Allwyn AG ($ALWN)

Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Allwyn AG Investor Conference call and live webcast to present and discuss the first quarter 2026 preliminary results. [Operator Instructions]. And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Robert Chvatal, CEO. Mr. Chvatal, you may now proceed.

Thank you very much, and good morning or good afternoon, everyone, and welcome to Allwyn's Q1 2026 earnings call. I'm particularly proud to present this quarter to you, not only because of the strong momentum and exciting developments in the quarter, but also because this is the first set of results post the combination of OPAP and Allwyn's. And this is obviously a real milestone that [ patients ] the group as differentiated, scaled and diversified listed gaming company. So in today's slides, I'll be walking you through key business developments. I will relate them to our strategy, and then we'll hand over to Ken for some more detail on our numbers and than financial topics. So let's get started with key Q1 headline as a strong start into 2026. So stay tuned. Q1 was a very strong start to the year with great progress, both strategically and financially. Financially, net revenues was up 21% year-on-year. Adjusted EBITDA increased 24% and adjusted EBITDA minus CapEx, free cash flow was up 30%. And it was driven by strong underlying performance and the acquisition of price picks in mid-January. So that strong cash generation is a key feature of our financial profile and supports obviously our high capital returns. We paid EUR 0.80 a share in May. We have announced EUR 150 million buyback today, and we expect an interim dividend of EUR 0.20 in the second half of 2026. We also continue to execute our strategy, which is proven during this quarter and across the market. And the pictures are headlining key achievements in this quarter. I'll come back to some of them later. So overall, a strong start. Numbers speak for themselves. Next slide, headlines, consistency and delivery of our strategy, which we have been executing for many, many years. It is based on the pillars of organic growth on -- of M&A-driven inorganic growth on operational efficiency and also CSR or commitment to sustainable growth. Thanks to the trust and this is basically has to highlight the trust and responsible gaming, which is very important in the gaming business, serving tens of millions of players and consumers every year. And this is the strategy that has delivered one of the fastest growth rates in gaming. So for the context, we highlight some examples of how this translates into tangible delivery across key priorities, both in the quarter and over the long term. For example, the Q1 saw a 23% online GGR growth, and this is a short-term highlight. But if you look longer term, Continental Europe, net revenue growth since 2019 was 12% compounded. So all in started to focus, this is another important message to start focus very attentively on three key enablers that the group develops, namely [ one ] brand. You will see we already started rebranding in recent Czech Republic. And Allwyn will build not only B2B operator brand, but going forward, also B2C consumer brand. Number two, [ one tech ], we will develop and deploy more of our own tech stack in lottery space. We can see trade benefits of having such capability in the tunnel and price fix case. And last but not least, [ one team ] is the last enabler where a strong single culture is, of course, key to delivering our ambitious goals. So moving to the next slide. That takes us nicely to the message where we break down for you how the strategy, its key deliverables, play out across all four market segments, namely Continental Europe, U.K., North America and the [ tunnel ] I will highlight some of them in more detail. But at this point, I'm proud to say that combination of, on the one hand, consistent delivery and on the other, diversification is a really, really important differentiator for Allwyn. On the next slide, let me be a bit specific. I mentioned [ one ] brand enabler and here is the concrete proof. We had a successful go-live in January in the Czech Republic [ Reason ] Cypress. And we have been very, very pleased by the consumer reception in the markets we've been rebranding. The adoption of the new global brand was very, very positive. And that is also reflected in the strong financial performance, by the way, in these markets. As a quick reminder, the rationale for our global brand is threefold. First, it is to transform visibility of the Allwyn brand and to support our international profile and growth. Secondly, it is to ensure that we remain relevant and exciting to the next generation. This is very important. And thirdly, to optimize marketing costs and capture synergies across markets. So there are only a few gaming operators with a strong global B2C brand. A great example is, of course, Betano, who's single brand has been one of the key drivers of its very strong growth and profitability. On Slide 9, let me briefly recap the price mix equation, which completed in January 2026. This has brought a technology-led innovative leader in daily fantasy sports in the U.S. into the group. And it's very important to remind that part of our broader ambition to become the world's leading gaming entertainment company is to combine high-quality lottery led operations with complementary high-growth platforms. And PrizePicks has a great team, great product and a great brand and it's front and center in fast-growing and opportunity-rich markets. And that includes moving to next slide, prediction markets. Message of this slide is, number one, prediction markets materially expand addressable market and engagement so far, driving incremental growth without cannibalization. And secondly, PrizePicks are well positioned to succeed given large and engaged player base they have [ on ] tech, they control. And also passionate and