Image source: The Motley Fool.

DATE

Thursday, Aug. 7, 2025, at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Peter Jackson
• Chief Financial Officer — Rob Coldrake
• Group Director of Investor Relations — Paul Tymms

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• CEO Jackson said, "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."
• CFO Coldrake stated net income (GAAP) was reduced by 88% year over year for the second quarter of 2025, driven by an increase in non-cash charges related to the Fox option valuation, amortization of acquired intangibles, and higher income tax expense.

TAKEAWAYS

• Group revenue growth-- 16% year-over-year group revenue growth, with adjusted EBITDA up 25%.
• Net income-- Net income reduced by 88% year-over-year, primarily due to an $81 million non-cash Fox option charge compared to a $91 million credit in the second quarter of 2024, and increased amortization and income tax.
• US revenue-- Revenue was 17% higher year-over-year, with Sportsbook revenue up 11% and iGaming revenue up 42%.
• US adjusted EBITDA-- Adjusted EBITDA of $400 million, up 54%, and adjusted EBITDA margin was up 530 basis points, driven mainly by a 440 basis point reduction in sales and marketing as a percentage of revenue.
• International revenue and EBITDA-- $2.4 billion in revenue and $591 million in adjusted EBITDA, representing 15% and 13% growth, respectively; SNAI and NSX contributed 11 percentage points to year-over-year revenue growth and 7 percentage points to year-over-year EBITDA growth.
• International EBITDA margin-- 24.7%, a 40 basis point reduction reflecting investment in Brazil.
• Net cash from operating activities-- Net cash from operating activities increased by 11% year-over-year, while free cash flow fell by 9% due to M&A and higher technology investments.
• Available cash and net debt-- Available cash rose to $1.7 billion, and net debt was $8.5 billion, with leverage at 3.0x last twelve months adjusted EBITDA (including SNAI).
• Share repurchases-- $300 million in share repurchases completed; up to $1 billion anticipated for 2025 share repurchases, and $5 billion over three to four years.
• Guidance upgrade-- Group revenue is now expected at $17.26 billion, and adjusted EBITDA (non-GAAP) at $3.295 billion, representing 23% and 40% year-over-year growth, respectively, for full-year 2025 adjusted (non-GAAP) group revenue and adjusted EBITDA guidance compared to full-year 2024.
• US 2025 outlook-- Revenue guidance for the US is $7.58 billion, and adjusted EBITDA is $1.245 billion, representing 31% and 146% year-over-year growth, respectively, for expected 2025 US revenue and adjusted EBITDA compared to 2024.
• International 2025 guidance-- Revenue expected at $9.68 billion, and adjusted EBITDA at $2.3 billion for international operations, reflecting 17% and 11% year-over-year growth, respectively, for international revenue and adjusted EBITDA in 2025.
• FanDuel ownership-- 100% ownership secured via Boyd deal, which is expected to generate approximately $65 million in annual cost savings.
• Migration and cost savings-- Nine million Sky Betting and Gaming customers migrated to the shared UKI platform; $300 million cost savings expected by 2027.
• Platform synergies-- SNAI and PokerStars integrations advancing; over 30% online market share in Italy.
• Illinois surcharge-- A 50¢ fee per bet introduced to mitigate state-imposed wager fee starting September 1.
• US live betting and product innovation-- Live betting accounted for over half of US handle; same-game parlay live is the fastest-growing component.
• Cost efficiency-- CFO Coldrake said payment processing fee reductions provided a 90 basis point margin benefit. Fraud and other cost efficiencies are ongoing.
• Acquisition strategy-- Two major deals completed: SNAI (Italy leadership) and NSX (Brazil scale), expanding international leadership and platform.

SUMMARY

Flutter (NYSE:FLUT) Management emphasized that operational momentum, platform migrations, and product innovation delivered material improvements in key markets. Strategic actions included achieving 100% ownership of FanDuel, reshaping US market access agreements, and integrating international assets, thereby expanding market share in Italy and Brazil. Cash generation and disciplined capital returns remain management priorities, with leverage expected to moderate following recent M&A activity.

