Lottomatica Group Spa

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.

Thank you, Guglielmo. Moving on to page 13, when we look at the group results, the company achieved 1.64 billion revenues in the first nine months of the year, recording an overall growth of plus 16%. Looking at adjusted EBITDA on a reported basis, we've recorded 617 million euros of EBITDA, equivalent to a growth of plus 28% versus the previous year. In Q3, we've recorded 511 million euros of revenues and adjusted EBITDA of 195, which is equivalent to an 18% growth compared to the previous year. When we look at the margins, clearly there has been an improvement since last year. We've recorded 37.6% of adjusted EBITDA margins, and this is thanks to the mixed effect where online with a higher margin is growing faster. And secondly, because of the synergies that have come in the nine months and also ahead of schedule, as Guillermo mentioned earlier. On page 14, when we look at it by segment, we see that on the left-hand side that online continues to remain the main growth engine of the group, recording a growth on a reported basis of plus 27%. This is followed by sports franchise with plus 22% for revenue growth. This has also been supported by the favorable payout in Q1 and then gaming franchise recording low single-digit growth in the first nine months. On an adjusted EBITDA basis, the effects, you know, taking into account also the effects of the synergies growth has been faster with online recording 33% growth, sports franchise 51% growth. and gaming franchise, plus 5% growth, also thanks to the effect of the bolt-ons that are coming into the P&L. On page 15, when you look at the operating cash flow, on the left-hand side with CapEx, we see that recurring CapEx of €67 million in the first nine months, which is in line with what we spent last year. We have 46 million euros spent on concession capex. And here in the callout, you can see what we expect to spend for the full year, which is 77 million for the retail concessions that are in our prorogation regime. And then 35 million euros for the upfront capex for the online concession. It will all be paid in 2025. And then 52 million of one-off growth CapEx, which includes the deferred components and carryover from the 2024 bolt-ons that we had indicated at the beginning of this year of 32 million, as well as the integration CapEx related to PwO of 20 million. This brings us on the right-hand side to an operating cash flow. defined as EBITDA minus CAPEX of recurring and concession of €504 million, which compared to €353 million in the nine months of 2024. On page 16, you see the net financial debt bridge from 30 June 2025 to 30 September 2025. So in addition to EBITDA, you have a negative impact of net working capital. This is negative by 87 million due to the payment of the imposta unica tax, which is typical for Q3, given that is a large payment that is done in the month of August. And this reflects the typical seasonality that we have, where Q3 has the highest cash absorption due to working capital. followed by capex at 46 million euros, financial expenses and leases of 15, and then a buyback of 64 million euros, which is the amount that we spent just in Q3. Just as a reminder, the total amount that we've spent to date is 117 million euros, equivalent to 5 million shares, or 2% of the total share capital issued. And then other of 30 million, which includes integration costs of 13. And this brings us to a... Net financial debt as of the 30th of September of €1.856 billion, including €221 million of cash and a net leverage of 2.1 turns, which continues to remain at the low end of our financial guidance. That said, we have completed.

Excuse me, this is the Coruscall Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touch-tone telephone. To remove yourself from the question queue, please press star N2. We kindly ask you to use the handset when asking questions. Anyone who has a question may press star N1 at this time. We will pause for a moment as participants are joining the queue. First question is from Ed Young, Morgan Stanley.

Good morning. I've got three, please. First of all, on the concession licence, obviously we're now close to the time that's going to be coming into effect. Can you give us an updated view on how much you think is sort of up for grabs and addressable and how quickly we might be able to see that, do you think, in your financial results? The second is online margins were very strong in the quarter. I guess that's the benefit of PwO as well. Is the Q3 online margin the right expectation for that going forward or is the nine month number closer to what we should model? And then finally on M&A, thank you for the detail on the sort of discipline you're applying to your M&A lens. You've also spoken a lot about the technology plans, both integrating PWO and all of the other sort of product improvements you're making the technology. If we take a step back and think about your M&A lens, if you were to do something outside of Italy, Do you have in your mind's eye a view of how large you would like an acquisition to be ideally? And in your mind's eye, is that also a deal that you would be synergizing, i.e. putting onto your platform, or would you potentially be running a multi-platform strategy? I just wondered if you had any view from those 14 deals you've looked at what you'd ideally like to achieve. Thanks.

