Greek Organistn Football

Ladies and gentlemen, thank you for standing by. I am Geri, your chorus call operator. Welcome and thank you for joining the OPAP-SA conference call and live webcast question and answer session to discuss the second quarter 2025 financial results. At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP-SA. Mr. Karas, you may now proceed.

Thank you, Geri. Good evening or good morning to everyone. I hope you all had an amazing summer and we are very glad to have you with us here today to share with you the strong set of Q2 2025 results. Hopefully you had a chance to review and enjoy the recorded video we have prepared for you and Chert earlier today. In a nutshell, we are pleased with our 6.5% growth rate in the first half of the year and we certainly remain confident for the rest of the year. I particularly wanted to highlight the strategic investment in Stichemann in the second quarter, targeting to create sustainable value for our shareholders, while at the same time distributing 0.5 euros per share as an interim dividend. I guess it's the best to jump straight into the Q&A to make our discussion more interactive. Kelly, over to you.

Thank you, Mr. Kados. The first question is from the line of Dražučka Mrapic with Eurobank Equities. Please go ahead.

Yeah, hello there and thank you very much for taking my questions. Hope you can hear me well. Actually three questions from my side, if I may and perhaps we can take them one at a time. So firstly on the dividend policy, on the interim dividend, how should we interpret the cut versus last year? You talk in your presentation about in essence preserving firepower for a for upcoming investment needs. I mean, just to put it plainly, if 25 profits end up higher year on year, should we expect the full year dividend to be higher as well? So that's the first question, thank you.

Okay, I will take this one. Good afternoon from Pavel Mukha. Yes, indeed. It's somewhat lower, the interim dividend, than what we could have distributed based on our half-year profitability, but still we opted for a more prudent distribution, taking into consideration the acquisition of the last 15% stake in Stichemann, which is a strategic investment of around 200 million euros, and also taking into account prospective Hellenic Lotteries license, which is coming So that's the reason, essentially, by slightly lower interim dividend. But for the total 2025 dividend per share, our dividend policy has not changed and indeed remains intact.

So, Pavel, sorry, just to clarify, so you mean that in essence the bulk of profits will be distributed to shareholders? Is this what you're referring to?

Yes, yes, exactly. So we remain committed to distribute the bulk of our net profits with a minimum of one euro dividend per share.

Okay, go ahead, thank you. The second question, because you mentioned the acquisition of the Stichema non-controlling interests, just from a strategic viewpoint, I'm basically wondering what the rationale is for continuing to operate OPAP online for non-exclusive games you know, operating separately from Stigman. So, in essence, having two platforms, especially in sports betting. If you could share some thoughts on that, please. Thank you.

Thank you for the question. I can comment. We certainly see a lot of reasons why to continue the dual brand strategy that we followed for several years and I believe the results confirm that being the right strategy. We are working with two different licenses, we have two teams dedicated and we have two different propositions to our customers. And while we are very happy with the market leadership of Sticheman, the contribution of Opap's own sports betting and casino vertical is certainly not negligible and showing exciting growth rates. as we have shared with you with the presentation. So we believe that your brand strategy is the right one and we certainly want to continue to pursue it further on.

Okay, got it. And the last question has to do with Joker, which has been the star performer really for the last few years. In your presentation, you talk about the long streak of jackpot rollovers in the second year running, really. And you mentioned the revamp of the product in late 2023. Just wondering, should we think about the too many back-to-back streaks of 2025 VARs and partial exceptions, let me put it this way, or is it like a new trend in your view? Thank you.

Well, it's a game of chance in the first place, but If that answers your question, certainly the concentration of hijack pods has exceeded our expectations in its statistical occurrence, but as a game of chance, it's a bit difficult to predict how it will evolve going forward. As we have said, we have intentionally changed the structure of the game where the build-up of jackpots should be more likely than it was before, fostering a cycle in which increasing price amounts fuel greater participation and excitement. So, essentially, the purpose of the change we have done and the ambition we had is being confirmed and we are very happy. I would say we will certainly need way much more time to be able to comment on any usual patterns of the new era, if I say.

Got it. Thank you very much. Thank you. Thank you.

The next question is from the line of Gurtesiakos with Perio Securities. Please go ahead.