flexible team who is there to win. And therefore, it can quick and show for them to come up with blended experience combining [ Tempe ] when player picks a lineup in a parlay. So let me expand on this. While DFS in [ fantasy ] sports is still the majority of the business, prediction markets are a major opportunity to bring more ways to -- for our players to engage with the content they love. So prediction markets expand price [ mix ] addressable market in multiple ways. Firstly, they include match outcomes, event outcomes beyond the traditional the DFS model for player [ stands ]. Secondly, they broaden the range of sports and categories available -- for example, college basketball, which is huge in the U.S. but has not been a big sport PrizePicks for products historically, unlike the NBA. And thirdly, they enable the enhancement of the DFS product. So each of these can expand both the number of the users and engagement per user. And PrizePicks is in a great place to capture this opportunity. So it already -- PrizePicks already has a very large and highly engaged player community. And as I mentioned, it is a joy to see the passionate team craving to deliver PrizePicks [ out ] customers a great experience. And that is what allowed PrizePicks to go from challenger to leader in DFS. And turning to product on the right-hand side, we have been moving fast and just -- last Friday launched a blended experience that allows the [ team pick ] to be combined with a DFS player pick lineup. So it becomes a seamless user journey between DFS and predictions. So far for players active in both the DFS and predictions, we see no sign of cannibalization and instead see that the DFS activity of these players is actually increasing. Moreover, we are actually continuing to iterate and innovate our offering, and we have some additional features planned for the start of the American football season in September. Now to the U.K. on the next slide. U.K. reached a triple inflection point in the beginning of this year. One, we have completed the tech transformation transition, one of the largest transitions in lottery history. So CapEx has now stepped right down and the OpEx related to the position is complete. Secondly, we start recovery of the significant majority of those costs under the license mechanism. And last but not least, with our new tech, we are able to begin to launch major commercial initiatives. And on that note, this month, we will launch an enhanced format for the domestic Jackpot [ game ] Loto, with 2 [ dross ] in a day, and that's 2 genes to win. -- which is a big change in the U.K. And then front and center on the slide, we are bringing the U.K. into Powerball. This is the world's biggest jackpot game and the first launch of a U.S. multi-state jackpot game outside the U.S. And we are obviously proud that it is Allwyn delivering it, demonstrating our leadership in global [ Atri ]. Powerball is literally a different auto of magnitude to the games that we currently offer in Europe. So a great customer acquisition tool as well as a major game in its own right. Now turning to the next slide. This is just an important reminder for you of our ongoing commitment to responsible gaming and CSR. Our initiatives in this space and not only the right thing to do, but they reinforce the social license of our business, which is essential for sustainable growth in the long term to have the trust with both consumers and the regulators. Turning to -- next slide, Slide 13. I will finish by briefly summarizing the highlights of the combined listed business following the recent completion of the transaction with OPAP. At a high level, you can think of the Allwyn platform in two very complementary parts. The first is a unique lottery portfolio, supported by Sports Betting and iGaming operations in European markets. This is a high-quality, cash-generative set of assets with market-leading positions, and it represents 70% of EBITDA. And this obviously provides a very sustainable compounding like a consumer staple line growth as well as strong cash generation. And for those of you who followed OPAP, these businesses are somewhat similar, though the total addressable market and the broad potential is now much greater. And secondly, we have a complementary market-leading high-growth assets. This includes PrizePicks and our stake in [ Patanol ]. These are among the most exciting assets in gaming globally and represent 30% of EBITDA. And they are fast-growing businesses, which enhance our growth profile significantly. And we then have our own content. A good example is IWG, which is the market-leading proposition in the U.S., for example, of [ e-scratch cards ], the digital scratch cards. We have our own deck and own brand. These are key differentiators and enablers of growth and competitive advantage across Allwyn. That makes Allwyn unique. And to be more explicit on what makes Allwyn unique, I want to lay out what sets us clearly apart and why we believe the platform is structurally advantaged. So we have global scale. We are in Continental Europe, U.K., Latin America, North America. We have exposure to lottery supporting really solid growth trends but they are stable, predictable and broadest installed base as lotteries have always the broadest installed base among the gaming world. And this is always a great base to cross them. We have leading market [ stations ] across multiple geographies and businesses, which also gives us the benefit of diversification and optionality for growth and we already have very high cash generation. So together, these factors underpin a combination of growth and cash returns that is really differentiated and is core to our investment proposition. So we look forward to delivering this proposition moving forward and are delighted to have got off to a strong start in Q1 2026. And with that, I will hand over to Ken to talk through our numbers in more detail.

