Flutter Entertainment plc (FLUT) Earnings Call Transcript & Summary

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Flutter Entertainment Q2 2026 Earnings Call. [Operator Instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Paul Tymms, Group Director of Investor Relations. Paul?

Hi, everyone, and welcome to Flutter's Q2 update call. With me today are Flutter's CEO, Peter Jackson; and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will go through our Q2 financials and our updated guidance for 2026. We will then open the lines for Q&A. Some of the information we are providing today, including our 2026 guidance constitutes forward-looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors are detailed in our earnings press release and our SEC filings. In addition, all forward-looking statements are based on current expectations, and we undertake no obligation to update any forward-looking statements, except as required by law. Also, in our remarks or responses to questions, we will discuss non-GAAP financial measures. Reconciliations are included in the results materials we have released today available in the Investors section of our website. I will now hand you over to Peter.

Thank you, Paul. Good morning, everyone, and thank you for joining us. Before we get into the results, I wanted to say a few words about the announcement we made this morning. After nearly 9 years as CEO, this is the right time to hand over to Dan, and I'll be stepping down at the end of September. It's been an enormous privilege to lead this business, and I do so a tremendous confidence in Flutter's future and the team we've built and in Dan's leadership. One thing I've always tried to do throughout my time as CEO is to take a long-term view of how we create value for shareholders. There are sometimes meant making decisions that weren't universally welcomed in the moment because we believe they will strengthen the business over the long term. In 2019 and 2020, for example, we continued to invest heavily in FanDuel at a time when many question those decisions because of the impact on near-term earnings. Looking back, those investments proved to be the right thing to do. They strengthened our competitive position and laid the foundations for the business we have today. And we're making the same type of decision again today. We see a significant opportunity to invest behind our leadership in U.S. sports betting and iGaming, strengthening our proposition and positioning the business for future growth. We recognize that this way on near-term earnings but we convinced is the right thing to do to maximize long-term shareholder value. With that, let me turn to our results. We've delivered an encouraging quarter relative to our expectations, and I'm pleased with the progress we're making across the business. In the U.S., we've implemented our new leadership structure, made good progress on our Sportsbook improvement plan and further expanded our prediction like offering and capabilities. H2 will be delivering an improved value proposition for our customers a move, we believe, is critical to strengthening our #1 position in the highly competitive U.S. market, aligned with our new customer first strategy and better positioning the business for market share gains in 2027 and beyond. During Q2, U.S. revenue was 6% lower year-over-year, reflecting a 6 percentage point growth impact from customer-friendly sports results as a next legendary win in June put some cash back in our customers' wallets in time for the World Cup. Customer engagement with exon throughout the NBA finals and the FIFA World Cup. And even when you adjust for these marquee events, Underlying sportsbook trends were in line with our expectations as our sportsbook improvement plan continues to deliver. We continue to see a limited cannibalization impact from prediction markets on our existing customer base in regulated sports book states. And we believe FanDuel's operational execution and our performance both in recent state launches and during key marquee events, confirms the strong demand for traditional sports betting products when sports content is compelling. We expanded our loyalty program to 70% of customers this quarter, which has helped with engagement metrics with 82% of customers surveyed saying the Rewards Club improved their experience and more than half saying it lists their betting activity. We also introduced [indiscernible], our best-in-market injury protection feature and enhanced our soccer offering for the World Cup leveraging the Flutter Edge to offer unique features such as SuperSub. And while FanDuel trends have been encouraging, the market continues to be subdued, and we estimate that the market grew by around 5% in H1. Although we continue to closely monitor the implications of the growth in prediction markets on the broader online sports betting market, we believe the market is yet to rebound from the disappointing NFR performance experienced in Q4 2025. We firmly believe market growth will ultimately return to higher levels with more compelling content driving stronger customer engagement. There are forecasts prudently achieve market growth rate in H2 will be broadly consistent with those seen in the first half. The U.S. leadership changes we recently implemented are working, and we are well positioned to deliver improved performance through a more competitive customer-led proposition. In fact, the encouraging underlying signs we're seeing give us the confidence to increase generosity customers and improve our value proposition. And while this proactive action will result in a reduction in near-term