Yes, good afternoon, gentlemen. My first question has to do with Hellenic lotteries. You've announced along with the first half 25 results announcement that you passed in the second phase of the international tender for the concession of Greek state lotteries. However, there were press reports today that indicate that the other competitor, the other interested party, Bright Star Global Solutions Corporation, did not pass in the phase B. Could you comment on the progress for the Hellenic Lottery's license and if you can confirm if you have any information if Bright Star is or not on the second phase of the of the international tender. And second thing it has to do, it's quite impressive the growth rates you've recorded in the online. I can see that in first half 25 you have an online casino at 22% growth year over year and in iLottery 30% growth year over year. Should, I understand this is a growing market, should we expect this to continue at these rates, double-digit growth rates, and if you gain or not market share in the specific categories, please. Thank you.

Thank you very much for your questions. Let me start with the Hellenic Rotary's question. Indeed, it has been confirmed to us that we are moving to Phase B or we are progressing to Phase B. When it comes to the other contender, the only thing we may refer to is anything that has been published officially by Superfund. And to our understanding so far, Superfund has not commented or communicated in their channels anything when it comes to the other contender, the Bright Star. So at this moment, we can... only speculate, and I understand what articles you refer to, but that's not an official communication from Superfund, and it's only Superfund that can provide any official information on that front, so I would like to abstain from any speculations about the progress or not of the other contender. But certainly, again, confirmed, we are progressing to the second round, and it's something that has been confirmed to us by Superfund. Sorry, that was the first question. Second, did I cover you, I hope, with the first one, so I can progress to the... Yes, Chris. Progressing to the second question about the growth rate, so obviously that's a little bit of a crystal ball thinking here as to what trends we will foresee going forward. We certainly believe this is a that online is a growing segment. The non-exclusives, in our case, sports betting and casino, continue to present a great opportunity when it comes to growth. The same goes for online lottery. Digitalization generally is the name of the game. So overall, I would say we can expect positive trends to continue. What exactly will be the trends and how much the trend so far will continue or will accelerate or will slow down? I think the answer will differ per vertical. And also very importantly, and that comes back to the previous question of the dual brand strategy, it's also different being the market leader and defending its position. versus being the challenger, which is the case of our OPAP non-exclusive proposition when it comes to growth. Growing from a single-digit market share in a double-digit rate is certainly easier than being the market leader with dominant position achieving the same. But we believe for both of our brands, for positive continuation and continuation of the good momentum, judging from the feedback from customers we have so far and the positive trends in activities we have shared in our presentation.

Thank you very much. Thank you.

The next question is from the line of Ponton Russell with Edison Group. Please go ahead.

Good afternoon, Jan. Good afternoon, Pavel. A couple of questions. First of all, on BLTs, you had very good growth in the course of 7% or so. You've been talking about a number of these changes in presentations over the last few quarters in terms of the cabinets, more games, et cetera. So what really kicked in in the second quarter to get the growth so high? Thanks.

It is indeed the result of our commercial initiatives, especially the machines upgrades, as you correctly noted. If you had a chance to see the difference before and after, you would probably understand why it certainly is a significant contributor to customers' activity as well as in our ability to attract new customers. The difference in customer experience is really significant and it is something also that is supported by various promotions and loyalty schemes that we are putting in place in engaging players. So I wouldn't necessarily highlight any specific action. It's a complex ecosystem of various elements that are influencing the performance of this vertical, but we are very happy to see that this year we are seeing the growth that we are seeing because VLTs are certainly a gaming vertical where we still have seen and we continue to see opportunities to explore.

Okay, that's great. Thank you. And second, On the instance and passives, again, you've had very good growth in the quarter, and I think that's the first positive growth you've had in two years or so. And the presentation refers to, you know, you've expanded the family of tickets in scratch, et cetera. So I just really wanted to confirm that it was solely that that led to the improvement or what else was happening within that revenue stream.

Well, honestly, if VLTs are a complex topic, then scratch and passives even more. So to give you a little bit glimpse in the kitchen, last few years, we are putting in incredible efforts, and I would even say disproportional efforts compared to the other gaming verticals, to try everything possible to revamp, boost, and grow the scratch and passives categories. For both of them, we believe there continues to be opportunities that we want to be exploring in many different areas. A lot of things have been tried. And the impact on customers' interest is a little bit mysterious. Sometimes we have customer researches indicating that they want something that then later doesn't work and the other way around. So it's really interesting and a bit mysterious category for us. Now, when it comes to this year, So referring to what I just said, it's certainly a result of continuation of the efforts across all the many different fronts of success, promotions, product, presentation, the point of sales, incentivizing the sales channels, etc., etc., that we in the 360 execution continue to focus on. If there is something to highlight that I believe impacted significantly this year, then it's really the new family that we have significantly impacted of the – how does it go? So now I lost the English word. The annuity games, in other words, the change to win money that you are receiving every month. So, annuity games kicked in. There was lesser interest in the previous year. This year, they seem to resonate well with the customers and they like it. a very new family of stretch products became actually the star of our portfolio and has the highest and biggest share compared to all the other families, even the long-time superstar of Lucky Cats. So I hope that longer answer gave you some additional insights. It's really a complex category where a lot of focus is needed. That's great. Thanks for the insights.