Thank you very much, Robert, and hello to everybody on the call. I'm going to start with our financial performance in Q1, then I'm going to cover current trading and the outlook. And we'll wrap up and move to Q&A. As always, we've tried to provide the information that our investors and [ less ] need in the clear and convenient way. So we've included some slides in the appendix with some additional detail, in particular for the benefit of our debt investors. I'd also like to draw your attention to our financial data book, which is intended to make it easy to work through our numbers and also to build a model, as usual, we published a new version of that on our website today. Before I start, just one point of context, most of the financial information that we're going to be talking through today is presented on a look-through basis. That's a non-IFRS basis, which reflects the underlying performance of the enlarged group. Data on that business [ date ] on that basis does differ from the reported IFRS statements following the combination in March, those IFRS statements will be published on our website next week. So now moving to Slide 6, where we have a summary of what that strong start that Robert was talking through translated into in terms of financial performance in our P&L. Net revenue increased by 21% year-on-year to EUR 1.2 billion. Adjusted EBITDA increased by 24% year-on-year to EUR 443 million. Now margin would up to 37% of net revenue. There are a couple of moving parts impacting comparability that I would mention now, primarily, of course, the first time consolidation of PrizePicks from the [ 1 ]6. And there are a few others, which I'll talk through on subsequent slides. On an underlying basis, adjusting for those factors, net revenue was up 5% year-on-year. And I'd also highlight strong performance in the digital channel and in Continental Europe as key drivers of that performance. On that same underlying basis, adjusted EBITDA growth was strong, up 11% year-on-year. That reflects another quarter of very strong top line and also profitability growth at Betano as well as the positive net revenue dynamics that I just mentioned. Finally, on leverage, net debt to adjusted EBITDA was 2.8x at the end of the quarter and we remain committed to our 2.5x target. Now on Slide 17, we have a bridge for the development of adjusted EBITDA year-on-year to explain the underlying performance in Q1. Key takeaway here is that underlying EBITDA growth was 11% before the acquisition of PrizePicks, so before the impact of the consolidation of PrizePicks during the quarter. And I've mentioned that, that is against a relatively strong comparative period in Q1 2025 where we had record jackpots in a number of our markets. So starting from Q1 '25 adjusted EBITDA of EUR 358 million. Higher gaming taxes in Austria were a EUR 14 million headwind. We have some supplier contracts that are linked to net revenue in Austria as in many of our markets and the EUR 14 million is net of the automatic mitigating effect that those contracts provide. We then have organic EBITDA growth of EUR 46 million, partly offset by the EUR 9 million effect of higher license fee amortization in Italy under the new license, which began in December last year. And taken together, that gives underlying adjusted EBITDA growth of EUR 37 million or 11%. [ Duke ] was a new market that we entered in the second half of last year, carrying some minor launch costs that we also show on the chart. And then finally, PrizePicks was consolidated from January. So the consolidated reported number reflects consolidation from the 18th of January, slightly less than the full quarter's contribution, therefore. Slide 18, we've included as referenced pre-summary of our segments for those who may be less familiar with Allwyn. And now moving to Slide 19, we've summarized performance in terms of those segments. And include the buildup of the segmental performance into aggregate metrics. Before we move to our normal commentary on the individual segments, a few words on performance by product. We saw very strong growth in iGaming, which was up 30% year-on-year in the quarter and also saw a double-digit growth in sports betting and VLTs and casinos, which are up 12% and 11%, respectively. Performance in lottery reflects the all-time record high jackpot that I mentioned earlier, there were record jackpots in euro millions, which is the international game that we offer in the U.K. and Austria. And also in Joker, which is the national game in Eastern Cypress. So bearing in mind that difficult comparative, we are very pleased with the performance of our lottery products in Q1 this year. And of course, as Robert mentioned, we've got some really, really exciting product launches to come, particularly in the U.K. with the revitalization of Lotto and the launch of [ Pogo ]. I'm now turning to Slide 20, where we recap the current split and diversification of our business across geography, across products, across channel and across [ pipelines ] that high degree of diversification is, of course, a real benefit in gaming with our operations under a large number of licenses and fiscal and regulatory regimes. From the financial perspective, it also helps to smooth volatility in our individual businesses and products between quarters, whether that's caused by sports betting margins or jackpot or FX. And you can see that in the revenue performance that I commented on the previous slide. And strategically, of course, it places us with a great deal of optionality, having expertise across verticals and geographies is really pretty differentiated within gaming, and it's been a key contributor to the success of our M&A strategy over a long period. So now moving to Slide 21. We begin with a strong start to the year in Continental Europe, which is, of course, particularly pleasing as this is our largest business. We delivered good top line growth with net revenue up 5% year-on-year, led by the digital channel and strong year-on-year growth across our products with the exception of lottery where I commented already on headwinds from large outputs in the comparative period. Excluding the impact of higher gaming tax rates in Austria, underlying net revenue growth was actually 7% [ that ] strong comp again. The bridge on the bottom left of the slide illustrates the impact of the main moving parts, which I discussed earlier on the aggregate waterfall on the Continental Europe results, which is where all these factors came to bear. So you can see that on an underlying basis, adjusted for these factors, EBITDA increased by 8% year-on-year. Moving on to Slide 22, we show results for our North America business here on what we describe as a 100% basis. So that's including price picks for all Q1 in 2026 and also for Q1 2025 comparability. On that basis, net revenue increased by 5% year-on-year. in U.S. dollar terms with our reported performance in euros, reflecting an FX headwind as a result of a weaker dollar against the euro year-on-year. In terms of PrizePicks, we saw strong performance in the first couple of months of the year with growth in the low teens with the eventual outturn for the quarter also reflects in customer-friendly outcomes in March. With that, we saw the contribution of prediction markets increased sequentially across the quarter despite a relatively early stage product offering that, as Robert mentioned, is continuing to evolve rapidly. At the adjusted EBITDA level, we saw a decrease of 5% year-on-year, which mainly reflects those currency headwinds that I already mentioned. Finally, in North America, we have one exciting recent update from Illinois legislation, which would allow a 3-year extension of the current private management agreement under which we operate the Illinois lottery has asked both legislative chambers in Illinois and is currently awaiting