance reflects the revised terms of Caliente Interactive Agreement. We saw solid underlying growth within the B2B business. At the same time, we continue to make excellent strategic progress in core markets, in particular the Americas, where we have laid the foundations for significant growth in the US and Brazil. The disposal of Snytech, which completed in April, has bolstered our balance sheet, giving us the flexibility around capital allocation. Given the solid start to H2, we are on track to deliver fully-adjusted EBITDA for 2025 ahead of expectations. As we transition back to our roots as a pure play B2B business, the board remains confident in our ability to execute our strategy over the medium term. I will now hand over to Chris, who will take you through the financial performance and outlook.

Thanks, Mark. And on to slide five, please. Before we look at the numbers, I think it's important to note the two major events that took place in the first half of this year, which are, of course, the completion of the sale of Snytech, as well as the revised terms of our agreements with Caliente Interactive taking effect. These big changes have fundamentally reshaped Playtech, and we are pleased that the financial performance of the group, which includes the impact of these changes, has come in ahead of expectations. Now looking at the numbers, group revenue for the first half came in at 387 million euros down 10% year on year due to the impact from the revised agreement with Caliente Interactive. As a quick reminder, under the revised agreement which came into effect on the 31st of March, the additional service fee will no longer be collected, reducing revenue while direct costs are also slightly reduced. As previously communicated, our share of income from associate as a 30.8% direct equity holder is now included within group adjusted EBITDA. We've put a slide in the appendix that walks through the comparison and changes at revenue and EBITDA level so you can see the effect of the new Caliente Interactive Agreement has had in the period and how underlying group earnings have grown. Excluding the Caliente Interactive impact, group revenue was flat year-on-year in the first half. This performance also absorbed several headwinds we saw in the first half of the year, such as the Brazil regulatory transition issues, the implementation of VAT in Colombia, and the exit of a major operator from Asian markets. Adjusted EBITDA in the first half came in at 91.6 million euros ahead of consensus expectations prior to our August trading update. On an underlying basis, adjusted EBITDA grew 5% year-on-year in the first half, reflecting the strength of our core operations. We have maintained a strong balance sheet, ending the period in a net cash position due to the net proceeds from the Snytex sale. Finally, our free cash flow generation in the first half was impacted by the timing of dividend payments from Caliente Interactive totaling 20 million US dollars which were received post-period end. Turning to slide six. Looking at the B2B division in more detail, H1 revenues declined 9% to 348 million euros. On an underlying basis, revenues grew by 3%. Also on an underlying basis, Latin America saw revenue growth of 5% as the tailwind from Brazil's inclusion within regulated markets in our reporting was partially offset by the previously flagged headwinds in Brazil and Colombia. The U.S. and Canada region continues to see very strong momentum with revenues increasing 64%. Looking at Europe excluding the U.K., revenues grew 4% driven by Poland and Spain. In the U.K., revenues declined 3% due to the continued impact of an operator insourcing their self-service betting terminals. Elsewhere, in unregulated markets, revenues declined reflecting the reclassification of Brazil as a regulated market. From a cost perspective, and you can see more details with a breakdown in the appendix, continued investment into strategic areas such as live in Brazil and the U.S., was largely offset by tight cost control, which resulted in B2B costs increasing by only 2%. Now on to slide 7, where I will talk you through the performance of our B2C division. B2C revenue declined 17% year-on-year to €41 million in the first half, while adjusted EBITDA loss narrowed from €4.3 to €1.5 million. Happy bet! saw a 19% decrease in revenue driven by the closure of the Austrian business and the ongoing winding down of the German operations. Adjusted EBITDA losses narrowed significantly to 2.3 million for the same reasons. As announced in May, we have initiated the disposal process with another German operator, which includes the transfer of Happy Bet's German franchise partners and associated hardware subject to negotiations. This marks a key step in our exit from the non-core happy debt business. Elsewhere, our SunBingo and other B2C operations were impacted by enhanced regulatory requirements in the UK, which contributed to a 17% decline in revenue and a reduction in adjusted EBITDA. Turning now to slide eight, where we look at our net debt bridge from the end of 2024 to the end of June 2025. Following the disposal of Snytec and the payment of the special dividend, we received just over 300 million euros in net proceeds. As a result, we ended up with a net cash position of 77 million euros as at the end of June. It's worth flagging that this net cash position is elevated as there are outstanding liabilities from the Snytec disposal totaling just over 90 million euros. These liabilities, which are not due until 2026 and 2027, include a portion of management bonuses related to the deal, taxes on the Snitex sale, and dividends to holders of unvested LTIPs. Adjusting for these on a pro forma basis, we would have had a slight net deposition of 15 million euros at the end of the period. Turning to our borrowing facilities, In Q2, we successfully repaid the remaining €150 million outstanding under a €350 million March 2026 bond using a portion of the SNITECH proceeds. This leaves us with a single €300 million bond, which matures in June 2028, alongside our recently secured €225 million revolving credit facility, which replaced our previous facility and currently remains fully undrawn. On to slide 9, Taitac continues to maintain a strong balance sheet, which provides us with the flexibility to allocate capital in a disciplined and strategic manner. Our approach is focused on driving long-term growth while delivering value to shareholders. We are actively deploying capital to high growth areas such as the US, Brazil, and La Cucina, where we see strong momentum and scalable opportunities. In addition, we're investing in both new and existing structured agreements that support our expansion into regulated markets and reinforce our B2B leadership. Our M&A strategy remains disciplined. We are open to accretive acquisitions that align with our strategic priorities and regulatory trends with a clear focus on enhancing Playtech's position as a pure play B2B technology provider. At the same time, we continue to evaluate mechanisms for returning capital to shareholder, including dividends and buybacks, ensuring that any action taken is both sustainable and value accretive. This balanced approach allows us to invest in growth, maintain financial resilience, and deliver returns, all while remaining agile in a dynamic market environment. Turning to slide 10. As you recall, at our 2024 full year results, we introduced a new medium term adjusted EBITDA target of 250 to 300 million euros. We have a starting point of approximately 150 euros in adjusted EBITDA for 2024 when you adjust for the revised Caliente Interactive Agreement. I'm now walking you through the key levers we're deploying to reach this target. First, our U.S. business is in growth phase and as a result has annual losses of approximately 15 million euros. This is primarily due to the significant investment being made within the live segment as we have three studios now operational in the U.S. with small but rapidly growing revenue. Given the structural growth drivers and demand from operators, we see a clear path to profitability over the coming years. Strong operating leverage on the revenue growth translate into narrowing EBITDA losses and then ultimately positive EBITDA. Secondly, we have identified underperforming businesses within the Playtech group that contributed more than 20 million euros in annual EBITDA losses. Of that, a significant amount relates to HappyBet, which we've discussed, where there's a process underway to wind down that business. The remaining underperforming businesses will be addressed in the coming periods with actions already being taken. Next, as more we'll talk about in more detail, we are well positioned in markets such as Brazil and Mexico, partnering with the biggest and most ambitious brands, which should drive further earnings growth over the medium term. Finally, we continue to identify inefficiencies across our processes and footprint while taking steps to eliminate duplication. This will ensure our B2B business operates with the right cost base and that our resources are focused on the growth areas that we've just discussed. And finally, moving to slide 11 and our outlook. We've seen a solid start to H2 with performance tracking in line with normal seasonality. We plan to continue to increase investment in the second half, particularly in the US and Brazil, where we see strong and sustained demand for our products. Despite the increased investment, we're on track to deliver full-year 2025 adjusted EBITDA ahead of expectations, reflecting the strength of our core business. For guidance, we now expect full-year 2025 capbacks, which includes capitalized development, to be between 80 to 90 million euros, which is a reduction from our previous guidance of 90 to 100 million euros, which is due to lower capitalization rates and a disciplined approach to capital spending. We maintain our effective tax rate guidance of between 25 to 28%. Our financial performance and good strategic progress in the first half of the year keeps us firmly on track to meet our medium term adjusted EBITDA and free cash flow targets of 250 to 300 million and 70 to 100 million euros respectively. With clear strategic priorities, strong execution, and a strong balance sheet, the board remains very confident in Playtech's prospects for the remainder of 2025 and beyond. I'll now hand back to Mark to take you through our strategic priorities.

