Jumbo Interactive Limited (JIN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the 2024 General Meeting of Jumbo Interactive Limited. We have a hot and steamy day in Brisbane today, and I can see it standing room only here. So welcome, everybody. Welcome to those online and on phone as well. I'm Susan Forrester, the Chair of the Board, and I'd like to thank you all for attending our hybrid AGM today. We have shareholders joining us here physically in our offices at Toowong and also via the Computershare meeting platform. I'd like to start by acknowledging the Yuggera and Turrbal Peoples, and pay my respects to their elders past and present. I'd also like to extend my respect to Aboriginal and Torres Strait Islanders People who are joining us to this presentation today. I've been advised by our Company Secretary that a quorum is present, so I am pleased to declare the meeting open. A couple of introductions to start the meeting. Joining us at this AGM today are: Sharon Christensen, Non-Executive Director; Giovanni Rizzo, Non-Executive Director; Mike Malone, Non-Executive Director; Mike Veverka, our Managing Director, CEO and Founder; Jatin Khosla, where are you here, Chief Financial Officer; and Lauren Osbich, our Company Secretary. Suzy Kuo, our representative from our auditor, Ernst & Young, is also attending the meeting and will be available to answer any questions from shareholders. Giovanni Rizzo as Chair of our Audit and Risk Committee, and Sharon Christensen as Chair of our People and Culture Committee, will also be available to answer your questions. Ladies and gentlemen, at this point, I will ask our company Secretary, Lauren, to explain the arrangements for asking questions and voting on any 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're attending the meeting physically 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. [Operator Instructions] 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 have already been answered. Otherwise, we will endeavor to answer as many of the questions asked as we can. In terms of 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 on to how you can vote at today's meeting. All resolutions to be considered at this meeting will be determined by a 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 open shortly for all resolutions. At that time, if you are attending online and if you are eligible to vote at this meeting, select the Vote icon. All resolutions will then be activated and the voting options will appear on your screen. To cast your vote, simply select one of the voting directions for, against or abstain, and 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. 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, Lauren. I'm pleased to provide you with an update on Jumbo's progress today. As a digital lottery specialist, our mission is to provide positive social impact through making lotteries easier. We strive to become the #1 choice in digital lotteries and services around the world. Currently, we provide our proprietary lottery software and lottery management expertise to the government and charity lottery sections in the U.K., U.S. sorry, Australia, U.S. and Canada. In the financial year ended 30 June '24, we helped more than 15,000 not-for-profit organizations and raised over $260 million for good causes. Whilst inflation has moderated, the operating environment continues to be impacted by relatively high interest rates and cost of living pressures. Lotteries have delivered consistent growth over the long term and have provided to be highly resilient to economic downturns and cycles. In addition, digital penetration continues to trend higher and remains well below levels seen in other countries, particularly Europe. Labor market conditions and wage pressures have also eased, although the demand for digital expertise, including artificial intelligence skills remains elevated. With almost 50% of our Australian workforce comprising software engineers, product managers and data analysts, it's still very important that Jumbo remains a sought-after employer for top digital talent. The 2024 financial year was Jumbo's most successful to date, with strong growth across all key metrics, helped by a very strong run of large jackpots in Australia, this result reinforces our track record of successfully growing earnings and dividends for shareholders over time. The Board was pleased to determine a final ordinary dividend of $0.275 per share taking the total ordinary dividend for the year to a record of $0.545 per share fully franked, equivalent to a dividend payout ratio of 79% of statutory net profit after tax. This is towards the top end of our targeted dividend payout ratio range. We continue to execute our growth strategy of broadening our footprint through diversifying our business beyond our reseller relationship with The Lottery Corporation. Whilst the pace of international acquisitions has been slower than anticipated, we are not seeking growth at the expense of value and risk for shareholders. At last year's AGM, we received some proxy adviser and shareholder feedback about the similar size of our Board compared to companies on the ASX 300. We consider this feedback and subject to the approval of shareholders today, we propose to confirm the appointment of Michael Malone to the Jumbo Board. Michael is a valuable addition to our Board, and our Audit and Risk Committee. He brings significant entrepreneurial expertise in founding and scaling successful businesses. He also has extensive Board experience in high-growth technology companies. You'll have the opportunity to hear a little more from Michael during the resolution for his election. The Board recommends that you vote in favor of the resolution to appoint Michael Malone to our Jumbo Board. Today, Sharon Christensen is also seeking reelection, and she will address you shortly when we reach the resolution for her election. The Board also recommends that you vote in favor of this. As I've said before, strong governance, conduct and ethics are prerequisites for doing business in a regulated industry such as ours, especially when you're working with charities amongst multiple jurisdictions. This has been heightened with scrutiny over the Australian gaming industry over the last few years. We are pleased that lotteries are exempt from the ban on using credit cards for online gambling and the ban on advertising of online gambling. These exemptions reflect the understandings that lotteries pose a very low risk of societal harm relative to other gaming products and actually create positive social impact. In today's interconnected world, a key priority for our Board is managing risks related to data protection, privacy and cybersecurity as well as the emerging risks from new technologies, artificial intelligence and innovation. The Board is focused on compliance with workforce reforms that have been implemented in Australia in 2024. Our remuneration framework is in its third and final year and will be reviewed in FY '25. The Board's review will consider feedback from all stakeholders, including shareholders and proxy advisers. And our goal is to have a remuneration framework and practices that are fair and reasonable, aligned with industry standards and will attract and retain capable senior executives to execute our growth strategy. We've had some renewal of our executive leadership this year and after a comprehensive recruitment process that considered both internal and external candidates, Jatin Khosla was appointed to the role of Chief Financial Officer. Formerly, he was the Head of our Investor Relations section at Jumbo. Jatin's promotion demonstrates the strength of our team and our commitment to developing and nurturing internal talent. We also welcomed Tam Watson and Marina Avisar to our regional leadership teams in the U.K. and Canada, respectively. Tam and Marina strengthened our regional leadership team and will be instrumental in driving growth and optimizing business performance. In light of these changes, we also streamlined our senior leadership group into an executive leadership team. And we believe this new operating structure drives clear accountabilities, which will result in improved strategic execution. A couple of comments on our people. This year, Jumbo's operations in Australia and the U.K. were awarded a Great Place to Work certifications. This is a huge highlight for us because we believe our workforce culture is critical to our success. It's how we attract and retain the most talented and collaborative people. We want a unified and dynamic culture in all of our workplaces and have aligned our people processes across Australia, the U.K. and Canada to build it. By drawing on the diverse strengths and perspectives of our international teams, we are fostering a culture built on collaboration, continuous improvement and mutual support. Our streamlined executive team also has been instrumental in shaping this culture and enhancing the leadership presence across our organization. The next step is to invest in professional development, employee well-being and engagement. And I should note that over the past year, Jumbo University, which is our transformative learning and development platform, has flourished. It now supports continuous learning and career development in-house. We take great pride in our recent industry recognition for excellence in candidate experience and learning and development, which highlights our industry-leading approach to talent acquisition and skills development. Jumbo is a socially responsible and sustainable business. We were pleased to retain our Climate Active Carbon Neutral certification and reduced our total absolute emissions by 18% in FY '23. We enhanced our supplier protocol to ensure we are screening suppliers for ESG risks, including modern slavery and introduced compulsory modern slavery awareness training to all of our employees. As a Board, we see investments and projects to help -- sorry, we oversee investments and projects to help our data and systems. We achieved greater than 40% female representation across the group in FY '24. And in FY '25, we aim to increase the number of women in technical roles. This will require pathways and support systems internally and externally to support women choose technical career path and to encourage those already in the industry to join Jumbo. Our Elevate HER program enhances leadership skills and influence through executive coaching, tailored workshops and dedicated women's support network. After such a successful year, I'd like to thank all members of the talented Jumbo team for the energy and focus that they bring to their roles every day and for fostering our vibrant, collaborative and innovative culture. I'd like to thank my fellow directors, our Managing Director, CEO and founder, Mike Veverka and his whole executive team for their ongoing leadership and passion at jumbo. Together, we have helped more than 15,000 not-for-profit organizations and raised over $260 million for good causes this year alone. As shareholders, I think you have every right to feel proud of the company and I thank you for your support. Thank you, and I look forward to taking your questions later in the meeting. I'll now hand over to Mike to present a more detailed view of the company's performance.