Yeah, hi, I'll take one and three. So on the question, yeah, I mean, we stick to the estimate that we've given so far. So we estimate that the potential area for the potential grabbies for the market is 7% to 10%. That is basically done by the 3% which has already opted out and is actually going out of business on November 13. plus the remaining part which is based on business model which are not compliant with the new concession anymore. It could be anything between 7% and 10% at market level. How fast that happens... There's probably going to be some which happens around the start of the new concession, meaning November and December. because that's the part you will see the effect of those who have opted out. Then for the rest, it will take more time. So we go into 2026, because part of that is going to be driven by the new... technical and compliance rules which require technical upgrades which will take until May 2026. So it will be spread during 2026. in terms of impact on our P&L. We have a strategy which we discussed, which we shared in the last earnings call, which is trying to maximize the reach, say how much customer base we can, out of this redistribution, we can we can address, we can grab. And then, you know, several of these cases come at a much lower profitability than our historical brands. lots of reasons, you know, it's longer value chain, and we will have to work on profitability in the mid-term. So first it's customer base and market share. starting from the new concession and into 2026 and then work on profitability which is a mix of basically supplier conditions and an improvement of the of the margins alongside the value chain so it's not coming immediately it's taking time but but it will come hopefully On M&A, and then I leave point number two to Lawrence, we don't think that going international with... bolt-ons will be at the stage particularly meaningful you know you don't achieve diversification and at the same time you make the story more complex if we do something international it will have to be something meaningful and it will have to be an industrial rational so it will have to come with synergies Now, for sure, the synergies will be around strategic suppliers. We all buy from the same content suppliers. We all buy the same business services all around Europe, at least. So there's a synergy potential with that, which may be significant. And it's not... different from putting together two in-country online assets and doing international M&A. It's the same type of providers, counterparts, and things that you have to do. So this is the baseline. Then it will depend on the asset. You may have an asset which is very sizable in a country which is already doing very well, which is a very good product and it makes no sense to do a re-platforming of the gaming platform. Absolutely no sense and it's going to be very risky and you don't see why you should do that. but at the same time you can integrate that, you can provide to that the layer above that. which is the martech layer, it's dell'automatica core, which is functionalities which can be linked to the platform without changing the gaming platform, which is the risky business. And it's on top of that, and still you can create a lot of value, especially on all the digital marketing activities, and that doesn't require replatforming. On the other side, there may be assets where the trade-off between the risk of re-platforming and the benefit of providing a better product, not necessarily the same product for all the countries, but a better product, can be worth the effort. So it will be a decision which will be made on an asset-by-asset basis. Nevertheless, you can have... top line synergies, relevant, and not only top line, because the martech will also help you on the cost side, you know, on the cost of managing affiliation programs, on the cost of managing bonuses and promotions. So you can have synergies on the tech side without a re-platforming of the gaming system, but with adding the automatic layer. I hope I answered your questions.

Maybe on the second one, I'd say that Q3 has been a strong quarter in terms of margins. which has been helped by the acceleration of the synergy, realization of synergy realization. But there's also some timing of costs. So I would not take this as a normal, as a run rate, as a run rate margin. We should probably, we're more looking at for online in particular at the mid-50s. So which is pretty much in line with what we've seen in the first nine months.

Thank you for the comment.

Next question is from Clark Lampen, BTIG.