Thanks, Chris. Onto slide 13. I'll begin by highlighting two landmark milestones completed in H1 that fundamentally reshaped Playtech into a highly focused B2B business. Let's start with Snytech, a transformational deal and a clear example of our commitment to deliver shareholder value. We acquired Snytech in 2018 for 846 million euros at an attractive EV EBITDA multiple of 6.1 times. Alongside the Snytec team, we successfully transformed this business from a predominantly retail operator into a higher-margin, less capital-intensive, technology-driven omnichannel leader. In September last year, we announced the sale of Snytec to Flutter Entertainment for €2.3 billion, representing a premium EV EBITDA multiple of nine times. This transaction, completed in April 2025, delivering a cash return of more than three times our initial investment, with 1.8 billion euros distributed to our shareholders through a special dividend paid in June. On to Caliente Interactive, our most successful structured agreement to date. After a challenging period, we restored our strong and collaborative relationship with Caliente Interactive by signing a revised strategic agreement in September 2024, which completed at the end of March this year. This agreement represents a good outcome for both parties and lays the foundations for the next phase of growth for our partnership. Under the new structure, Playtech now owns a 30.8% equity stake in Caliente Interactive, a newly formed U.S. incorporated holding company for Caliente's online business. And importantly, this partnership is already delivering cash returns. Caliente Interactive declared and paid its first dividends to Playtech in early H2. On to slide 14. where I will outline Playtech's investment case. There are two elements that are important to understand when looking at the company and its prospects following the Snytex sale. Firstly, operationally and commercially, we are a high-growth B2B business providing technology to the majority of the leading brands in the industry. We provide these brands with our market-leading innovative content across a range of verticals, including the rapidly growing live casino segment, where we are gaining market share in key markets. One of our greatest strengths is our presence in some of the fastest-growing regulated markets in the world, including the U.S., Brazil, and Mexico. and we offer a range of innovative business models to ensure we are able to extract the appropriate level of value for the software and services that we provide. Taken together, we have an attractive set of levers that will see us deliver on our ambitious medium-term adjusted EBITDA and free cash flow targets set six months ago. Secondly, we have a collection of highly valuable assets on our balance sheet with a total book value of over 1 billion euros. And of course, book value is generally regarded by the market to be a conservative estimate of realizable value. Nevertheless, in the interest of prudence, we will use this measure. The largest asset by far is our 30.8% equity stake in Caliente Interactive, which has a book value of 726 million euros. Our other assets are at an earlier stage in their development, yet they have the potential to grow strongly and ultimately generate significant value for Playtech shareholders. In the U.S., our low single-digit equity stake in Hard Rock Digital gives us strategic exposure to a rapidly growing business with a market leadership position in Florida's online sports betting market. In Brazil, we also hold a nominal cost option on 40% of the equity in GaleraBet, which was amongst the first batch of operators to be granted a license in the newly regulated Brazilian market. I'm really excited about this business, and you'll hear me explain why in a few slides. In Colombia, we hold a nominal cost option on 50% equity in a leading online gaming operator, Wplay, representing a strategically valuable asset. Next, we have a valuable 49% equity stake in L-Sports, the real-time sports betting data provider covering over 100 sports with some of the lowest latency rates in the market, and the business is growing rapidly. Finally, we have equity stakes in various other assets, such as AlgoSports, whose profits have continued to grow, as well as assets such as Nostal and the Sporting News. And underpinning our investment case is our commitment to deliver shareholder value, including through shareholder distributions. So in summary, Playtech offers access to a high-growth B2B business, complemented by highly valuable assets, and a strong commitment to delivering shareholder value. On to slide 15. Here, I'll briefly outline the strategic priorities that will drive our progress towards achieving our medium-term adjusted EBITDA target of 250 to 300 million. Firstly, we will continue to prioritize regulated and regulating markets, with a clear emphasis on those offering the greatest long-term growth potential. Markets such as the US and Brazil are currently in the investment phase, but we are confident they will deliver substantial returns over time. Others, like Mexico, are already highly cash generative and provide a strong foundation for scalable growth. Secondly, we will concentrate our product investments in areas with the highest potential for profitability and return on capital. Playtech is renowned for the breadth of its product offering, but there are certain verticals that provide the greatest opportunity. We believe that live and casino present the greatest opportunity for growth, supported by our market-leading PAM Plus platform and our value-accretive services business. Thirdly, our transition into a highly focused B2B technology company is a natural moment to review our operational efficiency and agility, as Chris touched on. This means addressing underperforming businesses, streamlining operations, eliminating duplication, and building a leaner, more responsive organization that can adapt quickly to changing market dynamics and customer needs. By executing on those core priorities, we will optimize resource allocation, reduce structural complexity, and improve cash generation, positioning Playtech for sustained long-term success. On to slide 16. Let's now turn to one of the most exciting, strategically important growth drivers in our B2B business, our successful partnership with Caliente Interactive. The overall Mexican online market is set to grow 21% in 2025. But despite its scale, we think there is capacity for further growth in the years ahead. According to industry analysts, GGR per adult in Mexico averages $35. This compares to $65 in the Philippines, a market with similar demographics and digital infrastructure, but a much lower GDP per capita, suggesting a significant opportunity for further growth in Mexico. As many of you know, Caliente Interactive has long been the undisputed market leader in Mexico's online sector. Over the years, its technology platform has been finely tuned to reflect the unique preferences and behaviors of local consumers, giving it a distinct competitive advantage. At the same time, Caliente's scale enables it to invest aggressively in marketing, reinforcing its leadership position. This sustained investment has created a brand that is unrivaled in Mexico. For example, Caliente sponsors 13 out of 18 teams in the Liga MX, the country's top football league. With Mexico set to co-host the 2026 FIFA World Cup, Caliente's dominance is expected to reach new heights as the tournament will significantly amplify its visibility and further solidify its brand leadership. Beyond Mexico, Caliente's ambitions extend to other markets. Later this year, the company plans to enter Peru's newly regulated market, marking the first step in a broader expansion strategy across Latin America. At the same time, Caliente is actively exploring other markets across the region, carefully evaluating the most exciting opportunities for future expansion. Moving to slide 17. where I'll provide an update on the current and future growth drivers of our U.S. business. After signing partnerships with all of the major operators throughout 2024, we have seen very strong momentum in the first half of this year, with revenue growth surpassing 100%. A key factor behind this growth has been our ability to expand