• CEO Jackson stated, "In the US, we maintained our clear position as the number one online operator in both Sportsbook and iGaming," explicitly confirming market leadership.
• CFO Coldrake affirmed that recent cost transformation milestones and technology investments have strengthened conviction in reaching the $300 million cost savings target by 2027.
• Guidance for full-year 2025 incorporates a $100 million positive impact from US sports results, a $40 million adverse impact from new state taxes, and a $20 million timing benefit from the later Missouri launch.
• Management asserted that Illinois is considered an outlier for punitive tax measures, as evidenced by the introduction of a wager fee on July 1, and management's statement that lawmakers generally will recognize the importance of adopting a balanced approach, with mitigation approaches in place and no expectation of similar measures elsewhere at this time.
• No in-house iGaming content has been introduced to FanDuel yet, though exclusive third-party titles have driven notable engagement; future plans could include leveraging internal studios to optimize costs and differentiation.

INDUSTRY GLOSSARY

• Flutter Edge: Proprietary multi-segment technology and product development platform providing operational, data, and cost advantages across the group’s global portfolio.
• AMPs (Average Monthly Players): Key operating metric representing the average number of unique users active each month.
• SNAI: Leading Italian online and retail betting brand acquired by Flutter in 2025.
• NSX: Entity involved in transactions expanding Flutter’s presence in Brazil.

Full Conference Call Transcript

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's Second Quarter 2025 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Paul Tymms, Group Director of Investor Relations.

Please go ahead.

Paul Tymms: 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&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. 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: 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 are making meaningful progress against our strategic priorities. This, in turn, is driving our strong financial performance. During Q2, we saw around 16 million average monthly players engaging with our products, driving revenue 16% ahead year over year and adjusted EBITDA 25% ahead. While increased non-cash charges resulted in net income reducing by 88% year over year, cash from operating activities was $36 million higher. Before I provide an update on our US and international businesses, I would like to update you on the excellent progress we are making against our strategic priorities.

Starting with our transition to the US. Following our move to US primary listing in May, Flutter Entertainment plc has become a well-established business within US capital markets. 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 with other major US indices. Secondly, we continue to demonstrate our credentials as an end business, deploying capital at high returns organically, through M&A, and returning cash to shareholders. This is again evidenced in July with the extension of our US market access partnership with Boyd.

This deal increased our ownership of FanDuel to 100% at an attractive valuation and also secured US 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 US 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. We believe our substantial US scale positions us well to mitigate tax changes.

This is based on 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. As previously announced, starting September 1, we will introduce a 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 that 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 of experience operating the world's largest betting exchange, the Betfair Exchange, which shares similar characteristics with events contracts. This will help inform our views. We are closely monitoring regulatory developments and are assessing opportunities and potential participation strategies this may present for FanDuel. 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 2026. 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 Flutter Edge and local management expertise, our strategy is to elevate our Brazilian proposition. 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.

We believe this will place us well for future success. I'll now take you through progress in our US international businesses during the quarter. In the US, 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 FanDuel 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, by the proprietary platform we migrated to last year, we also added a record volume of new titles to the platform. In Sportsbook, continued product improvements drove growth in player frequency, with team handle 7% higher year over year. AMPs were 4% lower as we lapped 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 the 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. We've been really pleased with engagement and are looking forward to offering a broader product proposition in the upcoming NFL season. FanDuel's same-game parlay experience continues to be by far the standout proposition in the market and underpins the 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.

We also expanded same-game parlay live to tennis for the first time, delivering a record Wimbledon for FanDuel. On MLB, our batter-up feature allows customers to pilot outcomes for the next three batters up, was rolled out for all live games, and has been resonating well. 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, 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. We saw good product delivery in the quarter driven by our focus on the Flutter Edge and have recently launched MyCombo to see sales 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 SUSO's Italian online bingo customers. We are also executing our cost efficiency program as we successfully migrated 9 million Sky Betting and Gaming customers onto our shared UKI platform. This will give customers access to new exciting features, which will include a version of our super sub product in time for the upcoming European football season.

