The Lottery Corporation Limited (TLC) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to The Lottery Corporation 2023 Half Year Results Briefing Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sue van der Merwe, Managing Director and CEO. Please go ahead.

Thank you. Good morning, and thanks for joining us. I'm Sue van der Merwe, CEO of The Lottery Corporation, and I'm joined by our CFO, Adam Newman. Today, we'll be presenting our financial results for the 6 months to 31 December 2022, and we'll take you through the investor presentation lodged with the ASX this morning. When we were last on an earnings call 6 months ago, we had just started live as a listed company and presented a strong indeed a record set of results. And I'm pleased to say that momentum has continued into our first full 6 months as a stand-alone entity. A significant step-up in customer numbers and growth across both our retail and digital channels, demonstrating the strength of our customer-led omnichannel approach. Our focus as a team has been on maintaining positive momentum in the business, progressing key strategic initiatives, setting the business up for success and driving a full program of activity around separation. We continue to manage the company for long-term sustainable growth with a strategic approach to optimize revenue across our balanced game portfolio. And a good example of that is the accelerated Powerball jackpot sequences, which led to the record $160 million jackpot. We're thinking ahead, and we're driving for that overall portfolio results. We're delivering strategic initiatives, such as the innovative Store Syndicates online product, which leverages our omnichannel model. We set our strategy, our vision, purpose and principles, and we're seeing very strong team engagement. One of our principles are there to find a better way is about driving a culture where people question, challenge and strive to be smarter and more effective about the way we do things. To that end, we are focusing on efficiency and managing our costs. It's important to recognize we are a growing business, and our revenue is responsive to AMP, which is 1 of our biggest costs. What we're doing about that is looking at how we optimize marketing spend, growing active registered customers, for example, enables us to deliver more effective personalized marketing programs. The investments we've made in building digital capability also continue to deliver benefits. We're now driving our digital media buying through our internal team rather than an outsourced provider. And that's delivering cost savings and quicker response times. And finally, we've also worked with our new board to review our capital settings and capital allocation framework, and that's led to adjustments to our target dividend payout ratio and leverage levels, which we've announced today. We're also pleased to announce TLC's first dividend today, an interim dividend of $0.08 per share fully franked as well as a special dividend of $0.01 per share. The special dividend is for 1 June to 30 June 2022, our first month as a listed company. And finally, before I hand over to Adam, I think it's worth highlighting this business' pro forma EBITDA in first half '18 was about $200 million. And today, 5 years on, we're reporting a first half result of more than $400 million. As Chief Executive, I couldn't be more pleased with the way the team has come together with passion and drive to deliver this strong set of results, which has set us up well in our first financial year as The Lottery Corporation. I'll hand over to Adam now to take you through the financial results.

Thanks, Sue. Hi, everyone. If we can go to Slide 6, and this provides a snapshot of our first half results. It does continue to be noise within our numbers associated with the impact of the demerger, and we thought it might be helpful to call this out. Consistent with what we presented at year-end, we've provided both the reported numbers and the numbers on a comparable basis, which we consider a more representative of the ongoing business. The reported results include 6 months of lotteries in both periods. However, they don't include the Keno results in the PCP. Reported numbers in the current period also reflect the interest of the debt that's transferred from Tabcorp at the time of the demerger and is, therefore, also not included in the PCP. Consistent with what we presented to you at year-end, we've adjusted our reported numbers to include the full contribution of Keno in both periods as well as the impact of the fair value uplift on the Keno acquisition when driving the comparable numbers. The comparable results for the prior period also included a pro forma adjustment for the impact of demerger dis-synergies, and this is consistent with what was set out in the Demerger Booklet. We see significant items there in the reported numbers and -- for the half, and these relate to costs with the separation from Tabcorp. Approximately 80% of these costs are determined to be OpEx with the remainder considered to be CapEx in nature. And we have set out further details with regards to these costs in Appendix 1. If we can now move to Slide #7, and this shows the components of the growth in EBITDA on a comparable basis. Lottery's revenue was the biggest contributor to the EBITDA growth and there was also VC margin increase in both businesses. In Lotteries, that came from 3 areas: first of all, increased digital sales; secondly, there was a further step-up in fees from the jumbo reseller agreements; and lastly, interest income on the set for life deposits. The increase in the Keno VC margin is attributable to New South Wales venues being closed in the prior period because of the COVID restrictions. New South Wales is our largest Keno market, and our arrangements with our co-license team means we account for our share of that business as VC as revenue. You can see that our costs grew a little over $5 million for the half off a small base, and this is after adjusting for the de-synergies that I called out earlier. As Sue mentioned, we remain focused on controlling costs, especially in this unusual inflation environment and tight labor market, noting that people costs represent over half of our OpEx. FY '23 is a transition year for us as we continue to work through separation and exiting the TSA arrangements with Tabcorp. I'll now hand back to Sue.