wallet share amongst Tier 1 operators. Our live casino business made material progress following a successful launch with DraftKings across the three largest iGaming states. By the end of June, we were operating more than 50 active live tables in our US studios, and we continue to invest in additional capacity to meet the strong and growing demand of our products. Our expansion with existing operators into new states creates a further avenue for growth. In June, we announced our entry into West Virginia, our fourth iGaming state, where we launched with major operators, including DraftKings, Rath Street, and BetMGM. We also expanded our relationship with Delaware North, launching online sports in Arkansas and multiple products in West Virginia. Through our equity stake in Hard Rock Digital, we benefit from their unique leadership position in online sports betting in Florida. The cash generated from Florida supports hard rock digital expansion into other states across the U.S. and other international markets where we are also positioned to capture value from their growth. Margin accretive platform deals are especially attractive given the value that accrues to Playtech when operators use both our PAM Plus platform and content. We now have three U.S. operators utilizing our platform with revenue from this subset growing significantly and we expect this to be an increasing contributor to our U.S. growth. Finally, we continue to prioritize the development of innovative content tailored to the U.S. audience as we look to increase wallet share amongst operators In H1, we released 20 new games, including branded titles such as Robocop Collectem and Deadliest Catch. Our content strategy is delivering results. Multiple Playtech titles consistently rank amongst the top 25 games in industry reports, underscoring our ability to compete with established suppliers and reinforcing the strength of our content portfolio. As we deepen our U.S. presence, our focus remains clear. Innovation, operational excellence, and supporting our partners to capture long-term growth opportunities. Moving to slide 18. Let's turn to Brazil. One of the most exciting and fastest-growing markets in the world. The official launch of Brazil's regulated online gambling market in January marked a historic milestone for the industry and a major opportunity for long-term growth. Industry analysts project the market to grow at 15% annually, reaching GGR of $17 billion by 2030. That said, as with any major regulatory shift, there have been some well-publicized bumps in the road to begin with. Brazil introduced some of the strictest onboarding requirements globally, leading to unusually high KYC rejection rates, and as a result, lower than expected volumes across the industry in the first half of the year. Given our strong partnerships with leading Brazilian operators, this has had an impact on us as a B2B supplier. But let me be clear. We see this as a temporary headwind. Our conviction in Brazil's future is reflected in our decision to invest further in the country. We are building a state-of-the-art live casino studio in Sao Paulo on track for completion by the end of 2025. This will allow us to deliver localized premium content with native-speaking live dealers creating an authentic experience for Brazilian players. To support this, we are scaling our local presence. Our team in Brazil is expected to grow to over 100 people this year, and we are continuing to invest in talent and infrastructure to capture this opportunity. We have signed partnerships with some of the country's leading operators, strengthened our position through our structured agreement with GaleraBet, And we are in the final stages of securing an agreement with a major player, which has the potential to be one of the largest operators in the Brazilian market. Let's now turn to slide 19, where I'd like to cover our progress in live casino. Throughout the first half of 2025, we saw strong and sustained demand for live, with revenues up 9% year-on-year. A standout region was the United States, where we delivered over 300% revenue growth following a series of successful launches with DraftKings across the three largest iGaming states. Across our 15 studios, we now have over 470 tables, an increase of 5% versus the end of 2024. In response to strong demand, we are investing in further capacity expansion across all of our U.S. studios to capture the growing opportunity we see. We are also expanding across Latin America. Live Casino is proving to be highly popular in Brazil. While our new Sao Paulo studio is under construction, we are expanding our Peru facility to meet the surge in demand and reinforce our leadership in the region. On the product side, we are building on the success of our landmark partnership with MGM Resource International. Earlier this year, we launched a dedicated studio on the MGM Grand Casino floor, bringing the energy of Las Vegas directly to online players in regulated markets outside the U.S. Along with the game show Family Feud, the studio also broadcasts a variety of interactive table games, all hosted in a fully transparent glass studio on the MGM Grand Casino floor, visible to the public 24-7. We also introduced Vision Blackjack, a game that replicates the look and feel of a live table while operating entirely on RNG technology. Unlike traditional live dealer games, it eliminates the need for human dealers and video streaming, enabling faster gameplay, lower operating costs, and highly scalable deployments. Live Casino continues to be a high-growth, high-margin vertical for Playtech. With strong performance in the U.S., expansion across Latin America and Europe, and continued product innovation, we are well positioned to capture the next phase of growth in this space. On to slide 20, where I want to highlight the growing importance of our services business, which is set to remain a key contributor to B2B revenue growth. Through partnering with over 200 licenses globally, Playtech has amassed significant knowledge on the gambling industry, including customer acquisition and retention, risk management, and operational know-how. In addition, Playtech can optimize its products to maximize their value for operators. Our services have been hugely valuable to partners, particularly those with strategic agreements in place. This is a key competitive advantage and an important contributor to their success. To meet strong demand, we are now rolling out our services offering to a broader set of operators, enabling a greater proportion of our licenses to benefit from optimization of Latex products and our marketing and operational expertise. Given our revenue share model with operators, this should act as a tailwind to revenue growth, providing a win-win model for both Playtech and its licenses. Finally, slide 21, where I summarize Playtech's investment case. Playtech has clear levers for medium-term growth. In terms of geographies, we see the greatest opportunity in the Americas, most notably the US, Brazil, and Mexico. From a product perspective, we expect Life Casino to be an increasingly important contributor. Given the significant investment across these areas and our ongoing work on operational efficiency and addressing underperforming businesses, the foundations are in place to achieve our medium-term adjusted EBITDA and free cash flow targets. We own highly valuable assets, such as our stakes in Caliente Interactive and Hard Rock Digital. Both of them, along with our other assets, occupy strong positions in their local markets, and we see significant potential for them to continue increasing in value. Our strong balance sheet provides the flexibility to pursue both organic and inorganic growth opportunities, while also supporting future shareholders' returns. We are confident in continuing to deliver shareholder value over the medium term, and I'm really excited about what is in store as we embark on the next chapter at Playtech. Thank you all for listening. Chris and I will now be very happy to take any questions you may have. And a quick reflection on DH, right? So I just turned the glasses. I just turned 52 weeks ago. big milestone for me. And I just celebrated my 20th anniversary with Playtech. So you should all go easy on me.