the governor's signature. Commercial terms for that extension remains to be negotiated. Illinois being one of the best performing lotteries in the U.S. in recent years in terms of draw-based games and in the [ stance ] and also in terms of the digital channel. And we think that we've done an absolutely great job of running this business, and we'd be very pleased to continue to deliver for the state and the people at Ilinois. We'll keep you up to date with developments as they occur. Turning now to Slide 23. We come to the U.K. The U.K. has been our only cash flow negative business over the past 2 years as we've invested significant amounts in transition at the start of the new license [ spend ]. approximately GBP 450 million in total. Now that the transaction -- transition apologies, finished with positions for a triple inflection in terms of our financial metrics, as Robert mentioned. In terms of revenue driven by product initiatives in terms of profitability as we begin to recover transition costs and also in terms of CapEx. Looking at the numbers for Q1, the revenue increased by 7% year-on-year on a local currency basis, although as we've also called out on the slide, GGR was lower year-on-year in the first quarter. That performance reflects a strong comparative in which there was a record high euro million's jackpot and also some short-term effects related to the digital platform in the quarter which we'd expect to continue to run into the second quarter to some extent. Now on Slide 24. And moving on to Betano which continues to go from strength to strength, as you can see the looking at the revenue growth from the top right chart. Total revenue was up 27% year-on-year, strong performance even by the [ tone ] standards with growth even stronger on a constant currency basis at 31%. Our share of net income increased at 43% year-on-year to EUR 60 million. I'd also note that Betano is not only growing very quickly, but also highly cash flow generative even after significant investment in growth. This has enabled a substantial increase of dividend payments over the last several quarters, and we saw a continuation of that trend in Q1 with Betano paying EUR 200 million of dividends compared to no dividend in Q1 last year. Now turning to Slide 25. We provide some detail on a few cash flow items. And I'd like to use this opportunity to emphasize your point. First of all, ongoing CapEx requirements across the group are low, typically a few percent of net revenue on a run rate basis. Over the last couple of years, of course, CapEx levels in aggregate have been above that level because of our investment in the U.K. transition, but that is now done, and you can see step down already beginning in Q1 2026. Secondly, our EBITDA adjustments have also been higher in recent quarters than we'd expect over the medium term and higher than they have historically been as well. That reflects, first of all, transition costs associated with the combination of Allwyn and OPAP and the PrizePicks acquisition in the quarter. Clearly, those are landmark transactions and not part of the normal cost structure. Secondly, of course, we've been expensing a portion of our U.K. transition costs under IFRS. Q1, you see a step down already in some noncash acquisition accounting relating to the acquisition of IWG. We expect those amounts to be minimal after the payment of an earn-out to IWG this quarter. And finally, you see investment in our Allwyn brand initiative, which as Robert mentioned, we kicked off in terms of the B2C proposition during the quarter. So similar to -- similarly the position with CapEx. I hope you can see that several of those items will be stepping down or present in future quarters. Now on Page 26, a few adds on our capital structure. As you can see, looking at the top left chart, we've got a smooth and long-dated maturity referral with no material maturities until '29. And we have a very diversified access to key capital markets in terms of instruments and in terms of currency, you can see looking at the top right chart. And that allows us to access market opportunistically to achieve an attractive cost of funds. During the quarter, we issued EUR 550 million of bonds at -- a [ transaction ] that I'm pleased to say it was very well received by the market. We also saw good ratings momentum in the quarter with [ Fitch ] upgrading our issuer rating by 1 notch instrument rating by [indiscernible] and S&P upgrading their outlook. At the bottom of the page, you can see our leverage going back over the last 6 years. You can see that our leverage during that period has been conservative and also you can see how rapidly the business deleverages naturally because of our high cash flow generation. As a reminder, during the period that we showed on the chart, we made some very significant investments in organic growth and paid substantial shareholder dividends while maintaining a conservative level of leverage significantly inside our leverage target for most of that period. Now on Slide 27, a few words on capital allocation. We continue, of course, to target a minimum annual cash distribution of EUR 1 per share. And in connection with that, having paid already EUR 0.80 This year, we expect to pay further EUR 0.20 per share interim distribution in the second half of the year. And today, we've announced a share buyback of up to EUR 150 million on market. The buyback reflects, of course, our confidence in the outlook and our commitment to cash returns to shareholders. It also reflects somewhat lower than previously expected M&A spend following our withdrawal from the [ movie ] transaction and assessing capital allocation in light of those factors, we see our own shares as an attractive option at current levels. KKCG will not be participating in the buyback given the high level of confidence in the long-term value of Allwyn, especially the current valuation. So overall message on capital allocation is unchanged. In fact, probably reinforced by our announcement of the buyback. We're focused on disciplined capital allocation, balancing investment in value-accretive growth and also material capital returns to shareholders. And with that, we move to the final section and current trading on Slide 29, probably brief in terms of the trading update since the start of the year trading has been in line with our expectations overall and the business continues to develop well. Turning to guidance, we're pleased to reaffirm our outlook for 2026 net revenue and adjusted EBITDA. And in the current macro environment, I'd just like to remind you briefly that historically, our business has been very resilient even during periods of weaker consumer sentiment. That's a function of our product, low price point. Low-spend customer in a very large base [ rate ] players. Of course, we also benefit here from our very substantial diversification across geographies, across products and across channel. And now turning to Slide 30. I'd like to end by putting the strong results that we delivered in Q1 in the context of our long-term financial performance. We're very proud of our track record, and this is one of my favorite slides showing some of our Allwyn key financial metrics going back to 2019. Net revenue, adjusted EBITDA are up over 3x during that period and adjusted EBITDA minus CapEx only marginally below that because of our investments in the U.K. with a CAGR of about 20% for each metric. And as you'll notice, sub-Q1 performance is right in line with that long-term dynamic. That combination of consistent strong growth, profitability and cash flow generation on scale. It's quite unusual for a company in any sector and underpins our shareholder value proposition. With that, I'd like to pass back to Robert to summarize the key points that we hope you'll take away from our presentation today and then we can move to Q&A.