Thanks very much. Good morning. I wanted to follow up on PWO first and maybe... see if there's a target for market share, I guess, beyond just solely recapturing what's been lost over the past couple of quarters with migration. And as we're looking at the synergy target that you guys provided in the slide deck, is that primarily revenue synergies as we're thinking about 2026 Maybe second question sort of following on Ed's questions with regard to relicensing. As we think about, you know, maybe the sort of medium-term state of the market a couple of years as we sort of flow through the relicensing, do you expect something as the market sort of concentrates and coalesces around a smaller number of operators? Could market share start to eventually resemble what we're seeing offline? Or, you know, sort of if not, why should we expect maybe it to sort of settle out in a different way? Thanks a lot.

So, Clark, I think for this on the market share for PWO, I mean, we're now at around 6% of total online. We were at 7% pre, a bit north of 7% pre-migration online. I think it's fair to say that our objective is to at least recoup that amount. And then the rest is to be seen. Of course, I don't think we would be happy stopping there, but it's always hard to predict or give any guidance on that. I think on the synergy target, what you'll see is of the total amount, you can see the split between CapEx and Opex. You'll see the revenue on Opex of 77 million run rate. $10 million of that is revenues, the rest is OPEX. Then there's an additional $10 million of cash costs that bridges the $77 to $87, which includes CAPEX synergies as well as synergies on the guarantee costs that we've already achieved.

Yeah, Clark, on the relicensing and the market in two years' time, yeah, it will be more concentrated. Most likely it will be more concentrated. That's where all the forces are – that direction all the forces are pushing. Will it be concentrated as much as offline? probably a little less because in offline you always, things are more sticky because you have a physical network and you just don't wake up and have a physical network and change the market share. It's for sure more sticky business. So once you are concentrated because of the size and quality of your network, that pretty much stays. unless you do something very, very bad or very good on the other side. But that's a tendency, yes. We believe that there's all reasons to think that it will be – offline can be a benchmark, not probably the final ending point. But yes.

Thank you very much. You're welcome.

Next question is from Pravin Gondhill, Barclays.

Hi, good morning. Thanks for taking my questions. So firstly on retail concessions, do we have any update there? And then secondly, you sort of talked about synergies and timing of some cost benefit, cost benefiting the Q3 margins. Could you help us quantify the timing of those costs and what sort of, what's the nature of those costs that help the Q3 margins? Thank you.

So I'll go on retail concessions. So where do we stand with retail concessions? I mean, the government continues to work on the overall reform of the retail, which also part of that, of course, will be the renewal of the concessions because you have the reform and then you can... launch the concession tenders and award the new concessions. I think we're all aware since a few months of the new scheme, a new proposed scheme for the reform of the sector which is pretty constructive, we commented that in the past. Now the government continues to discuss with the regions to find an agreement. I don't think there is any, update on that side, except that there looks to be a strong focus and a strong commitment this time in achieving an agreement. And the basis for that are, as I said, very solid and constructive. So hopefully they'll make it.

Thank you.

Next question is from Estelle.

Apologies, there was a second point. I was on mute responding to the second question. I think in terms of what synergies were brought forward, we brought forward a certain amount of synergies in the year because we completed the tasks of the integration just earlier, and they primarily relate to the network of franchisees. We talked about one of... There were two items in particular, which is one is the replacement of the points of sales, the lower productive points of sales that went ahead of plan, and secondly, the contract-free negotiation with the points of sales. that was going to be carried out over the course of the year has been completed ahead of schedule. So these are the main drivers.

Thanks, Roddy. That's really helpful.

Next question is from Estelle Wayne-Grode, JP Morgan.

Good morning and thanks for taking my questions, the first one. With respect to your targeted market share gains following the new online concession regime, you're proceeding with two structures from what we understand. The first one is via total C, and the second one via direct deals, whereby you take minority stakes. How should we think about the longer-term market share potential across the two? And also I have a question on the payout within iSports. We only got the one for the sports franchise for Q3, I think. Thank you.