So just moving on to Q&A. So we'll first take questions from inside the room. And unless all of those are exhausted, we'll then move to the conference call line and take any questions there.

Morning, guys. David Brown from GoodBody. Three for me. Firstly, on the live from Playtech products, Is there any KPIs you can share on how this has performed versus comparable games in your live business? And then on the SaaS business, another very strong period of growth. How long do you think the future runway of growth is in that business? And then finally on the US, any kind of sense on timeline for the US to get profitability? Thank you. Sorry.

The first one, David, can you repeat that live comparable?

Yeah, so just any KPIs you can share on how customer metrics look on your live from Vegas versus your other live products.

Yeah, I think the Vegas one, it was interesting. It was a new concept, right? And we were, I think, both MGM and us were quite excited about it. Obviously, we're still ramping it up and I think 12 months ago, when many of us were at G2E in Las Vegas, we had a couple tables operational to Bellagio and a couple at MGM Grand, which were dual play. But in recent months, we've opened the whole studio at MGM Grand. And in parallel to all of that, we've been ramping it up with customers and rolling it out. Obviously, it's not available to anyone in the U.S., but it's being broadcast elsewhere. I think we had modest expectations, but the KPIs have probably surpassed our expectations. It's still modest. I would describe it as you know, a new adjacent product in terms of innovation and offering something new and a key part of what we're doing. So I think the KPIs are, you know, probably better than expected. However, overall, I would say, you know, in terms of impact, it's relatively modest. And you look at the, you know, 400 plus tables we have across the whole business and you're talking about a relatively small number. But nonetheless, it's something we've been quite excited about.

If I may just allow further, but I think it's too early to suggest and quantify, right? I think that what we do see is a very strong demand by various operators that decided to take the product. You have to understand that when you roll it out and we indicated that it is for online customers outside of the U.S. in regulated markets. which means basically that we need to go through the certification and licensing in each and every country where we would like to offer that, because it's a new product streamed from Vegas. We see strong demand for customers. The pipeline is there already secured. We are rolling out in different territories, and I think that we will be sometime next year, we'll be in a better position to quantify that, but it's looking very, very encouraging. We are very excited about this opportunity, as evident by the increased investments further extending the relationship to family-fueled game show and additional tables. So very encouraging, yet too early to quantify. Still small in size, given that it's early stage, early days. On SaaS, maybe I'll pick up, I'll continue with SaaS. We still believe that there are a long list of, there is a long list of customers that will onboard onto our products. We use now SaaS not only as a model for small, mid-sized operators, but also certain operators, such as in the US, such as in Brazil, the long tail in each and every country, in each and every regulated country. And therefore we still see a lot of demand and we still see the pipeline growing. Having said all that, there is also a very, very attractive opportunity for Playtech to increase market share. Today, Playtech represents less than 5% on average. Playtech represents less than 5% of the overall market share for the small mid-sized operators. If we only double that to become 7% or 8% or double it to 10%, we double the business. together with the existing customers. So it's horizontally to additional customers in additional territories where existing customers extend together with us to additional countries, such as Brazil is a good example, even in the U.S., And beyond that, obviously, vertically, where we can grow together with them and grow the market share of Playtech. We are developing, we developed earlier this year an entire program of campaigns working together, campaigns including promotions, together with the operators to expose the Playtech portfolio within the portfolio that they had before. Remember, these are small, mid-sized operators. Some are also big operators, and they never had Playtech. It's for the first time they have Playtech, and we now work together with them on a program to expose Playtech, expose it to end-user customers, and this is why we believe that it still has a lot of potential going forward.