profitability, Investing behind customer momentum is an approach that has consistently served us well. This momentum and the current market dynamics mean now is the right time to move from a focus on margin growth to prioritizing AMPs and growing ARPU. This will position us well to extend our leadership in the U.S. market and capture further share in 2027. Turning now to prediction markets. We view prediction markets as an attractive opportunity. And while we are closely monitoring their impact on the broader online sports betting market, we continue to see prediction markets as incremental to sports betting and iGaming growing the overall market by capturing new demand. Our own prediction market offering, FanDuel Predicts, allows us to acquire customers ahead of sports betting regulation in new states, while delivering incremental economics in the meantime. And while operational progress in H1 was slower than planned, we are gaining traction and have a clear road map for improvement. The integration of the Crypto.com, exchange to expand our sports offering ahead of the FIFA World Cup has significantly enhanced our product proposition. And in coordination with CME, we have agreed that all FanDuel predict sports and loyalty contracts will now be moved to Crypto.com, while continuing to provide our customers access to CME's extensive financial markets. This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season start. Our One app offering is also enabling us to leverage FanDuel's nationwide brand equity, driving both accelerated penetration and marketing efficiencies. We believe we are also uniquely positioned to provide liquidity for combination markets across different prediction market platforms with a market-making offering, they can scale rapidly and at low incremental investment. It is very early days, but we already expect to generate approximately $50 million of revenue from market making this year, demonstrating both the good progress made so far and the potential opportunity. Turning now to international. We've made good progress in the quarter. We strengthened our market-leading position in Italy and leverage the power of the Flutter Edge to drive record engagement during the World Cup. As a result, revenue grew 10%, including the benefit of our Snai and Betnacional acquisitions. AMP growth in the quarter was impacted by the closure of our India business last year. Italy continues to deliver exceptional levels of growth across both Sportsbook and iGaming, and our revenue performance continues to outpace the market as we extend our market leadership. This was despite the short-term impact from the SEU migration, which we successfully completed back in April. As expected, the migration resulted in a brief period of share loss. The performance recovered strongly in June as customers embrace a significantly expanded product offering without increasing 30% in June and strong parlay penetration during the World Cup. SEA iGaming revenues were up 34%, driven by new and exclusive content in Italy and an expanded product offer in Turkey. The post-migration recovery in Snai and the strength of our first half performance in both Italy and Turkey give us confidence in sustaining this strong growth in the second half. In the UKI, SkyBet customers are adapting well to the new highly rated user interface, driving a sequential improvement in SkyBet performance, while overall iGaming growth in the UKI remains robust at 7%. The increase in UKI iGaming tax became effective in April. As a leading operator in the market, we are confident in the delivery of our first order cost savings and in our ability to gain share as other operators begin to react to this increase. In Brazil, good operational progress, including the integration of Flutter's products and pricing capabilities into our local platform was offset by more challenging market conditions driven by government social economic measures. This resulted in Flutter Brazil organic revenue declining year-over-year, in line with the market. We will continue to enhance our Sportsbook product offering with further product rollouts enabled by the integration and improve iGaming generosity mechanics in the second half of the year. Brazil remains an attractive long-term opportunity, and we are focused on building a market-leading platform that scales our customer base and delivered strong returns. Our performance in APAC was broadly in line with expectations, with positive performance in key sports offsetting continued softness in racing. And while excellent execution in CEE saw us gain market share in all of our main markets. And finally, we've also announced today that we've initiated the next phase of Flutter's cost transformation, reshaping our cost base to fund our next stage of growth. Rob will cover this in more detail shortly. To close, I'm encouraged by the progress we've made in Q2. In the U.S., we're delivering continued sequential improvements in key sportsbook metrics alongside sustained our gaming growth. The new U.S. leadership team is driving a renewed customer-first approach, and our proactive investment will help place us in the best possible position for growth in 2027. Within International, we are executing at pace and Flutter Edge enabled product improvements are driving our momentum in the second half. I'm confident that the choices we're making today from investing in the U.S. to expanding our term with FanDuel Predicts and Market Making, strengthening our international businesses and advancing the next phase of cost transformation will deliver sustainable long-term value for our shareholders. And with that, I'll hand over to Rob.

