Jumbo Interactive Limited (JIN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2023 Annual General Meeting of Jumbo Interactive Limited. I'm Susan Forrester, the Chair of the Board, and I'd like to thank you all for attending our hybrid AGM today, where we have shareholders joining us physically in our offices at Toowong and also online via the Computershare meeting program. I'd like to begin by acknowledging the Yuggera and Turrbal peoples and pay my respects to the elders, past and present. I'd also like to extend my respect to any aboriginal or Torres Strait Islander people who are joining us for the presentation today. It is now 11:00 a.m. here in Brisbane, the nominated time for our meeting. And I have been advised by our Company Secretary that a quorum is present, so I am pleased to declare the meeting open. Joining me for this AGM today are Sharon Christensen, Non-Executive Director; Giovanni Rizzo, Non-Executive Director; Jatin Khosla, our Interim Chief Financial Officer; and Graham Blackett, our Company Secretary; and Mike Veverka, Director and Chief Executive Officer. Susie Kuo, our representative from our auditor, Ernst & Young, is also attending this meeting and will be available to answer questions from shareholders. Giovanni is Chair of our Audit and Risk Committee, and Sharon Christensen as Chair of our People and Culture Committee, will also be available to answer questions. Ladies and gentlemen, I'm quite relieved at this point to have Graham Blackett, our Company Secretary, explain the arrangements for asking questions and voting on the formal items of business.

Thank you, Chair, and good morning, everyone. I will firstly deal with how you can ask questions at today's meeting. If you are attending the meeting physically and are here in the room, at the appropriate time when questions are called, please raise your hand and a microphone will be brought to you to speak. It's important that you do use the microphone so that those attending online can hear your question. If you are registered on the online platform as a shareholder or proxy holder, you can ask questions at this meeting. There are 2 ways by which questions can be asked, either by typing a question into the platform or by asking your question verbally. Online attendees can submit written questions at any time. To ask a question, select the Q&A icon in the meeting platform and select the topic your question relates to, type your question into the text box at the bottom of the screen. Once you have finished typing, please click on send. Please note that while those of you attending online can submit questions from now on, they will not be addressed until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. For those shareholders attending online who wish to ask a verbal question, an audio questions facility is available during this meeting. To use this service, follow the instructions in the online meeting platform. You will listen to the meeting on this page while waiting to ask your question. We ask that you keep your questions short and to the point so that as many shareholders as possible have the chance to ask a question. All online questions in writing will go through me as the moderator for the meeting. I will identify each person who asks a question, read out the question, and will then pass the question on to our chair, who will either answer the question or pass it on to the most appropriate person to respond. Where we have a verbal question, the telephone moderator will introduce the shareholder who can then ask their question. We reserve the right to rule out questions that do not relate to the business of the meeting. We will also not answer questions that are the same or substantially similar to questions that has already been answered. Otherwise, we will endeavor to answer as many of the questions asked that we can. In terms of the order for each item, questions will first be taken from the room, then online written questions will be addressed, followed by any verbal online questions. I will now move to how you can vote at today's meeting. All resolutions to be considered at this meeting will be determined by poll. Shareholders were given the opportunity to appoint a proxy to vote on their behalf at this meeting. As set out in the notice of meeting, our Chair will vote all directed proxies in accordance with the directions provided by shareholders and will vote all undirected proxies in favor of all resolutions. Voting will shortly open for all resolutions. At that time, if you're attending online and if you're eligible to vote at this meeting, select the vote icon. All resolutions will be activated and the voting options will appear on your screen. To cast your vote, simply select one of the following directions; for, against, or abstain, a tick will appear to confirm receipt of your vote. To change your vote, select click here to change your vote and select a different voting direction to override your vote. If you are present in the room here and you are eligible to vote, you would have received a blue voting card upon registration. Please fill this out, and it will be collected from you by a Computershare representative at the end of the meeting. I will now hand back to the Chair.