The next question is from the line of . Please go ahead.

Yes, good afternoon. Thank you for the presentation. A couple of questions on my side. The first is about the outlook for the second half of the year considering a very high base of last year. So how do you see the situation developing and would you expect to have a positive growth despite the base and maybe how the trends have been shaping up so far in July and August? Also, more of a traditional question, if there are any updates on the main concession that expires in 2030, so what's the current situation there? Thank you.

Thank you very much for your question. We are very glad, obviously, about the performance so far at 6.5% year-over-year, and we are optimistic going forward. Having said that, we continue to expect a normalization of our GGR growth rate in H2 versus H1 because of those tougher comparisons in the second half of the year. While also we need to keep in mind that H1 was positively influenced by the tailwinds from the favorable Joker jackpots that we have discussed before. But in any case, we remain very confident expecting solid four-year performance. So that's on the outlook. Now, when it comes to the main licenses, there I don't have any news for you at this moment. As we said many times, we are, of course, interested in extending our rights on our exclusive games licenses beyond 2030. We have publicly referred to this. However, the relevant discussions have not started yet. It is still too early, or maybe not too early, but still early for this, and should there be any development, we will, as always, inform you promptly and immediately. Thank you. Thank you so much.

The next question is from the line of George with Wooden Co. Please go ahead.

Yes, hello. Thanks for the presentation. In the previous session about the outlook, I've got a question in the outlook for your operating expenses. How do you see that evolving in the second half and how should we actually think about it for next year as well? If I'm not mistaken, you've got two sponsors in as well, agreements with two major football teams in Greece have actually expired. So I was thinking that maybe that would have an impact on your picks on the positive side. Thank you.

Okay, so OPEX indeed is growing up from year to date and will continue to grow in the second half of year versus last year. It's driven quite a lot by two main categories, really. The first one is the payroll costs, where it has a number of reasons. Those results and the growth in GGR doesn't come just by doing nothing, obviously. We are innovating a lot. There are many innovative agendas for which we need to attract new talent in the company, which is not cheap. So it's quite expensive positions and increasing the headcount. And also, we need to remain competitive in the market. Greek economy is doing very well. Everybody is hiring. There is a lot of competition. So, obviously, the salary has to be at a competitive level. And so that's on the payroll. Also, IT costs are growing because we are doing a lot of digital transformation activities, both in online but also in retail. That's why we have so good GGR growth, not only online, but also in retail. So also IT costs are increasing. And that can be expected in the second year. Indeed, there was some renewal of sponsorship assets at higher costs. And it's a very competitive market with video competition. It's quite tough competition for all these companies. sponsorship assets, and that drives the cost up. Nevertheless, our outlook remains the same, not only on the GGR side, as Jan just commented, but also on EBITDA. And so overall, we reiterate our outlook that our margin should still keep in the mid-30s, despite of the increase of operating expenses. So it shouldn't have any impact on overall margin and profitability. Thank you.

The next question is from the line of Puri Karan with J.T. Morgan. Please go ahead.

Hi. Thank you for taking my question. I have a quick follow-up on the question on margin. So just based on your full year guidance of 35-ish percent margin, I'm just wondering if it's right to think there would be a pickup in H2 margin, given that H1 was a bit below the 35% range. Is that the right way to think about it?

Yeah, kind of. But really, I think what you should bear in mind is that it will be in mid-30s, around 35. Yeah, that's a pretty safe assumption for any modeling, I would say.

Okay. Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you.

Thank you very much, Gali. And thank you very much to all of you for being with us today. It's been a pleasure as always. Our investor relations team will be ready to address and happy to address any additional questions you still might have and explore your inquiries in more detail. We will be looking forward to talk to you again in November upon the Q3 results announcement. Thank you very much for being with us today and have a great rest of the day. Goodbye.