Lottomatica Grp Spa U/Adr

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the Lottomatica Group's 9-month 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Mirko Senesi, Head of IR at L'Automatica. Please go ahead, sir.

Thanks, operator, and good morning to everyone. Welcome to L'Automatica Q3 results presentation. I'm here today with our CEO, Guglielmo Angelozzi, and our CFO, Lorenzo Vallanca. Now the floor directly to Guglielmo for the presentation. Guglielmo, please.

Thanks Mirko and good morning to everybody. Happy to announce another very strong quarter. We are page number two of the presentation. The quarter has been very robust both in financial terms and in competitive terms. ABTDA is up 18% in line with the increase that we had in Q2. Market share is at record high on the entire portfolio. This is driven by the performance of the historical brands, which reached a peak of 24.8%. So we achieved a record high on the entire portfolio, notwithstanding the migration of PwO. PwO is at its peak. lowest during the quarter, but of course, because we completed the migration during the quarter, but of course it's on the path to recovery and we already see very encouraging and strong signs. So very good quarter. Page number three of the presentation, and this is not the end, of course, because there's more to come, we believe. with the PWO integration completed, IDOF plan, with a lot more product and tech innovation, which has been done during the quarter, and having a positive online regulatory backdrop, we think that there is room for further organic growth. This will generate, of course, additional cash flow, and so discipline on capital allocation and focus on shareholders' return will remain key. Now, let me focus on a few points that we have highlighted in this slide, namely the PWO integration, the completion of the PWO integration and the implication of these, all the jobs that we've done in terms of product and tech innovation, and how this will reflect potentially into additional market share gains. and then of course on capital allocation. Now to start with PwO integration, page number four of the presentation, you can see quarter by quarter what I was mentioning before. So the strong, very strong track record of the historical brands, which gain 3.2 points of market share, compared to quarter one of 2024. We're having a look, give or take here in this slide to the last two years, quarter by quarter. PwO, as you can see, has been pretty stable until the beginning of the migration. At the completion of the migration in Q3, it reached its negative peak, but then restarted to go up after the migration was completed. Of course, this happens because during migration, pre-migration and during the migration, you freeze the product implementation and all the innovation on the old platform. There's very limited CRM activities that you can do. And also when you execute the technical migration, you actually freeze the customer base in order to migrate clients. But then of course, when the customer base, when the brand is onboarded on the new platform, on the group platform, you can restart all CRM activities. You do a bunch of targeting to do reactivation of the customers which have been impacted in migration. You can do much more effective CRM. You have a better product, of course. And in the case of PWA onboarding, the group's platform, we have the availability of L'Automatica Core, which is our proprietary Martech platform. which is going to be a very strong lever for the competitiveness of PwO. So on page number five, we see a little more in detail what the anticipation of the migration has implied. Of course, on the negative, higher impact, negative impact on the revenues in general and compared to historical brands in the year 2025, because of course with the migration, with all the Slowdowns that I just mentioned, revenues also slow down, so there's been a higher impact in 2025. But on the other side, you have an anticipation of the synergies, so you see more synergies in 2025 actually than planned. This results in basically no effect on the group's EBITDA that we estimate at circa 860 million euros for the year, assuming the year to date to September and assuming a normalized payout for Q4, and revenues that we expect to be at 2 billion point 27 for the year. Now going on to the second block, so PwO is completed, no impact on EBITDA in the mix of revenues and anticipation of synergies. And the second block is product innovation. As I mentioned, we've done a lot of product innovation in this quarter, especially in iGaming. As you can appreciate from the slide, there's been a constant progression in terms of new content launch through the years. it's important to innovate and make available new products to players to give them opportunities to choose. And then, of course, you have to present these opportunities in the best way possible ways through your apps and websites. But we've continued to increase the throughput of new games through the years and also in in 2025. Another key point here is that we focus more and more on exclusive content. Exclusive content means content that for agreements with the top providers we get on a time-based exclusivity, so we have an advantage towards the market. And you can appreciate from the slide that this is 10 times the amount that we had in 2021. So we're focusing a lot on this. The concept here is providing more content, innovation, and differentiation in terms of content through exclusivity. But time and exclusivity is not enough, so lately we've been focusing on another concept, which is bespoke, tailor-made, exclusive content. Now, we have a lot of experience and know-how in B2C online. We have know-how in omnichannel, which means in terms of product games with a very good payout. And we have our own studios, so also we know how to build the products. This allows us to be able to ask for specific products which are designed on purpose for us by top third-party providers. And of course, we have full exclusivity, not time-based, on these products. This increases the distinctiveness of the offer and also improves the product portfolio lifecycle. There's a couple of data points here. Of course, this has not been going for long, but it looks to be very promising. We've tripled the lifecycle of the games with this bespoke exclusive content. And there's a couple of example here of a couple of games. One that we launched the first experiment in this one year ago, which has shown a massive premium in terms of turnover compared to the other launches that we've done in the same period, 18 times more. And another game that we recently launched, which is currently in our top 10 of most played content. So, innovation, lots of new content, exclusivity, time exclusivity, and tailor-made content. Our point in terms of offer is the onboarding of PwO on L'Automatica Core, our MarTech platform. This means having available for PwO Lots more data, behavioral and business-driven personalization, data that allow us to improve the customer journey, and a much more effective SEO engine, basically. So this is another important improvement that we get from the migration of BWO on the group's platform. All of these, we are at page 9 of the presentation, results into additional opportunities for market share, additional market share gains in the future. We try to outline this brand by brand in this slide. Of course, there are things which are common to every brand. namely the redistribution of the long tail of the operators, which we believe will start to happen with the new concession scheme and throughout 2026, but also the improvements coming from the Lottomatica core. but there are others which are specific to each brand. Planet Twin, I already mentioned, the recovery post-migration and the exploitation of the functionalities of the group's platform. Bestleg, which is doing much better in high sports, but still has unexpressed potential compared to its position in high gaming. Golbet and Better, who can focus even more on omnichannel experience and cross-sell. And of course, TotoSea, which will benefit from additional commercial agreements and on the work that we are doing and going to do on the profitability improvement in the mid-term. As I mentioned in the beginning, we are page number 10. This has already resulted in operating cash flow improvement and potentially even more in the future, which brings us to the point of managing this in a wise manner. So going back to our capital allocation principle, we have our dividend policy, we have our financial policy, And then all the excess cash available is deployed to basically currently the buyback, which is doing fine, very well. We've bought back 2% of the share capital. It's been driving compounding returns. Or alternatively, it could be deployed in M&A, but with discipline. Page number 11. This is just to remind a key point. M&A, we've always been doing it. We're pretty good at doing it, but we want to keep our discipline approach and measure that on value creation and benchmark that vis-a-vis the share buybacks. In the last five years, we've not been sleeping. We've assessed 57 targets. We've fully due diligence 14, but we've pressed the button only on three of them and only in Italy. Because we have a very selective approach, which is focused, as I said, on value creation and shareholders' returns, and we're committed to keeping that. So, good news on the current business momentum, opportunities on additional market share growth in the future on the various brands, very strong operating cash flow generation and potentially also better in the future. discipline in capital allocation. So I give the floor now to Lawrence. Lawrence, please.