Thank you, Graham. So I'd like to formally welcome again you to our AGM. For the second time running, we are holding a hybrid AGM, which means you can attend both in person or virtually. And as your Chair, I'm pleased to be providing you an update on Jumbo's progress today. If I was to summarize our progress and where we are today, I would say that we have remained focused on executing on our long-term strategy, and we have once again delivered solid financial results in an uncertain economic environment. Since my address at this time last year, our operating environment has been quite dynamic and characterized by uncertainty, whether that be due to the broader macroeconomic environment or more recent global political pressures. With inflation at record levels, central banks have been tightening monetary policy and the uncertainty around interest rates has resulted in volatile equity markets with investors cautious around the resilience of consumers. As a result, the share price of small and medium companies have been impacted significantly. And with the small ordinaries index underperforming the ASX100 by approximately 20% since January last year. Labor market conditions continue to be tight, and we are at the beginning of a significant transformation led by artificial intelligence, which will revolutionize industries and create uncertainty and require appropriate levels of governance. In positive news, Jumbo remains very positively positioned to navigate the current operating environment in terms of our strategy and financial performance. The essence of our strategy has not changed. We are focused on maximizing our Lottery Retailing segment in Australia and replicating our capabilities and expertise in other jurisdictions. Lotteries is still a category that has proven resilient to economic downturns, even in the current environment of higher interest rates and cost of living pressures on household budgets. Jumbo is an innovative and nimble technology company with a vibrant culture that attracts and retains top technology people. This means we are very well placed to benefit from the significant opportunities presented by transformational technology such as generative AI. Overall, FY '23 has been an important year for Jumbo. We've made progress with our growth strategy and also maintained solid financial results in a challenging environment. We achieved record sales from the $160 million Powerball Jackpot in October last year. We completed the acquisition of StarVale in the United Kingdom. We secured a 6-year extension of the Mater as a Services Agreement and also the 4-year extension of Lotterywest Software as a service agreement in September 2023. Despite a somewhat subdued large jackpot environment, Jumbo delivered solid revenue and earnings growth and cash generation for our shareholders. Lower-than-anticipated revenue from an unfavorable run-on Jackpots in Lottery Retailing was offset by the contributions from Stride and StarVale and disciplined cost management. This means our FY '23 ordinary dividend was $0.43 per share, fully franked, up slightly on last year. Turning now to developments in the lottery sector. As a collaborating member of the World Lottery Association, Jumbo recognizes that responsible gaming is critical to our social license to operate, and we are committed to facilitating responsible play. While charity lotteries are a gaming product, they carry far less risk of harm than other forms of gaming, such as sports betting and poker machines because players are motivated to support good causes and the frequency of draws and payouts are lower than for commercial lotteries and other gaming. Our low risk of harm has been recognized in the conclusion of the Australian Parliamentary Joint Committee in 2021 and the recent report into online gambling by the House of Representatives Standing Committee on social policy and legal affairs. As a result of the findings from both inquiries, lottery services have not been included in the legislation, which proposes bans on the use of credit cards for online wagering, nor have they been included in any recommendations to ban advertising for online gambling across media in Australia. Similarly, in the U.K. government's white paper on modernizing the U.K. Gambling Act for the digital age, the measures proposed do not significantly affect Jumbo's existing operations. As a digital lottery specialist, the player experience is at the heart of what we do, and responsible play principles are embedded in our technology. We train our customer-facing employees on responsible play principles and how to identify signs of problem gambling. We also make gambling assistance resources readily available on our websites and during interactions with our employees. Strong governance, conduct, and ethics are prerequisites for operating in a highly regulated industry like ours and maintaining the trust of our clients and customers. I joined the Board in September 2020 with a mandate to ensure Jumbo had the robust governance practices and frameworks it needed to execute on its growth strategy. Since then, we have realigned responsibilities for corporate compliance within the Group and enhanced both our legal and internal audit resourcing across our jurisdictions. Equally importantly, we have fostered a proactive risk management culture to ensure that the Board is appropriately supported in its oversight role. When it comes to governance, it's important to avoid complacency because new risks are continually emerging. We will continue to review our structure and internal capabilities to ensure we maintain the appropriate standards of governance. It is worth noting that data protection, privacy, and cyber risk remain a significant focus for our Board. We continue to work hard to keep up to date with emerging data governance regulation and best practices and to ensure we have the appropriate infrastructure to protect the integrity of our service offering and our clients' privacy. In line with normal rotation rules in our constitution, today I'm re-standing for re-election as Chair of the Board. I will address the meeting when we reach that part of the resolution. On the topic of the Board, I acknowledge some proxy advisors and shareholder feedback on the size of our Board, specifically that the current Board size of 4 directors is smaller than your average sized companies in the ASX300. As the business continues to grow, we believe that there is scope to appoint an additional non-executive director. And we will use the most recent Board skills matrix to determine the skills and experience that would be most beneficial. The Board conducts annual reviews of its own performance and reviews its skillset regularly. These reviews have found that we do work cohesively and respectfully with management, while providing sufficient challenge and keeping them firmly accountable for Jumbo's performance. Additionally, as a small Board, we do remain nimble and can make decisions in a timely manner. Jumbo and our people are part of a vibrant, nimble, and innovative workplace culture which drives our success. We are delighted that Jumbo was certified as a Great Place to Work globally in April this year. This certification not only singles out our strong workplace culture and the positive regard our team members have towards Jumbo as an employer, but it also enables us to continue to attract top talent and to strengthen our overall employer brand. Whilst we are seeing a shift towards a more favorable employer market, the labor market remains tight. The work we have done on improving our Employee Value Proposition combined with more sophistication in our recruitment processes has led to increased engagement with candidates, improved time to hire metrics, higher than average applications for roles, and positive candidate feedback. As we integrate Stride and StarVale, we are focused on aligning cultures and building strong relationships between our employees. Where appropriate, we are implementing common systems and tools, such as a global onboarding programs, communication platforms, recognition and reward initiatives, talent management, and learning and development frameworks. Earlier this year, we transitioned to a hybrid work model and asked our teams to attend the office on core days per week. This mix provides employees with the time for quiet concentration at home and time for collaboration at work, and it has enhanced our productivity, engagement, and work-life balance. Jumbo is on a mission to create social change and positive social change by making lotteries easier. This year we delivered our second Sustainability report with a focus on 5 key areas. Firstly, for our players, our focus is to deliver a fun and safe player experience. For our charity partners, our focus is to empower them with best-in-class technology to minimize the effort involved in managing lotteries and maximize the opportunity to sustainably raise funds for their mission or cause. Our people continue to be our greatest asset. And we have been focused on ensuring Jumbo remains a sought-after employer for not just the best technology talent, but for other professional services roles such as marketing, business development, people and culture, and finance. Diversity, Equity, Inclusion, and Belonging has also been an important aspect of our Sustainability agenda and we are a signatory to HESTA 40:40 Vision, aimed at achieving gender balance in executive leadership across ASX300 companies. On the Environment front, we were delighted to have received our Climate Active Certification last month after undergoing a rigorous assessment using the only Australian Government-accredited carbon neutral certification scheme. We have developed a community engagement framework and identified corporate sponsorships that align with our vision, mission, and core values, including Women in Lottery Leadership, Women in Digital, WattleNest, and Paralympics Australia. Our Reflect Reconciliation Action Plan is endorsed by Reconciliation Australia, and we are partnering with external cultural educators to raise awareness and celebrate First Nations cultures. To conclude, I would like to acknowledge the whole Jumbo team for the energy and focus that they bring to their roles every day. In particular, and on behalf of the Board, we would like to thank Dave Todd, our former CEO, for 16 years of dedication and service, and the invaluable contribution he has made to Jumbo. We wish him and his family the very best. As a Board, we remain focused on providing sound governance and diligent stewardship of the Company's strategy and culture. We continue to encourage management to invest in our technology, people, international growth opportunities, and sustainability, which will be critical to delivering long term for all our stakeholders. I thank my fellow Board members for their counsel and support throughout the year. I'd now like to hand over to Mike to provide a more detailed review of the Group's performance. Thank you and I look forward to taking your questions later.