Thanks, Sue, and good morning to everyone. Thank you for making the time to come out here, and welcome to the 2024 Jumbo Interactive Annual General Meeting. It was just a few weeks ago, we celebrated 25 years of being listed on the ASX. It's hard to believe how Jumbo has grown over the years from humble beginnings as an e-commerce company, trying our hand at selling various products to a digital -- to becoming a digital lottery specialist that now has over 250 employees, over 4 million active players. And last year, for the first time surpassed $1 billion. That's $1 billion with a B in annual ticket sales. We are fortunate to be in an industry with strong long-term growth dynamics. Lottery games provide a responsible player experience while continuing to contribute valuable funds for government and good causes. This dynamic continues to drive player participation and the lottery industry to new heights. A further development we are seeing is the increased participation of a younger demographic in lottery games, which drives additional growth in the digital sector, which is where we operate. When we started selling lottery tickets, the digital channel for tickets was virtually 0. Fast forward to today, and the digital channel has grown 41% in Australia. We now sell more tickets in a single large Powerball draw than we did in an entire year all those years ago. As a strong growth driver for Jumbo at 41% digital penetration is still well below the levels seen in other countries and well below other industries, such as online banking, music, accommodation, housing and car sales. This is a clear indicator of a strong tailwind driving growth over the long term. The sustainable nature of lottery growth is reliant upon minimizing player harm. Healthy players lead to a healthy industry. This naturally leads to short-term ebbs and flows in player activity as participation rates decrease following periods of large jackpot activity as we saw in 2024. Eventually, the cycle returns at a sustainable pace. Just a couple of weeks ago, I attended the World Lottery Summit in Paris. The event occurs every 2 years and provides a unique opportunity for representatives from the lottery industry to connect and share learnings and best practices. This year, there were over 1,200 representatives from all over 200 lotteries in attendance with the theme of impacting society together. Key themes from this year's summit related to the ongoing digitization of lotteries and the use of artificial intelligence. The imperative to make lotteries more engaging for our younger generation and how lotteries remain a force for good and critical in raising funds for our communities and good causes. As a pure-play digital lottery specialist, Jumbo remains exceptionally well placed for the future. I'll now turn to the key highlights from FY '24. During last year, we showcased our ability to engage with our player base during periods of large jackpots delivering our most successful year to date. This contrast with the previous year where our nimble operating model provide -- proved its worth and good cost discipline helped offset the natural ups and downs of jackpots. Our SaaS segment continued the positive momentum with the new partnerships with the RSPCA and MS Queensland, along with a 4-year extension to our Lottery West partnership. With a growing business, we had to really manage our cost base, and we did a great job finding the right balance between cost efficiency and reinvestment for growth. And lastly, on capital, we maintained a strong capital position with available funds of approximately $60 million and entered into a new debt facility, which effectively structures our capital position for maximizing shareholder value and provides incremental flexibility and liquidity should we need it. Key metrics. We achieved significant growth across all key metrics. Group TTV and revenue were up 24% and 34%, respectively, while underlying earnings and profit both increased by approximately 30%. Free cash flow was up 14%, highlighting the strong capital generative nature of the business, and we delivered a record $0.545 per share fully franked dividend, up 27% on the prior corresponding period. Our first priority will always be to keep growing our Australian business well beyond the 2030 renewal date for our reseller agreements with The Lottery Corporation. We'll do this by continually innovating our player experience and continuing to make Oz Lotteries a fun, safe and exciting place to play, not only the Powerball, OzLotto and charity games, but also for the first time in Jumbos, Jumbo's own proprietary games and programs. We continue to attract a younger cohort of lottery players. 71% of our -- Oz Lotteries active player base is under 50, with the 18 to 43 age group category, representing 59%. This cohort is yet to hit their peak spend. As we have seen time and time again, as these players go through the typical life stages of getting a mortgage and having a family, they'll tend to spend more on lotteries and less on other gambling products. Last week, we had our inaugural U.K. customer forum in London, attended by our five largest U.K. charity clients. The forum was a great opportunity to connect with our clients, discuss the charity lottery sector in the U.K., share learnings and discuss how we can help grow and optimize their lottery programs. The key highlight was the Marta Foundation, the first charity client to use our lottery platform sharing their digital transformation journey to become one of the largest and fastest-growing charity lotteries in Australia. While the adoption of digital sales channels for charitable lotteries in the U.K. has been slower than anticipated, it is clear that many of our clients were encouraged by Marta's journey, and there is a general willingness to adopt digital more broadly. It's also clear that Jumbo needs to take a more proactive role in driving this shift. We'll continue to pursue M&A opportunities that either help build scale in our targeted regions or add complementary capabilities and propositions that drive growth. In doing so, we are opening -- we are open to acquiring high-growth, more technology-enabled businesses in the B2C space. Initially, we focus on developing a platform to manage very high volumes compressed in a short time frame, for example, just before a large draw. This extended to creating a best-in-class player experience improving the player interface, maximizing convenience, minimizing friction and leveraging data and analytics to drive personalization at scale. This included key features such as personalized number pages, AutoPlay, Lotto Party, and the inclusion of charity