Thanks, Peter, and good morning, everyone. Q2 performance was ahead of expectations with revenue growth of 3% and reflecting the benefit of M&A and excellent engagement during the FIFA World Cup across the U.S. and international. This was partly offset by an adverse swing in U.S. sports results year-over-year. The increase in U.K. gaming taxes and planned investments in both prediction markets and World Cup marketing resulted in adjusted EBITDA declining 45%. Net loss of $296 million for the quarter versus a net income of $37 million in Q2 2025 was primarily driven by the reduction in segment profitability and one-off historical tax costs of $95 million. These were partially offset by an improvement of $81 million and $171 million in other income expense and taxation, respectively. Loss per share and adjusted loss per share declined to $1.57 or $0.49, respectively, reflecting these profitability factors and a noncontrolling interest benefit. Net cash provided by operating activities increased by $4 million with the increased net loss in the quarter, offset by the benefit of an increase in other current liabilities, including the impact of U.K. gaming tax increase historical tax cost provisions and a positive swing in player deposit liabilities. As a result, free cash flow, including financing CapEx and excluding player funds, reduced by 56% year-over-year. We ended Q2 with a leverage ratio of 4.3x. We expect our second half cash generation will drive a reduction in leverage by the end of 2026. We continue to prioritize organic investment in our core business and strategic initiatives, including emerging opportunities such as prediction markets, while also maintaining a clear focus on deleveraging the balance sheet. We expect to return to our target leverage range of 2 to 2.5x in the medium term, consistent with our stated policy with exact timing dependent on the cadence of our strategic investments. Moving now to our group-wide cost transformation program. Phase 1 of our program is delivering ahead of expectations we are on track to deliver in excess of the previously guided $300 million of savings by 2027 and $200 million of additional cost savings that were announced as part of our U.K. gaming tax mitigation plans also expected to be delivered in 2027. Building on the significant progress, we have initiated the next phase of Flutter's cost transformation. Phase 2 reflects a broader program to reshape our cost base build a more efficient and resilient cost structure for the long term and protect profitability through removing duplication, delivering technology efficiencies and leveraging AI this cost action will reflect an evolution in how Flutter operates, leveraging our global scale while still maintaining a fundamental local focus on the customer. We expect Phase 2 to deliver an additional $500 million of gross savings by 2029, providing the headroom to absorb inflationary pressures and known tax headwinds whilst freeing up capacity to invest in revenue-generating initiatives. In the U.S., we believe that this will ensure the business is well positioned for its next stage of growth. In international, we expect that the benefits will underpin our 5% to 10% revenue growth algorithm by both protecting adjusted EBITDA margins in more mature markets and enabling investment in growth areas. These actions are also expected to drive a meaningful improvement in cash generation. Our plans are progressing well, and we will be in a position to share more details of our Q3 results in November. Moving now to our 2026 outlook. Early Q3 trading was ahead of expectations, reflecting good engagement in the knockout stages of the FIFA World Cup and slightly favorable sports results. Full year guidance is therefore updated to reflect positive impact of Q2 trading in U.S. and international; expected market making revenue and adjusted EBITDA benefit of $50 million. additional operating cost savings of $45 million delivered through our efficiency program in the U.S. The impact of confirmed 1-week delay to the 2026-2027 NFL season start not previously captured in guidance of $75 million revenue and $50 million adjusted EBITDA, investment to strengthen our proposition and accelerate FanDuel's Sportsbook momentum, as Peter outlined earlier and forward FX rates in international. These movements result in a reduction to our full year group revenue guidance of $395 million to $17.91 billion at the midpoint and a reduction of our adjusted EBITDA guidance of $210 million to $2.655 billion at midpoint. We've also improved our capital expenditure guidance to $815 million to reflect incremental project efficiencies, also resulting in a reduction in depreciation and amortization guidance to $730 million. Additionally, group transaction, restructuring and integration costs will be approximately $500 million, reflecting an increase of approximately $200 million from our previous expectations, primarily due to the initial cost to implement our 2026 cost efficiency programs and tax provisions of $95 million relating to historical India and U.S. sales and use tax exposures. Additional detail on our guidance is available in today's release. Before I close, I'd like to acknowledge and thank Peter. His leadership over the past 9 years has been instrumental in building Flutter into the global leader it is today. On a personal note, have greatly valued his support and advice since becoming CFO, and I'm incredibly grateful for his partnership. Having worked closely with Dan over the past 6 years. I'm equally confident we have the right leader for the next phase of Flutter's journey. He knows our business exceptionally well, has played a central role in shaping our strategy is ideally placed to lead the company as we continue to execute our strategy and deliver sustainable long-term shareholder value. In closing, I'm really encouraged by the momentum we have built through H1, and in particular, during the FIFA World Cup which give me confidence in delivering our second half guidance. Peter and I are now happy to take your questions.

[Operator Instructions] All right. It looks like our first question today comes from the line of Ed Young with Morgan Stanley. .