Thank you, Sue, and good morning to everyone. Welcome to the 2023 Jumbo Interactive Annual General Meeting, my 25th meeting as CEO and Founder. Jumbo's mission. Jumbo started with a single computer in 1995 and we patiently explored e-commerce opportunities before finding our niche in digital lotteries in 2000. Today, we provide our proprietary lottery software platform and lottery management expertise to government and charity lotteries around the world. Our mission is to create positive social impact through making lotteries easier, and we aim to be the number one choice in digital lottery and lottery services globally. Turning now to some key highlights in FY '23. In FY23, our nimble operating model proved its worth. Good cost discipline and a handful of large Powerball jackpots greater than or equal to $100 million offset the impact of what was a relatively an unfavorable and volatile run of jackpots. The financial year also included only 5 jackpots greater than $50 million, compared to 13 in the prior corresponding period. In response, we were able to reduce our marketing spend and optimize our cost base to deliver a class-leading underlying Group EBITDA margin, excluding acquisitions, of 51.0%, exceeding our original margin guidance of 48% to 50%. Despite the unfavorable jackpot run, Lottery Retailing delivered a resilient performance, underpinned by a record $160 million Powerball in October 2022 and an improved revenue margin due to product mix and pricing changes implemented late in the financial year. SaaS continues to deliver reliable growth and it was great to see Lotterywest achieve an 8% increase in total transactional value amid the weaker run of jackpots. Both Stride and StarVale performed in line with our expectations and helped drive continued growth in overall revenue and earnings. And finally, the balance sheet remains robust and provides flexibility to drive further growth. Over the past 2 decades, lotteries, particularly draw-based games, are an asset class that has delivered solid and consistent growth, and proven to be resilient in economic downturns and recessions. The Powerball game change in April 2018, which resulted in significantly larger jackpots led to a step up in total ticket sales in FY '19, which is coincidentally when we completed the rebuild of our best-in-class software platform. Pleasingly, that momentum has continued, with even stronger growth, albeit subject to jackpot volatility. Lotteries' share of household spend has also remained relatively stable over the last decade. Whether it's the prospect of changing your life, or a form of fun or entertainment, or just the fear of missing out, people continue to play the lottery. While the rate of digital penetration growth slowed in FY '23 to a little over 38%, we expect this to trend higher as it is still well below other jurisdictions around the world and of course still behind other industries such as online banking, music, accommodation, housing, and car sales. Initially, our focus was on developing a platform specifically to deal with the nature of lotteries, very high volumes compressed into short time frame, for example, just before a large draw. This extended to creating best-in-class player experience; improving the player interface, maximizing convenience, minimizing friction, and leveraging data and analytics to drive personalization at scale. Lotto Party, a convenient and engaging way for players to pool their funds with friends, family, and others, is a testament to our innovative spirit. Not only does it enhance the odds by enabling more entries for participants, but it also ensures the secure and seamless proportional distribution of winnings based on individual contributions. Lotto Party shows a player's avatar and first name, adding a touch of personality and humanizing the experience, making it evident that participants are playing with real people. Lotto Party ensures that players need not worry about managing funds or chasing friends for their share, we've got all of that handled. A testament to the effectiveness and appeal of Lotto Party came during the Superdraw on Saturday, 31 July. For that draw, 3 brothers from New South Wales combined their funds to purchase a ticket through Lotto Party and walked away with over $2 million from the $20 million Superdraw. Their story is both endearing and powerful. It was their first purchase with Oz Lotteries. They had always bought individual tickets until one of them suggested trying out Lotto Party. Little did they know this decision would forever change their lives. As they joked about potential ventures like opening a pizza shop, their story resonated with many, epitomizing the joy of shared success. Since its introduction in 2018, Lotto Party has become a preferred choice for our syndicate players on Oz Lotteries. Our data reveals that during peak jackpot periods, there's a marked surge in popularity, a trend we credit to its social and personal appeal. Feedback consistently highlights the platform's ease of use and the peace of mind it offers by eliminating the often stressful task of gathering contributions from peers. As a software company, Jumbo has always been an early adopter of new technologies. We research, develop, and test new technology before deploying it to our partners. Our partners recognize the need to stay ahead of technology and look to Jumbo for guidance and leadership in this area. Artificial intelligence is no different. I have personally been fascinated by neural networks since 1995 and have followed the development of AI ever since. In 2020 I was fortunate enough to be part of the private beta for OpenAI's GPT-3 which developed into the ChatGPT we know today. And just 2 weeks ago I delivered a presentation on the impact of Artificial intelligence in the lottery industry at the Asia Pacific Lottery Association conference in Bangkok. Jumbo has already been using machine learning to improve the customer experience for a few years now and the new advances in generative AI provide further opportunities for us. These include further improvements to customer experience, improve support, improve fraud detection, and problem gambling protection. However, this comes with the responsibility to deploy AI with appropriate guardrails and thorough testing. The complexity, risk, and cost involved in safely deploying these new technologies is a key reason why lotteries choose to partner with Jumbo. Few words on global opportunities. Through mergers and acquisitions, we are able to enhance our existing portfolio of assets, enable access to new markets, complementary capabilities and propositions, and to build scale. We are focused on established, profitable businesses with long-standing relationships with their charity clients, and opportunities to drive growth and scale using our technology, lottery expertise and existing capabilities. In the U.K., for example, with Gatherwell and StarVale, we now have access to the full spectrum of charity lottery management and raffle services across grassroot, mid-market. and enterprise clients. In Canada, following the granting of a Gaming Service Providers license in British Columbia in late 2022, Stride was recently granted a gaming-related supplier license in Ontario. Stride now has a great opportunity to expand into the provinces of British Columbia and Ontario, where the population size is over 3 times that of its existing footprint. Over the last 3 years, our Managed Services segment has grown from approximately $2 million in revenue to $23 million in revenue on a proforma basis. I recently returned from Canada and the U.K. after visiting the Stride, StarVale, and Gatherwell teams. I am impressed with the changes that have occurred in those businesses as they become more aligned with Jumbo and are reinvigorated with new opportunities. Coming back to Lottery Retailing for a moment. The large jackpot environment for the first quarter of FY '24 was solid with 11 large jackpots and an aggregate value of $410 million, equivalent to an average value of jackpot of $37.3 million. October 2022 provided a formidable comparable period with 5 large jackpots and an aggregate value of $390 million including a $100 million and $160 million Powerball. This compares to an aggregate value of only $185 million in October this year, less than half that of the prior corresponding period. As expected, given the strong jackpots in the PCP, Lottery Retailing TTV growth was down in the first 4 months of FY '24. Pleasingly, revenue increased 3%, underpinned by higher margins as a result of the pricing changes implemented in May 2023. Any level of regression following the pricing change has been minor to date, however we will continue to closely monitor player behavior. Moving to SaaS and Managed Services. Today we have also provided the SaaS and Managed Services TTV and revenue figures for the first quarter of FY '24. SaaS TTV and external revenue increased 20% respectively. Pleasingly Lotterywest TTV growth continues to outpace Lottery Retailing. In the first quarter of FY '24 Managed Services figures reflect contributions from Gatherwell and StarVale in the U.K. and Stride in Canada. The first quarter benefitted from the contribution from StarVale, which was not in the prior corresponding period as we only completed the acquisition on 1 November 2022. Excluding the impact of StarVale, revenue growth in the Managed Services segment remains in line with our expectations. Turning now to FY '24 outlook, which remains unchanged. We continue to target a group EBITDA margin in the range of 48% to 50%, excluding the impact of employee incentives and share-based payments. We continue to target growing revenues faster than operating expenses this year. FY '24 will also see the final step up in the service fee paid to The Lottery Corporation. Going forward, as the service fee will remain constant, we will be focused on generating strong operating leverage from our agreement with The Lottery Corporation, as we did in the years prior to the introduction of the service fee. Looking abroad, we remain focused on growing the business through acquisitions that drive an uplift in earnings per share and deliver synergistic benefits for the Group. Before I conclude my presentation, I would like to take the opportunity to thank our staff for their hard work, commitment, and how as a team we have adapted to the changing work environment and the shift to the hybrid work model. It has been great to connect with our teams in person, both here in Brisbane, but also internationally, in the U.K. and Canada. I would also take the opportunity to thank David Todd. Dave's invaluable insights, incomparable work ethic, unwavering commitment to the team are an inspiration to us all. We wish Dave the very best. Finally, I would also like to thank you, our shareholders, for your ongoing support as we continue to grow the business and aspire to be the #1 choice in digital lottery and services globally. I'll now hand back to Sue.