games, just to name a few. Today, we are focused on enhancing the player experience even further by creating new ways to play and more ways to win. Firstly, through the launch of Splash for Good, the first Oz Lotteries exclusive charity lottery game. And secondly, through daily winners, our Oz Lotteries loyalty program. Daily Winners launched in September 2023 and is designed to surprise, delight, engage and reward our players. This program provides member access -- members access to benefits, including discounts at selected retailers in various categories such as groceries, technologies and white goods. These savings and benefits enhance the overall value proposition for our players, making everyday purchases more affordable and rewarding. Although we've only been operational for just over 12 months, Daily Winners is still in its early days in the loyalty program world. However, we are pleased to see some positive indicators from the playing activity of newly acquired players who joined Daily Winners showing a higher monthly retention. And in general, our Daily Winners members representing a grouping of more frequent lottery game players. Based on player feedback, we launched a Daily Winners premium tier in August 2024, just a few months ago, offering exclusive benefits to this new membership tier. We'll continue to expand our exclusive benefits and rewards providing even greater value to our premium tier members for their monthly membership fee. Daily Winners gives us more opportunities to talk to our players using our own content with 6x more content published on social media channels in September '24 than it did in March 2023. This is an important development for Oz Lotteries and our ongoing engagement with our ever-growing player base as it provides us with greater flexibility in our marketing and begins to lessen, but not remove the direct relationship between jackpot levels and marketing activity. Jumbo is a tech company and being at the forefront of emerging technologies has always been a core part of our strategy. Our success has been built on our commitment to early adoption, allowing us to leverage technological advances to enhance our offerings continually. In the realm of artificial intelligence, we have substantial experience expertise that spans many years. A dedicated AI team is utilizing multiple large language models to advance our products and services, keeping us at the forefront of the industry. To demonstrate our AI capabilities firsthand, we invite you to explore our AI-powered annual report chatbot at Jumbointeractive.ai. This tool enables you to ask any question about our annual report, provide concise automated summaries and response. We believe this is an industry first, highlighting the practical applications of the technology we're developing with future potential for our lottery programs. We hope you'll find it useful. The large jackpot environment in the first 4 months of FY '25 was relatively subdued. With 14 large jackpots greater than or equal to $15 million, an aggregate Division 1 price of $440 million, equivalent to an average value per jackpot of $31 million, 9.4% below the PCP. There were only two large jackpots greater than or equal to $50 million with three in the PCP. As a result, Lottery retailing TTV was down 11.8%, impacted by the lower jackpot profile. In particular, the skew towards Powerball with the jackpot sequence has not exceeded $30 million since the $100 million jackpot in August. Revenue was 10.3% lower, reflecting an improved revenue margin of 23.2% compared to 22.8% in the PCP, mainly due to the product mix. Despite the unfavorable run of jackpots, player health metrics remain robust with average TTV per draw for like-for-like jackpots continuing to trend positively for Powerball and stable for OzLotto. SaaS underlying TTV increased 14.2% with revenue up 8.1%. The lower revenue margin of 4% or 4.3% in the PCP reflects the revised licensing fee structures with the extended Marta and Lottery West SaaS agreements. Pleasingly, both Endeavour and DevConnect have extended their SaaS agreements with Jumbo to December 2028 and December 2029, respectively. Both agreements include optionality for further extensions at the end of the license period. Managed Services underlying TTV decreased 8.1% with revenue down 4.5%. The performance reflects broadly flat revenue in our U.K. business, impacted by timing of lottery campaigns and lower revenue in Canada as customer contracts across the lottery value chain are reevaluated. Overall, at group level, for the first 4 months to 31 October 2024, TTV and revenue were down 4.9% and 8.1%, respectively, on the PCP, mainly due to the subdued jackpot environment. Despite the subdued jackpot environment to date, we are managing our cost base to ensure that the group EBITDA margin is maintained in line with our previous guidance. The ups and downs of jackpot cycles are not new to us. And we're fortunate to have a nimble operating model where we can adjust our cost base and our product portfolio as we did in FY '23 when overall lottery ticket sales were down on the PCP. So today, we are reaffirming our outlook for FY '25. Whether it's the prospect of changing a life or a form of fund or entertainment or just a fear of missing out, people continue to play lotteries. The underlying growth of lotteries has been underpinned by changes in demographics and game design with lotteries delivering consistent growth over the last 20 years. Digital penetration has increased to nearly 41% from 9% a decade ago, and we expect it to continue in line with other countries. With our 1.1 million active players, it's a simple philosophy. The more active players we have on our platform, the more we can engage with them and continue our growth. International expansion, we've established ourselves in the U.K. and Canada. We have installed strong leadership and have set the foundations for growth. We've uncovered new revenue opportunities, such as our SaaS partnerships, Splash for Good and the Daily Winners premium tier. And lastly, our X factor, a long list of innovations that keeps growing. Just as AutoPay, Lotto Party and apps kept us ahead of the competition in the early days. Daily Winners and AI-powered features will keep us ahead in the future. Before I conclude my presentation, I'd like to take the opportunity to thank our staff here in Australia, the U.K. and Canada for their hard work and commitment every day. Finally, I'd also like to thank you, our shareholders, for your ongoing support as we're continuing to grow the business and aspire to be the #1 choice in digital lotteries and services globally. I'll now hand back to Sue.