Reactions to the new Sky Bet customer proposition have 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 2025 underlines the strength of Flutter's fundamentals. I feel confident as we head into 2025. 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'll now hand you over to Rob to take you through the financials.

Rob Coldrake: 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 US business as it rapidly scales. The benefit of the NSX and SNAI acquisitions and continued growth in international. 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 million versus a credit of $91 million in the prior year.

Other movements included the amortization of acquired intangibles related to the new acquisitions and the PokerStars 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 59¢ from $1.45 in Q2 2024 due to the impact of the non-cash items I've just outlined. Turning to the US. Revenue was 17% higher, including sportsbook growth of 11% and exceptional iGaming growth of 42%. Adjusted EBITDA of $400 million was up 54% and EBITDA margin was 530 basis points higher, driven by strong operating leverage.

This came primarily from sales and marketing, which decreased by 440 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 $2.4 billion and adjusted EBITDA of $591 million for the quarter reflected growth of 15% and 13%, respectively, as the inclusion of the SNAI and NSX acquisitions contributed 11 percentage points to the year-over-year revenue growth. The 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 the delivery of the PokerStars and Sky Bet migrations in Q2, important milestones on this journey. Progress to date gives me even more conviction in achieving the $300 million savings that I shared with you at our Investor Day last September.

We continue to expect the majority of the $300 million savings to arise in 2027, following the final planned migration from the PokerStars technology stack in 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.

Available cash increased quarter on quarter to $1.7 billion, while net debt for the quarter was $8.5 billion, with leverage three times our last twelve months adjusted EBITDA, including SNAI. As Peter already highlighted, we extended our access agreement with Boyd in July, which we expect will deliver approximately $65 million in annual cost savings. We purchased Boyd's 5% holding in FanDuel 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 two and a half times. We continue to return capital to shareholders through our share repurchase program, with total repurchases of $300 million in the quarter. We still expect to return up to $1 billion 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 billion of cash to shareholders over a three to four-year period, while 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.

Moving now to the outlook for 2025. Performance since our Q1 earnings from previous guidance was set has been positive. We are upgrading our full-year adjusted EBITDA guidance to include a $100 million positive impact of US sports results, a $40 million adverse impact from US tax changes in Illinois, Louisiana, and New Jersey, which we expect to be almost entirely mitigated by the Boyd market access savings, and finally, a $20 million benefit due to the timing of our anticipated launch in Missouri moving later to December. We therefore now expect group revenue and adjusted EBITDA of $17.26 billion and $3.295 billion respectively at the midpoint, representing 23% and 40% year-over-year growth.

Our improved US outlook includes expected 2025 revenue and adjusted EBITDA of $7.58 billion and $1.245 billion respectively, representing year-over-year growth of 31% and 146%. Foreign currency changes since our previous guidance are not material, and therefore, international revenue and adjusted EBITDA guidance of $9.68 billion and $2.3 billion is reaffirmed, representing year-over-year growth of 17% and 11%, 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. I 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&A session, we ask that you please limit your input to two questions. I would like to remind everyone to ask a question. Please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Your first question comes from the line of Ed Young of Morgan Stanley. Please go ahead.

Ed Young: Good evening. My first question is on US marketing. Your gross profit was a little bit better than we had, but your contribution was a lot better in your marketing. It's already in your Investor Day range a couple of years early. And in absolute terms, you mentioned the year-on-year North Carolina telling, but it's actually almost exactly flat with what it was in '22 and '23. 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 x prediction market investment. 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: Evening, Ed. Let me pick up the prediction market one first, and then Rob will come in and talk to you about the US marketing. Look. With prediction markets, it's clearly a fast-moving space. And for, you know, for those of you on the call who are a bit less familiar with our business, it's worth remembering that we've got sort of two decades of experience operating the world's largest betting exchange, the Betfair Exchange. You know, we offer this product in lots of markets around the world, and it shares some similar characteristics with event contracts, which will obviously be helpful to us as we consider the landscape and any developments.