Then on U.S. profitability, it's a bit of a moving target, but that's a positive in that What we're seeing in the U.S. is as we build the infrastructure, which is largely live casino, but more than that, but the big majority of the investment is live casino, both CapEx and then OpEx to run these facilities online. As we're building and expanding, it's just leading to more demand, which then requires more building and expanding. So if we stopped sort of expanding, we could probably get a break even in profitability in, I don't know, 18 to 24 months. However, that would not be the right thing for the medium to long term for Playtech. So, you know, at the moment what we're seeing is, and we're sort of trying to keep up with it, to be honest. So that requires more investment. So that's going to delay profitability. So at this point, probably a few years away, if we're being honest. But, again, it's a very positive thing because we're seeing a lot of demand for our products in the U.S., particularly live.

Thank you.

Thank you, it's Rebecca Chacha from Investec. So I have three questions on the same subject actually. Sweet steaks in the US. There's been a lot of noise on the press regarding the course case in California. Other companies have been involved, you haven't been mentioned, but I wanted to know if you can. First, if you can quantify what is your exposure to that business. And secondly, which states you actually operate in? And third, what is your position going forward? If you're doing it, do you want to keep doing it or will you select state by state? What's your view going forward on that?

I'll take the first part on quantifying it and then leave the rest to more. On quantifying it, I mean, overall, we see it as immaterial. But just to give you a bit more color around that, you know, circa 1% of group revenues or single-digit millions kind of amount on a revenue basis. So a small amount that we largely consider immaterial.

Yeah, and I'm happy that Chris started because he put it into context, right? It's 1% of the overall group revenues. I would say that we always look at a conservative approach. And this conservative approach meant that we only worked with a very selected few operators of size that we knew obtained certain legal advice alongside Playtech in only selected few states. So from the outset, Playtech has not been involved in many of the states that some other operators do operate in and other suppliers supply their software and services into. Our approach is very conservative. We monitor the developments. Our model in each and every state is somewhat different. I won't get into the individual states. There is a list, not a very long list by the way, left. And we obviously take a very conservative and prudent approach towards with stakes. We were one of the first to pull out of California, even ahead of anything happening there. But this is the nature of Playtech. You know, sometimes you pull out of the market. Sometimes you buy into Hard Rock Digital before the market is regulated when there is still certain, obviously certain concerns about whether Hard Rock will be able to operate in Florida. And I think that it's the natural development, putting it back into context, it's 1% of revenues. We take a very conservative approach. We will follow the fluid changing and fluid regulatory environment in the United States, and we will continue, and this is the most important thing, we will continue to further establish ourselves in the regulated states across the US with the largest and leading online gaming operators, and this is our focus. It was the focus, it is the focus, and will remain the focus going forward. I think it's evident by the growth, the 100% growth in the US, 300% growth in live casino. We only just started, and I think this, alongside the fact that it's only 1%, put it in context and our approach to the U.S. and the activity in the U.S. altogether.

Can you just confirm these revenues are classified under unregulated revenues?

That is correct. As was Brazil before it was regulated, even though many refer to it as regulated.

Morning. James Deacross from Jefferies. Just a couple of me, please. Firstly, just in terms of capital allocation, I'd like a sort of newish slide. What would you be comfortable with in terms of leverage going forward, either for buybacks or for M&A? Secondly, just in terms of UK tax discussions, have you got a view on what we should expect and the implications for Playtech? Thank you.

Yeah, I'll take the first one on capital allocation on leverage and then more conflicts on the UK regulation. On leverage, and this is a, you know, there's no change. This is what I've said in the past, but I see it more as a medium term sort of target and not something we would, you know, look to get to immediately. But one to two times net debt debita is, I think, where we'd feel comfortable operating. Obviously, the numbers you've seen today, we're in a net cash position, so it's very under levered. However, I did flag some of the liabilities that sort of aren't captured in that number, which takes us to a small net debt position. But obviously, that gives us flexibility to increase leverage. I think we would do that in a measured way, not in one fell swoop. But it's something I think we will look to do over time is to get that leverage back to a probably more efficient level.

And the second question was the implication of the taxes. the tax reform in the UK, right?

And maybe if you have a view around what you think that might be.

I don't think that we have a view. Remember that we are one step removed. We always adapted to any changing market conditions, including changes of regulations, regulatory changes, as well as tax increases. However, I will say that we truly think that it's important that the government engage with the operators and understand the implications. of such increasing taxes. We understand policy makers, we understand the fiscal pressures. However, sometimes there are some unintended consequences. You take the Netherlands, for example. What happened in the Netherlands, they increased the taxes and it pushed the industry towards illegal activity. At the same time, it created a shortfall in tax receipts of 200 million euros. So sometimes there are some intended consequences for increases in tax. I will add that it's not yet clear because we have gone through certain changes in other territories. However, we also experienced that in the UK when they first introduced the tax. And I can say that it's not yet clear how it will evolve and develop because sometimes what happens, like I said, some go to illegal, but the government, the UK government has a better enforcement approach in the market. But it does lead to operators leaving the market because it's not sustainable for them. And in this case, the type of customers that Playtech has, i.e. the largest and leading operators in the market, as a matter of fact, may over time benefit from an increase in tax. So increase of tax is... By definition, not a great thing, day one. May have unintended consequences, but the longer-term implications are not yet clear for certain type of operators, i.e., the leading and largest, which are the type of operators that LaTeX has.

