Flutter Entertainment Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Flutter delivered a 16% revenue increase and a 25% rise in adjusted EBITDA in Q2, with cash from operations up $36 m, driven by 16 m average monthly players.
  • Positive Sentiment: FanDuel remained the #1 US operator, achieving 17% revenue growth (11% sportsbook, 42% iGaming) and a 54% jump in adjusted EBITDA, buoyed by product upgrades and strong live betting engagement.
  • Positive Sentiment: Flutter completed the SNAI acquisition in Italy and NSX deal in Brazil, securing over 30% online share in Italy and setting the stage for platform integration in H1 2026 and targeted synergies.
  • Positive Sentiment: The company extended its US market-access partnership with Boyd, acquired the remaining 5% of FanDuel, unlocking approximately $65 m in annual savings and reaffirming a $5 bn share repurchase program over 3–4 years.
  • Negative Sentiment: Despite strong adjusted metrics, net income fell 88% year-over-year due to non-cash charges and Illinois’ new $0.50 per-bet surcharge will increase local operating costs.
AI Generated. May Contain Errors.
Earnings Conference Call
Flutter Entertainment Q2 2025
00:00 / 00:00

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flutter Entertainment Second Quarter twenty twenty five Update Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the call over to Paul Tims, Group Director of Investor Relations. Please go ahead.

Paul Tymms
Paul Tymms
Group Director - IR & FPA at Flutter Entertainment

Hi, everyone, and welcome to Flutter's Q2 update call. With me today are Flutter's CEO, Peter Jackson and CFO, Rob Coldrake. After this short intro, Peter will open with a summary of our operational progress, and then Rob will go through the Q2 financials and updated guidance for 2025. We will then open the lines for Q and A. Some of the information we are providing today, including our 2025 guidance, constitutes forward looking statements that involve risks, uncertainties and other factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

Paul Tymms
Paul Tymms
Group Director - IR & FPA at Flutter Entertainment

These factors are detailed in our earnings press release and our SEC filings. In addition, all forward looking statements are based on current expectations, and we undertake no obligation to update any forward looking statements except as required by law. Also in our remarks or responses to questions, we will discuss non GAAP financial measures. Reconciliations are included in the results materials we have released today available in the Investors section of our website. And I will now hand you over to Peter.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Thank you, Paul. I'm delighted to report a strong set of results for the quarter. Across the group, our operational performance was excellent, and we're making meaningful progress against our strategic priorities. This in turn is driving our strong financial performance. During Q2, we saw around 16,000,000 average monthly players engaging with our products, driving revenue 16% ahead year over year and adjusted EBITDA 25% ahead.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

While increased non cash charges resulted in net income reducing by 88% year over year, cash from operating activities was $36,000,000 higher. Before I provide an update on our U. S. And international businesses, I would like to update you on the excellent progress we're making against our strategic priorities, starting with our transition to The U. S.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Following our move to U. S. Primary listing in May, Flutter has become a well established business within U. S. Capital markets.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

This is demonstrated by inclusion in both the Crisp and Russell indices during Q2 and increased levels of liquidity we now see for Flutter stock. We also believe we remain very well placed for admission to other major U. S. Indices in time. Secondly, we continue to demonstrate our credentials as an and business, deploying capital at high returns organically through M and A and returning cash to shareholders.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

This is again evidenced in July with the extension of our U. S. Market access partnership with Boyd. This deal increased our ownership of Fanjul to 100% at an attractive valuation and also secured U. S.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

State market access at much more favorable terms. This is also a great example of the longer term cost levers we have available, which help underpin our confidence in the delivery of our long term adjusted EBITDA margin targets. Thirdly, on The U. S. Regulatory front, I believe our sector is making meaningful progress in encouraging lawmakers to adopt a balanced tax strategy, which promotes market growth and investment.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

We believe our substantial U. S. Scale positions us well to mitigate tax changes. This is both from a direct mitigation perspective as well as benefiting from the market share gains we typically observe market leaders experience over time when regulatory changes are introduced. We were, of course, disappointed to see the state of Illinois introduce a wager fee on July 1, which unfairly impacts our recreational lower handle customers and significantly increases operating costs in the state.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

As previously announced, starting September 1, we'll introduce a $0.50 fee on each bet placed in Illinois to help mitigate this impact. We are confident, as evidenced by the majority approach to date, that Illinois is an outlier and the lawmakers generally will recognize the importance of adopting a balanced approach. Fourthly, the events contract landscape continues to develop at pace. We have two decades experience of operating the world's largest betting exchange, the BETFA exchange, which shares similar characteristics with events contracts, and this will help inform our views. We are closely monitoring regulatory developments and are assessing opportunities and potential participation strategies this may present to Fanjul.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

In our international markets, we were able to complete the SNAI and NSX transactions during the quarter, creating a leadership position in Italy and establishing a scale position in Brazil. In Italy, SNAI integration plans are well underway, and our good progress means we have increasing confidence in our synergy targets. We finished the quarter with over 30% share of the online market, and our attention is now on bringing SNAI customers onto the SEA's market leading online platform in the 2026. And finally, in the newly regulated Brazilian market, we retain a strong conviction that the market opportunity will be very significant and that those operators with scale and the best product will win the largest share of the market. Leveraging the flatter edge and local management expertise, our strategy is to elevate our Brazilian proposition.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