But, you know, as you said, we're evaluating the various regulatory developments and assessing the potential opportunity this may present for FanDuel. You know, naturally, we've got a lot of important stakeholders that we need to consider, so we're watching this space very closely.

Rob Coldrake: Yeah. Hi, 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. Of that is due to the maturing state profile. We also have the North Carolina launch, if you remember, in Q2 last year. And, you know, 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. So which we're looking forward to.

Ed Young: Are you able to quantify that phasing? Are you or you're not?

Rob Coldrake: It's broadly 20 to 25 million.

Ed Young: Thank you.

Operator: Your next question comes from the line of Jordan Bender of Citizens. 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. So you know, I guess the question is, you know, the total capital outlay could be quite significant. How do you get comfortable investing that type of money given the backdrop that you know, potentially three years from now, there could be a different US administration or even change of political party here in the US? And then the second one, I want to touch 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? Thank you.

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

It's not good for player protection, and it's certainly not good for collection of revenue to the state. You know, we didn't think it's a good idea, but, you know, we've introduced this fee, which I think is the fairest way to deal with it. And so we think Illinois is an outlier. We don't expect this to happen anywhere else. Yeah. We will introduce the fee. We'll see what happens.

Jordan Bender: Great. Thanks.

Operator: Your next question comes from the line of Barry Jonas of Truist Securities. Please go ahead.

Barry Jonas: Guys. Just to 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 adjusting pricing or anything else? Thank you.

Rob Coldrake: Yeah. Hi, 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 fee. It's quite simple for our customers to understand, and it also ties directly to the legislature that was issued. It's also more straightforward to implement from a tech perspective. So you know, we're monitoring and, you know, if there are some changes around the way that the fee is perceived by the state, then we'll address that accordingly.

Barry Jonas: Got it. And then I was hoping you could spend a minute talking about maybe provide any update on how sports betting could look there and how that factors in with, you know, 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: I mean, we've talked about California before. You know, you're right about the, you know, the AG issuing this nonbinding view around DFS. Yeah. Clearly, something in which we're following carefully. I think from our perspective, you know, we have a lot of respect for the tribes and, you know, we will be, you know, very thoughtful about, you know, making sure that, you know, we are, you working with them and listening to them. You know, they're clearly the important stakeholder in the state of California, and we have a lot of respect.

Barry Jonas: Great. Thank you so much.

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

Jed Kelly: Hi, thanks for taking our questions. This is Josh on for Jed. 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: No. In fact, we're not gonna comment on just current trading.

Jed Kelly: Okay. And then maybe you could touch on, I guess, how your Way parlay is kinda progressing into football and just talk about some of the highlights that you've seen in the NBA playoffs using the Your Way parlay? Thanks.

Rob Coldrake: Yeah. Your you know, as a reminder to those of you on the call, you know, Your Way is just one feature in this underlying technology we're building for our sports betting business. And we think, you know, it's gonna be very exciting for customers in the future. It's gonna be a, you know, a revolutionary approach to sports books. And, you know, will allow us to deliver, you know, a meaningful superior experience to customers. Yeah. In terms of the way in which, you know, we were able to utilize it in the NBA playoffs. You know?

We weren't we weren't pushing it, but we saw in a big skew towards, you know, same game parlay within the YourBet capability. And there's some exciting plans we've got, you know, you know, for the products as we get into the football season. Mean, clearly, not gonna put all the details of it into the to our competitors' minds right now. But, you know, 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 premarket. You know, the Your Way product allows that's a huge choice.

And, you know, we think it would 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 McTernan of Needham and Company. Please go ahead.

Bernie McTernan: 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 has been, and what it means for the upcoming NFL season.

