Flutter Entertainment plc

Good afternoon and welcome to Flutter's Q4 and fiscal year 2024 earnings call hosted by CEO Peter Jackson and CFO Rob Koldrick. Please note this conference call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. We kindly ask that you please limit your questions to two. I will now hand you over to Paul Timms, Flutter Director of Investor Relations, to begin today's call.

Hi, everyone, and welcome to Flutter's Q4 results call. With me today are Flutter's CEO, Peter Jackson, and CFO, Rob Goldrake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will run through the Q4 financials and our new guidance for 2025. We will then open the lines for Q&A. Some of the information we are providing today, including our 2020 These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations and we undertake no obligation to update any forward-looking statement except as required by law. Also in our remarks or responses to questions, we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today, available in the investors section of our website.

I will now hand you over to Peter. Thank you, Paul. I'm delighted to provide an update on what has been a fantastic year for Flutter. Our strategic positioning provides a compelling investment opportunity. This includes access to significant growth markets and a scaled and diversified portfolio of local hero brands who win in their local markets through accessing our unique differentiator, the Flutter Edge. In 2024, we capitalized on these opportunities as we strengthened our leadership position in the US market, while globally, our local brands solidified their number one positions and took share in key markets, including the UK and Italy. We also grew into new markets with a very successful Fangio launches in North Carolina and Vermont, along with the addition of MaxBet in our international business. We've achieved this by leveraging the Flutter to deliver the best product for players. Our pricing capabilities give our players access to the leading same-game parlay products across multiple geographies, driving both engagement and continued expansion of our market-leading structural gross revenue margin. Our iGaming product proposition is going from strength to strength with the creation of Flutter Studios, which we believe will better harness our games development capabilities, and which complements the addition of further tier one supplier content. Altogether, this translated into excellent financial performance, with revenue growth at 19% and adjusted EBITDA $482 million, or 26% higher, in 2024. With leverage now within our medium-term guidance range after declining by nearly a turn in 2024, we will truly see the benefits of being an and business in 2025. Firstly, we expect Fangio's fantastic product pipeline will drive continued organic investments in player acquisition to sustain our leadership position in the US. Secondly, in the newly formed international division, we expect to add the SNAI and NSX acquisitions in the first half, further enhancing the scale and diversification of the group in high-grade markets. And thirdly, we'll get a four-year benefit of the share repurchase program with up to a billion dollars of repurchases expected across 2025. Turning now to our performance in Q4. In the US, we exited the year in a position of unparalleled strength, with a sportsbook GGR market share of 43% and an iGaming GGR market share of 26%. This means we close the year as the clear number one online sportsbook operator in the US, a position we have consistently maintained. and we have now also overtaken other multi-brand competitors to become the number one iGaming operator. This market leadership position has been delivered and maintained through our laser focus on product innovation combined with a disciplined customer acquisition strategy. The strong performance in the quarter was somewhat masked by the world's optimistic adverse sports results as we saw some of the most customer-friendly NFL results on record. While these short-term results led to a change in outlook for 2024, the transitory nature of these impacts, which are part of operating a sports club, has no bearing on the long-term position of the business, as we have absolute confidence in our leading pricing and risk management capabilities, and in the structural growth and net revenue margin targets which we outlined at the investor day. I've been really pleased with the strength and trajectory of the US business. Existing player cohort growth remains encouraging and the opportunity to acquire new customers remain very compelling with payback periods of less than 18 months and well below our two year threshold for investments. Our focus on product innovation helps to drive our structural gross revenue margin to 14.5% in the quarter. Parlay penetration continues to increase with NFL up 500 basis points from a high base as our market-leading, same-game parlay products continue to resonate very well with our customers. Our product pipeline is stronger than ever, with a number of new sports features launched in Q4, leveraging our market-leading pricing capabilities. These included increased betting markets across all major sports, a new live activity tracker for NFL, which has seen good early adoption rates, and greater ability for customers to tailor the generosity they receive. but more to come during 2025. We also continue to trial our revolutionary new YourWay product, with all states having access to this new, customisable way of betting NFL in the quarter. And we're now in the process of rolling out YourWay to NBA markets. Although it's really early stages, the engagement we've seen from customers has been very pleasing. And iGaming, products innovation, has also delivered us to our number one positions. Launches included sports-themed games such as NBA Super Slap, who we expect will help drive sportsbook cross-outs, and exclusive titles like Samurai 888 Kenji. We know access to exclusive games appeals to our direct iGaming customers in particular, as we laid out at Design Best today. We improved our iGaming rules proposition with the introduction of a new jackpot functionality on our daily prize mechanic, Fanjul Reward Machine, as well as trialling our new Fanjul Rewards Club loyalty programme. Combined, these features help to deliver exceptionally strong anchorage, up 37%. Our fundamental drivers are taking good momentum into the new financial year. The NFL season ended with a great Super Bowl, and as we look into 2025, I feel very confident about Fanjul's prospects. From a regulatory perspective, the US continues to be a dynamic market. On new state opportunities, we continue to push map expansion for both Sportsbook and iGaming. We also note the recent developments of prediction markets and opportunities that may arise for us there. We are also monitoring proposals for state gaming tax increases within the regulated sports betting market, and we're working closely with advisors and regulators alongside our peers to ensure the impact such changes can have on the regulated market are well understood. Irrespective of what means states may use to manage their budget deficits, as the largest operator in North America, we believe that we are in the best position within the sector to mitigate impacts should they arise. Outside of the US, we have a strong quarter with revenue growth of 14% where access to our flat edge capabilities is driving share gains across the portfolio. In UKI, we had another excellent year. We've now grown our market share by four percentage points over the last two years. Product delivery continues to be key to that success. In the quarter, Paddy Power's expanded super sub products drove increased pilot penetration and in turn structural growth revenue margin improvements. An engaging English Premier League has also driven high levels of player demand. Our iGaming proposition continues to improve with expanded free-to-play content such as the SkyVegas Guaranteed Prize Machine and a broader range of Tier 1 gaming content. In Italy, CSAL's poker players now have access to PokerStar's shared liquidity pool, quickly resulting in record prize pools and showing the direct benefits of access to the Flutter Edge. DeSalle's compelling omnichannel offering helped drive a 33% increase in Italian apps during Q4, with omnichannel players generating over one and a half times more online revenue compared to online-only players. Given its large omnichannel presence, we look forward to welcoming Snye into the group in the second quarter. Positive momentum continues across our key consolidating investment markets, demonstrating the benefits of our diversified portfolio and our capacity to invest for long-term growth. This is demonstrated well in India, where we continue to invest for the impact of tax changes introduced in October 2023, which temporarily impacted growth rates. The underlying can now be seen, with our growth 72% on a year-over-two-year basis. In Australia, player-driven momentum in sports remains a positive tailwind against the known softer racing market, with underlying trends playing out in line with our expectations during the quarter. Finally, and in summary, we believe that the group is very well positioned for 2025 and also to deliver our 2027 goals that we set out at our investor day. We have excellent momentum in our global businesses and we are delivering against our play well ambitions. Fangio has made a strong start to the year, and we expect to materially expand our fair base due to our market-leading products. The reorganisation of our ex-US businesses into our new international division will enhance our strategic focus on winning in our local markets, while our cost transformation programmes will ensure we maximise shareholder value. I will now hand over to Rob to take you through the financials and our guidance.