Thanks very much, Mike. And I'll now move to the formal part of the meeting. Shareholders will be asked to consider five resolutions set out in the Notice of Meeting dated 4th of October 2024. 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 the Company Secretary outlined earlier. 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 by the ASX company announcements platform and made available on our website as soon as possible after the close of this meeting. The first item of formal business is to receive and consider the company's financial statements and reports for the financial year ended 30 June 2024 as set out in the 2024 Annual Report. This item of business does not require shareholders to vote on it or to formally adopt the reports. Shareholders or proxies may comment or ask questions on the financial statements and reports or about the management of the company. Shareholders or their proxies may also ask questions about -- to 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 independence of the auditor in carrying out the audit. I'll 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, would you raise your hand and we'll get a microphone to you.

I'm David Lu, small company. Wanted to -- on a volunteer basis from the Australian Shareholders Association. Today, we've got proxies from 44 shareholders holding 133,000 shares. With the Software-as-a-Service and Managed Services not growing EBITDA as fast as lottery retailing in the last financial year, how will Jim keep the momentum of the growth going to reduce the reliance on lottery retailing. And will this require acquisitions as you foreshadowed in your speech potentially a large acquisition?

I'll hand it to Mike.

Yes. Look, M&A will certainly play a part in continuing our growth in the future. I think you can expect more moderate size acquisitions. That's just the way the landscape is. We've made a start in the U.K. and Canada where there are opportunities for us to grow via acquisitions. There wasn't really much scope for us to grow in Australia via acquisitions. We realized it's been a little bit slow on that front as we've been kind of learning the markets and making adjustments as necessary. As we outlined in the Annual Report, there was a deal that we missed out on, and that's just the way it goes. But we have a pretty good pipeline of other companies to look at. We met with quite a few just in the last couple of weeks while we're over in that part of the world. Also, to add to that, the organic growth of Jumbo is still very much in the forefront even overseas. SaaS and lottery and Managed Services are very much a B2B style of our business. One of the learnings that we've had, not only from the conference and the acquisitions that we've purchased so far has uncovered some opportunities in the B2C space, so where we can actually sell direct to the consumer. And it kind of replicates what we've done successfully here in Australia, where we've shown how using our software and using the Internet can be a real positive thing for lotteries, and we've kind of led by example. So we're looking to do the same sort of thing in those markets. But it all takes time, but we feel that, that strategy is pretty solid.