Thanks, Adam. So moving on to Slide 10 and our Lotteries segment results. The Lotteries revenue growth number of 6.5% shows the value in how we actively drive our portfolio of games, including jackpot sequences. The benefits from accelerating the jackpot sequence leading up to the record $160 million Powerball draw in October as well as the lift in digital turnover were key drivers of the revenue growth. And it's worth noting that from a Lotteries perspective, we believe the half was free of COVID impacts. Slide 11 breaks down turnover by category and by product. At a category level, we saw a strong outcome from jackpot games in aggregate, led by Powerball. Non-Jackpot or base games were up slightly on the PCP, with Lucky Lotteries posting a record $33 million super jackpot and this record run led to 139 draws of this raffle style jackpot game in the first half versus 40 in the PCP. Saturday Lotto as our largest base week game was resilient in the face of the heightened jackpot activity. There were several initiatives the team put in place to benefit from the traffic flows we get from big jackpot draws and maximize reinvestment across the portfolio. And this included placing promotional $10 million Saturday Lotto draws to follow big Powerball jackpot draws, accelerating the Powerball jackpot sequence to get it to $100 million in December to maximize reinvestment into the $40 million New Year's eve mega draw, adding cash case celebrations and double dividend offers to the Monday & Wednesday Lotto game time to follow super draws again to maximize reinvestment. Turnover from the jackpot games benefited by around $180 million from accelerated jackpot sequences and to a lesser extent, favorable jackpot outcomes. Lucky Lotteries has also now returned to more normal levels after it record jackpot runs, and that added more than $50 million in additional turnover in the half. It's also worth remembering there's some seasonality in our results given Christmas trading and the New Year's Eve mega draw, which on its own contributed approximately $100 million in turnover. The table on the right shows the impact of COVID tailwinds in the PCP on our base games turnover growth. The 3-year CAGR on the other hand, shows the positive underlying performance and momentum across the portfolio over time, and the benefits that we continue to see from game changes to Set for Life and Saturday Lotto. On Slide 12, we've included the outcome of the simulations we run to assist the actual jackpot run against expected outcomes for both jackpot games. Powerball had two $100 million draws and the record $160 million draw in the half, contributing to an outcome that was in the 60th percentile in terms of the 100 year simulation. Remember that we did redesign Powerball in 2018 to deliver more frequent $100 million jackpots. Oz Lotto, on the other hand, had a 15 percentile result. This unfavorable outcome was more than offset by Powerball, which shows the benefit of having a diversified portfolio. Slide 13 looks at the activity in the jackpot segment. During the half, we took proactive action to drive the Powerball results through accelerating jackpot sequences delivering that $160 million jackpot in 2 fewer weeks than previously. There hasn't been $100 million jackpot for 9 months, and we backed ourselves with $160 million offer, which maximize returns and had a very strong demand from customers. Turning to Oz Lotto. The game changes have only been in market in around 9 months now. The change has been well accepted by players with early sales volumes strong at the lower end of the jackpot sequence. The majority of the revenue upside is expected when the game gets to those larger jackpot levels, and we expect to see those benefits play out over time. Looking at growth across our channels on Slide 14. From our perspective, it's a very positive outcome to see turnover growth in both channels against the PCP. Digital as a percentage of overall turnover accounted for 38.4% in the half. The short-term flattening of digital share growth reflects the post-COVID rebound in retail activity and the fact that COVID brought forward some of that digital growth. But moving forward, we expect digital to continue to grow. However, the rate of growth may moderate. Our focus continues to be about maximizing results and customer growth across all channels through our customer-led omnichannel approach. In fact, we've welcomed 1 million more active registered players in the last 4 years. One initiative that really epitomizes the strength of our omnichannel model is our Store Syndicates online product described on Slide 15. It's a customer-led innovation developed by our in-house team and brings home the idea of a seamless customer experience. Syndicates are popular and social way to play and they've been a staple for our retailers for many years, allowing customers to share in buying that bigger entry. Our big jackpot and event draws along with this new innovation, helped grow overall Syndicate participation by more than 25% in the half, allowing customers to now purchase a share in a Syndicate set up by the local outlet through the Lotto Apple website is something we introduced in late November, and it's been a hit. Retailers love it for 1 they can sell 24/7 without labor or other variable costs. And we've been really pleased with adoption with more than 1/3 of retailers offering online syndicates in the first week of launch. Research tells us 1 of the reasons customers like to play Syndicates is because it connects them with the community they value. Slide 16 and on to Keno. A strong result as pubs and clubs transitioned to unrestricted trade in contrast to the PCP. Queensland, in particular, saw strong growth as footfall increased, and we ran a full program of marketing activity to encourage the return to pre-COVID behavior including practical promotions such as the play the numbers you know campaign. And as we mentioned, the result also has the margin impact from the return to trade in New South Wales, which is our largest Keno market. You can see on Slide 17, the growth during the half in Keno was in retail. It's worth noting that digital turnover while down on the PCP has more than doubled from pre-COVID levels. While COVID brought some of that digital growth forward, we believe there is more upside in this channel. Slide 18, our new Victorian Keno offer went live yesterday, giving customers an integrated digital and retail experience. Customers can now use their Keno app which incidentally has a 4.8 star rating to play in Victorian venues. Our messaging in market reinforces what our Keno offer is very strong and that's its trust in market, Australian ownership and frequency of real winners. We see real opportunity through this integration with buy-in from licensed venues as they'll receive commissions on digital sales in their venues. Adam will now take you through the next section. Adam?