Thank you. Ivor Jones from Peel Hunt. Happy birthday again.

Thank you very much.

Clearly small. You talked about cost-cutting. You talked about, I think, cost growth in the first half of around 2%. Can you just help us give some way of scaling what the cost-cutting potential is within the plans to increase investment in certain parts of the business, that building block towards the EBITDA target? Secondly, Brazil more. You talked about hoping to sign up another big licensee. With and without that licensee, is there a way of you talking about your percentage share of the Brazilian market? We can make a forecast of the total, but what do you think your share might be of your part of that market? And then last one, following up on David's question about the U.S., it sounds like it's like a fully costed local business. So does that mean it's mature margin is 20% EBITDA or is it drawing on a lot of group costs and it's a 40 or 50% contribution type of business? How should we think about scaling that opportunity? Thank you.

Yeah, I saw I can take the first and the third and Mark can take the middle one. Cost growth and cost cutting. I think if you look at the slide in the appendix, The numbers won't be exactly like that every time, but I think that's sort of our goal going forward in that what you don't see in those numbers is that we've removed costs from the business. So costs have gone down. So you can see the lines, you know, like operational costs, things like that are generally flat. However, live, an area of investment, you can see a significant increase in costs because we're, you know, we're still investing. And all that together leads to a relatively modest increase in overall costs. So we're, you know, we took... In 2024, we took over 20 million of costs out of the business. Again, costs overall still went up a little bit in 2024, but there was a significant amount of cost cutting that happened. The year is not over, so I won't give a number in 2025, but we've taken further costs out of the business, but then continue to invest in other areas. One thing that I think is a given is the underperforming businesses that I flagged that have been a drag. Whether you consider that cost-cutting or not, it's an underperforming area, which is a drag on EBITDA, and we will address that. We will not be sustaining 20-plus million of EBITDA losses indefinitely. Obviously, we talked about the happy-bet business, and that's being addressed, and we're in that process, and we've started – processes around other assets as well. So that's an easy one to say that in the future that $20 million of loss will not be there. Maybe just since I'm already talking, I'll jump to U.S. margins. So in U.S. margins, I think they will be lower than group margins for the main reason it's and you have to build live casino facilities in each, not necessarily every state, but West Virginia is allowing you to use facilities in the other states. But the big states so far, New Jersey, Michigan, and Pennsylvania, have required you to have facilities in-state. And obviously, Lifestino is a scale business. And you look at our facility in Latvia or Romania, some of the big ones, we can serve from there, many, many locations around the world. So you get a lot more operating leverage and scale benefits out of those facilities. The U.S., the way it's at least gone so far, it's not the same model, right? You need to build multiple facilities. So that will put a cap on margins, so to speak. So without putting numbers on it, I do think U.S. margins over time will probably be a bit lower than say some of the group overall. But that being said, the U.S. margin, sorry, the U.S. opportunity is so significant and we're so underpenetrated there still from a market share perspective that, yes, maybe margins will be a bit lower than the group, but the magnitude of the opportunity there for Playtech, it can be one of our largest markets over time. So, you know, we're as convinced as ever about the investment we're making in the U.S.

On Brazil, as you know, the market has turned into a regulated market in the beginning of the year. They introduced the strictest onboarding process and the strictest set of regulations worldwide, more than the U.S., which had a severe impact on the operators. Some operators saw an impact of 20%. Other operators saw an impact of 70% on their business. However, and this is why we were very focused in the first four, five months of the year in order to ensure that our software and our platform will accommodate the new onboarding requirements and will do that in the best way. Today, Platec customers onboard fastest in the market. It's being measured every month. And within four to five months, not only we improved it, we are now market leaders in terms of the onboarding process in Brazil. Given the fact that the numbers are picking up, the levels of GGR that we saw in August is at the same level we saw before regulations were put in place. After the market went backwards significantly, remember that there is tax involved. So there is, I'll be very open and say, there is still a small impact from, not small, but there is still impact of the tax because it's now deducted. So from a royalties perspective, we are not yet where we need to be, but it's growing. We see accelerated growth. We see all the operators improving the onboarding processes. In terms of market share, it's hard for me to estimate because we have a partnership where I know we have more than 50% market share across all content and products that are provided by the operators. And we have other operators, Betano, Bet365, and a long list of other well-established operators where Playtech obviously is amongst many others and it does not provide a platform and it does not provide scores. So we believe that our share of wallet is more 5% to 10%. I think that the way we approach it, now that the market is stable and growing fast, the way we think about it is growing organically with existing customers, extending to new customers that are not yet our customers or that we already secured an agreement with but have not yet agreed. a gone launched or not yet launched sorry um extend the relationship that we have with the group of galera bet which consists of today four brands right not just galera bet it includes also luva bet f12 and brazil bet and as we indicated earlier i can't name it as of yet but we are in a advanced stages of discussions with what we believe will be one of the largest operators in Brazil. I can tell you that It's a name, it's a brand name, it's a company that I, in my entire 20 years in Playtech, never had as many positive feedbacks about the potential of a company like that. Of course, all jurisdictions, including the U.S., just to put it into perspective. Again, we can't name them as of yet, but it's a massive opportunity for us. They have access into the market. and they are very well established in the market, not yet in online sports betting and gaming, but definitely a very significant opportunity for Playtech. So market is growing. Market has gone through the first cycle of regulatory changes that had a severe impact on the business. Now stable, fast-growing, Playtech extends its reach together with existing customers, new customers, its partnership, structured agreements with GaleraBets, and hopefully soon a new agreement that will have a significant, that presents a significant opportunity for Playtech in Brazil going forward.

Is the new relationship potentially another 2% on top of your 5% to 10% or another 10% on top of your 5% to 10%?

What do you mean the 2% to 5%?

Maybe you thought roughly your market share of operators in the...