My first question is on the additional $270 million of EBITDA investment you're putting into the U.S. business. Can you give us some color on how we should think about the components of that? Because obviously, on promotions, you've launched a new [ Nortyscheme. ] There were some events noise in Q2, but you're already at 540 basis points of promo spend. So some thoughts on that. And then on marketing, similarly, how should think about the CAC-to-LTV top on the incremental marketing dollars you intend to put to work in the current competitive environment? And then my second question, Peter, in your written remarks, you mentioned -- I think you reiterated in your verbal rocks as well about long-term thinking the business in your letter, you noted your convinced Dan shares a similar mentality. I guess given your expectations for a mid-single-digit growing market in the U.S. at least for now, how do you the argument that some of your international markets might be as or more deserving of incremental investment than the U.S.? .

Thank Ed, I think what we have to focus on is the sports book improvement plan and the great progress we're seeing on that at the moment in FanDuel. If I think about the growth we saw in handle around the NBA finals were up sort of 40% year-over-year per game, actives up 25% year-over-year 2.3 million customers engaged in the World Cup of which have been reactivated and recent trading, I think we've seen some record weeks from an MLB perspective. So I feel like we've got good momentum in FanDuel, the Sportsbook improve plan is working. The changes have made loyalty, there's a generosity posture from a product perspective, things like BetProtect and fortunately, we brought SuperSub here in on FanDuel around so there's good momentum in the business. And I think what we've always found before is that when we've got great content, great product, we've invested behind it, it's helped build a bigger business for the future. And that's what we're intending to do. We want to invest behind the momentum we're seeing in the moment. Rob, do you want to pick up on the specifics?

Yes. A couple of points to add. I mean, this is an investment in generosity deliberate investment decision. [indiscernible] made really good progress with the Sportsbook improvement plan in the last quarter. We're really encouraged by the customer response that we're seeing. We're also seeing really good returns on our marketing spend, both on sports and in casino, and that's been boosted by the World Cup, the paybacks that we're seeing at the moment are excellent. This is a proactive decision that we're making around the longer-term U.S. opportunity. We're really seeing an opportunity to lean in at the moment, and it's working well. We intend to continue that in H2 and exit 2026 with the strongest business possible.

On the international versus U.S. investment? .

Well, look, I think we've always been very focused on investing behind organic opportunities across the business. If I look at the progress that we're making in Italy, in Turkey, in Central and Eastern Europe, the sequential improvements we're seeing in the U.K. These are all benefiting from the investments we're making behind the business. And so I think we are focused on delivering the plans driving growth in international and in the U.S. market. And I think as Rob mentioned, we see good returns on the investments we're seeing here in the U.S. and in international, and that's why we're the investing line base.

And our next question comes from the line of Barry Jonas with Truist Securities. .

I wanted to get some maybe additional thoughts on what do you think is driving the softer market-wide trends in the U.S. you commented on prediction market cannibalization, but curious with the increasing popularity of combos if maybe those risks have increased from an OSB cannibalization perspective?

Barry, I think we -- if we look at the success of the NBA Finals and the World Cup where -- with exciting content, we've seen really good engagement from a customer perspective. I just -- I mentioned that the 2.3 million customers, further those were reactivated going into the World Cup. They're seeing active numbers up 26% year-over-year on our NBA finals games. We're seeing very good content from a -- these are big marquee events, and I think it's helping drive engagement from a customer perspective. Clearly, parlays are very popular for us. So we've made a bunch of changes to enable us to drive some improvements from a parlay penetration perspective through things like the World Cup and the NBA, which we delivered on. I think from the question around cannibalization, we have seen, as we stated before, low single-digit impacts on the business, I look at this as incremental TAM. These are -- there are opportunities for us to go and acquire customers in advance of sportsbook regulation passing in, frankly, the half of America that we can't currently operate in. And then there's the opportunity for us to leverage our pricing and risk management capabilities through market making on a national basis. And both of those things are incremental ton to us we are going to deliver a step change in our position market product as we go into the football season, the launch of the 1 app, which is going to enable customers nationally to access the tremendous user experience that we have currently available in our regulated state is going to be important but we're going to see a really big step change in the sort of catalog that's available to our customers through the integration and movement of all of our sports contracts to Crypto.com.

I think I'd just add as well that you look at the rate of World Cup sort and when you got really good concept, it really kind of reaffirms the demand that there is out there for traditional sports betting products. So in June and July, in the U.S., we had our highest respective active months ever and we're carrying that momentum through now albeit it's a slightly lower point in the sporting calendar from a phasing perspective, but we're seeing really strong volumes through into the MLB season, which is really encouraging. Of course, still early days in Q3. And whilst that momentum is really encouraging, ultimately, performance in the quarter and the second half will be determined by the focal season as we...