Thanks very much, Mike. At this point, I'd like to provide shareholders with the opportunity to ask Mike any questions in relation to his presentation or as regards to the performance of the company more generally. Do we have any questions from the room? If we do, could you please raise your hand, we'll arrange for a microphone to be brought to you. It's just coming now.

Thank you. Who are our competitors in terms of providing services to the lottery industry worldwide? Is there another Jumbo somewhere else? Are there many more? Is our model unique? And maybe operating -- the lotteries overseas operate in a more traditional fashion rather than so advanced [indiscernible]?

Probably the nearest competitor to what we do would be the likes of Scientific Games and IGT which are large, predominantly U.S. based companies that provide technology and lottery services, prominently to government organizations. But as we go towards the charity area, we find that they don't operate in the charity area, which is the reason why we're a lot more active in that area. And there are smaller external lottery managers in the U.K. and even in Australia and Canada that kind of compete with StarVale and Stride, but they're not of the same size as IGT and Scientific Games. So really, in that particular space, Jumbo is quite large in that industry. So we're all quite well aware of how we sort of line up against our competitors, and we're always kind of improving our offering so that we can always be one step ahead. And the one area that we always have shone quite brightly is in the technology area.

Do we have any further questions from the room? Yes, sir?

[ Glenn Reston ]. My question is really around the future outlook section of the thing where you kind of say steady state, we're trudging along. So my question really is, is there something more -- where is the next incremental -- sorry, where is the next step change that we can make other than going and buying something else? Is there something that we're working on to make that step change that sort of hasn't been there for a few years?

Yes. Look, you kind of have to look to the M&A side of things as to where the step change would be. The Australian lottery business is very steady. As you can see from those graphs, it sort of steadily grows. Nothing is going to suddenly make that shoot right up there. There may be a game change. But what we saw in 2019 with our new technology platform coming out, that was a unique time because we had an older platform that we changed. Our platform is fine now. So there's nothing that we can do in that area. So Australia is sort of on a nice trajectory. But the one important thing about the 2020 deal that we did with TLC was that it gave us the ability to go out and focus internationally. And we bought 3 businesses, we're busily looking for more, and we can do that internationally while the Australian business just keeps on growing. So it'd be nice if every year was a fantastic year and keeps on going, but that's not how the lottery industry works. The lottery industry is priced because it's just that regular type of industry. So you do get periods where we buy something, we have to work hard at integrating those businesses, and then once we've gone past that period, we buy something else and we try to keep the growth going. But certainly-, that international growth opportunity through acquisition is something that we've never had prior to 2020. So that's an area where I focus a lot of my attention. And it is a bit lumpy in terms of the growth. Sometimes you get a big shoot forward and then it's a consolidation and then it shoots forward again, which is the right way to do it. If it just goes too quickly, then you end up not being able to keep the team up with it. So I think we're doing it at the right pace and the opportunities are still quite significant going forward.