So in certain operators, in the largest, well-established operators, like BetanoBet365 and others, I believe that LaTeX is 5% to 10%, right? For each, right? It's amongst them. For GaleraBet, for example, given the fact that we work together, they use our PAM+. as part of the infrastructure. They have our sports, so they onboard through sports, they onboard through casino as well, but a lot of the customers come from sports and then convert to gaming. Playtech has a 50% market share, 50 plus percent market share. With this customer, I believe that Playtech will have a significant share.

I understand now, sorry, I didn't understand the first answer. I was trying to understand Playtech's share of the whole Brazilian market. I think you're answering about Playtex.

Yeah, but it's very hard to ask. I need to do the calculation. I don't have it out of the top of my head. I apologize because I need to calculate the 50% of galera bet and each share within the market, and then the operators that we have, the 5% to 10% of those we operate with, those that just launched, those that will be launched, and then this new opportunity. But I think that the way I described it just indicates and is important you know, it's evident that Playtech is, why Playtech is so excited about Brazil. I will come back to you. I'm not trying to avoid it. I safely don't want to give you a number that I can't stand behind, right? So I'll do the calculation and hopefully by the end later this year, we will have a clear view because the numbers are also changing. Remember, some of our operators tripled over the course, those that went down 70%, right? Tripled the business since the beginning of the year to date. So a lot of changing, a lot of moving elements there. I will come back. I'll try to come back with some answers so you can also model that and we will try to be as helpful as possible in this matter.

Thank you. Hi, good morning. Richard Stieper from Deutsche. Two questions, please. One on Caliente, another on Brazil as well. In terms of Caliente, you mentioned that they may be looking to expand outside Mexico. Are they a well-recognized sort of brand or have any sort of presence outside at the moment? And in that case, would you expect them to have to sort of invest quite heavily? And consequently, do you expect any impact on potentials of dividends and payouts? Or do you expect dividends and payouts to continue to grow despite them having to invest? in new markets, that's the first question. And in terms of Brazil, just to follow up what Ivor was saying, is this new partner, is this new partner which you will be announcing shortly, is that going to be more of a structured agreement or is it more just kind of a is it so, and would you expect it, would you expect over time to outperform the Brazilian growth market, so to go more than 15%, so given your positioning at the moment in terms of, you know,

in some of the larger names but will partners partners with some of the smaller names do you still expect to grow more than 15 over the next five ten years okay so on caliente i would say that caliente is a very well recognized brand also outside of outside of mexico they do a lot of marketing activities that are picked up by different neighboring countries There is also one other or two elements that are kind of almost one and the same, and it is the marketing. You have to understand, when someone advertises on ESPN, ESPN is a certain, just as an example, right, but it's the same for other media providers. certain media providers are shared among certain countries, clusters of countries across Latin America. So when you advertise on ESPN, it will be picked up by definition. If Caliente advertises on ESPN on a certain video stream, it will be picked up by all the audiences in the countries that ESPN streams into, and therefore, and this is why not only not only it will be picked up, but it will be alongside people that follow the Mexican League. So some people will follow the Mexican League, but you can argue that certain people in Peru will not follow the Mexican League. But the countries that they are looking into share the same media channels that they already use and invest into, and therefore, by definition, the end-user customers are exposed to the brand Caliente. And this is part of the approach that they take when they select where it is best for them to establish themselves. Also, obviously, the competitive landscape, the market entry point, market access, licenses, et cetera, et cetera. Has this answered the question?

Yeah, I guess the question is if they have to, normally when you enter a new market, there'll be some loss making for a short time, I guess. It's very cash-in to be in just Mexico at the moment. So will that impact?

Yeah, so I will say they look at the competitive, they look at the development of the market, right? How young the market is. So Peru is relatively new market, right? It's only just been regulated. So it's 11 playing field, right? Secondly, the competition, they looked at competition. They saw that they can compete well against the other competitors. Yes, it will come with certain investments into marketing. specifically into Peru alongside certain other marketing activities that they already do that are picked up by the end user customers in Peru. But they believe and we strongly support their view that they have more than a fair chance to become one of the leading operators in Peru. They will all operate it centrally from their existing operations, obviously. So there are some operational leverage there. So altogether, it actually ticks all the boxes for them in terms of licensing, the development of the market, the competitive landscape, the marketing being used already, and the marketing investment they intend to allocate for the Peru market.

And just to add, I think you were getting at financial implications. I think they're going to be relatively modest in entering these new markets, so they're not going to come and be uber-aggressive of marketing spend to the point where it's going to impact our share of income drastically or our dividends. There may be an impact, or maybe you wouldn't see the same level of growth. Remember, there's still growth to come in Mexico, as more outlined on this slide. So I think they can balance continued growth and use some of that for expansion in these other markets without having, you know, a very material impact.

Yes. On Brazil and the 15%, right, 15% is a big number. So I don't want to get ahead of myself and commit to more than 15%. However, I truly believe that we lay the foundations for accelerated growth that potentially can be more than the 15%, or the market growth. If the market growth is 15%, then Playtech will be able to grow vertically with existing customers, horizontally with additional customers, alongside that with Galera Bet Group, and alongside that with this potential customer of Playtech. I think that when you add all of that together, Playtech has the potential to exceed the market growth, whether it is 15%, 17%, or 12%. But I'm not yet ready to commit. Once we announce, I believe that we will be in a better position because it will be another building block which will be significant, which brings me to the second part of your question, whether it is a structured agreement. Structured agreement is – the definition of structured agreement for us is the combination of software and services. So you can argue that it's structured agreement, but it will likely not – involve equity or an option for equity. It will be a very comprehensive relationship that will involve software and services that is very lucrative and attractive for Playtech. Thanks so much. Thank you.

Are there any more questions in the room?

Hi, Harvey Robinson from Pamela Liberum. Just a quick question in terms of going forward in terms of disclosure and KPIs as you become more software and services again. Have you got intentions to give us a feel for where gross margins would be on a more traditional basis? Would you be looking at things like net retention and churn that we would look in software? Are those things you might start talking to over time? I don't expect to happen overnight.