Thanks, Sue. We foreshadowed at our AGM that we will come back to discuss further our capital allocation framework and how we think about managing shareholders' capital. We are fortunate that we've been a low capital intensity business with defensive earnings stream, along with a track record of generating strong and steady cash flow. This page sets out the framework for capital allocation decisions or said another way, how we think about allocating cash flow in order to help us drive long-term shareholder value. Firstly, we do intend to translate that strong cash flow into consistent and reliable dividends for our shareholders. And reflecting this, we have increased our target dividend payout ratio from previously 70% to 90% to now 80% to 100% of net profit after tax before significant items. We also expect our dividends to be fully franked. This range does provide us with some flexibility and helps balance short-term earnings and cash flow fluctuations that may arise from time to time from jackpot-related volatility. Center of this framework is the financial policy, ensuring that -- ensuring both a robust and flexible balance sheet. After discussions with Board, we have adjusted our target leverage range to 3 to 4x over the medium to longer term. The prior half turn was a tight range whilst appropriate at the time of the demerger, widening it to a full turn is considered appropriate in order to afford us greater flexibility. There's no fundamental change to our views on target leverage capacity, and we will look to target at the midpoint of the wider range over time. In terms of uses for the remaining capital post dividends, we'll always look to reinvest that capital at the highest available risk-adjusted return as per the framework. We do continue to assess various investment opportunities, predominantly focused on the existing domestic business. If you don't have suitably attractive uses for those circled funds, we look to return that excess capital to shareholders in the most efficient form available. So in summary, our aim is to deliver top quartile total shareholder return performance against the ASX 100 through a combination of fully franked dividends, share price growth and where appropriate, capital return. If we can now move you to Slide 21, and we summarize our key capital metrics there. I want to start with leverage. And you can see that leverage ended the half below our target range at 2.6x. And I would like to point out that this metric was favorably impacted by working capital movements due to higher payables for large jackpot events, which occurred towards the end of the calendar year and amounts owing to Tabcorp. These items have reversed in the second half. And if you adjust for them, leverage would have been around the bottom end of our new target range. Today's announced dividend also comprised a special dividend of $0.01, which relates to the June 2022 earnings being the first month post demerger consistent with the scheme Demerger Booklet [indiscernible] and $0.08 in relation to earnings for the 6 months to 31st of December, and both will be fully franked. A few other key call outs before I finish. We retained a strong investment-grade credit rating. Our BAU CapEx was actually relatively low in the first half. Given separation activities, we got off to a slow start and spend is expected to secure to the second half. Well, CapEx guidance of $65 million to $75 million remains unchanged at this stage. Most of the $149 million in separation expenditure is expected to be incurred this year. And most of the CapEx component is -- and the CapEx component rather of it is estimated at around 20%. Finally, it is worth noting that over 90% of our debt is mainly comprises of USPP notes is fixed, and we are, therefore, largely shielded from the impact of interest rates increase. So in summary, we have a strong balance sheet that provides capacity to support growth and gives us flexibility, including for any potential future capital management initiatives. And with that, I'll now hand back to Sue.