Can I ask another question?

Yes.

Sure.

Let me come to you. Before you do, I wouldn't mind just adding a comment to Mike's. And that is I think we are doing far more than trudging along. It feels like that sometime because of the pace of the lottery industry, but rest assured, we are constantly talking about those M&A opportunities. Even this morning, in our Board meeting, we were talking about what are we doing in Ontario? What are we doing in the U.K.? We have a strategy session lined up for December, where [ Michael Driver ] is going to be talking to us about all those opportunities. So it's not BAU, and we are quite dynamic in the way we are trying to continue that growth strategy.

I'm just talking about the image that I look at from my side, not your side.

Of course.

Okay. So you talked about AI. And it's supposedly the next big thing in all sorts of things. So most of the stuff that you had up there on the screen, on the slide seems to be about checking and protecting and looking for fraud. But I'm just wondering where is the expansionist part that comes with AI? Or is there an expansionist part that we're working on that I couldn't quite see in your comments?

Yes. Look, there certainly is. It's all centered around the player experience, the user experience. And that's something that Jumbo has been really good at. It will get easier to use the app. And kind of liken it like this, when we're a lot smaller, we could provide our players with kind of like personalized service, we literally get on the phone to people, talk to them, you get to know their name, you get to know what they're like and you develop that trust. As you get bigger, you can't just employ enough people to give everybody that personal experience. With the amount of tickets that we sell these days, you can't have that personal touch. So that kind of gets lost through the years. AI gives us an opportunity to bring a lot of that back. Yes, it's not a person. It's a machine talking to people. But the quality of the conversation is actually really quite good. So people at least feel that they're getting what they want. The suggestions that we're making them with other products is a bit more specific to what they like as opposed to getting one ad for everybody and it sometimes works, sometimes doesn't. It becomes a lot more specific. So it's not going to be a sort of a big bang type of thing, but it will be a gradual improvement, which whether you like it or not, it's happening. A lot of the big companies are implementing it. We are too. We're not going to be left behind. We're going to try and lead the pack in that area. And with all this sort of good stuff, it doesn't come cheap. And the benefit to Jumbo not only with the customer side of it, it does help us attract more partners because all of our partnered lotteries out there, they're all looking at AI and other things and going on, oh my God, how are we going to keep up with all of this. And a lot of them that have been doing it in-house suddenly changed their opinion and say, look, maybe we need a specialist partner, and on that basis, Jumbo shines. And so it does sort of -- we do get a lot more inbound calls saying, look, maybe it's time we partner with you because you guys know all about it, and we're struggling to keep up.

[indiscernible].

Working on it.

A follow-up question on the growth in the future. The TTV goal that you said some years ago, sort of -- is that still under the bonnet there, $1 billion in TTV? Is that severing underneath the bonnet there as part of your -- we parked that one?

No, no, no. It was an aspirational goal that we set ourselves a while back, and we're not that far from it. If you analyze the addition of StarVale and Stride, we're getting into the $900 million there once you analyze their impact. At the moment, not all of their numbers are fully impacted. So it was a case, like we knew we're going to get there, and we will. It's a question of timing and everything because we've got the ability to acquire businesses, which just give you that sort of step-up in TTV. So we're convinced we'll get there. We're already starting to look at how long is it going to take us to get to the next mark, $2 billion after that.

[indiscernible]. Is there something beyond that, so there is...

Yes, absolutely. There's no way it's going to just suddenly stop at $1 billion and not go any further. We're already looking beyond that and seeing where the next level is after that.

Do we have any further questions from the floor? If not, do we have any further written questions from our online attendees?

Yes, Chair. We have approximately 8 questions. So just to put to you on notice. So I'll -- the first 5 questions come from the ASA, Australian Shareholders Association. So I'll ask those questions. I commend the Board for the required skills listed on your metrics for directors. However, I would call this a table rather than a board skills metrics as it doesn't list individual's director skills. Going forward, can we please list which directors have each skill at each level, so shareholders who own the remaining 80% of the company can be properly informed when voting?

Thank you for your question, the ASA. I just wanted to recap that we actually review the competence that we think we need around the Board table annually, and then we review those competencies against the skills that we actually have. We do a self-assessment every 12 months. And we -- our policy is to actually have an external assessment every 3 years, given we have now done 2, the next assessment will be an external assessment. So we may well get some good feedback from that. In terms of your suggestion around identifying individual directors skills and experience in a table rather than -- a matrix rather than a table, we're happy to take that on board for next year's report.

The second question we have from the ASA is, in addition, we still have a small Board. So are you considering adding a director or 2, especially in the areas where we are least covered at present, like lottery industry, sustainability, and then also, I guess, international, given our acquisitions?

Thanks again for your question. As I said in my presentation, we are constantly reviewing the skills and experience we need around the table, including the number of directors we need around the table. Certainly, as we expand overseas, we are taking into account whether we need more international experience around the table, and we have committed to searching for another net with appropriate skills. The skills we believe that we're looking for at present, which we will review again once we do our strategy review in December, our finance expertise complemented with sustainability, data governance and cyber experience.

Another question from the ASA. Director's kin in the game. As we also raised last year, Professor Christensen and Mr. Rizzo both hold small parcels of shares in the company, but don't yet comply with your policy to hold at least 1 year's director's fees in shares and are both in their fifth year on the Board. Can they please advise if they plan to correct this by the end of the...

I have raised this topic directly with Sharon and Giovanni at year-end, and they have both advised me of their intention to reach the minimum shareholding requirements in the required time frames, which is July 2024 for Giovanni and August 2024 for Sharon.