Got it. And then just for a follow-up. North Carolina just recently passed the tax increase for OSB to be rate to 22%. While they also effectively added a 6% tax for prediction market. How does that weigh into your thinking strategically about prediction markets given the state effectively is signing off on it here. Just curious if the mix you want to lean in more or less strategically between the 2 offerings?

There's a lot of questions working on from a regulatory perspective around sort of prediction markets. Some of these things, the extent to which they can be rolled out will be resolved by the Supreme Court. I mean, from a state-by-state tax perfective, there's also a lot going on at the moment. I think we've been pleased with our focus on trying to get new states to open. I think that's an important component that we need to recognize as well. And I think we're excited the progress we're going to be able to make around both iGaming and sports betting as well.

Our next question comes from the line of Brandt Montour with Barclays.

So I wanted to start off with the market making and get your sense on how that market feels for you guys going into the second half? I think following the prediction markets, it's been out there that -- these markets are getting efficient pretty quickly. And so I know you guys did $6 million in the 2Q and you've got $50 million for the year. So what are you baking in for the second half? What platforms do you think you'll be most active in -- and what can you tell us about the mix between where you're trading in single leg versus combos as a percentage of mix?

Yes. So let me pick up on that one. I mean we're really excited about the opportunity in market making actually Peter and I were with the team in Jersey City last week, and we're definitely seeing volumes continue to increase across the ecosystem, and that gives us an increased level of confidence in the long-term potential of that market. Our ambition here, as we've stated before, is to establish a leading position in this space by leveraging the pricing and risk management and the trading capabilities that we've gone developed over the years with our sports book and we feel that we've got a real advantage in that place in pricing complex and correlated markets as but the combo volume increases, we're a better place to take advantage of that. And we see that as a really attractive and high-margin segment for us. Of course, it's still early days. I think the volumes that we're achieving in the second half of the year are encouraging and we think this got potential to become a meaningful revenue stream for us. But you see how we trade through the second half of the year and then we will update forecast into 2027.

Okay. Great. And then a follow-up on NFL. Could you just flesh out a little bit more details about the delayed start. This is a market that you've commonly wanted to invest, obviously, ahead of the start the time when there's the best customer acquisition opportunity. So what sort of the playbook with the delayed start, how will you approach -- how will you have to approach that differently?

The delayed start is really just a technicality Brandt that's sort of around the timing of the [indiscernible] and where [indiscernible] falls and this can move from 1 year to the next. We're not actually changing our investment posture at all the staff, the NFL season is something that we'll lean into. It's really important for us in terms of reengaging customers. What I would say is that during the World Cup, we actually reactivated a bunch more customers than we were anticipating, which is very encouraging for us. We're actually starting in a stronger position. We're also clearly focused on college football at the start of that, which is a key opportunity for us to get behind some sort of customer initiatives as we start the NFL. But from a posture perspective, we're not going to be changing our approach massively. Having the rewards club live for all customers this year is also going to be really important. So we've already rolled it out to 70% of customers by the start of the NFL that's going to be available for all of our customers. We're seeing really good traction behind that. So with the college foot will start in the week before that's a great opportunity. It's a prime customer, while we hope to see a running start to the NFL season.

Okay. So the NFL schedule delay was not previously got -- was not previously in guidance? is today, but this is an NFL schedule, not a Flutter schedule.

Correct. This is NFL schedule, which was a previously in guidance, and we've updated our guidance for it.

And our next question comes from the line of Jordan Bender with Citizens.

So direct casino [indiscernible] actually looked pretty strong in the quarter. And keeping in mind, you can't grow iGaming revenue 40% forever. Can you just talk about what the sports betting to iGaming cross-sell looks like now? And should we expect the investment into sports in the NFL season to actually help casino growth in the back half of the year? And then, Peter, I guess the second question handle up 31% in July, which was better than your June performance. Just trying to piece together some of your comments around your market growth won't pick up in the back half of the year, but you did say MLP starting to pick up a little bit. I guess, just like what does that imply for your actual underlying business outside of the World Cup in July? .