Thanks, Adam. If I can skip to Slide 24, which outlines our vision, purpose and principles. These were redefined following the separation from Tabcorp, and we announced them at our AGM last year. In short, the framework sets out how we want to unlock the extra potential we see in the business as well as the ways we want our teams to work to realize that potential. I'm pleased to say that we have a highly engaged team, and that's been validated by an early pulse survey. Ultimately, we want to be a company that people want to work for and do business with and with a clear aspiration to be the world's best in the category. This includes our commitment to operating with integrity and transparency with all stakeholders, including governments and regulators. Slide 25. We're very pleased with how the team has been executing our product and omnichannel initiatives, and we've outlined the priorities on this slide. As we've announced, Powerball will be the next game change with a planned $0.10 increase to $1.20 per game, subject to final approvals. It will be the first change to Powerball pricing since 2018. We're also proposing to lift commissions as part of the omnichannel remuneration model we put in place 4 years ago. Based on FY '22, we estimate this would give retailers an extra $75 million in commissions each year and circa $25 million to $30 million in EBITDA benefit to us as we retain the base commission on our own digital sales. Personalizing the customer experience continues to be a big focus. A lot of this activity so far has been in digital, but we plan to uplift our retail technology to unlock some of the personalization benefits in that channel and lift the in-store experience for customers. We're continuing to shift the mix of our A&P spend between above the line, which is more about reminder to purchase and targeting unknown customers and personalization in digital. Media consumption trends are helping us inform these decisions and that's making our A&P spend more effective. So as we conclude on Slide 26. We look back on the 6 months as a very positive start, a winning start for The Lottery Corporation. This is a strong company that's performing well. It generates strong cash flows, has defensive qualities and long-dated licenses and approvals. You can see from publicly available information that jackpots for our jackpot games have started relatively slowly in the second half but it's only early days. As we saw in the last half, the jackpot role can change very quickly, and that's 1 of the benefits of having a diversified portfolio. What's important in this business is to have a portfolio perspective and a longer-term view. We're certainly very happy with how we are placed. We expect you'll be interested in our thoughts on the inflationary environment and the economic outlook. We're not immune to the economic cycle, but history says demand for our products is quite resilient and relatively inelastic compared to other consumer products. We're not seeing anything in recent trading that fundamentally changes that view. Finally, I want to point out that we are equally focused on not losing sight of what makes the Lotteries model unique around the world. That's continuing to position The Lottery Corporation as a responsible operator that makes positive impacts and runs lottery games that return substantial revenue to governments. For the states and territories, lottery taxes are anywhere between 1.5% and 3% of their taxation revenue. So quite a meaningful contribution. The equivalent of half of the Australian adult population play lotteries each year, many of them buying tickets from their local news agent or lottery kiosks. They are supporting small businesses who receive a commission as part of that transaction. It's a low involvement purchase with an average weekly spend of $12 per player. Customers tell us they play because lotteries are a bit of fun. They can dream about what they do if they win and the game support the community and that, in essence, is what lotteries are about. Thank you. We're now happy to open the line for questions.

[Operator Instructions] Our first question comes from the line of Bradley Beckett of Credit Suisse.

Congratulations on the strong results. Maybe if I can just start with the Victorian online Keno strategy. Are there any sort of initiatives in the pipeline in terms of game innovation repricing? And would you be willing to see for larger jackpots?

Thanks, Brad, and thanks for the positive feedback. Look, with Keno in Victoria, we are the leading operator nationally. We have the scale for trusted brand. We have those retail partnerships and we think a very strong product offer across retail and digital. Of course, we've also got the jackpot pooling across jurisdictions. We've launched the advertising campaign that I outlined in the presentation. And I think the new offer that went live just yesterday, is about really leveraging that retail channel and this omnichannel experience. So what it means is that people sitting in venue now, will be able to scan a QR code in venues and play the same Keno offer that they're seeing on the screens in the venue through their mobile phone. And of course, that is very powerful because that's about expanding the customer base and expanding the opportunity to play in those venues. Outside of that, there's nothing else that I can share.

Payout ratio. Can I interpret that as being a movement away from an acquisition focus more towards capital management? Or are you sort of going to keep just for flexibility?