Thank you. Thank you, Ken. And the last slide, I believe it's Slide #31. This is where we summarize the quarter. So Q1 was a landmark quarter for Allwyn. We had a strong delivery across the strategy and major milestones in several geographies. We delivered a strong underlying performance in Continental Europe. Very pleasing results across the board, completed the U.K. tech transformation and moved into the next phase of commercial activities in the U.K. We completed the Price mix acquisition and continue to make great progress to capture the opportunity in prediction markets. And so another quarter of a very strong momentum at Betano. So all in all, this strategic delivery supported another quarter of strong financial performance, and we remain on course to deliver our outlook for 2026. And finally, the combination to create Allwyn AG is complete, and that creates a highly differentiated investment opportunity. And with that, we can move to Q&A.

[Operator Instructions] The first question is from the line of [indiscernible] [ Per ] Securities.

I have two questions, if I may. We saw that along with the announcement of first Q results, you've also announced the start of a EUR 150 million buyback program. If I remember correctly, OPAP had a similar program in the past. But back at this time, OPAP enjoyed a much larger free float. Now Allwyn has a much smaller free float, which is likely to get even smaller with the implementation of the share buyback program. Would you have any concerns with it about it? How do you think about this, please? And my second point has got to do with the interim dividend distribution you've announced today, the EUR 0.20 per share that will be paid in the second half of 2026, which is good news. I thought originally, you had a policy of EUR 1 distribution as of next year. And as far as I understand, you still stick to the guidance for EUR 1 total dividend per year. As far as I understand now, you are a Swiss company, so that's how much will be the withholding tax that we should expect as referring shareholders in Greece, will it be 35% as per Swiss companies. 5% as in Greece or 0% as you had in the previous distribution, which will effectively was to be treated as a capital return, if I remember correctly. Would you be kind enough to shed some light on this?

Thank you very much for the question. I'm happy to answer those. And thank you also for the opportunity to clarify in case there's any ambiguity about any of those points. First of all, you're absolutely correct that OPAP did indeed have a share buyback program also, if I remember correctly, EUR 150 million that was well received by the market, and that was a point of reference when we were considering our capital allocation options for this quarter. Just in terms of the free float. A couple of points. First of all, of course, we're aware that free float is very important for our investors, and we're aware also of the impact that -- well, the importance of free float in terms of listing rules, in terms of index inclusion and those are factors that we've absolutely considered when thinking about the buyback, and we don't consider that given the relatively modest size had any material impact in those terms? And final observation is that although OPAP's free float was larger in percentage terms actually in terms of absolute number of shares. And in terms of value, the difference is much more minimal. Second, in terms of distributions later in the year. Very happy to confirm that we intend to pay a further EUR 0.20 dividend later [ India ], so the EUR 1 share minimum dividend that we spoke to applies to calendar year 2026. And in terms of withholding tax as part of the transaction, we created a significant amount of capital contribution reserves in the listed entity. Those can be distributed without any twist withholding tax being payable on those distributions.