Okay. Thank you, Jordan. Look, picking up on the gaming we clearly harness the World Cup opportunity to increase football relevant content or soccer relevant content during the World Cup which obviously help drive reactivations and cost activation in the total. You've got to remember that the main focus and push for us from an iGaming perspective is around acquiring those direct-to-casino customers. And the Love Island unlocked launch we had in June, our new brand ambassador [ Automatix ]. We've seen some really good success from that the monopoly live exclusive launch. Yes, so there's been a lot of great content that we've got supporting iGaming. Clearly, the smaller sports betting business we had coming into the year did impact cross-sell. But it's worth mention we've got a bigger base now. So look, I think we're feeling good about the prospects for the iGaming business. Your question around market growth. We are -- we have seen this strong performance through Q2. We have seen the strong NBA finals. We've been very pleased with the engagement we see around the World Cup. We are pleased with how we started into Q3. Look, the football season was tough last year. We think a bunch of that was down to the content, which wasn't an engaging for consumers. There's also obviously some execution issue from our perspective around generosity. But we're planning some great campaigns this year. We're hoping for some very compelling matches and content. And I think we'll see what happens. But our forecast assumes some prudent views around market growth in the second half. And I hope we find that the market outperform at good it was the right thing to take the growth we saw in the first half and use that for the second half guidance.

The other point to mention on iGaming is that clearly, the success of our casino business has been built on direct acquisition, which remains very strong. the cross-sell piece, we've been really pleased with draw the World Cup, but the cross-sell actives are actually slightly ahead of our expectations. And if you compare Q4 this year versus Q4 last year, the cross-sell was actually slightly lower than we last year because of some of the execution issues, Pete, Q4, which means we're quite optimistic about how the cross-sell will perform as we moved to Q4 this year as well.

[Operator Instructions] And our next question comes from the line of Trey Bowers with Wells Fargo.

I guess just if we could -- on a pure modeling sense for the U.S. business, could we get a sense of the breakdown of the EBITDA for the balance of the year for Q3 and Q4 and just how potentially Q4 loaded the outlook is from here.

Yes, maybe pick that 1 up, Trey. So for Q3, we are assuming roughly breakeven EBITDA with $500 million of EBITDA in Q4, which is down from circa $700 million in our previous guidance. So if you roll through the factors that the generosity phasing in terms of the increased investment that we're making, you've got the NFL schedule effects, which is in Q3 only. There's also some state launch costs playing into that, where we've got the continued Arkansas investment this year. We obviously had Missouri launching last year, which was briefly in the guidance. things called out is we've got some operating cost savings coming through as part of the overall plan in the U.S., we've got about $45 million of operating cost savings in the second half. So those are the key moving parts for Q3 and Q4.

Our next question comes from the line of Jed Kelly with Oppenheimer.

Just going back to the investment in generosity -- should we just think of the U.S. sports book given all the sports, the engaging nature that this is just a lower net win margin market versus some of your other international versus some of your other international markets that just might not have the sports steps that we have in the U.S. .

Yes, we've seen some improvements as we come into Q2 around our structural margin. And I think I know there have been some questions around that. I think we would expect to continue to see growth in structural margin. I think we are seeing strong momentum in the business at the moment. I think we're feeling confident that the Sportsbook improvement plan is working. We'll have the loyalty scheme rolled out an entire customer base when we go into the football season. I think we've started making better customer focus and customer first decisions in the business. And I think as we've done in the past, it's time to invest behind that and make sure that as we move into '27 we have a bigger business and a better trajectory for the business. So a bigger business means we can invest in having better products from a customer perspective. And look, I think we can also make sure that we're sort of growing ARPU as well as AMC. And that's something that's really important for us as we said look to grow and expand the business.

And medium to long term, we see a very clear path to that margin expansion, as we've talked about previously, Tray say. We've consistently dove straighted across all of our international businesses, our ability to grow parlay penetration, also improve the product mix over time, and we think there's meaningful opportunity to do that in the U.S.

And our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

Curious with the transition to Crypto.com, for sports from CME, all your JV will work from a contract volume standpoint through non-CME exchanges. I guess Specifically, I believe it was a 50-50 economic split with CME. How does that work now with other exchanges? .

Ryan, look, we are excited about extending the sports and novelties catalog that will have available for our customers as a result of switching to this new venue for those products, and we will keep our existing financial markets with CME. So look, the economics for the financial markets with CME stay broadly as they were I think there's probably a slight positive for us in moving towards Crypto.com. This is a modest economic benefit. But the really important thing here is the step change we're going to see in the catalog to for customers. And together with the enhanced sportsbook proposition look and feel of the 1 app, I think we're going to have a very selling proposition available for consumers nationwide.