Yes. Look, I think we missed the first part of that question, sorry, it's a bit of line thing. Can you just repeat it, please?

So increasing the payout ratio to 100%. Is that sort of a bit of a shift away from the acquisition focus and more towards capital management?

So the ratio has moved. It was previously 70% to 90% of net profit after tax before. Now it's moved to -- range now is 80% to 100%. So -- and as I had foreshadowed previously, I mean we'll sit within that range as appropriate at the end of the day. I wouldn't read anything into the changing of the range indicative of anything more broadly than just a revisit of our capital savings along with looking at our capital allocation framework.

Our next question comes from the line of David Fabris of Macquarie.

I've got a couple of questions. Just firstly, with the cost base, how should we think about it once the TSA expires, should we be thinking about a notable step up? Or is the current trends pretty reflective of where you think they're going to go after it expires?

Yes. It's a good question, David. Sort of from an OpEx perspective, we'll be running through the TSAs with Tabcorp the course of this year. And I mean, materially, completed by then. So the TSA arrangements and the -- there's also commercial separation on top of this the TSAs because the TSAs represent activity that's being provided to TLC by Tabcorp to enable us to operate. And then the commercial arrangements that have instructed were the same entity, we flagged it in the Demerger Booklet. So there will be some increases in costs at this stage. We're not in a position to be definitive about where they land. And at the same time, we'll also be looking at ways to mention that we are able to attempt to mitigate those costs.

Yes, okay. And just on capital allocation, I may have misheard you, but I thought you called out that there may be some domestic opportunities around growth. Would that be potentially renewing or extending the Victorian lottery license on better terms? Or what sort of growth options are you talking about?

Yes. So we just called out that the focus is on the domestic business. I don't think we want to get hugely specific at this point -- at the present time about what those options may be.

Yes, right. But that will be sticking within your current verticals, right, Lotteries and Keno, you're not looking at moving anywhere else?

Right.

[Operator Instructions] Our next question comes from the line of Kai Erman of Jefferies.

Congratulations on the results, and thank you for the additional disclosure. That's really helpful. Just first question around the Powerball pricing, that step-up. Do you have any view on any volume pushback or what sort of levels of pricing traction you'll be able to get from when this is implemented in May?

Yes, sure. Thanks, and thanks again for the feedback as well. So the increase is going to be a 9.1% increase. Usually, we assume a target of around 50% to 75% price retention on a price increase. Obviously, that varies depending on the jackpot results that occur after we implement this, particularly on a jackpot game. So based on FY '22, that's applying about $120 million to $180 million in additional turnover.

And when you talk about depending on jackpot results, with that -- the thinking there be in a period of more jackpots or around jackpots that you would get more pricing traction there compared to sell less jackpots?

I mean, this -- there's a high degree of loyalty across the lower end of the sequence. And so generally, the majority of those players accept the price increase, and you do see the uplift there. But clearly, with jackpot games, that brings a lot of additional people into participating in the product, and we see benefits through that as well.

Okay. And given this is the first Powerball increase in 5 years, has something changed fundamentally in the ability to push price in Powerball more generally? Or is this something we should just think of that happens every circa 5 years or just something we don't really think about happening again in the medium term?

Look, the way we look at this is to come back to the portfolio view and we're constantly evolving the products in the portfolio so that each of them have the strong position and appeal to our player base and we look all the time at what the next change should be and on which game. So there's no magic sort of time frame around that, the price increase and the quite significant matrix change that we put into place for Powerball back in '18 was significant and was designed to deliver the jackpot through to $100 million and above, and it's clearly still doing that given the activity that we just had in the first half. So it's really about how the rest of the portfolio is going, how each game is going and when we think the best opportunity is to make a change and impact the portfolio positively.

[Operator Instructions] Our next question comes from the line of Ben Brownette of Jarden.

Previously, you've indicated what the turnover was with respect to some of the bigger jackpots. So I was just wondering on the $100 million and the $160 million, what the turnover might have been at least directionally compared to the jackpot?

So when you say the turnover directionally relative to the jackpot, what do you mean?

So for instance, the last -- or in the last presentation -- you said that in the last presentation, you said that for the February '22, $120 million jackpot turnover was $240 million. So I'm just wondering, could you give us an indication on the greater than $100 million jackpots this half -- what the turnover might have been?

Yes. We'll come back to you on it with a bit more detail. I will say that particularly the $160 million that had record turnover in relation to a number of steps in the sequence. So we had some very healthy jackpot turnover in recent times.