The next question is from the line of George Grigoriou with Wood & Co.

Two questions again. What going back to the buyback what made you choose a buyback rather than increasing, let's say, the interim dividend? That's the first question. Second is regarding your outlook, apart from the sales and the adjusted EBITDA guidance you've given the release of the fourth quarter is also 2025. You also provided some guidance below the line with depreciation, finance costs, et cetera. Do we still hold after the first quarter? Or do you think that some items, some guidance needs to be changed?

Sure. So in terms of the decision to allocate some capital to buy back instead of additional distributions -- sorry, cash distribution. A few factors that we considered here. First of all, we think the clarity in terms of the dividend policy is really, really valuable, and that was an important factor when we were structuring the EUR 1 minimum. And we think that the EUR 1 level is about as simple and transparent as it can be. And slightly increasing that level would potentially introduce a little bit of noise. As I mentioned, one of the factors that we considered when we started to launch the buyback was lower-than-expected investments in M&A, which essentially freed up a little bit of additional capital. We're also conscious that the share price at the moment offers a, we think, quite compelling acquisition sorry, value alternative. And so that was also a factor when we were considering whether to engage in the buyback or increase the cash distribution, I can't remember who said it, but has a nice idea that sometimes your own balance sheet can be the best place to make acquisitions, and that was certainly a factor here as well. Then finally, as I mentioned before, the buyback program a couple of years ago was generally, we think, well received by investors. So that was also a factor in our consideration. In terms of the guidance, when we put it out a few months ago, we provided a lot of very detailed guidance as there was no analyst coverage at that point and as is customary for capital markets transactions. We're not planning to update every single item of those going forward. But equally, please bear in mind that it's not a large number of weeks since we've passed since we gave that guidance. So you can see that it's still a play...

The next question is from the line of Stamatios Draziotis with EuroBank Equities.

Yes. Actually, could I follow up on the last question. I'm just wondering because the EBITDA adjustment, i.e. operating versus adjusted EBITDA. These adjustments almost doubled year-on-year to EUR 107 million in Q1. And this compares with guidance for EUR 270 million for the full year. I understand that a big chunk of this one-off relates to price mix acquisition cost. So I presume that the numbers will be lower as the year progresses. But just wondering if you could clarify whether -- this EUR 270 million is still realistic or whether investors should expect adjustments to exceed the previously communicated target. So that's the first question. And actually, could you disclose the actual reported net profit for Q1 after minorities and all these nonrecurring items. I don't think this was included in either the press release or the data book, please.

Yes. Okay. for the question in terms of add-back. As you actually correctly point out a significant proportion of the adjustments to our EBITDA in Q1 related to, I think, what we described in the table on '25 as transaction costs, which is a combination of costs related to price/mix acquisition and costs related to the combination with OPAP. Obviously, these are both big transactions, either of them would be the largest transaction that we've done previously in terms of fees incurred. So there may be some small additional amounts payable in Q2, but this is absolutely not part of our cost structure on an ongoing basis. if you compare Q1 2026 or Q1 2025, the increase was almost entirely accounted for by those transaction. The transition costs. So in general, we think that the guidance on EBITDA adjustment is absolutely still do make sense. Then in terms of the question about net profit, as I mentioned previously, we will be publishing our IFRS financials next week. The financials for Q1 are probably of limited analytical relevance given that the combination that took place at the end of the period, we haven't -- and there will obviously be a significant impact from IFRS accounting for the acquisition, which will introduce significant nonoperating items into the reported net income. So yes, as [ has ] been the case historically, we do plan to publish an adjusted net income number stripping out the impact of the acquisition accounting, which is absolutely market standard and gives a better view of the underlying performance of of the business. Obviously, we're very happy to, if any, talk through any questions on the IFRS 3 acquisition accounting when we publish those numbers.

That's great. And can I also ask a question on the cash flow front. If you could summarize the main cash outlays scheduled for the second quarter and their aggregate amount I'm basically referring to inorganic M&A cash distribution. So EUR 0.5 billion is for Italy and [indiscernible] put these together. There's EUR 1.1 billion for shareholder-related cash distributions, right? So the dividend and the and the cash exit. Is there anything I'm missing any, for example, [indiscernible] cash considerations still to be paid for PrizePicks if you could comment on that, please.