Yeah, so on the structure, yes, there are actually two structures. I mean, there's three ways to gain market share. One is because redistribution happens, you are on the market and you gain market share, you know, without, you know, just doing the work that you always do because you're able to attract the clients. And that's, you know... There's nothing specific around that except that you continue doing what you do. Then there are two specific initiatives. One is commercial deals. Usually these commercial deals will be related to TOTOC as they will be There will be deals basically for the migration of the customer, the usual structure we discussed. And then there is the latest addition to the toolkit, which is the one that we discussed in the last training school, which is these... minority deals with a path to control, which they might relate to TOTOC or to other things. It's gonna be decided on a case by case. But this is not particularly important. So the important thing is not where the gain shows up in terms of the brands that we have today. It's more that we have three options. One is being competitive and benefit from the redistribution. The other one is doing deals on the customer base. And the third is doing deals online. with operators who want to find, who want to onboard a larger project. How much is going to be of each of these categories, it's very hard to say today. It's almost impossible to make a plan on how much will come from from each of these fluids, something that we'll have to comment once it's done, unfortunately. But all of the three are active, that I can say, and we're actively working on all of them.

On the second question regarding the payout, and so in Q3 we had for the retail was 81.5% and so, and for online 86.1. So they're both sort of, they are below, so above the normalized levels. So in terms of payout benefit, clearly what we were carrying in the first and the first half was payout benefit has been slightly eroded in Q3 as a result of the high payout.

Thank you. Could you perhaps just quantify the adverse impact of PwO on the online NGR growth in Q3 specifically, if you have it?

You mean the impact of what, at the revenue level?

Yes.

Well, so we don't break it down, but I would say that the impact of PwO is the primary reason So the negative NPR is the primary driver for the lower growth that we've experienced to date. That's the main driver.

Okay, thank you.

I'm not disclosing precisely the split yet.

Okay, thank you very much.

Next question is from Ben Chalet, UBS.

Hi, thanks for taking my questions. I wanted to come back to capital allocation and M&A and the narrative you've outlined in the presentation. Would it be fair to conclude the core message you're giving today is that given the attractiveness of the Italian market and the propensity for shareholder returns, the bar is very high for transformational international M&A? And my second question is, You've got a notable free cash flow conversion improvement in 2025. I wanted to get your thoughts on what areas or cash outflows you think you can continue to gain leverage over or improve on in 2026.

Yeah, hi, William. I'll take the first one on capital allocation. Yeah, the bar is very high, definitely. The bar is very high. This doesn't mean it's out of reach, but for sure it's very high. Right conclusions.

On the second point, it's actually a good point because in Setsui this year there's been a good improvement but next year I'd say in addition to EBITDA growth, obviously if you start looking at the various components like you have So concession capex, we know that recurring capex are quite scalable, given they're primarily driven by the size of the footprint, which doesn't change, and the capex in tech that is highly scalable. So that is the recurring capex are. Very scalable item. Concession capex, we know what we'll pay. Next year, we will have the concession capex for retail, which we know already the amount. And online, we'll have zero because we'll have paid everything this year. And then in terms of other, let's say, extraordinary items, you'll see that basically the line items will almost disappear. We'll have significantly fewer non-recurring, we would expect because the PWO integration is is substantially complete now by the end of the year or will be practically done. So you will not have these or you have way fewer non-recurring items. But also at a, you know, we don't, it's also cleaner when you look at the earnouts and deferred considerations that we've had in the last couple of years, you know, the payment of the Bet flagger now is just not there anymore. That's done. Gold bet, most of it is practically done. So it's a much cleaner cash flow profile. Then when you look at the financial expenses, obviously we've entirely refinanced half of our capital structure a bit more earlier this year. And that has driven the average cost of debt down. So you'll see the full year benefit. You only see half year benefit this year. Next year you'll see the full benefit of it. So that's another item. Then the other items like leases are pretty stable. And then you're really only left with cash taxes. So all of this to say that you have fewer extraordinary items you would expect. more scalable CapEx and lower financing costs. So it looks, let's say, also neater from a cash flow generation perspective.

Thanks very much, guys.

Next question is from Hugo Paternoster, Kepler Chevrolet.