We've targeted quick wins in product and marketing, which we expect will deliver significant improvements to the customer proposition on both Sportsbook and iGaming over the next twelve months, which we believe will place us well for future success. I'll now take you through progress in our U. S. And international businesses during the quarter. In The U.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

S, we maintained our clear position as the number one online operator in both sportsbook and iGaming. We had a great quarter with revenue growth of 17%, benefiting from the highest gross revenue margin month on record in June for Sportsbook and excellent iGaming momentum. Our phenomenal iGaming performance with revenue 42% ahead and amps up 32% is clear evidence of the benefits of our very strong product roadmap. We launched our Fanjil Rewards Club to all iGaming customers in April and added the second installment of our very successful exclusive Huff and Puff series. Leveraging the Flutter Edge via the proprietary platform we migrated to last year, we also added a record volume of new titles to the platform.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

In Sportsbook, continued product improvements drove growth in player frequency, helping Handle 7% higher year over year. HAMs were 4% lower as we lapsed our very successful North Carolina launch in the prior year when we delivered significant population penetration during the opening months. Activity on the NBA playoffs was encouraging with four separate seven game series, including the finals, helping to drive better engagement than expected. On sportsbook product, we continue to deliver innovative and engaging features to our customers. Harnessing our next generation pricing capability, we added same game Parlay Plus and profit boost functionality to our Your Way feature during the NBA playoffs.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

We've been really pleased with engagement and are looking forward to offering a broader product proposition in the upcoming NFL season. Fanjul's same game parlay experience continues to be by far the standout proposition in the market and underpinned a further expansion in our structural gross revenue margin to 13.6% during the quarter. Building on the success of our Parlay Your Bracket offering for March Madness, we added similar features for NHL and WNBA during Q2. And we also expanded same game Parlay Live to tennis for the first time to deliver a record Wimbledon for Fanjul. On MLB, our batter up feature, which allows customers to pilot outcomes for the next three batters up, was rolled out for all live games and has been resonating well.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

These product enhancements supported strong live betting volumes in the period, with live betting making up over half our handle in Q2 and same game parlay live, our fastest growing component. A seamless live proposition was key to this growth as we leverage our global live betting expertise through the Flutter Edge. This includes winning at the core fundamentals, such as optimized in game settlement and ultimately delivering an overall player experience that minimizes friction and maximizes ease of use. Our international performance continues to be positive, benefiting from both our scale and diversification. We delivered year over year revenue growth of 15% in the quarter with the benefits of the SNAI and NSX acquisitions.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

We saw good product delivery in the quarter driven by our focus on the Flutter Edge and have recently launched My Combo to see Sal Sportsbook in Italy ahead of the new soccer season. This same game parlay proposition is a market first and represents a step change in product differentiation made possible by our global scale and deep industry expertise. In July, we also launched Flutter's first bingo network following the successful partnership between CSAL and Tumbola, which brings the latter's innovative product and deep liquidity pool to CSAL's Italian online bingo customers. We are also executing our cost efficiency program as we successfully migrated 9,000,000 Sky Betting and Gaming customers onto our shared UKAI platform. This will give customers access to new exciting features, which will include a version of our SuperSub product in time the upcoming European football season.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Reactions to the new Sky Bet customer proposition has been positive and early performance on iGaming has been very strong. The PokerStars transformation is another significant pillar of the program. We delivered our largest milestone to date in Italy in July with the migration of PokerStars Italian customers onto the shared SEA platform. In conclusion, looking ahead to the remainder of the year, our strong performance in the 2025 underlines the strength of Flutter's fundamentals. I feel confident as we head into the 2025.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Our performance in Q2 positions us well to deliver on our strategic objectives and execute strongly throughout the content rich calendars for NFL, NBA and European soccer during the remainder of the year. I will now hand you over to Rob to take you through the financials.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Thanks, Peter. I'm really pleased to be presenting you with a strong set of results for the second quarter. Group revenue increased by 16% and adjusted EBITDA grew 25%, driven by the sustained earnings transformation of our U. S. Business as it rapidly scales, the benefit of the NSX and Snai acquisitions and continued growth in international.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Group net income was impacted by an increase in non cash charges. This primarily related to the FOX option valuation, which was a charge of $81,000,000 versus a credit of $91,000,000 in the prior year. Other movements included the amortization of acquired intangibles related to the new acquisitions and the Polkestars and Sky Bet transformations and an increased income tax expense as historic losses were utilized in 2024. Together, this drove an 88% year over year reduction in net income. Adjusted earnings per share grew 45%, while earnings per share decreased to $0.59 from $1.45 in Q2 twenty twenty four due to the impact of the non cash items I've just outlined.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Turning to The U. S, revenue was 17% higher, including sportsbook growth of 11% and exceptional iGaming growth of 42%. Adjusted EBITDA of $400,000,000 was up 54% and EBITDA margin was five thirty basis points higher, driven by strong operating leverage. This came primarily from sales and marketing, which decreased by four forty basis points as a percentage of revenue against heightened investment in North Carolina's launch last year as well as our decision to reallocate some marketing spend from the quarter into the second half of the year. In international, revenue of $2,400,000,000 and adjusted EBITDA of £591,000,000 for the quarter reflected growth of 1513% respectively, as the inclusion of the Snai and NSX acquisitions contributed 11 percentage points to the year over year revenue growth.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