I also think it's a good sign that you didn't acquire the company under consideration because it shows that you -- you've got high standards. The federal government review into online Keno and foreign-sourced lotteries, I believe that's still underway. Do you see any potential impacts for the company?

Not so much. While -- again, while we're at the conference, we brought that up with our U.S. counterparts as to how we can deal with some of these issues. But they haven't really had that much of an impact on our numbers as yet. But we still kind of want to make sure that it doesn't get out of hand. So there's been a lot of efforts to try to keep and maintain a level and fair playing field in Australia. It's not really right when large prices are being offered backed by U.S. lotteries, and there's really not a lot of understanding on how it works or even if the players are being protected and looked after. So we work closely with TLC. I was just discussing it a couple of weeks ago with our colleagues at The Lottery Corporation about that very issue and it just remains a work in progress.

And my last question for this resolution is on Page 7 of the Annual Report, it says the Board and executive leadership are working with experts on cybersecurity and data protection. Could you please expand on that?

Yes. Look, Jumbo from the very first days was an e-commerce company. Everything we sell is on the Internet. And so the whole concept of data protection, cybersecurity, it's not new to us. We've been dealing with it for over 25 years. It's -- as we've grown, as the industry has grown, it's becoming a lot more topical, a lot more mainstream. And we've consistently upped our game and our understanding and the involvement of third parties and experts to help keep ahead of it. It's going to be an ongoing issue, but it's something that we take very seriously at Jumbo. The Internet brings a lot of great rewards but also a lot of responsibility. So it's something that's not new to us and something that we've -- take very, very seriously.

Can I just say we take a lot of comfort from the latest addition to our Board in Michael Malone, who has run and sold cyber businesses. And even this morning at our pre-AGM Board meeting, cyber was a major discussion as how do we manage our cyber risks and what would we do in case of an incident, and Michael's very practical inputs were very valuable. So it's an ongoing topic, which we highly attuned to. Any more questions from the floor? Do we have any written questions from online attendees? Oh sorry, I didn't see, Steven?

Steve, I am an ASA member and [ team ] invest member and also a long-term shareholder in the company. I just want to start out by commending you, Mike, on the last few years as you've allowed the governance of the company to improve. I've been a shareholder since before any of the existing Board members were here. And as a founder, I'm sure it's difficult to let some of those things go. But I do want to commend you on the improvement and of course, all of the Board that have been undertaking that work. I think it's going to help us become a much larger company over time. I also want to commend you on the results you're getting with culture. The staff engagement numbers and the Great Place to Work. Someone who's run a business, I know how difficult it is to get those kind of results. So that's wonderful. And I want to congratulate you on that work. My question here is around culture for the international businesses as we expand. I know that's a big part of our growth plans. So I'm sure it's easier with you and the family and the office here to kind of keep an eye on what's happening with culture in the Australian office. But as you're expanding internationally, what things are you doing to try and deliver that same Jumbo culture in our U.K. and Canadian in time, possibly other international businesses?

Yes. That's a very valid comment. How do we take something that's worked very well for us here culturally and bring that into new countries? Those have been around -- been shareholders for a long time know that we've -- we were in Germany for a while. This is not the first time we've tried internationally. So there are a lot of learnings that we've taken from that. One of the reasons we chose the U.K. and Canada was because of the similarities with Australia. So that makes things a bit easier, but it's still not an easy task. We're basically taking teams that have been working in a private company culture and bring them in under the wing of a large public company. So together, they require better governance, better accounting, better practices and things like that. And look, it's a journey. It doesn't happen overnight. I spent a lot of my time visiting the teams over there. I was in Canada and the U.K. just recently, I go there frequently. I tell everybody about the Jumbo story, what we stand for, the achievements that we've done here in Australia, what the vision is for the next 25 years and that type of thing. And really trying to make them feel that they're part of the Jumbo culture, the Jumbo story, and it's working, albeit slowly, but nobody expected these things to happen overnight. But it is a very important focus to us. It comes back to what I said earlier, the lottery industry is a great industry, but it's a very long-term industry. We're still only at 41% Internet penetration. So as I look forward to the next 25 years, I want to see that 41% get to 100%, but you have to think long term to get there. It's not going to happen in 5 years. So putting in place things, these cultural aspects, staff, putting the staff, elevate their position and all these things is all about that long-term vision that we want to get right.

And then a second related question, maybe for either Sue or maybe Sharon as Head of People and Culture. We've seen some pretty spectacular blowups at some other founder-led companies in recent times. And I haven't seen anything from Mike that would worry me, which is great. But how does the Board satisfy themselves that what you're hearing from Mike or what you're hearing from Jatin in Board papers, for example, how do you satisfy yourself that that's what's really happening at the ground level and with the rest of the team?