Yes, good morning, gentlemen. Thank you for the presentation and taking my question. I will have two follow-ups, if I may. The first one is on the online concession rollout. And regarding the data that you mentioned, the 7% to 10% data, suggests that the cake to be redistributed may be smaller than initially thought, I would say like six or one years ago, six months or one year ago. How does this change your expectation for competitive dynamics of the Italian online market? You mentioned that on the medium term you expect further rationalization. Would it go through organic rationalization or does M&A still an option? in this market. And the second question remains on the M&A abroad. You have mentioned that you are evaluating a lot of opportunities in international. Could you elaborate, give us a bit of an update on your M&A strategy there? And specifically in the context of a recent move in Germany, a French company acquiring a German one. Would you have a look at this company since it features a lot of what could fit your strategy, both franchise, both on the online and retail? Is this something that you consider? Was it too big? Any color on this I would say would be helpful. Thank you.

Yeah, I'll go on the first one. No, I wouldn't say the assessment is smaller. I think we've always said it was around 10% because you started from 15% of the tail. Then you had to take out all the... aggregations and consortiums, and then you had to take out those who were absolutely, you know, stable within the cluster, and so you ended up around 10%. Today we can say it's between 7% and 10%, which is not, you know, of course you have a lower end, but I don't think we're talking about different numbers than originally envisaged. And no, I don't think that there's... we're not thinking about, this is already a significant change. There's gonna be pressure on that part of the, of the operators of the tails to consolidate in the coming months and coming couple of years as we commented. And part of this is happening fully organically, part is happening through commercial deals, part is happening through the small deals that I mentioned to you. There may be some bolt-ons also in the market. They might come up. So it's a mix of things. I think all options are open in the next couple of years. I think the key point is that clearly there is a push towards some additional consolidation. How you get there, and that was also the question, we're going to see it's very hard to say how much is going to be coming from bolt-ons, how much is coming from commercial agreements, how much is coming from organic redistribution. But it's going to be a mix, and the endgame is a more consolidated market.

Maybe for your second question, I think the recent wave is a testament that the industry is currently going a phase of consolidation. I think for what we can comment, I think these are, you know, we appreciated the move that took place. I mean, on the face of it, they're very good assets. I mean, we can't comment on the deal other than say that Both assets are of high quality and I don't think we can really say much on the size, really whether something is too big or too small. I mean, we have all the levers to be able to do a deal of a similar size. We have both the financial capacity balance sheet capacity as well as ability to issue equity to do transformational deals. So that doesn't, I don't think that that size necessarily is a hindrance to any potential M&A. Okay, thank you very much.

Next question is from Domenico Ghilotti, Equita.

Good morning. A few questions. First, I'd like to have your updated assessment of market trends moving into 2026, so if anything has changed compared to your previous comments on market expectations. Second is a clarification on the synergies. I'd like to understand how much has really gone through already in 2025 P&L, just to understand what is the balance that we can also count on for 2026, and that, if you want, give us a Quick comment on the current trading. We've already seen a very strong high gaming market trend, not yet on high sports. So if you can just comment on that.

Yeah, I'll take them. I think in terms of market trends, on broad strokes, we hold similar views that we've originally said. What you may see is a movement of the demand, particularly in sports, between the online channel and the retail channel. So what you'll see is... If you look at online, iGaming will continue to see these, we expect to continue to see these mid to high teams growth. And that I think there are really structural tailwinds that continue to support it. In iSports, it's more towards the sort of low double-digit type of growth. Obviously, you have to take, given that it's a heavily omni-channel market, you will see that growth in sometimes demand can move more towards the retail end and in fact, if you look at the growth for this year in sports franchises has been significantly stronger. than we've had originally expected. It's just some of the masses have moved more towards the retail. But in aggregate, you'll see that the sports segment, when you combine retail and online, has been growing consistently between 8% and 9% per annum. And then we'd expect to continue to see iSports growing faster. You may have periods where it grows a bit less fast and retail grows faster than the original expectation that we had set of mid-single-digit. And then gaming franchise, I mean, we'll continue to see the decline of mid-single digit that I think is our expectation. On the synergies for... that we've already seen RPNL. I mean, for this year, we'll see circa 50 million in the whole for the full year. I think for what we've seen already in the last 12 months, ending 30th of September, we see around a bit more than 40 million already in our last 12 months. on the remaining, so we'll get to, as we get into the full year, that 40 plus million will go into 50. Then, Domenico, remind me, the last question is on market trends for October.