This result was driven by strong underlying performance in SEA despite lapping the European football championships and more favorable sports results in 2024. This contributed to excellent iGaming growth of 27% for the division, with notably strong performances in UKI, APAC and CEE. Adjusted EBITDA increased by 13% year over year with the acquisitions of Snai and NSX contributing seven percentage points of growth. And EBITDA margin reduced by 40 basis points to 24.7%, reflecting our ongoing investment in Brazil. As Peter previously outlined, I've been really pleased with the progress on our cost transformation program, with delivery of the Polkestar and Sky Bet migrations in Q2, important milestones on this journey.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Progress to date gives me even more conviction in achieving the $300,000,000 savings that I shared with you at our Investor Day last September. We continue to expect the majority of the $300,000,000 savings to arise in 2027, following the final planned migration from the Pokestar's technology stack in the 2026. From a cash flow perspective, net cash from operating activities increased by 11% driven by the earnings growth I previously referenced. Free cash flow reduced by 9% driven by the acquisition of Snai and higher investment in our technology platforms in Q2 than in the prior year. This technology investment continues to pay dividends as we harness the flutter edge and continue to innovate at pace.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Available cash increased quarter on quarter to $1,700,000,000 while net debt for the quarter was $8,500,000,000 with leverage three times our last twelve months adjusted EBITDA, including snide. As Peter already highlighted, we extended our market access agreement with Boyd in July, which we expect will deliver approximately $65,000,000 in annual cost savings. We purchased Boyd's 5% holding, Fanjil, at an attractive price, which has been financed through additional debt on competitive terms. We therefore expect our leverage to increase in the near term, but then reduce rapidly given the highly visible and profitable growth opportunities that exist across the group. We remain committed to our medium term leverage ratio target of two to 2.5 times.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

We continue to return capital to shareholders through our share repurchase program, with total repurchases of 300,000,000 in the quarter. We still expect to return up to $1,000,000,000 to shareholders via this program during 2025. As an end business, we are highly disciplined allocators of capital. We expect to return up to $5,000,000,000 of cash to shareholders over a three to four year period, whilst also maintaining the flexibility to invest significant amounts of capital, both organically and inorganically. The Boyd deal is a great example of both this flexible approach and the value we believe we can create.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Moving now to the outlook for 2025. Performance since our Q1 earnings when previous guidance was set has been positive. We are upgrading our full year adjusted EBITDA guidance to include the £100,000,000 positive impact of U. S. Sports results, a £40,000,000 adverse impact from U.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

S. Tax changes in Illinois, Louisiana and New Jersey, which we expect to be almost entirely mitigated by the Boyd market access savings and finally, $20,000,000 benefit due to the timing of our anticipated launch in Missouri moving later to the December. We therefore now expect group revenue and adjusted EBITDA of $17,260,000,000 and $3,295,000,000 respectively at the midpoint, representing 2340% year over year growth. Our improved U. Outlook includes expected 2025 revenue and adjusted EBITDA of $7,580,000,000 and $1,245,000,000 respectively, representing year over year growth of 31146%.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Foreign currency changes since our previous guidance are not material, and therefore international revenue and adjusted EBITDA guidance of $9,680,000,000 and $2,300,000,000 is reaffirmed, representing year over year growth of 1711%, respectively. Additional information on guidance is available in today's release, including additional income statement and cash flow items. With that, Peter and I are happy to take your questions, and I'll hand you back to the operator to manage the call.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As we enter the Q and A session, we ask that you please limit your input to two questions. Your first question comes from the line of Ed Young of Morgan Stanley. Please go ahead.

Ed Young
Ed Young
Equity Research Analyst at Morgan Stanley

Good evening. My first question is on U. S. Marketing. Your gross profit was a little bit better than we had, but your contribution was a lot better and your marketing is already in your Investor Day range a couple of years early.

Ed Young
Ed Young
Equity Research Analyst at Morgan Stanley

And in absolute terms, you mentioned the year on year North Carolina timing, but it's actually almost exactly flat with what it was in 2022 and 2023. So I wonder if you could talk a little bit about the drivers of efficiencies and leverage in that line. And can you quantify how much the benefit was from the reallocation into Q4? The second question is on prediction markets. One of your peers says they're actively exploring and is now explicitly guiding ex prediction market investment.

Ed Young
Ed Young
Equity Research Analyst at Morgan Stanley

And your other main peer is saying it has no desire to be a first mover and no presumption it has a right to win in that space. So where on the scale has your thinking got on the opportunity to this point? And how should we think about potential investment either this year or into later years? Thanks.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Good evening, Ed. Let me pick up the Prediction Markets one first, and then Rob will come in and talk to you about The U. S. Marketing. Look, with Prediction Markets, it's clearly a fast moving space.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And for those of you on the call who are a bit less familiar with our international business, it's worth remembering that we've got sort of two decades experience of operating the world's largest betting exchange, the Betfair exchange. We offer this product in lots of markets around the world, and it shares some similar characteristics of event contracts, which will obviously be helpful to us as we consider the landscape in any developments. As you say, we're evaluating the various regulatory developments and assessing the potential opportunities this may present for Fanjul. Naturally, we've got a lot of important stakeholders that we need to consider, so we're watching this space very closely.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. Ed, just picking up on the sales and marketing question. Obviously, you look at it year on year, we're about four percentage points lower quarter versus quarter. Part of that is due to the maturing stake profile. We also have the North Carolina launch, if you remember, in Q2 last year.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

And as we said proactively in our statement, we have faced some marketing into H2, which will help us in front of a very busy new NFL and NBA season, which we're looking forward to.