Peter Jackson: Live betting for us is something that we've been doing for years in Europe. It's a mainstay of our product offering, you know, in soccer and cricket, tennis, you know, whatever sports you think about. And in fact, you know, it's worth remembering that we invented Cash Out. So this is something that we've been really thoughtful about for a long time. And when I look at, you know, live betting in the US, there are three things which we think is really important. Yeah. One is to make sure you have a really good same game parlay proposition.

You know, people who want to go to then take the appropriate same game parlay depending on what's happening in the game. You know, 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, you know, making sure that we can, you know, reduce the friction for consumers that are watching the game. They can select that same game parlay very quickly. It is important. And that's an immersive front-end experience to ensure that they can discover that, you know, that same game parlay. They can track it and then they get the scoreboards and other visualizations of four.

So, yeah, look, when we combine all those things, position first. Very well with the leading live products in the US market.

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

Peter Jackson: If we look at our gaming at the moment, you know, the penetration rates have still got a, you know, a long way to go. So I think that we are, you know, still, you know, 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 early days, we're focused on cross-sell, but, you know, the biggest opportunity is the direct casino customers. And when I look at what we've been doing with, you know, the rewards club, exclusive content, there's a lot of great product work with them, which has been really helping push FanDuel to be number one.

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.

Operator: Your next question comes from the line of Brandt Montour of Barclays. Please go ahead.

Brandt Montour: So guys, when I look at the guidance for '25 and the changes that you made here, it's all sort of non-core things, and you laid it out very cleanly. And I go back last quarter, you know, 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 a 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: Yeah. Hi, Brandt. Yeah, 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. 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. We're going to take a reasonably prudent approach given the seasonality of the business.

And, you know, we're really pleased with the underlying fundamentals.

Brandt Montour: Okay. Thanks for that. And actually, another one for you, Rob, if I may. The deal with Boyd and the access agreement renegotiation. 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 and that deal? What does that sort of make you feel about your other access agreements? Is that a one-off, or do you think there's opportunity there for you?

Rob Coldrake: Yeah. Listen. There's definitely opportunity for it. It's longer term. These are very long-term agreements. You know, they were signed a few years ago when it was a different landscape and a different backdrop to market access. So there are definitely opportunities, but we consider them as longer-term opportunities. 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, you know, we are confident that we've got other levers within our cost of sales, you know, that can act as mitigation for other cost increases.

Brandt Montour: Right. Nice quarter, guys. Thank you.

Operator: Your next question comes from the line of Joe Stauff of Susquehanna. Please go ahead.

Joe Stauff: Thank you. Hello, Peter, Rob. I wanted to ask on FanDuel. You know, as we think about, say, your guide and the outlook in the new sports calendar, you know, how to think about your sports AMP growth and the outlook. You know, is this a season essentially where you press the monetization levers a little bit more, say, than volume levers that you've pressed historically? And then my follow-up is to that is just on the previous marketing spend question, you know, it is down. Rob, you commented on it.

But is there is FanDuel 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: Joe, hi. Nice to hear from you. I think if you go back to some of the conversations we've had historically around the 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 at CAC LTV criteria. You know, that's it's always been a set mainstay of the business, and it will remain so. We also think in the same way though around, you know, the application of generosity. You know, that as well.

And, you know, I think when we think about how we've been applying generosity, you know, over the course of this year and how you get it to the right customer segments, that's also really important. So I think your the characterization of this shift in volume to monetization may it may not be right, but I think we've always been very focused on, you know, that's a CAC TV dynamic. And that's what we use to drive both, you know, where and how we're applying this to generosity and also how hard to push from a customer acquisition perspective.

Rob Coldrake: Well, from an AMP perspective, Joe, clearly, you know, there's there's a couple of dynamics to this for the for the quarter now 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, that's largely due to the North Carolina launch last year where we effectively picked up one in 20 of the adult population at that launch. So, you know, 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, you know, we're seeing great frequency. We're increased frequency from our customers seeing excellent retention from those customers that we want to retain. And we continue to see the extension of our parlay penetration. So lots of strong attributes to the program.