Sure. Yes. Yes. Sure. So there is actually a slide in the appendix, Slide 37, which summarizes the key items that have been paid in the quarter. So as you know, we paid EUR 80 per share dividend during Q2. Obviously, the significant proportion of the free float elected to receive a script, but still a pretty substantial outflow then the final payment for the LottoItalia license was made in April this year as well. That was a total of EUR 470 million. And we paid EUR 456 million to shareholders who exercised their cash exit, right? Hellenic Lotteries, EUR 80 million, as you mentioned correctly, we will see the start of the buyback program, obviously, in the last month of the second quarter as well. So those are the items. They were exactly as reflected in our previous guidance, of course. And it's worth mentioning in the rest of the year. We don't have any similar items expected in terms of PrizePicks, no further items expected. As you know, there is an earnout payable potentially in 2021 if the business performs very well. We've got the details of that earnout on pay each I think it's Page 9 of the presentation. And there, as previously disclosed, earnout only becomes payable in a scenario where the business performed really, really well. in that scenario. Obviously, we'd be experiencing very significant cash inflow from that business, which would essentially fund the earn-out. We'd be very pleased to be in a position where the business has performed that well. So please don't assume that this is just a cash-out item in 2029 without assuming that the business that's been performing very, very strongly in order to trigger that actual payment.

Next question is from the line of Karan Puri with JPMorgan.

I've got two. One on Betano, one on PrizePicks. On Betano, I mean the performance was quite strong, 31% ex FX growth. You mentioned that it benefited from customer-friendly sports results. in H2. Wondering if you could share a bit more in terms of what other initiatives driving the performance? Was there any new market entry during the [indiscernible]. The second one is on PrizePicks. I think the implied organic growth was something like mid-single-digit percentage. I know you flagged customer-friendly sports results in the month of March. From what we understand, what we actually understood was that DFS essentially follows a commission-based model where you take rate on the entry fees. Correct me I'm wrong, but -- is that the model #1? And if that is the model then how it is unfavorable sports results have an impact on DFS, please. Yes, that's it from my end.

Sure. Yes. Go ahead with the Betano, we can comment on PrizePicks data.

Yes. Sure. So the Betano's performance in Q1 is from markets which Betano was already present in prior to that. Betano over the last several years has entered a lot of new markets. Actually, there was a great stat that George, the CEO of the business. shared a few weeks ago the last time that Betano sponsored the World Cup, they were present in three markets where those teams are also participating in the World Cup this year, they're present, if I'm not mistaken in 11 markets. So that gives you an indication of the expansion geographically of that business over time. But currently, there are great growth opportunities in Betano's current markets, obviously, including, in particular, Brazil, but other markets as well. So Q1 performance is within the comparable perimeter to the previous year. Obviously, excited about the opportunities around the World Cup and in Betano in particular as well as well as our other sports betting businesses.

So in terms of the PrizePicks business. There are some fixed elements of the player of the game. So there are certainly scenarios where the outcome of the individual assets performance or now also the individual teams performance can result in an increase or decrease in hold rate, which is effectively analogous to sports betting margin. It's not a fixed commission model, just to avoid any ambiguity. It's a peer contest where maybe some exposure to PrizePicks has some exposure to the outcome of the game. We're very happy to talk through the game mechanics in more detail if that would be helpful.

If I can add to this, still, the prediction markets for PrizePicks has to be viewed as a new accretive edited extension. And what PrizePicks teams did very quickly. I believe it was last November. They were the first one that included the prediction markets possibility, optionality called Price predict within one [ back ], then the others followed after that. So there was a key message of one app and one wallet and I think I mentioned that what we try to do is parlay or combine the core business of daily fantasy sports the DFS with the possibilities of prediction markets, which is the bet on teams into one parlay pale and that makes it also more appealing for the consumers and pretty much delivering on what I mentioned, and that is the -- it's the accretion rather than replacement or cannibalization of the business. So I think it's very important to note.

The next question is from the line of Ricardo Chinchilla with Deutsche Bank.

A lot of my questions have already been asked. But if I may, I have two questions. The first one would be following the completion of the U.K. tax transformation and the summer 2026 power all launch, how should we assess the potential revenue and EBITDA contributions from this segment going forward, how should we think about the potential here. And my second question, beyond the Illinois lottery potential 3-year extensions, are there any other North American market opportunities or legislative developments that could materially impact revenue or the competitive positioning of the company in the near term?