Ed Young
Ed Young
Equity Research Analyst at Morgan Stanley

Are you able to quantify that phasing or are you not?

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

It's broadly, broadly £20,000,000 to £25,000,000

Operator

Thank you. Your next question comes from the line of Jordan Bender of Citizens. Please go ahead.

Jordan Bender
Senior Equity Research Analyst - Gaming & Leisure at Citizens Capital Markets and Advisory

Good afternoon. Thanks for the question. I want to continue on the conversation with prediction markets for a second, but not the will you or won't you, but rather kind of how you underwrite the risk. I guess the question is, the total capital outlay could be quite significant. So how do you get comfortable investing that type of money given the backdrop that potentially three years from now, there could be a different U.

Jordan Bender
Senior Equity Research Analyst - Gaming & Leisure at Citizens Capital Markets and Advisory

S. Administration or even change a political party here in The US? And then the second one, I want to touch on the Illinois surcharge. Was that done on a state basis? Or should we view that more as a company policy moving forward that you could look to utilize if states do increase taxes in the future?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Jordan, look, I'll follow on the prediction market stuff. Look, we're not going to speculate on the different ways in which we're assessing this opportunity and what are the potentials of costs pros and cons of the different opportunities are. This is not worth speculating at this time. As it pertains to your sort of second question, the Illinois surcharge, I mean, we're obviously very disappointed that they've brought this tax into play in Illinois. I think it really will hurt the sort of recreational customers and ultimately risk fueling the black market, which is not good for integrity of sports, it's not good for player protection and certainly not good for collection of revenues at the state.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

We think it's a good idea, but we've introduced this fee, which I think is the fairest way to deal with it. We think Illinois is an outlier. We don't expect this to happen anywhere else. We'll introduce the fee and we'll see what happens.

Jordan Bender
Senior Equity Research Analyst - Gaming & Leisure at Citizens Capital Markets and Advisory

Great. Thanks.

Operator

Your next question comes from the line of Barry Jones of Truist Securities. Please go ahead.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Hi, guys. Just a follow-up on Illinois. Is the transaction fee mitigation and guidance assume the fee is taxable? And if it doesn't, does that change your could that change your strategy at all, whether that's moving to a minimum, pricing or anything else?

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Barry, it doesn't assume that it's taxable. Obviously, we are monitoring this situation quite closely at the moment. We landed on the transaction fees. It's quite simple for our customers to understand, and it also ties directly to the ledger that was issued. It's also more straightforward to implement from a TEP perspective.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

So we're monitoring. And if there are some changes around the way that the fee is perceived by the state, then we'll address that accordingly.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Got it. And then I was hoping you could spend a minute talking about California, maybe provide any update on how sports betting could look there and how that factors in with I believe the AG recently gave an opinion on DFS. So just curious how that all kind of comes together in the latest on California.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

I mean, we've talked about California before. You're right about the AG issuing. So this non binding view around DFS, clearly something which we're following carefully. I think from our perspective, we have a lot of respect for the tribes and we will be very thoughtful about making sure that we are working with them and listening to them. They're clearly the important stakeholder in the state of California and we have a lot of respect.

Barry Jonas
Barry Jonas
Managing Director at Truist Securities

Great. Thank you so much.

Operator

Your next question comes from the line of Jed Kelly of Oppenheimer. Please go ahead.

Analyst

Hi. Thanks for taking our questions. This is Josh on for Jed. I just wanted to see if you could speak to any of the early July handle trends or hold trends that you guys are seeing?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

No. In fact, we're not going to comment on just current trading. Okay.

Analyst

And then maybe you could touch on, I guess, how Your Way parlay is kind of progressing into football and just talk about some of the highlights that you've seen in the NBA playoffs using the Your Way parlay.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Yes. As a reminder for those of on the call, Your Way is just one feature in this underlying technology we're building for our sports betting business. And we think it's going to be very exciting for customers in the future. It's going to be a revolutionary approach to sports books and will allow us to deliver a meaningful superior experience to customers. In terms of the way in which we were able to utilize it in the NBA playoffs, we weren't pushing it, but we saw a big skew towards same game parlay within the Your Bets capability.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And there's some exciting plans we've got for the products as we get into the football season. Mean, clearly, we're not going to put all the details of it into the to our competitors' minds right now. But rest assured, this is a foundational change that we're making. And I think when you think about how important it is to ensure you've got a broad range of markets, whether that's in live or pre market, the Your Way product allows that. It's a huge choice and we think that will also allow us to sort of improve the presentation of betting to consumers as well.