Okay. And then just with the payables, a bunch of that was clients leaving their money and following all of those jackpots. So what's happened after 31 December, have you seen those players buy additional tickets? Or is that money still there waiting for another big jackpot and any kind of trends there?

Yes. So the payables, we've got, obviously, the New Year's Eve draw. And this year, we had the $100 million Powerball that was the 20th to 29th of December at the end of the day. So as a consequence, we had a combination of a number of things that were in payables. It wasn't just customer account balances. Government taxes and GST would be another 1 that would sit in there, for example. So it's a bit mixed, but we're definitely see net payables. The other thing that was in there was a Tabcorp, I think, at the end of the day. So we've definitely seen that positive movement reverse in the second half and customer account balances have probably settled that down to the normal sort of level of where they are, but they do ebb and flow a bit because customers do put money into their accounts, waiting for them to buy a ticket and then you get reinvestment at the end of the day of their winnings that they may have.

I might just add to that from a strategic -- I'm just going to add to that from a strategic perspective. This very deliberate positioning that we do of having an event followed by another event on a different game has been really successful for us. And as Adam said, we had the $100 million and we had $40 million -- the Powerball $100 million at the $40 million Saturday mega draw and then we flowed that through the $10 million special event the following Saturday. And that's all about engaging customers and growing our customer numbers because different games bring different customer groups in and we take the opportunity to transfer the experience of a customer from 1 game into the other and then deploy all of our marketing capability to retain those customers and keep them interested. And this is about driving the overall portfolio and growing, I guess, the whole part.

[Operator Instructions] Our next question comes from the line of Annie Zhu of Barrenjoey.

I was going to ask about Lotteries online penetration, which is flat sequentially from last half. Can you give some further color on that and how you expect that to trend in the medium term?

Yes. I think, obviously, we saw some flattening off of that uplift. Having said that, we had experienced significant uplift through the COVID period. So I think we got a bit of momentum -- additional sort of momentum, I guess, over and above what we had been experiencing prior to that through that COVID period. I think we're doing a lot to keep driving that digital growth, including leveraging that uplift -- very significant uplift in our active registered customer base. The launch of Syndicates online is all about engaging players through both our retail and digital channels.

And my next question was on leverage. Just wondering how you plan to move back into the midpoint of the range, as you mentioned.

Yes. Well, that will happen over time. I think in the construct of the overall capital management framework, if you make those adjustments at -- I called out for the half, which trending towards the bottom end of the range. Look, I think it would just be something that we'll continue to monitor with the Board. Do note that in the first half of this year, we didn't have a dividend to pay, so we'll be paying the dividend in the second half. We've also got separation costs that need to be funded in the second half next year because the majority of that wasn't paid for in this part as well.

Okay. And just wanted to ask about the payout ratio increase again. Anything else that you would call out regarding how you came to that decision and how you decided that was the right range?

Not really. I mean we set the original capital settings at demerger in conjunction with the Tabcorp board, and subsequent to demerger, we've constituted a new Board with TLC and we now got a good trading history and did a holistic review in conjunction with the Board, and this isn't we've taken that given where we're now set and we knew a few things that we didn't know there previously. We just adjust the range in the manner that we do. Yes. I might just be -- I've got those couple of numbers that you're asking for. The $160 million had approximately $270 million of turnover associated with it. And the 2 $100 million had average around about $150 million.

And the $270 million is a record result for us and Powerball highest ever result.

[Operator Instructions] Our next question comes from the line of Kai Erman of Jefferies.

Just a follow-up from me. Have you guys seen anything in terms of the impact on rising interest rates and inflation in terms of the balances that customers are leaving in their accounts over periods of time? Or has that remained relatively stable?

Look, our business is as we said, very resilient in terms of different economic cycles. And we haven't seen any impact or change to the way customers are behaving from any of those pressures.

Yes. I'll just add, it's been pretty stable. It did spike up both at June and at December with some of those large jackpot activities that we've had. But then it sets back down into more of the norms.

Have we got Kai online?

Sorry, I just dropped out for a second, but thank you. That was it for me.

At this time, I would like to turn back to Sue van der Merwe for closing remarks.

Thank you. Thank you all for taking the time to join us. We understand it's a busy reporting day. We appreciate you giving us the time. Have a good day. Thanks all.

This concludes today's conference. Thank you for participating. You may now disconnect.