Yes, on sports in general.

Sports in general, I think it continues to be, I mean, the We'll have to wait until we can publish the data that comes from, that will be published in the coming days. But in that, you know, sports continues to remain, continues the similar trends that we've seen. If you look at the trend line, it's continued to be pretty strong at the same levels. I mean, October particularly, we'll comment on it when the numbers come out. But I would say that in general, if I take a step back, particularly on this segment, it is important to note that if you plot, particularly if you plot GGR of the whole sports segment, you know, the trend line is pretty clear. Then you have periods where you're above the trend line, periods where you're below the trend line. And more recently, we're in a period where it's below trend line, but we'd expect the trend line to continue to remain valid going forward. And so we'll see. But on October, I reserve until we see judgment, until we see what the outcome of the whole market is.

Okay. Thank you.

Next question is from Chiara Tampurini in Termonte. Good morning, thank you.

I have a couple of questions. The first one is on the game franchise division. That is third quarter posted a very strong EBITDA, where there are a lot of person growth. What is the support by Boltona and is the format a one-off or some of these positive formats will be possible to see in the next quarter? And the second question, our curiosity, looking at Boltona, particularly in the UK, with the about the regulation toward the end of the... We can really barely hear you.

It's very muffled. We tried to get the first one, but you might be starting if you... Yes. Yes. We probably got it, but we'll make sure now that we got it right. Yeah.

Now it's better.

A little bit better. Yes.

Okay, so there is some problem with the aircraft. So the first one is about the gaming franchise division. In the third quarter we see a strong EBITDA with 11% growth in the division and I'd like to know if it was supported by Bolton, if this was a one-off or if some of these positive performances will be possible to be seen in the next quarter. The second one is about deregulation. It's our priority looking at both, particularly the dual analytics kingdom. We have seen interesting megabit headlines about deregulation toward the end of the year. And so far, we haven't seen any concrete megabits developed in Italy. Exchange deregulation is ongoing. I want to know from you, if you see a risk of warning extending news over the next two months. Thank you. Hope you are better.

Okay, I'll take the first one. The performance of the gaming franchise business in Q3 is, I mean, the growth is entirely driven by the bolt-on activity that we've carried out. So the growth is entirely, so it has more than offset the decline of the market decline of retail gaming.

Yeah, on the second one, I mean, there's nothing in the current draft of the budget law and there's no discussion around that. So I think that's the short answer to that.

Okay, thank you. The last question is from Andrea Ponfa, Banca Acros.

Hello, good morning to everybody. Very quickly, I've got two curiosities, if you can allow me. First of all, if it's possible to know if you are on a due diligence phase on your M&A scouting abroad. And the second one is I calculated more or less you spent just over $50 million on the shares by back in the month of October. Is this a level that we might consider normal at this price level of your share? Thank you very much.

Andrei, if you don't mind, on the first one, we very politely pass whether we're in the diligence phase. That's right. The second one, yes, I mean, the spend that you see for the buyback, the reality is it's algorithmic. It's not something sort of that we give the total amount to spend and then the bank carries it out. But I think what we had ultimately said is that we have authorization for up to circa $500 million We got now, since mid-June, we spent almost 120. I think you should look at how it averages out per month, and I think that's a fair proxy. But it's hard for us even to forecast it because the buyback is done really with an automatic tool.

Thank you very much.

Thanks, operator. I think we are done with the Q&A. So thank you all for joining.

Bye-bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.