Operator

Your next question comes from the line of Bernie MacTurnan of Needham and Company. Please go ahead.

Bernie Mcternan
Senior Analyst at Needham & Company

Great. Thanks for taking the question. Maybe just continuing on the product conversation. If you could just talk to how you're merchandising and pushing players to try same game parlay live, how the retention of those products have been and what it means for the upcoming NFL season?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Live betting for us is something that we've been doing for years in Europe. It's a mainstay of our product offering in soccer, cricket, tennis, whatever sports you think about. And in fact, it's worth remembering that we invented cash out. So this is something that we've been really thoughtful about for a long time. When I look at live betting in The U.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

S, there are three things which we think is really important here. One is to make sure you have a really good same game parlay proposition. People who want to take the appropriate same game parlay depending on what's happening in the game. Let's remember, sports is inherently unpredictable and that's what makes it so much fun to watch and so much fun to bet on. So making sure that we can reduce the friction for consumers, they're watching the game, they can select that same game parlay very quickly.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

It is important. And that's an immersive front end experience to ensure that they can discover same game parlay, they can track it and then they get the scoreboards and other visualizations report. So look, when we combine all those things, it positions us very well with the leading live product in The U. S. Market.

Bernie Mcternan
Senior Analyst at Needham & Company

Understood. Thank you. Then maybe just a more broad one on iGaming. Just given the impressive results accelerating in the quarter on difficult comparisons, just where can it go from here? Do you think you're expanding the market or you're taking share?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

If we look at iGaming at the moment, the penetration rates have still got a long way to go. So I think that we are still early in where penetration can get to in iGaming. And we're clearly, with the FanDuel business, very focused on acquiring direct to casino customers. In the early days, we were focused on cross sell, but the biggest opportunity is the direct casino customers. And when I look at what we've been doing with the rewards club, exclusive content, the jackpots, There's a lot of great product work we've done, which has been really helping push Ned Fangil to be number one.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And there's a long way to go, a lot more opportunities for us, big opportunities to increase penetration in The States we're operating.

Bernie Mcternan
Senior Analyst at Needham & Company

Thank you.

Operator

Your next question comes from the line of Ben Montour of Barclays. Please go ahead.

Brandt Montour
Brandt Montour
Director - Equity Research at Barclays

Good evening, everybody, and thanks for taking my question. So guys, when I look at the guidance for 2025 and the changes that you made here, it's all sort of noncore things, you laid it out very cleanly. And I go back last quarter, again, it's sort of the same thing where there was no changes to your underlying thinking. And I just want to level set for the first six months of this year, do you feel better or the same across those core KPIs like handle, hold, promo, iGaming? I know that's sort of a convoluted question, but just want to understand the evolution of your confidence on those core KPIs sort of halfway through here.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Brent, Yes, I think in summary, we feel really good about the momentum that we've got at the moment, particularly moving from Q1 into Q2, definitely seeing some strength in the underlying KPIs. With regards to the guidance for the full year, as you mentioned, it's largely mechanical, the moves. We did slightly beat our expectations for Q2 on an underlying basis, and that was a combination of the marketing phasing that I talked about earlier and some slightly better underlying Sportsbook and iGaming performance. But listen, it's early in the year. You can't extrapolate the summer performance.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

We're going to take a reasonably prudent approach given the seasonality of the business, and we're really pleased with the underlying fundamentals. Okay.

Brandt Montour
Brandt Montour
Director - Equity Research at Barclays

And actually, another one for you, Rob, if I may. The deal with Boyd and the access agreement renegotiation. That that sort of really did set a new low mark on what the value of those access fees could be worth. What is that going through that negotiation in that that deal? What does that sort of make you feel about your other access agreements?

Brandt Montour
Brandt Montour
Director - Equity Research at Barclays

Is that a one off? Or do you think there's opportunity there for you?

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. Listen, there's definitely opportunity, but it's longer term. These are very long term agreements. They were signed a few years ago when there was a different landscape and a different backdrop to market access. So there are definitely opportunities, but we consider them as longer term opportunities.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

And they will be material when they come around, but it's largely from 2030 onwards. In the meantime, as we've previously said and laid out at the Investor Day, we are confident that we've got other levers within our cost of sales that can act as mitigation for other cost increases.

Operator

Your next question comes from the line of Joe Stauff of Susquehanna.

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

Thank you. Hello, Peter, Rob. I wanted to ask on FanDuel. As we think about, say, your guide and the outlook in the new sports calendar, how to think about your sports amp growth and the outlook? Is this a season essentially where you press the monetization levers a little bit more, say, than volume levers that you've pressed historically?

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

And then my follow-up is to that is just on the previous marketing spend question, it is down. Rob, you commented on it. But is there is Sandal in a position where the preference is to use the promotional line versus, say, the advertising and marketing line for engagement and user growth similar to where you are in other jurisdictions? Or is it too early?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Joe, nice to hear from you. I think if you go back to some of the conversations we've had historically around sort of acquisition, it's worth remembering that we've always been very focused on acquiring as many customers as we can, whilst ever they meet us for CACT LTV criteria. That's it's always been a mainstay of the business and it will remain so. We also think in the same way though around the application of generosity, that as well. And I think when we think about how we've been applying generosity over the course of this year and how you get it to the right customer segments, that's also really important.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And so I think your the characterization of the shift from volume to monetization may or may not be right, but I think we've always been very focused on that sort of CAC to LTV dynamic. And that's what we use to drive both where and how we're applying this generosity and also how hard to push from a customer acquisition perspective. Rob?