Joe Stauff: Thank you, guys.

Operator: Your next question comes from the line of Paul Ruddy of Davy. Please go ahead.

Paul Ruddy: Hi, Peter and Rob. Just a quick one on this side of the Atlantic if that's okay on Friday. I think you would lose it to Thursday. Tap for migration. Happening in H1 2026, and you also kinda 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 and synergies a little bit? And then secondly, just on the platform migration, will it require that to happen for kind of the new product maybe you're bringing in to see.

So we brought in Smile, can you start introducing that product, the kind of FlutterEdge product into Smile fairly quickly? And then just very quick follow-up on US tax, if that's okay, just would it be a sensible assumption for next year that the known tax increases can be offset by the Boyd's renegotiation?

Peter Jackson: Hi, Paul. Look, let me just deal with SNAI, and then we'll to you about the US tax piece. I mean, yeah. I think, you know, as you as you pointed out, you know, we're planning to do a migration of the SNAI, you know, business onto the factory to CSAL platform in H1 2026. That will allow us to offer the SNAI customers the full suite of products that CSAL have access to. So things like MyCombi and, you know, the full range of products we have available. The platform. So excited about that. There are things we're doing in the meantime to provide yeah, a step up to for the client customers.

But, you know, it's not long to wait. Until that migration will happen. And, you know, 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 sort of we, you know, reaffirmed our confidence in our ability to hit the synergies which we reference.

Rob Coldrake: Yeah. With regards to the US taxes, so, you know, we will see a higher benefit from Boyd last year compared to next year as it annualizes. So for $65 million. As we said, it largely covers for this year. For next year, obviously, that's going to cover a significant proportion of the tax increases that we will see. I think it's important to remember a couple of the other dynamics. So we always talk about first order mitigation where think we can mitigate circa 20% in the first 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 benefits play out following that.

So we'd expect that mitigation to 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: That's really helpful. Thank you.

Operator: Ladies and gentlemen, as we resume the Q&A. And your next question comes from the line of Monique Pollard of Citi. Please go ahead.

Monique Pollard: Hello. Evening. Thank you very much for taking my question. Just one question then. Can I just ask on the US gross margin? That's coming very strong for the second quarter. You do mention in the state 90 basis points of benefit from payment processing fees and those are changes you made back in the '24. So, obviously, that then annualizes '25. But do you think there are other things that you're working on, whether it's, you know, further negotiations on payments or other things that could lead to further scaling of the non-part of the cost of goods sold?

Rob Coldrake: Yeah. Hi, Monique. Yeah. As you correctly pointed out, I mean, we have been had some success 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.

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 that we set out at the Investor Day in September.

Monique Pollard: Thank you. Very helpful.

Operator: Your next question comes from the line of Clark Lampen of BTIG. Please go ahead.

Clark Lampen: Thanks very much. Good evening. Peter, you touched on iGaming before and mentioned low penetration. You guys provided a really helpful overview at the start of July of the product and platform work that you guys have sort of done over the last couple of years. I wanted to see if you guys could help us, you know, sort of digest, I guess, the second derivative implications of that. 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, you believe that some of the advantages that are translating to share right now are sort of durable that over time, you could have you could be a market leader I guess, for iGaming. Thanks a lot.

Peter Jackson: Well, Clark, 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, you know, 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, you know, three-step approach to how we were gonna get to product leadership, and we've done that.

And I think if I look at it, you know, the stuff I've mentioned earlier, you know, the work we've done around chat bots, the work we're doing with exclusive content, the rewards club, and it's actually leveraging the Flutter Edge as well in terms of bringing new titles out. So we're in a team has done a phenomenal job huge growth in AMPs and revenue. But we're still in very early days. It's, you know, lots of 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: Hi. Thank you. If I could do one more on iGaming. Think in 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 wanna talk about it, is driven by in-house or exclusive content versus third-party games or maybe just big picture. What the mix of that in-house games has evolved over the past couple years, where you expect that to end up? Thank you.