Okay. I think because the majority of Directors are actually based in Brisbane, we do have quite close working relationships with the executive and leadership team. So I think trust and respect is developed over time. We have fairly good visibility of the Board around the office and at various events. We actually -- I'll raise it up a level. We actually had quite a robust conversation even at Board level today around what are the risks posed in a founder-led business, lots of opportunities as we know. And we all commented just on how radically transparent Mike has been with all of his disclosures, which are minimal. But we believe that we do have a very open and honest relationship around the Board table. Michael has been through a founder-led situation of late and has some battle scars to prove it. So he certainly has some of the experience to know what to look out for and share that with us. So really just develop trusting relationships. We have a very good relationship with the people and culture team in terms of the work that they're doing there. I'll let Sharon add anything further.

The only thing I'd add is what you've already noted in terms of the work around governance frameworks and building that transparency between the Board and the management team. And also, I think, as Sue mentioned, that trusting relationship between the Board and Mike, that if there is something to disclose, Mike feels comfortable that he can actually bring that to the Board.

Thanks, Steven. Do we have any written questions from online attendees?

Yes, we do, Chair. We have two. First one from shareholder, Wendy Copeland, is the proportion of revenue from SaaS and managed services likely to increase in FY '25? It appears that the profit margin from these two sectors is flat to negative in FY '24. Is there likely to be an improvement in FY '25?

I'll hand to Mike for that one.

Yes. Look, over the medium term, yes, it's very much a goal of ours to try to get that percentage up as much as possible. We have a vision of trying to make it more 50-50. I think right now, it's around about 15-85. What will happen in the short term, like in the next 6 months or the next year will depend on what -- on maybe a couple of wins we might get in the U.K. or Canadian markets. There's a lot of change going on in those companies. We've brought on Tam in the U.K. and also Marina. Marina has probably had a hell of a job to pick up a few things in that business, but she's well and truly on top of it. Like I said, I went over there just a couple of months ago and worked through some issues with her. She's tremendous. She does an amazing job, and she'll get Canada moving ahead quite well. These things you get when you buy businesses. They all look good on paper. They go through the earnout and then you have to sort of deal with issues, which usually are not that major, but they still need to be dealt with. We had to do it in Gatherwell. We successfully did it then. We're doing it with Stride. So I still have high hopes for those businesses. And from there, we use that as a platform to then extend the business even further. But the word is spreading in the U.K. that a large professional company is in the market over there with a great track record in Australia. And like when we took the Marta over to the U.K. just a couple of weeks ago, we're really driving that awareness that Jumbo has got a lot to offer and the clients are listening. So I'm confident that it will keep on going up.

Thank you. Second question, Lauren.

Our second question is from Mr. Stephen Mayne, regarding the amount of takeovers that have been happening with 27 major takeovers above $200 million completed so far this calendar year. He asks why are public markets not valuing ASX-listed companies like ours more highly? And what are we doing to avoid being taken over? And does the Chair agree that this is a problem for the nation, particularly with so few new floats replenishing the ASX ranks?

Thanks for you Stephen -- your question, Stephen. I think it's a very broad takeovers oriented question, which is not terribly relevant to where Jumbo finds itself at the moment. Obviously, we have a defense strategy in place, should we find ourselves subject to a takeover. I am concerned too, that there's more companies listed leaving the ASX and they are joining it via IPOs. And I have observed that as a result of the very low pipeline of IPOs coming through, there is a certain lack of confidence in the market. There is usually far more of a buzz in the market when you can see IPOs coming through both large and small. But the Board doesn't have a specific view in terms of takeover environment in Australia. Any -- most of my fellow directors want to add to that?

No further questions from online, Chair.

Thank you. And do we have any questions on the telephone, Lauren?

Chair, there are no further questions on the telephone.

As there are no further questions, we'll now move to the next item of business, which is Resolution 1, the reelection of Professor Sharon Christensen. The resolution is set out on the screen. Details of Sharon'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 Sharon's contribution to the Board through her considerable experience in commercial transactions and regulatory compliance as well as her research and digital innovation and disruption brings significant benefit to the Board discussions and in her role as Chair of the People and Culture Committee. I invite Sharon to briefly address the meeting.

Thank you, Sue, fellow Directors, and good morning, ladies and gentlemen. I was reappointed as a Non-Executive Director in October 2021, and currently serve as the Chair of the People and Culture Committee and a member of the Audit and Risk Committee. I believe I complement the Board's existing skills with my extensive legal, commercial and governance expertise gained from a diverse range of industries. My experience spans university sector, legal profession and government consultancies, bringing a unique perspective that strengthens the Board's collective capabilities. Specifically, I bring relevant organizational experience in navigating through digital transformation, risk management, maintaining workplace culture during periods of change and understanding the business impacts of regulatory reform. As Chair of the People and Culture Committee, I've worked closely with the committee and the Chief People Officer to deliver several key initiatives. These include industry-leading programs for recruitment, talent retention and development, succession planning, diversity and inclusion, and increased employee engagement across the organization. More recently, our attention has focused on aligning internal policies to new Australian workplace and gender equity pay laws to ensure compliance and set a foundation for a high-performing global workforce. I'm honored to be part of a company with such a talented and committed workforce, sharing a passion for technology, innovation and delivering outstanding customer experiences. I'm also proud to be part of a well-functioning Board, and want to thank my fellow Board members for their support in my reappointment. It's with great enthusiasm that I put myself forward for reelection as a Director of the company, and I sincerely thank you for your consideration. And now, I'll hand over again to Sue. Thank you.