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. From an AMP perspective, Jack, clearly, there's a couple of dynamics to this for the quarter and how we're looking at it for the rest of the year. But we're obviously seeing phenomenal growth in our iGaming amps, which were up 32 in the quarter. We've seen a slight retracement in the sportsbook amps in the quarter, but as we explained, that's largely due to the North Carolina launch last year, where we effectively picked up one in twenty of the adult population at that launch.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

So we're feeling reasonably sanguine about the volume and the handle that we're seeing. But as we previously articulated at Q1 and Q4, handle is just one metric that we look at. And we're seeing great frequency. We're seeing increased frequency from our customers. We're seeing excellent retention from those customers that we want to retain.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

And we continue to see the extension of our Parley penetration. Lots of strong attributes to the program.

Joseph Stauff
Senior Equity Research Analyst at Susquehanna International Group

Thank you, guys.

Operator

Your next question comes from the line of Paul Roddy of Davy. Please go ahead.

Paul Ruddy
Head of Client Strategy - Equity Analyst at Davy

Hi, Peter and Rob. Just a quick one on this side of the Atlantic, if that's okay, on Slide. I think you alluded to there, just a platform migration happening in H1 twenty six. And you also kind of talked maybe, if I don't know if I'm using the right language, but some conservatism around the synergy targets or maybe increased conviction in synergies. Could you flesh out that piece on the increased conviction in synergies a little bit?

Paul Ruddy
Head of Client Strategy - Equity Analyst at Davy

And then secondly, just on the platform migration, will it require that to happen for kind of the new product that maybe you're bringing into CECL to be brought into Smile? Can you start introducing that product, the kind of FlutterEdge product into SNOI fairly quickly? And then just very quick follow-up on U. S. Tax, if that's okay.

Paul Ruddy
Head of Client Strategy - Equity Analyst at Davy

Just would it be a sensible assumption for next year that the known tax increases can be offset by the Boyd renegotiation?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Paul, look, let me just deal quickly with Snion and then Rob can talk to you about The U. S. Tax piece. I mean, yes, I think as you pointed out, we're planning to do a migration of the Snai business onto the effective T cell platform in H1 twenty twenty six. That will allow us to offer the Sly customers the full suite of products that CSAIL have access to.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

So things like MyCombi and the full range of products we have available on the platform. So excited about that. There are things we're doing in the meantime to provide a step up for the Sly customers. But it's not long to wait until that migration will happen. And I think the speed at which we can get that done, we've got our hands on the business now and that's why we reaffirmed our confidence in our ability to hit the synergies, we referenced.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. With regards to The U. S. Taxes, so we will see a higher benefit from Boyd last year compared to next year as it annualizes, so $65,000,000 As we said, it largely covers for this year. For next year, obviously, that's going to cover significant proportion of the tax increases that we will see.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

I think it's important to remember a couple of the other dynamics. We always talk about first order mitigation where we think we can mitigate circa 20% in the first six months, and that depends on the competitive dynamics in the market. And then you tend to see a second order mitigation and kind of the scale benefits play out following that. So we'd expect that mitigation increase thereafter. So as we've said on a number of occasions, we've got Boyd, but we've got a number of other tools in our kind of levers and powers as well to deploy if we do see further tax increases.

Paul Ruddy
Head of Client Strategy - Equity Analyst at Davy

That's really helpful. Thank you.

Operator

And your next question comes from the line of Monique Pollard of Citi. Please go ahead.

Monique Pollard
Monique Pollard
Director - Equity Research at Citi

Hello. Good evening. Thank you very much for taking my question. So just one question then. Can I just ask on The U?

Monique Pollard
Monique Pollard
Director - Equity Research at Citi

S. Gross margin? That's coming very strong for the second quarter. You do mention in the statement that there was 90 basis points of benefit from payment processing fees and those are changes you made back in the 2024. So obviously, that then annualizes '25.

Monique Pollard
Monique Pollard
Director - Equity Research at Citi

But do you think there are other things that you're working on, whether it's further negotiations on payments or other things that could lead to further scaling of the nontax part of the cost of goods sold?

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Monique, yes, as you correctly pointed out, I mean, we have been had some successes in this area. So a lot of the payment cost initiatives that we've put into play, we made roughly around Q3 last year. And a number of these relate to our improving our deposit to handle ratio and also renegotiation of payment costs more broadly. And alongside that, we've also been making some efficiencies in terms of the fraud cost line, which continues to come down. And as we've also said in the past, there's a number of other cost items that we're looking at the larger buckets within cost of sales, including the geolocation costs and the other large buckets.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

So continue to make good progress. We're very pleased with where the cost of sales is, and it's very much on track to be within the parameters that we set out at the Investor Day in September.

Monique Pollard
Monique Pollard
Director - Equity Research at Citi

Thank you. Very helpful.

Operator

Your next question comes from the line of Clarke Lampin of BTIG. Please go ahead.