Another question from the ASA. This one is in relation to cyber. Given recent direction from ASIC and the Home Affairs Office about cybersecurity and their intention is to hold boards more accountable moving forward. A couple of questions. Who is our expert on the Board in all things cyber? And as examples, do we conduct internal fishing tests, delete all unnecessary customer data, et cetera, to minimize damage to our company when rather than if hacks occur to our business?

So you will note in our annual report in the skills assessment that we carried out, both Mike and Giovanni were identified as experts in cyber. I completed the diligent accreditation and cyber risk this year as well. And I'm going to hand over to Mike for more detailed explanation.

Yes. Look, cyber is a key factor for all companies, not just e-commerce companies. And Jumbo has been an e-commerce from day 1. So it's very -- it's always been an issue and always will be. So what I'm trying to say is that we've grown up with cyber. It's not something that we've just suddenly had to scale up on in the last few years because it's become topical. Internal fishing tests, we do them quite regularly. We try to catch out our own staff that might fall for these traps. We have an ongoing educational piece where our staff have to go through training. Customer data, where we are required to hold some customer data, but where possible, we either obfuscate them or we just delete them or we put them in a place where it's just offline and a lot more protected. We employ technologies like Cloudflare to reduce the ability for hackers to get into our network. It's one of those technologies where it's never -- it's not easy to get to complete 100%, but vigilance is the key. And because it's near and dear to our heart, it's in our DNA pretty much is something that we look at on a daily basis. So I think Jumbo is one of those companies which handles the cyber threat very seriously.

And the last question from the ASA is in relation to political donations. Did we make any political donations in the 2023 financial year? And if so, did we disclose them in the annual report? And what is our policy there?

Thank you for the question. Political donations on behalf of Jumbo is a prohibited act under our anti-bribery and corruption policy. The policy also expressly states that political contributions or donations are not permitted by Jumbo and must not be made by workplace participants on behalf of Jumbo. And to the best of my knowledge, Jumbo has not made any political donations.

We now have a question from Mr. [ Stephen Mayne ]. The question is, the Chair uses the phrase problem gambling in her formal address. This industry language -- sorry, this is industry language designed to blame the gambler as opposed to the addictive product such as poker machines. If possible, could Jumbo interactive, please switch to language, which talks about gambling harm and addiction rather than suggesting that gambling customers are the problem.

I think that's a very fair request that we modify less than optimal language around problem gambling, and I undertake to address that in future communications.

We now have a question from Mark Eagleson. He's asked, can you advise of Lottery Retailing's revenue growth for Q1 financial year '24. This is more useful than the 4 months year-to-date figure as it will not be distorted by last October's $160 million jackpot. Thank you for your question.

I'm going to refer to Jatin, our CFO, to answer that.

So you'll see the presentation we gave the 4 months -- the first 4 months of FY '24, and that's really due to the tough comps that we had in October FY '23. You'll note we had $100 million Powerball and $160 million Powerball. That's distorting that trajectory. If I look just at Q1, the TTV growth was greater than 20%, and that's really driven by the strong jackpots we saw in Q1. You'll recall Q1 PCP was a poor jackpot period. I think the average value was only $25 million, whereas in Q1 FY '24 was about $37 million. And the revenue growth and the margin is similar to what you would have seen what we disclosed today.

And we have another question from Stephen Mayne. Lottery taxes are still ridiculously high across Australia, especially compared with the huge reductions in taxes imposed on the rising industry over the past 20 years. What are you doing to stand up for lottery consumers who are being overtaxed by state-based legislated monopoly lottery operators? Which states have the highest lottery taxes? And is there any sign of movement on this front?

Are you happy to take that, Mike?

Yes. Look, I'm happy just to explain that, that's something that we would stand with the Lottery Corporation, they would really need to drive that type of an effort. Yes, it's not for us to drive in that area. Look, the purpose of lotteries is to raise revenue for governments. We could argue about what is too much and what is too little. If -- the purpose of lotteries is to do good socially as well as provide a fun game. If you start reducing the tax, then you might also create -- play a harm by having games that are -- the winning just starting to come through a bit too quickly. So there is a balance to be had there. But in terms of standing up, we stood shoulder to shoulder with TLC on a number of issues that have come through like the payments issue, the advertising issue. And to the comment earlier about the growth in lotteries, while lotteries kind of -- you might think it's slow growth, I don't think so. I think it's having a nice trajectory. That comes with -- that comes from keeping the player harm to a minimum. And so that's just what lotteries are like. Hope that answers the question.

And that's all the questions we have online for that particular item.

I'll just check in with Graham. We don't have any questions on the phone. It would appear not. All right. Moving to resolutions for today's meeting. Shareholders will be asked to consider the 4 resolutions set out in the notice of meeting dated 9 October, 2023. The poll for each resolution is now open and will close at the conclusion of the meeting. For each proposed resolution, I will introduce it. There will be an opportunity for shareholders to ask questions on the resolution through our online platform in line with the process that Graham explained. Those persons entitled to vote on the resolution may cast a vote on it at any time before the close of the poll. And the results of the poll will be released on the ASX announcements platform and made available on our website as soon as possible after the close of this meeting. So financial statements and reports. The first item of business is to receive and consider the company's financial statements and reports for the financial year ended 30 June, 2023, as set out in our 2023 annual report. This item of business does not require shareholders to vote on a resolution or to formally adopt the reports. Shareholders or their proxies may comment or ask questions about the financial statements and reports about the management of the company. Shareholders or their proxies may also ask questions on the company -- of the company's auditor, Ernst & Young, in relation to the conduct of the audit, the preparation and content of the audit report, accounting policies adopted by the company and the independence of the auditor carrying out the audit. I will now address any questions relating to this item of business or any general business questions. Do we have any questions from the room? If so, please raise your hand. We don't have any questions from the room. Do we have any written question from online attendees?

No, Chair, the questions were dealt with in the previous session.

All right. Thank you. And no questions on the phone?

There are no questions on the phone at this time.