Thank you, Sharon. The Directors, with Sharon abstaining, unanimously recommend shareholders vote in favor of this resolution. I'll now address any questions relating to this item of business. Do we have any questions from the room? Yes.

David Lusmall. The Australian Shareholders' Association has a policy where we like to see the strengths of each individual Director shown in the Board matrix, and Jumbo doesn't have that currently. Would Jumbo consider doing that in the future?

I'm happy to answer that, Sharon, if you're okay with that. We review our skills matrix every year and certainly take into account what other companies are doing and what the current best practice is. We'll be reviewing it in the next year. We have a strategy session in April next year. And following that, we will formally review our policy to check that we've got the right combination of skills and experience around the Board table in order to actually oversee and govern that strategy execution. In relation to whether we will go down specifically identifying Directors, I can't say. But I think with a small Board, you can certainly have a look at our bios in the Annual Report and see exactly where our skill sets lie. Any other questions? Do we have any questions online, Lauren?

No questions online.

Do we have any questions on the phone?

Chair, there are no questions on the telephone.

As there are no further questions, I'll now put Resolution 1 to the meeting. The results of the proxies received are now being displayed. Thank you for those online. Please now select either for, against or abstain for Resolution 1 on your voting screen. For those here in person, please mark your selection on your voting card. [Voting]

We'll now move to Resolution 2, which is the election of Michael Malone as a Director. And the Directors -- the resolution is set out on the screen. Details of Michael's background and experience is set out in the explanatory memorandum. I don't propose to go through that. However, I would like to emphasize that the Board considers Michael will make an excellent contribution to the Board through his extensive founder and executive expertise across strategy, operational cyber and risk management roles particularly in high-growth technology companies offering products that reshape industries. I now invite Michael to briefly address the meeting.

Thank you, Chair, and good afternoon, ladies and gentlemen. I was appointed to your Board effective from the 26th of September 2024, and I'm a member of the Audit Committee. This AGM is my first opportunity to seek the support of shareholders. As some background, I completed my tertiary studies at UWA, receiving a Bachelor of Science in Math and Computer Science and post-graduate deployment and education. I founded INET in 1993, the first Internet service provider in Western Australia, which went on to list on the ASX in 1999. I believe in the same week as Jumbo by coincidence. So I continued as a Director and the CEO until 2014. After I INET, I cofounded and Chaired a cybersecurity advisory company, employing former members of the defense community, which became part of Cyber CX. Over the past decade, I've also been an investor and Non-Executive Director on several ASX-listed companies, including Axicom, Dreamscape and Super Loop. I take ongoing training and development seriously, and I'm up to date, a member of the -- a fellow of the ARCD and the Australian Computing Society. I'm presently a Director of Seven West Media and WiseTech Global, which are ASX listed as well as unlisted public company health engine and the government-owned NBN Co. Your Chair, Susan Forrester, is also the Chair of HealthEngine, which helps us both optimize our time there. My term at NBN Co finishes next April, I'm term limited after 9 years. In any case, I believe I have sufficient time to commit to your company. I'd be honored to serve as one of your Directors for the next term and proud to work alongside Mike, Susan and the rest of the Board and the team at Jumbo. Thank you. I hand back to Sue.

Thanks, Michael. The Directors, with Michael abstaining, unanimously recommend shareholders vote in favor of this resolution. I'll now address any questions relating to this item of business. Do we have any questions from the room? Yes, Steve?

I was actually going to ask for a specific example of where Michael could add value to the Board but you've already done that today. So I'll consider that. And so with five Non-Executive Director roles, you're at a level where you have quite a lot to do. Do you think that you'll likely address that workload in the future?

I'm happy for you to address it, if you wish.

As mentioned, HealthEngine is public, but unlisted. So it's a relatively light load. I shared that one with Susan. So we've actually aligned all the Board meetings. There's only 3 or 4 per year, but they've all been aligned with Jumbo Board meetings, which is kind of convenient. And I step off NBN Co in April. So I think that -- I feel like the workload is already fine, but there will be far more time in the future.

Can I just back that up in that one of the reasons that Michael was successful in securing the role, notwithstanding we went through an external candidacy process that I had seen him on the Board at HealthEngine, and he has enormous capacity. He is incredibly attentive at all of his meetings. He doesn't miss any even if he's in deepest darkest Ireland or Colombia or wherever it is he finds himself. And I mean that as a Chair, seeing a new Director coming, you want to know that they as well as having capacity will go the extra mile to attend meetings and provide advice, and I've only seen positive examples of that.

With your election, the Board will grow by one. What would trigger another growth in the Board?

We'll review that over the coming months. As I said, we continually review our skills metrics, and we also review our succession plan, and we'll just -- it's just an ongoing review that we have. If we were to add one more NED, I don't think it would be large considering ASX 200 standards, but we are conscious we are looking for a future Chair of our Audit and Risk Committee, just in terms of succession for Giovanni down the track being our longest NED serving. So we consider all those matters regularly via the PCC succession planning process.

Michael, you're a Director of WiseTech as well, obviously, I'm not going to ask you to comment on WiseTech because that wouldn't be fair at this meeting. But have you learned anything from the experience there over the last few weeks? And is that going to add some value at the Jumbo Board?