Clark Lampen
Managing Director at BTIG

Thanks very much. Good evening. Peter, you touched on iGaming before and mentioned low penetration. You guys provided a really helpful overview at the July of the product and platform work that you guys have sort of done cumulatively over the last couple of years. I wanted to see if you guys could help us sort of digest, I guess, the second derivative implications of that.

Clark Lampen
Managing Director at BTIG

Where do you see the biggest deltas versus peers from a product standpoint? And if we were to boil it down sort of in a purely quantitative way, do you believe that some of the advantages that are translating to share right now are sort of durable and that over time you could have you could be a market leader, I guess, for iGaming? Thanks a lot.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Well, Clarke, we are the market leader for iGaming. And I think that we are the market leader because we have continuously executed on our strategy. We set out at the Investor Day in 2022 that we believe the majority of the iGaming TAM would come from casino direct customers, and I think that's proved to be the case. We also laid out a very clear sort of three step approach to how we're going to get to product leadership, and we've done that. And I think if I look at it, the stuff I mentioned earlier, the work we've done around Jackpot, the work we're doing with exclusive content, the rewards club, it's actually leveraging the flutter edge as well in terms of bringing new titles out.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

So we're in a the team has done a phenomenal job, huge growth in amps and revenue. But we're still in very early days. Lots of potential to come from a penetration perspective. And I think that we're really well set. We've got the best products and we've got some really exciting plans to keep innovating it.

Operator

Your next question comes from the line of Robert Fishman of MoffettNathanson. Please go ahead.

Robert Fishman
Senior Research Analyst at Moffettnathanson LLC

Hi, thank you. If I could do one more on iGaming. I think in the prepared remarks, talked about adding a record volume of new titles. Just curious if you can talk how much of FanDuel's iGaming handle or business, however you want to talk about it, is driven by in house or exclusive content versus third party games? Maybe just big picture, what the mix of that in house games has evolved over the past couple of years and where you expect that to end up? You.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Hi, Robert. Look, the all of our content for FanDuel at the moment is all coming from third parties. Some of that is exclusive for us, and we have exclusivity provisions for periods of time on it. So the half and half and half and even more half have been exclusive titles for us on our platform. Clearly, in the rest of the organization, we do have access to our own enhanced studios and content.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And in time, that's something that we can put into the FanDuel business to help alleviate some of the costs of procuring that content. But at the moment, we've been focusing on making sure that we have the broadest and best range available for our customers and delivering things like the jackpots with over 200,000 jackpots have been won since launch and the rewards club, which I think is a very exciting piece of capability. Getting that right has been a priority for us before we start bringing some of the in house content that we know how to do. And we've got good penetration levels in some of our other iGaming markets around the world for in house content, but it's just it's not something that we've been prioritizing getting into Poundrel yet.

Robert Fishman
Senior Research Analyst at Moffettnathanson LLC

Understood. Thank you.

Operator

Your next question comes from the line of Chad Beynon of Macquarie. Please go ahead.

Chad Beynon
Chad Beynon
Managing Director, Analyst at Macquarie Group

Hi, good afternoon. Thanks for taking my question. I wanted to ask about kind of a postmortem question after the lottery tender. So now that the results are final and you won't have a major cash outlay in the next couple of years, I guess two parter on this. One, does it maybe free up some capital to do some things that you would not have been able to do if you had invested in that market?

Chad Beynon
Chad Beynon
Managing Director, Analyst at Macquarie Group

And then second, related to this tender, did it also kind of open up your mind to maybe other things within the lottery space in other geographies? Thank you.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Hey, Chad. Yes, I can pick this one up. So I'll take the second part of the question first. I mean we always said with the Italian Lotto opportunity that we thought this was a unique opportunity in Italy. So we don't have a broader interest per se in other lottery products around the world.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

With regards to whether or not it frees up capital, as we've said in a number of occasions, we are very disciplined when it comes to our capital allocation. We are very committed to bringing our leverage ratio back to the two five times 2.5x that we've talked about in the medium term. And we believe that we've got a number of opportunities front of us. And as we've said before, we think we can continue to be an end business. So we'll continue to invest behind the business organically.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

We'll continue to look at accretive M and A opportunities as they come along, And we'll continue to operate our share buyback, which is operating as we set out previously, and we'll buy back up to $5,000,000,000 of our stock over the next three to four years. So we feel we're in a really good place here. We're deleveraging very quickly, very cash generative, and that opens up a lot of opportunities for us.

Chad Beynon
Chad Beynon
Managing Director, Analyst at Macquarie Group

Thank you, Ralph. Appreciate it.

Operator

Your next question comes from the line of John DeCree, CBRE. Please go ahead.

Max Marsh
Max Marsh
Equity Research Associate at CBRE Group

Hi. This is Max Marsh on for John DeCree. Thanks for taking my question. I think some good growth out of Brazil. Correct me if I'm wrong, but I believe that's your only Latin American market.

Max Marsh
Max Marsh
Equity Research Associate at CBRE Group

Is your strong performance there impacting your thinking on expanding to other regulated markets in Latin America? And maybe if you're developing a bit more of a flutter edge in that market that might be able to be replicated?