Peter Jackson: Hi, Robert. Look. All of our content for FanDuel at the moment is all coming from third parties. Now you know, some of that is exclusive for us, and we have exclusivity provisions for periods of time on it. So, you know, the Huff and Puff and then Huff and even more parts have been exclusive titles for us on our platform. It clearly in the rest of the organization, we do have access to our own enhanced studios and content. And in time, that's something that we can put into the 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 have been won since launch and the rewards club, which, you know, 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 FanDuel yet.

Robert Fishman: Understand. Thank you.

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

Chad Beynon: 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 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? 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: Hey, Chad. Yeah. 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. Italy. So, you know, we don't have a broader interest per se in other lottery products around the world. With regards to whether or not it frees up capital, as we said on 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 and a half two to two and a half times that we've talked about in the medium term.

And we believe that we've got a number of opportunities in front of us. 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. Continue to look at accretive M&A opportunities as they come along. And we'll continue to operate our share buyback, which is operating as we set out previously, we'll buy back up to $5 billion 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: Thank you, Rob. Appreciate it.

Operator: Your next question comes from the line of John DeCree, CBRE. Go ahead.

Max Marsh: This is Max Marsh on for John DeCree. Taking my question. Seeing some good growth out of Brazil. Correct me if I'm wrong, but I believe that's your only Latin American market. 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: Hi, Max. Yeah. Look. We are, you know, the world's, you know, biggest and most, you know, global sports betting and gaming business. And you know, when we sit here and evaluate, you know, what the opportunities are around the world, you know, you're right. We think about Latin America. We think about many markets where we're operating in. But we have to evaluate where do we think is the best place to sort of, you know, deploy our capital. We look there's a lot of soccer goes on in Latin America. You know, there's some interesting opportunities there. So, you know, look.

They're all in the mix of it, you know, as we think about, you know, where we're going to be deploying our capital. And as Rob said, you know, we're in our business. We invest organically in the business. We're doing share repurchase, and we're also doing M&A. So we've only just closed the SNAI acquisition and the Brazil acquisition, but, you know, clearly, the team is thinking about other opportunities around the world in Latin America, Europe, you know, with that.

Max Marsh: Thank you very much.

Operator: Your next question comes from the line of Ben Shelley of UBS. Please go ahead.

Ben Shelley: 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: Yeah. 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. Southern Europe and Africa is really outperforming. That business has gone from strength to strength since we first acquired the CSAL business and brought it into the group a couple of years ago. At that point in time, CSAL was doing approximately 400,000 AMPs a month online. It's now surpassed a million. 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. 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 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 horse racing.

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

Ben Shelley: Thank you, Chaps.

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

Ryan Sigdahl: Hey. Good day, Peter. Rob. When I look at the new state, within the guidance, the cost, so $70 million EBITDA loss, assume that's all for Missouri. Online sports betting launch. That's double what your closest peer in the US is guiding for. So I guess curious if you have any change in the in 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: Yeah. Hi, Ryan. 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, you know, a contribution loss of circa $35 million per 1% of population. Missouri is about 1.8% of the population. I think we've held a number for Missouri. We can't talk for others and their economics, but we're very confident in our own workings.

Ryan Sigdahl: Okay. Thank you, Rob. And I think that's the end of the questions now. There's no further questions on the call. Can see that. I just like to thank everybody very much indeed for joining. And look. As we move into the, you know, second half of the year, you know, we're pleased with how we started Q3, and we're excited to see what we can do when we bring our great product to our customers whether that's with NFL, NBA, or European properties. So thank you very much.

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

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,046%* — a market-crushing outperformance compared to 181% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 4, 2025

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool recommends Flutter Entertainment Plc. The Motley Fool has a disclosure policy.