As there are no further questions, we will now move to the next item of business, and that relates to my reelection. So I propose handing the chairing of this item to my fellow Director, Giovanni Rizzo, who is the Chair of our Audit and Risk Management Committee.

Thank you, Sue and good morning, everybody. We'll now move to Resolution 1, which is the reelection of Susan Forrester as a Director. The resolution is as set out on the screen. Details of Sue's background and experience were set out in the explanatory memorandum, which accompanied the notice of meeting. So I don't propose to restate that. However, I would like to emphasize that the Board considers that Sue's contribution to leading the Board through a significant experience in corporate governance across a number of industry sectors, human resources, and innovation brings significant benefit to the Board and committee discussions and as an efficient and accomplished Board leader. I'll now invite Sue to briefly address the meeting regarding her reelection.

Thank you, Giovanni. I don't propose to set out my skills and experience that's been well set out in the explanatory memorandum. So I thought I might just talk a little further about the way that I chair the board, the way our Board interacts, and some of the benefits that I think come from that. I do believe I complement the Board's existing skill set with my strategy, commercial and governance expertise, which I've gained from many years of working. It's quite surprising how much cross-pollination occurs within a Board portfolio as all the organizations I serve on are grappling with cyber risk, how to harness AI, the future of work and ESG. And at the time where there's so much additional risk for companies grappling with these emerging issues, it's really important to have a stable and cohesive board, which respects each other's experience and viewpoints. We have an annual appraisal process I have spoken about, and it demonstrates that we are a well-functioning board, which is consistently trying to improve its processes to ensure we make good and prudent decisions for our shareholders. I thank my fellow board members for their support for my reappointment. Of recent times, I have developed a genuine interest in cyber, AI and the SNG and ESG, and I have taken time to develop my knowledge through external accreditations and certifications. In June this year, I was fortunate enough to attend [indiscernible] role of the chair course, which was an excellent opportunity to develop my chairing and facilitation skills in an international environment. I believe I have the capability, capacity and commitment to continue to effectively contribute to the strategic governance and direction of Jumbo. As we have grown internationally, I have particularly enjoyed supporting Mike as he has developed his executive and management teams, which are -- and I appreciate being part of a very diverse workforce, showing a passion for technology, innovation, and engaging customer experiences. It is with great pleasure and enthusiasm I put myself forward for reelection as a director of the company for another 3-year term. Thank you. And over to you, Giovanni.

Thank you, Sue. The directors with Sue abstaining, unanimously recommend shareholders vote in favor of this resolution. I will now address any questions relating to this item of business. Any on the floor? No questions on the floor. Graham, any questions online?

Yes, we have a couple of questions online. First of all is a question from Stephen Mayne. And the question is, Brisbane can be quite an insular market in terms of who serves on public company boards. Could Susan clarify what her pathway was to the Chair of Jumbo? This is not to criticize her leadership in any way. I'm just curious to understand the history.

Thank you for your question, Stephen. My pathway to the Jumbo directorship and chairmanship was through an external recruiter. I can't remember the name of them now. But they conducted a national search. I believe the 2 final candidates. One was Sydney Bais and the other was myself. We were just coming out of COVID at the time. So there may have been some decisions around having a local Chair who could support and help grow the company locally. And as for the Insular Brisbane commentary, I serve on boards both locally outside of Queensland and internationally, and I do try very much to bring that experience to the Board. I think globally, our experience around the table has increased significantly with the M&A strategies that we have, and Mike is traveling regularly. So if there's any perception of being insular, we are certainly working towards being quite broad ranging in our thinking and our horizons.

We have another question from Mr. Stephen Mayne. It has been substantially addressed by a previous question, but I will read it because it does also offer a compliment to the Board. And there's a couple of questions which I can respond to as well. So the question is, a 4-person Board seems too small for a global business to capitalize at almost $900 million in the fast-moving tech space. What is the current fee cap for directors and constitutional cap on the Board size? And could we please appoint 1 or 2 new directors for shareholder approval at next year's AGM? The existing 4 are no doubt fabulous, but we prefer to have a super group of 6 directors. And I can just respond to the fee [indiscernible].

We'll just pause until that test is over. Yes.

I think we may be good to continue.

I think so.

Yes, let's hope.

And I can confirm that last year's AGM, the cap -- the director's fee cap was increased to $1 million and approved by shareholders. And within the constitution, there is an upper limit at the moment of 9 directors.

Thank you, Graham. All I can do, Stephen, is -- thank you for your question, and confirm what was in our presentation today that we have recognized we are small. We are actively on the lookout for at least one new net, if not 2. And I believe I've answered the question in terms of the nature of the skills we we'll be seeking. Just remember that we're seeking people, not robots. So whilst you might start off with a checklist of cyber AI and sustainability, if we could find someone who had excellent international lottery experience, that would be terrific. If we had someone perhaps based in Canada who had great commercial experience and great networks, that would be good too. So we are -- whilst we have a checklist, we are quite broad again in relation to the nature of the person we are seeking. We are doing an internal search to start. And Abby and her team will be assisting us with that. But if we do need to go more broadly in terms of external recruiters, we will.

Thank you, Sue. Any further questions, Graham?

No further online questions.

All right. Thanks. Any questions on the telephone?

There are no phone questions at this time.

Fantastic. Thank you. As there are no further questions, I'll now put Resolution 1 to the meeting. The results of the proxies received to date are now being displayed on the screen. For those of you online, please now select either for, against, or abstain for resolution 1 on the voting screen. For those here in person, please mark your selection on the voting card on your person. And I'll just pause for a few seconds while everybody cast their vote. As that now concludes Resolution 1, I will hand the meeting back to Chair, Sue. And congratulations, Sue, on your reelection.