Yes. I guess one thing I will say that's very specific to Jumbo is -- and it was -- I have only met Mike in the last year, although I'm sure we must have crossed paths in the past. But Jumbo is a company that requires social license to exist. And all I've seen in this company is that's embedded deeply into it. The old saying culture eat strategy for lunch. Everyone here knows that if you stuff up in this business and lose -- start to lose 1 or 2 customers, then there's a cascade on and everyone from the frontline to the Board is deeply aware of that. So I think everything I've seen -- I've only been here a couple of months, but all the signals I've seen so far is that it's deeply aware of that in a way that can't be just dealt with through rules and corporate governance.

Any further questions from the floor? Do we have any questions online, Lauren?

Yes, we had two from Mr. Stephen Mayne that I believe both of them have been addressed in regards to the recruitment process and issues with the WiseTech Board.

All right. Thank you. Do we have any questions on the phone?

Chair, there are no questions on the telephone.

As there are no further questions then I'll put Resolution 2 to the meeting. The results of the proxies received are now being displayed. Thank you for those online. If you please select either for, against or abstain for Resolution 2 on your voting screen. For those here in person, please mark your selection on the voting card. [Voting]

We'll now move on to Resolution 3, which is the Remuneration Report. It's a nonbinding and advisory vote on the company's remuneration report for the year ended 30 June 2024. The Corporations Act requires that the section of Directors' report dealing with the remuneration of Directors and key management personnel of the company be put to an advisory vote of shareholders. The Remuneration Report detailing our company's report to remuneration is contained in our Annual Report, which is available on our company's 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? Do we have any questions online, Lauren?

No questions online, Chair.

And any questions on the phone?

Chair, there are no questions on the telephone.

If there are no further questions, I'll put Resolution 3 to the meeting. The results of the proxies received are now being displayed. For those of you online, if you would please select either for, against or abstain for Resolution 3 on your voting screen. And for those of you in person, please mark your selection on your voting card. [Voting]

Now move to Resolution 4, the issue of STI Director rights to Mike Veverka. The resolution is set out on the slide. The details and background of this resolution are set out in the explanatory memorandum, and I'll address any questions relating to this item of business. Do we have any questions from the room? Do we have any questions online?

No questions online, Chair.

Thank you, Lauren. Do we have any questions on the phone?

Chair, there are no questions on the telephone.

Thank you. As we have no further questions, I'll put Resolution 4 to the meeting. The results of proxies received are now being displayed. For those of you online, could you please select for, against or abstain for Resolution 4 on your voting screen. For those of you here in person, would you please mark your selection on the voting card. [Voting]

We'll now move to Resolution 5, which is the issue of LTI Director rights to Mike Veverka. The resolution is set out on the slide. Just -- excuse me, we just have a minor technical issue we're going to address, I hope. That's better. I thought -- it was just my heart beat. Thank you very much. So we're on Resolution 5. The resolution is set out on the slide. The details of and background to this resolution is set out in our explanatory memorandum, and I'll address any questions relating to this item of business. Do we have any questions from the room? Yes, Stephen?

Just a comment, actually. I think this is the first AGM I've been to where we haven't had a question on REM or STI or LTL. So I'm not going to ask a question. I'm just going to commend you again. I think you're seeing in the proxies how happy shareholders are with the understandability of the remuneration structure and how well aligned it is with shareholders. So well done to the team that are doing this and to Mike for being reasonable with what you're looking for and keep it up.

Thank you very much for that commentary. Do we have any questions online?

No questions online, Chair.

Thanks, Lauren. And do we have any questions on the phone?

There are no questions on the telephone.

As we have no further questions, I'll put Resolution 5 to the meeting. The resolutions of the proxies received are now being displayed. For those online, would you please select for gates or abstain and those in the room, would you please mark your selection on your voting card. [Voting]

That concludes the formal part of the meeting. Before I close the meeting, are there any other questions or comments about the management of the company that shareholders would like to ask? Do we have any questions online, Lauren?

Yes. We have two questions from Mr. Stephen Mayne online. First question, thank you for disclosing the proxies early with the formal addresses. It looks like all proxy advisers supported all resolutions. Was that the case?

I might defer to our CFO, just to check on that.

Stephen, I'm afraid we can't comment specifically on the proxy advisers' recommendations. Those reports are available for purchase. But you can see with the results that we had today, they were pretty very strong for the resolutions. Thanks.

Thanks, Jatin. And we have a second question online?

We do. Another question from Mr. Stephen Mayne. When disclosing the outcome of voting on all resolutions today. Could you please advise the ASX how many shareholders voted for and against each item similar to what happens with the scheme of arrangement.

We can. I want Jatin to answer that question as well.

Stephen, thanks for the feedback. We just did the percentage voted for and against, but we'll work with our registry to get those details. So we'll take it under consideration.

Thank you, Jatin.

No further questions online, Chair.

Do we have any questions on the phone?

Chair, there are no questions on the telephone.

As there are no further questions, a member from Computershare will now come around to collect your voting card. The results of this meeting will be announced on our ASX company announcements platform and be available on our website as soon as possible after the close of the meeting. That ends the formal part of the Annual General Meeting, and I now declare the meeting closed. I also declare the poll closed. Thank you very much for participating in our hybrid meeting today, and we look forward to your continuing support over the coming year. Thank you.