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Hi, Max. Look, we are the world's biggest and most sort of global sports betting and gaming business. And when we sit here and evaluate what the opportunities are around the world, you're right, we think about Latin America, we think about many markets where we're not operating in. But we have to evaluate where do we think is the best place to deploy our capital. I mean, look, there's a lot of soccer goes on in Latin America.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

There's some interesting opportunities there. So look, they're all in the mix as we think about where we're going to be deploying our capital. And as Rob said, we're in our business. We invest organically in the business. We're doing share repurchase and we're also doing M and A.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

So we've only just closed the Snail acquisition and the Brazil acquisition, but clearly the team is thinking about other opportunities around the world in Latin America, Europe.

Max Marsh
Max Marsh
Equity Research Associate at CBRE Group

Thank you very much.

Operator

Your next question comes from the line of Ben Shalif, UBS. Please go ahead.

Ben Shelley
Ben Shelley
Director at UBS Group

Good evening. Just on the international business, can you walk us through the biggest countries of outperformance and underperformance versus your original expectations at the start of the year? Thank you.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. Hi, Ben. Obviously, there's been lots of overperformance, so I'll probably talk about that for a while, and there won't be won't take me long to cover the underperformance. So in particular, I would say the SEA business, so Southern Europe and Africa is really outperforming. That business has gone from strength to strength since we first acquired the CSAIL business and brought it into the group a couple of years ago.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

At that point in time, CSAIL was doing approximately 400,000 amps a month online. It's now surpassed 1,000,000. If you look at the profitability inflection of that business as well, yes, it continues to go from strength to strength. We've now acquired the Snaitech business, which is a very complementary brand and takes back the gold medal position for us in the Italian market. So we're very excited about Italy.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

In addition to that, in that region, we've got Turkey, which is performing phenomenally well. We've recently signed a new contract with our partners in Turkey, and there's a number of other opportunities that are really kind of going to make that quite an exciting market for us. I think with regards to some of the more mature markets, I think the growth has slowed down slightly in Australia, as we've mentioned before, some challenges there around horseracing. But actually, when you look at this quarter, we've actually increased revenue year on year, so we're quite pleased with the performance of Australia in this quarter. But overall, the international portfolio is performing really well.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

We're pleased with the changes that we made operationally this year to bring it together as one segment because it really gives us excellent visibility to look at capital allocation opportunities across that as a portfolio, and it's really working well for us.

Ben Shelley
Ben Shelley
Director at UBS Group

Thank you, chaps.

Operator

Your next question is from the line of Ryan Sigdahl of Craig Hallum Capital Group. Please go ahead.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

Hey, good day Peter, Rob. When I look at the new state within the guidance, the costs of $70,000,000 EBITDA loss, I assume that's all from Missouri online sports betting launch. That's double what your closest peer in The U. S. Is guiding for.

Ryan Sigdahl
Senior Research Analyst at Craig-Hallum Capital Group LLC

So I guess curious if you have any change in your plans from a state playbook launch. I know it's a similar number from last quarter, but just vis a vis what they're planning to spend and how you compare that to previous launches? Thanks.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Yes. Hi, Brian. We've not changed our approach. So we've always been very consistent in terms of what we think new state launches cost. We set this out at our Investor Day last year where we said a contribution loss is circa $35,000,000 per 1% of the population.

Rob Coldrake
Rob Coldrake
CFO at Flutter Entertainment

Missouri is about 1.8% of the population. I think we've consistently held a number for Missouri. We can't talk for others and their economics, but we're very confident in our own workings.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

Okay. Thank you, Rob. And I think that's the end of the questions now. There's no further questions on the call I can see. So I'd just like to thank everybody very much indeed for joining.

Peter Jackson
Peter Jackson
CEO & Director at Flutter Entertainment

And look, as we move into the second half of the year, we're pleased with how we started Q3, and we're excited to see what we can do when we bring our great products to our customers, whether that's for the NFL, NBA or European soccer team. So thank you very much.

Operator

Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect.

Executives
    • Paul Tymms
      Paul Tymms
      Group Director - IR & FPA
    • Peter Jackson
      Peter Jackson
      CEO & Director
    • Rob Coldrake
      Rob Coldrake
      CFO
Analysts
    • Ed Young
      Equity Research Analyst at Morgan Stanley
    • Jordan Bender
      Senior Equity Research Analyst - Gaming & Leisure at Citizens Capital Markets and Advisory
    • Barry Jonas
      Managing Director at Truist Securities
    • Analyst
    • Bernie Mcternan
      Senior Analyst at Needham & Company
    • Brandt Montour
      Director - Equity Research at Barclays
    • Joseph Stauff
      Senior Equity Research Analyst at Susquehanna International Group
    • Paul Ruddy
      Head of Client Strategy - Equity Analyst at Davy
    • Monique Pollard
      Director - Equity Research at Citi
    • Clark Lampen
      Managing Director at BTIG
    • Robert Fishman
      Senior Research Analyst at Moffettnathanson LLC
    • Chad Beynon
      Managing Director, Analyst at Macquarie Group
    • Max Marsh
      Equity Research Associate at CBRE Group
    • Ben Shelley
      Director at UBS Group
    • Ryan Sigdahl
      Senior Research Analyst at Craig-Hallum Capital Group LLC
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