We'll now move to Resolution 2, which is a nonbinding and advisory vote on the company's remuneration report for the year ended 30 June 2023. The Corporation Act requires that the section of the directors' report dealing with the remuneration of directors and key management personnel of the company are put to an advisory vote of shareholders. The remuneration report detailing the company's approach to remuneration is contained within the 2023 remuneration report, which is available on our website. The resolution is set out on the slide. I'll now address any questions relating to this item of business. Do we have any questions from the room? If so, please raise your hand. With no questions from the room. Do we have any written questions from online attendees?

There are no online questions, Chair.

And do we have any questions on the phone?

There are no phone questions at this time.

As there are no further questions, I'll now put Resolution 2 to the meeting. The results of the proxies received are now being displayed. For those of you online, please now select either for, against, or abstain for resolution 2 on the voting screen. For those here in person, please mark your selection on the voting card. We'll now move to Resolution 3, which states -- which relates to the issue of the STI director rights to the CEO. The resolution is set out in the slide. The details and background to this resolution are set out in the explanatory memorandum. And I'll now address any questions relating to this item of business. Do we have any questions from the room? If there's no questions from the room, do we have any written questions from online attendees?

Yes, Chair. We have one question from Stephen Mayne. And the question is, the founder CEO owns $120 million worth of ordinary shares based on current prices. Does he really need STI awards to keep him motivated? James Packer used to work for free at public companies. Has Mike thought about doing the same and just relying on dividends to draw an income from the company?

I'm happy to take that. Well, Sharon, would you like to take this chair? Okay. My response to that question would be that we have spent quite some time developing our remuneration framework for all members of our KMP, including the CEO. Noting Mike is, in fact, the founder and does have a significant shareholding. We still believe it is very important that the position of CEO is benchmarked appropriately when it comes to remuneration, and it's not appropriate for him to ask Mike to effectively not take STIs or LTIs. The other reason for doing that is that if Mike were to resign or step down and we were to recruit another CEO, we would then have an unusual position where the previous role didn't have those and we're moving to a new regime of STIs and LTIs. So the Board feels very comfortable about the remuneration that Mike is offered both from a fixed and from a risk perspective, and these are benchmarked regularly as part of our annual remuneration review. Would any other member of the board like to make any comment about that?

There are no further questions, Chair.

Do we have any questions on the phone?

There are no questions on this line at this time.

As there are no further questions, and I'll Resolution 3 to the meeting. The results of the proxies received are now being displayed. For those of you online, would you now please select either for, against, or abstain for resolution 3 on your voting screen. And for those here in person, please mark your selection on the voting card. We'll now move to Resolution 4, which relates to the issue of LTI director rights to the CEO. The resolution is set out in the slide. The details and background to this resolution are set out in the explanatory memorandum. And I'll now address any questions relating to this item of business. Do we have any questions from the floor? If not, do we have any questions from our online attendees?

Yes, Chair. We have one question from Mr. Stephen Mayne. And this is the question. Could the CEO summarize his past LTI grants as to whether they have vested or lapsed? Also, he's been in the job a very long time. Could he briefly summarize his share buying and selling history? Please don't say look it up in the annual report and through the ASX announcements. It's complicated over a long period, and the CEO could factually summarize the situation in 60 seconds.

I'm going to preface that -- thank you for your question, Stephen. I'm going to preface the answers to that in terms of, we do in an enormous amount of detail, explain both our STI and LTI setting and vesting and exercise program in our annual report, which is always quite easy to look up. However, we are in the spirit of accountability, happy to explain that. I'm going to hand over to Giovanni just to explain the LTI vesting component.

With Mike being in place for over 25 years as CEO, I think we'd be here all day if we had to go through all of the vestings and all the share purchases and sales. But what I would like to add is, Mike has a significant amount of shares in this company, as explained, close to 9 million shares, 15% of the business and retains that commitment to the company in terms of making sure he's a large shareholder and being very committed to the company. In terms of his remuneration, a significant portion of Mike's remuneration is both STI and LTI. And that ensures alignment with shareholder wealth creation and maximizing the share price of the business as well. So in terms of the vesting criteria that we have in place, every year, the Board together with the people committee has a look at what are the key performance hurdles that need to be attained to drive this business and to drive shareholder wealth going forward. And ultimately, those performance hurdles determine what the vesting conditions are for the business. And we obviously evaluate that on an annual basis. So to summarize, over the 25-year period, I mean, I know Stephen has asked for us not to say look at the annual reports, but I would advise that we'd have to look at the annual reports because there are numerous LTI grants that have been provided over the years. And it basically details what those performance criterias are and what the vesting conditions are around that and whether they have actually been met or haven't been met. But to close on that one, just to say that Mike has a significant commitment to this business, he's still a very large shareholder and obviously has shareholder wealth creation in the forefront of his mind.

In relation to the question relating to Mike's buying and selling of shares, the information I have at hand is that in April 2022, he sold $688,000 worth of shares. Is that, to your knowledge, Mike, the only sales?

That was the number of shares?

That was 688,000 shares.

Shares, that's right, which is about 1.1% of the shares. So in essence, I've held on to my shares pretty much from day 1, except for small amounts, relatively speaking, over the years, which indicates my commitment to the business and my vision for the future. I still think the best years are ahead of us.

Thank you, Mike. Do we have any questions on the telephone?

There are no phone questions at this time.

If there are no further questions, I'll now put resolution 4 to the meeting. The results of the proxies are now being displayed. For those online, would you now please select for, against, or abstain for resolution 4 on your voting screen. And for those here in person, please mark your selection on the voting card. If you are attending here in person, a member of the Computershare team will now come around to collect your voting card. The results of the meeting will be announced on the ASX company announcements platform and will be available on our website as soon as possible after the close of this meeting. That ends the formal part of the AGM, and I now declare the meeting closed. And I now declare that the -- I'll just wait one moment, some people just filling out their blue cards. I haven't. All right, just one moment. Are there any more cards to collect? I now declare that the poll is closed. Thank you very much for participating in our hybrid meeting today, and we look forward to your continuing support during the coming year. Thank you.