Yeah, I think I think disclosure as a whole, without necessarily referring to the specific KPIs you mentioned, Harvey, but disclosure as a whole I'd say it's something we're looking at. It's something I think as any company evolves, your disclosure and KPIs you provide needs to evolve as well. And obviously, Playtech this year in particular has undergone significant change, kind of as more said, back to our roots as a B2B technology provider. So I think looking at the KPIs you provide and if there's Are the ones we're giving now the right ones? Are there any additional ones? It's something we do need to consider. And even just looking at our B2B business, it has changed a lot in recent years with SaaS that we've talked about. So I think alongside that, we need to keep looking at which KPIs we provide. And some of the ones you mentioned are certainly ones we'll give strong consideration to.

Yeah, I don't want to put Chris on the spot here, but I will begin to develop the conversation. I think that it's extremely important now that we move back to our pure Play B2B status. I think that once people will understand the barrier to entry, the stickiness of the Playtech products, as well as the low churn rates, I think that people will start understanding better the quality of the offering of Playtech, which will value, which will allow people to value the relationship. You know, some of our relationship, I joined in 2005. Like I said, 20 years in Playtech. So, and I remember having, you know, I remember Bet365 back then, right? And Betano is a customer from day one and still is the case. And so, and it is the same with Betfred and the Toad, the Toad, now the Toad is part of Betfred, that are customers of Playtech for the last 20 years, never left us. And the same goes with other customers that join Playtech, like I said, very low churn rates. So I'm very keen to better understand how Playtech can, what KPIs will allow people to understand better Playtech and highlight the strength of Playtech because I think that there are a lot of trends that are not fully understood. Maybe understood, but not fully understood by the market and the shareholders of Playtech. And it can be very helpful. It also helps us to improve where we need to improve, right?

Thanks. Can I go back to Rich's question? Is there cash sitting in Caliente to fund investment? Because I guess we would probably both assume it would come out of operating cash, but is there a cash pile sitting there to fund it? And the second thing, on slide 24, when you show adjusted EBITDA excluding the Caliente impact, and we get to 61.9, is that taking out the contribution in the first quarter from the old arrangements? but not adding back in pro forma what you might have got under the new arrangements?

Is it quite a hair-shirty number? So the first part of the question, they keep working capital, and now that can change if they're – not that they've done M&A, but hypothetically, if they were doing small M&A, they could keep a little bit extra cash for a period. But generally, they keep a few months of working capital in line with the shareholder agreement we have in place. So they're not sitting on loads of cash or anything like that. They generally return it other than sort of a few months of working capital needs. In terms of the... maybe we take it offline and we can walk you all through it later either or anyone else. But generally, we've tried to adjust both numbers to make them apples to apples so that you can see the trend and the numbers on a like for like basis. But let's maybe take that offline and we can walk you through it step by step.

Thank you.

If there are no more questions in the room, Can we move to the conference line and see if there are any questions from there that we can take?

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. When preparing to ask your question, please ensure your device is unmuted locally. We have a question from Andrew Tam with Rothschild & Co, Redburn. Your line is open. Please go ahead.

Hi, guys. Thanks for taking my question. Good morning and happy birthday. Just one question from me. Could we get some more colour on your unregulated exposures? So on my numbers, there's about 19% of good revenues in unregulated. We've heard US suites is just 1%. Can you give us some more colour on where the other 18% is? And then second to that, can you give us an outlook on what you expect to happen to those unregulated revenues? Do you expect those to shrink? Are you actively shrinking those or not? uh is that a part of the market that would be increasingly less of a focus uh over in time and just naturally uh shrink by attrition and then uh finally i just wanted to think about i guess what are the longer term impacts on that uh do you do you regard those exposures to be hard higher margin and and what do you think will happen as that shrinks back

Yeah, so unregulated. I'll run through some of the numbers. I think our percentage might be a little bit higher than what you suggest, Andrew, particularly if you include SunBingo and HappyVet, which are fully regulated. So I think we're well into 80% being regulated, so a relatively small amount unregulated, certainly compared to others in the industry. Unlike perhaps in the past, at Playtech, we don't have a very high degree of concentration in any unregulated market. It's quite a long tail. But to give one example, one of the biggest is the unregulated parts of Canada. So obviously Ontario and Canada goes under-regulated, but the other parts of Canada are under-unregulated. And I use that as an example because that's the type of unregulated markets we want. Similar to Brazil, which last year was unregulated and now it's regulated. We expect further parts of Canada to regulate. So I wouldn't use the word attrition that you sort of used in your question, Andrew. I think it's more it's our strategy. Our strategy is to focus on regulated and soon-to-be regulated markets. So you'll see this transition here. and yes, unregulated should go down, but it's not about us necessarily targeting to exit or reduce it. It's us targeting markets that we expect to regulate. So they'll stay in unregulated. Sometimes these unregulated markets grow like Brazil did in advance of regulations. So you might see it go up in a period, but then it'll take a step down when it moves to unregulated. So I think that's the way to think about unregulated, both numbers and sort of how they fit into Playtech. So they are not a focus other than markets that are unregulated where we see a path towards regulation. So that's what we focus on. But there's no particularly high degree of concentration there, like I said, and it's markets like the unregulated parts of Canada. I think that they make up most of that with a relatively long tail of different jurisdictions.

Thank you.

We now turn to Halvard Badruin with BNP ConEA. Your line is open. Please go ahead.

Thank you, and thank you for taking my question. I just have one. Playtech or anyone affiliated with Playtech procured the so-called report on Evolution AB written and released by the Israeli company Black Cube back in 2021.

Not sure what was the question.

Had Playtech or anyone affiliated with Playtech procured the so-called short report on Evolution AB written and released by the Israeli company Black Cube in 2021?

Obviously, we can't say. It's not a question for us. It's a question for people involved in this matter.

Okay, thank you.

Okay.

We have no further questions. I'll hand back to the speaking team.

Right. No more questions yet. That's it for now. So I'd just like to thank you all for attending, and the team will see you in six months for the full year results. Thanks, everyone.

Thank you.