Okay. So let me try to -- again, feel free to also add if you feel it needs to be added. On the U.K., we've been working on the transition a bit longer than we wanted admittedly. But it has one important benefit. We have absolutely new technology platform, both in retail as well as digitally. And that enables us to launch both major Lotto enhancement, which is still the biggest game in the U.K. as well as the introduction of the Powerball. But when it comes to how exactly this will add to the top line of the U.K. business, we -- I don't think that we want to disclose, but we assumed a reasonable level of reshuffling in our portfolio, meaning that there will be a certain portion for Lotto. There will be a certain portion of euro millions, and there will be a certain portion for Powerball. But obviously, the end result is that we will grow top line. This is the year where the U.K. business should start delivering on the top line growth. We believe the U.K. market, if you compare the average more product spend per capita is lagging behind Italy or even France. So there is potential. And that's the expectations from 2026 in the U.K. We have to -- we want to grow more than what was the case in 2025 simply because the business was focusing on the transition. When it comes to North America, maybe I'll start by saying we announced a new CEO of our all-in North America business, I think yesterday with Khalid Jones who is the lottery Director in Virginia and experienced also as a regulator, which we believe is important in the space of North American lotteries. And we believe that by ceiling all this extension for 3 more years in Illinois within the private management agreement, we made no secret at all in that we believe that Allwyn is well positioned to be expanding in other U.S. states either through the PMA model, which is most akin to what we -- and best what we do best in Europe, i.e., operating lottery for the state. Ken mentioned that Illinois, despite of a tough environment for stable lotteries in general, Illinois Lottery is performing as one of the best. And we believe that both PMA are delivering our technology going forward is the right answer a way to indicate that there could be more to come in the U.S. But we -- this is not sealed in our outlook. We have to first deserve it. But the potential and opportunities there.

I can maybe add a little bit more color on the financial outlook in the U.K. The biggest opportunity in the U.K. has always been growing ARPU and increasing penetration, which, as Robert mentioned, is significantly below what you see in other comparable European countries. So that's nearly a big opportunity there and [indiscernible] not over the first steps towards capturing that opportunity. There's also a clear turnaround in profitability and cash flow generation coming this year, though, under the U.K. license mechanism, a significant proportion of the costs that we've invested in the transition of recoverable over the course of the license. As I mentioned on the call, we've invested about EUR 450 million in the U.K. over the last couple of years and a significant proportion of that will be recoverable under that mechanism. It's regular equal payments for each period for the rest of the lines, that has an immediate impact on our EBITDA and also on our cash flow generation. And then secondly, the reduced CapEx as we completed the transition, and we also have a material impact on cash flow generation in the U.K. So we referred during the presentation to a triple inflection point in the U.K., which is really kind of a pretty nice situation to be in where you've got an inflection in revenues inflection in profitability and an inflection in CapEx coming over the next quarters.

The next question is from the line of [ Ronan Clarke ] with Aberdeen.

Thank you for the presentation. A couple of questions for Ken, please. I think just to clarify a couple of things. The 2.8 leverage number. I'm just wondering the mechanics behind that. Is that a full 12-month LTM for PrizePicks and any other consolidation impacts? And is that state -- but Slide 7 then we just get to probably show next year or next quarter.

Yes, that's correct. So the number that we report is pro forma for PrizePicks, and obviously, that's the same basis, but all our documentation works on as well. And the 2.8 million doesn't reflect the outflows after the end of the period that we summarize on Page 37, that's correct as well.

Okay. And then I just wanted to also clarify just the chart where you show the distribution buybacks '27. So I guess the [ EUR 583 ] is -- does that include the cash exit for OPAP? Or is that just regular dividends?

No, it doesn't. This is just a dividend. I mean that's not strictly distributed to shareholders. It was an element of the transaction mechanics. So I don't think it's really comparable to other shareholder distributions.

Sure. So that means the full year will be, call it, somewhere looks around [ EUR 880? ]

About right, I think, in that order of magnitude yet. The point to note on the chart on Page 24 is there obviously as a result of a combination of wind and OPAP, the pretty substantial cash leakage that we used to see to from speaking from the credit perspective to minority shareholders of OPAP is eliminated. So that's the dark blue bar on the chart, which, as you can see in some years, it was actually significantly higher than payments out of the [ Topco ] infrastructure.

Okay. I guess just I was in case I'm expecting to see the total number this year to be lower than the total of solving and then already in previous years?

But it does not like that's the case now it's kind of equal to 24. I think it's worth bearing in mind the growth of the business during that period as well, right? If you think about in 2024 is EUR 1.5 billion. This year, obviously, is going to be a EUR 100 million higher than that. So if you look at the dividend payments as a proportion of EBITDA and even more search in terms of cash flow generation, given that we're now coming out of the period of high arrangements in the U.K. business is bigger and it's more cash flow generative.

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

Thank you, and thank you all for your questions. It's very important for us that you have a good visibility and clarity on where Allwyn is heading and how Allwyn is performing. And to close all in. I hope that you see the confidence in our Q1 2026 results. We are pleased with them. We are also confident about the outlook for 2026. As Allwyn is focused and committed to deliver when all in always delivered, which is growth in the top line, growth on the bottom line and -- this is thanks to its diversified nature, both on the product side and geographically, and we stay committed to execute on our strategy that brought results. So what Allwyn said, we typically deliver it, and I hope it will be the case going forward. So thank you very much. enjoy the rest of the day. And I look forward to -- with my team to see you on the next opportunity.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining.