Flutter Entertainment PLC (FLUT) 2023 Q2 法說會逐字稿

Good morning, and welcome to the Flutter Entertainment Plc 2023 Interim Results Call. (Operator Instructions) But first, I'd like to hand you over to Mr. Peter Jackson, CEO of Flutter. Please go ahead, sir.

Good morning, everyone, and thank you for joining Paul Tims and I for this call this morning. As noted in the presentation, which hopefully you have all had a chance to watch. Paul Tim is standing in for Paul Edgecliffe-Johnson, who's out of the office this week due to a family medical emergency. Before we go to questions, I'd like to touch on a few items.

The first half marks a pivotal moment for Flutter. Our U.S. business is now structurally profitable with FanDuel delivering an H1 adjusted EBITDA of $100 million, including a Q2 EBITDA of $153 million. This has occurred 6 months earlier than we were forecasted when providing this guidance back in August 2021. And as outlined then, our U.S. customer base is now a sufficient scale to more than offset the cost of future customer acquisition.

This effect will continue to compound and drive significant profit growth, which in turn will transform the earnings profile and financial flexibility of the group. FanDuel attracted over 2 million new players in the half, which drove revenue growth of 63%. We maintained our position as the #1 online sportsbook operator with a 47% share of the market and grew our iGaming share to 23%. And outside of the U.S., pro forma revenue grew 8% and EBITDA was up 4%.

In U.K. and Ireland, we grew amps and revenue by 10% and 13%, respectively, as our recreationally focused brands took significant share due to product enhancements and new gaming content. In Australia, while we have successfully retained our COVID-enlarged customer base, our expectations to market growth in H2 have moderated somewhat due to reduced spend up.

International is also a growth inflection point, underpinned by the strong performance of our consolidated investment markets, which grew revenues by 19% and represent 77% of the divisional revenue.

The second half started well, and we remain focused on delivering against our strategy and capitalizing on the significant opportunity ahead, both in the second half of the year and beyond.

And with that, I'd like to hand it over to George for questions, and I'll ask if you can limit it to 2 questions per person, please.

(Operator Instructions) Our first question is coming from Paul Ruddy of Davy.

Peter and Paul. Just 2 quick questions, if I may. The first one is just on the U.S. So H1 EBITDA came in at around $50 million or $79 million ex PokerStars and FOX. Just thinking through that looks along the way ahead of H1 consensus and just thinking through the midpoint of the guidance range, which looks to be in line with consensus expectations. Could you kind of give us some color on that kind of H2 outturn what level of additional investments you might make? And is there anything we're thinking about -- we should think about in H2, which colors that number?

And the second one is just on Australia. So you've obviously reset the guidance down in Australia. Just wonder, could you give some context on what the underlying market is declining as in Australia at the moment and what your expectations are for that for the rest of the year, i.e., and maybe some context on when you might think the Australian markets return to growth?

Thanks, Paul. Look, in terms of the first question, I think it's important that we go back and remember the context a couple of years ago. When we first told people that we see US business make money this year. And the reason we saw that was because we knew that this year would be the tipping point where we have more customers in the back book or sufficient customers in the back book to generate contribution to a couple of our fixed costs and the customers that we were going to be acquiring.

And we've actually reached that milestone earlier, and we've reached that milestone earlier because the business is bigger than we anticipated it would be a couple of years ago. Look, I think the important thing for me is, in terms of the shape of the business, which I think is where you're getting to the H1-H2, I'm not really focused on that. What I'm focused on is it's a transition and the pivotal moment this year as we become profitable. I'm thinking about the shape and the trajectory of momentum into next year.

If you think about the very material shift in earnings for us on making a loss last year to the profit we made this year. Of course, it'll get compounded next year, right, because we're going to have another huge seller customers that we've acquired this year that will make a positive contribution.

So we knew this year would be profitable. We've already reached that milestone. So the business is now structurally profitable to prove the model works. And so we will continue to acquire and invest in acquiring as many customers as we possibly can do. Whilst ever they meet our CAC/LTV hurdles. I mean I think we were very pleased with the acquisition in the first half, and we'll try and acquire as much business as we can do in the second half.

I think with regards to Australia, I think the context there is we saw a very significant benefit going into COVID for the sports background. We've got a customer base that's a 2.5x the size of anyone else's. And we're really capable of winning the market. There's been some reversion though as we saw in the U.K., we're now seeing in Australia. And that is impacting the business. Look, when we look to next year, I think we hope the business will get back to growth. But I think we have to acknowledge that going into the second half of this year, we're going to see some wins. Paul, you'll give us some thoughts.

Yes. Our view of the market is we can see the racing market down about 8% to 10% in Q2. Sports is ahead, we can see the market growing by 5%, and we're taking market share there. I think our view for sports bet for the rest of the year is revenue broadly flat and returning to growth next year.

We'll now move to Ed Young, calling from MS.

The first one on U.S. investment. I understand how you've laid out the ambition to invest more into growth that's clear. But just in terms of that investment itself, I mean sales and marketing is coming in very nicely with the gearing in the business. So could you perhaps give us some color on how that is being spent. You mentioned, obviously, you're saying to CAC to LTV ratios. Are you spending on higher CACs because your LTVs are higher? Is that why spending is higher? Are you finding more better channels to allocate it? Just be interested about if you could talk a little about the how what you're doing?

And then the second one was on capital allocation. There wasn't a customer 1 to 2x that you've spoken about previously. There's a lot of pink countries on Slide 36. So are you sort of broadly expressing that you might run leverage at a higher level than you've previously talked about getting to? And perhaps on that, could you reflect on the operational capacity of the business to absorb a big acquisition as well as your balance sheet capability to do it.

Thank you for the questions. Look, I mean, on the U.S., we're continuing to see good returns across the board. I think we've talked in the past about how delighted we were with the performance of this year's Super Bowl and actually the nature by which we acquire the customers leading up to (inaudible) payment, the quality of customers are much better. But just in general, in the first half, we've been really pleased with the performance across all channels. And look, our lifetime values have proved to be better than we had originally anticipated. And we think the quality of our products, the levels of retention the structural margin changes, we're making, particularly through to pricing [accuracy] and things like that have all contributed to give us higher LTVs. And we've got real confidence in that.

So we're still sticking with our CAC/LTV framework of 12 to 18 months. And as we mentioned in the Q1 of coming well within that in terms of the newly launched states, for example -- but we're very pleased with it. With regard to the -- your second question, you're right, there are a lot of pink countries. And I think it's on that map. And it is an indication that there are a lot of opportunities for us to expand. I think we have to be thoughtful about what is the right level of leverage for us to carry as a business and there are factors in that, which we need to think about in terms of the earnings profile for this business now and also whether U.S. listing will change investors' views on any of those themes.

I think from a capacity perspective, we've been very pleased with our ability to integrate the assets that we've acquired to date. And look, whilst it's something we have to be thoughtful of I think our ability to make bolt-on acquisitions into our -- into the business, particularly across the International division, where we've got a real platform capability now and something that we're very comfortable with. Paul, I don't know if you want to add any comments to this.

Our next question comes from Clark Lampen calling from BTIG.

Two questions, please. Peter, you've laid out some detail, I guess, in previous presentation decks and reports around performance and payback periods for newer FanDuel player cohort. I didn't see that this morning. You may have just sort of confirmed what I'm about to ask with the prior question, but would it be possible to update us on performance and whether you've seen any meaningful change in what was otherwise a pretty healthy trend.

The second question that I have is on U.S. product. You saw about 1/3 of your NBA players engaging with shorter duration micros during the playoffs. Were those betting options driving incremental spend, was that maybe more of a reallocation? And as we're approaching NFL season, is there any reason to think differently, I guess, about the opportunity with engagement or stand with football?

Yes. Thank you for getting up so early. So let me just take the second question quickly, and then Paul will talk to us about the performance piece. Clearly, there would have been some reallocation right? So when customers are picking up about some of that newer products we made available with those products available in NBA, we'll have seen some substitution. I think the point we're making there was less around what I think is incremental, it's just our ability to continue to innovate and drop new products into the market.

Yes. And the fact that we capture 50% more revenue than our competitors from the handle means that we've just got a bigger war chest to invest in product marketing and generosity more generally. And so we're excited to see what we can do with the product. We're not -- we're a fast-moving target for people in terms of trying to replicate what we have. I know the team have got some very exciting plans for the upcoming season, in fact, the years ahead. Paul, do you want to talk about the performance.

Yes. The customer cohort analysis, which you're referring to, that's something we've used say, for the last 6 to 12 months to demonstrate our confidence in profitability, which we've now achieved. And you can see how we've laid out on Slide 11. And I think it's been pretty successful in demonstrating our confidence in profitability. It is very difficult then to take that forward and use that as a basis for modeling. And as you can see, if you listened to the presentation this morning, we transitioned from using customer cohorts to those state cohorts. I think that is a much better basis for modeling the business going forward, particularly if we think about the complexity of what does our business look like in 2024, 2025. In terms of any changes to underlying trends in that customer cohort, I mean there's a lot of moving parts in there, but no, we're still seeing the very strong returns that we've seen for the last 12 months.

We'll now move to Mr. David Brohan calling from Goodbody.

Just 2 questions from me. Firstly, I wonder if you give an update on India had a recent proposed tax changes factor into your long-term thinking in that market. And then just secondly, around I know the FOX Bet losses are going to ease off in the second half of the year. I wonder could you give a time line on when the PokerStars losses will reduce be it this year or next year?

Look, in terms of India, I think we've now -- we've got clarity around the new basis for calculation of GST, which is effectively going to be on deposits, and we think it will be anticipated to be introduced from the first of October. But we've been very pleased with the performance of our business since we acquired it. Junglee is one of the fastest growing Rummy players since we acquired it. I think their GGR is up to 4x since we made the acquisition.

From our perspective, the tax basis change does impact the business, but what it effectively does is it means that there's a there's a slug of -- sort of essentially sort of tax costs in the EBITDA -- in the revenue line, which means that the EBITDA profile is probably more similar to the U.S. business in the long run than would otherwise have been the case.

So look, we're still very excited about it. And I think it probably means a bit like the U.S., you'll need to have real scale to win in the Indian market. Paul, do you want to talk about the FOX Bet, please?

Yes. So we've talked previously about our 2022 losses for FOX Bet and PokerStars, $91 million. We'd expect to retain probably just under half of those losses going forward on the current run rate for the PokerStars business. In terms of what happens to those losses going forward? I mean we're setting up the business for the long term. We do expect the losses to reduce over time. It is a good brand for when the gaming TAM expands. Clearly dependent on the poker regulatory framework in the U.S., but we think there's definitely a very strong brand there that resonates that we can utilize going forward.

I now move to Ryan Sigdahl calling from Craig-Hallum Capital Group.

Good. Just want to start with FOX Bet quick question. I guess you have license in several states, New Jersey, Pennsylvania, Michigan, Colorado, curious what your plans are to do with those, whether you're going to sell those or launch a different brand there. And then secondly, on FanDuel, the app consistently ranks at the top for virtually every category of testing you can imagine, which is kudos to you guys in the product. The 1 Bet365 is a reputation internationally now in the U.S. as well probably the fastest in-game bet settlements. How important is that in your mind when you think about kind of innovation and improvements going forward?

Ryan, and look, kudos to you for getting up so earlier. I appreciate it. Look, I'll take these questions. Look, with regards to FOX Bet, look, we have a separate entity in the U.S., which operates what is effectively the PokerStars business in America. So that has its own market access partners, and we don't intend to make any changes as a consequence of the deal that we've done with FOX to close down FOX Bet. So you need the PokerStars business continue to exist in those entities in the U.S.

With regards to FanDuel, we've continued to invest and develop our products in a way that we think really resonates and works for the American audience. Ultimately, we have great products in all of our businesses in all of our different markets around the world, but we give them the freedom to operate and develop whatever is applied for a local audience. And that's what the FanDuel team has done so successfully over the years.

So if I look at the quality of product. We are very proud of the fact that we rank so highly, speed and needs of use are crucial. And we continue to develop and innovate the product. We've got plans for the short term and plan for the long term clearly, I'm going to disclose those today to competitors. But rest assured, we're investing very heavily in maintaining our product leadership in the market.

Our next question comes from Dan Politzer calling from Wells Fargo.

First one, just 1 of your competitors in the U.S. last night announced a partnership with ESPN. I just wanted to get your sense of, one, did you look at that type of deal? And two, how you think about promotional expectations going into the third quarter? Does this change anything? And also, there's another big competitor [Fanatics] here so just the extent you're thinking about this promotional season with NFL.

And then the second question that was about 12%. I think there were some favorable sport outcomes in there. So what was that on a normalized or normalized basis, excluding those outcomes? And how do you think about this trending over time given -- it seems like you're bumping up against that 12% 2025 goal?

Dan, another one who's up earlier, so I appreciate it. Look, the start of every football season and football as you know is always one which is we have a degree of trepidation for us because we just reactivate and reenergize our book of business. I mean, look, we've done this many times now, but still we always anticipate a highly competitive environment when we get -- when we see the season starting. And look this year will be no different. I think as you rightly point out, there are a few people who have stated that they intend to make a bit of a splash this year.

We will stay focused on what we've always done, which is making sure we deliver our ability experience to our customers by having the best products and using us fantastic of leading engaging brand. You ask me whether we look at deals and transactions in the U.S. market and of course, we do, right? And I think we do the ones we want to do, and we leave others to do the ones that we don't want to do. And that's probably what I'd say about that particular one.

Paul, do you want to talk about the margin?

If I just -- yes, I cover the margin. So our actual gross win margin in the period was 12.2%. And as you saw in the presentation, expected gross win margin, 11.3%. That does benefit from 170 basis points of structural margin improvement. That's again a combination of what we've seen over the last 12 months. So increased pricing accuracy, increased parlays penetration. We did talk about the target of 12% expected gross win margin target by 2025. And I guess the question is how quickly are we getting there. We'll be making very good progress towards that 12%, clearly already at 11.3%. There are quite a few moving parts in there, though. So is it a question of do we go through the 12% potentially, but a lot to work through. It remains to be a question, are we getting there quicker.

I mean, Paul, I doubt. I mean I think the scale of our business in the U.S. now and the investments we're making in risk and trading, the amount of data that we see and our ability to sort of really focused on pricing accuracy, something which I think makes particularly difference, especially when people are thinking about some of that sort of this complex parlays bets, which I think that's 1 of things that's really helping support that structural margin and how sort of accelerate our part.

We'll now move to Monique Pollard calling from Citi.

I just have a couple of questions on the U.S. from the slides that you gave where you're sharing sort of how we should think about modeling those cost items out to 2025. The first one is on the U.S. COGS. I just wanted to question again, whether the 47.5% to 52.5% revenue is a bit conservative, given obviously, New York relative exposure shrinks as new states launch. Is there some tax creep being assumed in there, which I guess might be reasonable given what we've seen in Ohio? And is there any fall in generosity of the proportion of GGR that's embedded in that guidance?

And then the second question on the U.S. expenses is on sales and marketing expense. Your 2025 framework outlines that you're going to approach basically your 2030 target on EBITDA margin pretty quickly, maybe in by 2026. So just trying to understand what drives the material scaling of the marketing budget from here?

Look, let me give you a sense of -- sort of overall, so context as sort of shape around this stuff and then Paul can come in on the specifics. Yes. I think when we look at the COGS, I think, we have to sort of acknowledge there's quite a lot of moving parts here around process of data and rights, the tax changes, those kinds of things. And here, in fact, where we are today, this is our best view of what we think is going to happen. You're right to highlight the tax creeping higher. But look, we don't anticipate there being a wholesale shift in the tax burden. And I think you're right to highlight in New York, there's something to get diluted. I think when we think about generosity, the big driver for us is actually around a very focus and an increasing focus on personalized generosity. It's something we've done very successfully in the U.K. We've done it very successfully in Australia as well. It makes a really big difference and it's obviously a very large sort of cost item for us.

From a marketing perspective, we operate in a pretty saturated retirement. And actually, it's quite hard to significantly scale that. So I think you do get some natural benefits. So look, I think what we're really showing here is the benefit of our scale, but Paul you can add something on the...

I think that's right. Just on the sales and marketing, you're right, Monique. We do at the scale that we have and quite simply, the new states are a smaller proportion of the overall revenue mix, which means that we do start to see that leverage come through pretty quickly on the sales and marketing line. We've said I mean the midpoint is 6 percentage points leverage benefit per year. That will be quicker in the first year and the second year through to 2025.

Our next question is coming from Alistair Johnson calling from BNP Paribas Exane.

I had a couple of questions on the same slide, actually. On the OpEx increases, it looks like you're expecting some quite material growth there. So just if you could provide color on what's driving that. And then secondly, within the OpEx number, how should we think about management incentives because I think on your guidance slide for the debt, it looks like some of the cash costs are being adjusted out, but I under the -- understanding that you historically have included management comp within your EBITDA numbers suggest if there's any change in the accounting.

So I can very quickly deal with that second one. We -- unlike I think the way that some people account for these things, we fully account for all management incentive or the share-based comp included in that number. Paul, I don't know whether you want to talk about the OpEx piece?

So on that slide, we talk about a 1 percentage point leverage benefit per year through our 2030 targets, which get us to OpEx of [10%] revenues. So pretty much straight line. In terms of OpEx movements in the half, 45% increase (inaudible) that demonstrates good leverage versus the revenue growth of [53%]. So we still are in an investment phase. We do -- I mean, some share-based payments point again, we do include share-based payments within our OpEx. And we've always been disciplined throughout the group on our OpEx spend, but the business is still growing quickly and we can (inaudible) deleverage.

We will now move to Richard Stuber, calling from Numis.

Just one question for me. Your U.S. active...

We can hear him. I can hear Richard.

(technical difficulty)

We'll now move to James Rowland calling from Barclays.

Can you hear me?

Yes. We can hear you.

Richard, we'll get you in back, I apologize.

I've got a couple of questions. The first is just on the deferred tax asset that you've outlined in the modeling assumptions of $166 million. I wondered if you could give any color on how long it would take for that to unwind? And also, could I just check that the recognized deferred tax asset is the sort of extent of the U.S. losses built up so far? There wasn't any sort of off-balance sheet you haven't yet recognized for example.

And then on the U.S., we're seeing your closest and largest competitor taking a little bit of share in online sports betting. And I think you've slowed down a little bit on improved product and they're also talking about having the leading products going into the second half. I just wondered if you could give any color on whether you're seeing your customers spend change at all or whether you're aware of engagement metrics suggesting that they're playing on multiple or more products than they previously did. And I also there a follow-up, would be, given the intensity of competition on product or so it seems going into the second half. How does that make you feel about leaning into customer growth from here or new customer growth from here?

James, let me take the second question first, and then Paul will talk to us about the deferred asset. I think when I look at our performance in Q2 with a 47% market share, I'm very, very pleased with that. I mean, yes, it is down a bit on the same period last year. But I think for context, we should remember that a number of operators were sort of pulling back from the market last year, but still 47% is a very, very strong performance. I think that the -- we should also recognize that people are making changes and improvements to their products, of course, they are. But we are a fast-moving target. We made 50% more revenue from every dollar of handle from our customers and our competitors do.

And we're taking that money and we're investing it further product enhancements getting smarter around our application of generosity and in general, boosting the business. And that means that our product, which is the best in the market today is a very fast-moving target, people trying catch up with. We're not going to show on the call today that the plans that we have that we are -- we remain very paranoid around us (inaudible) to maintain our product leadership but confident that we can do so at the same time.

On the deferred tax, so we'll recognize GBP 166 million credit for U.S. deferred tax this year. In terms of how does that unwind -- we can't comment on how that unwinds because obviously, that relates directly to our U.S. profitability going forward. But I would say that we expect the group tax rate. So group ex U.S. and U.S. to be roughly in line with the current group ex U.S. tax rate going forward.

Sorry, can I just follow up on the -- is there any change in your spending within your existing customer mix to suggest that they're using more products than they previously did?

No.

We'll now go back to Mr. Richard Stuber.

Just 1 question for me. On the U.S. U.S. active (inaudible) from $2.5 million in the first quarter to $2.8 million in the second quarter. I was wondering how do you keep your so players engaged. Is it is that just more product or other sports? And do you think you'll ever be able to maintain and grow actives quarter-on-quarter like you do in the rest of the world? Or is it just the seasonality in the U.S. is too big from sporting events such as Super Bowl and March Madness?

Richard, you've answered your own question. I mean that's the nature. We -- in the years that we've been operating there. We've seen that -- there's seasonality in other parts of the world. Our Italian business is pretty quiet in August, right, in July and August. We see seasonality in Australia as well, particularly early on in the year. So it's not an aberration to find our segment situation in the U.S. And I think the team have got pretty accomplished at making sure that we can sort of reengage the customers who've been active on the platform as soon as things come back to life.

Okay. Great. So you don't see that you can sort of try and cross-sell a product to infer that to those sort of sports betting customers during Q2. Do you think that's just the nature of the U.S.

Look, tennis and sports like that, which are popular year-round are always there for people to bet on. But just use a degree of seasonality, and we're comfortable with that. And apologies for earlier.

Our next question is coming from Kiranjot Grewal calling from Bank of America.

So my first one on the US iGaming. I think on Slide 29, we can see that your iGaming market share ramped up quite a bit from mid-'22, but it's flatlined in recent months. Do you think there's more you can do to increase that share? Or do you think you're comfortable with where you've got to?

Do you have any other questions, Kiranjot?

The only other question I have is around the secondary list. I'm not sure how much you can actually say, but any implications to existing list and would you look to drop 1 of the listings to just maintain 2?

Okay. So on the iGaming side, we're ambitious, okay? And we knew last year when we had also talked about on iGaming that our product wasn't good enough. Look, we saw this as a sort of multiyear operation, and we started to address some of the things that were not in place, frankly, last year and having a dedicated team, brand content capabilities, et cetera. We did that, and we've seen -- we've been really pleased with the way in which the business has grown and taken share.

We've got a bunch of improvements, we've made this year, which we cover in the in the presentation, which we think will provide further support for the business. And we've got exciting plans into next year as well. So we think we'll get to product leadership in iGaming. And obviously, that will enable us to continue to take significant share both in the casino direct market as well as the cross-selling market.

Look, we are the world's biggest regulated online casino operator. So we now have to do this stuff. We just haven't always brought those capabilities into the U.S. market, but we've done that now, and that's why I think that share is stepping up. With regards to your question around sort of the U.S. this day, I mean, I think as we -- as you've mentioned in your question that we're working through the implications for our other listings on securing this U.S. listings a little what we're doing with the with SEC at the moment in terms of preparing our application to SEC, which is ongoing, and we'll continue to work in the background on what the implications are for our other listings.

Our next question is coming from Joe Stauff from Susquehanna.

Peter and Paul, I did want to follow up maybe on an additional question on Slide 29, just kind of talking about your U.S. iGaming position. I wondered if you could maybe give us like a read on kind of your relative market share, say, the sports first iCasino customer versus, say, the online iCasino first customer?

And then the second question to that is with PokerStars essentially freed up in the U.S., I was wondering if you would use that possibly as a second brand.

Joe, thank you for -- again for another 1 for getting up so early. In terms of iGaming, we've been really pleased with the market share growth [taken], which has mainly actually been in the direct casino market. So that's where we've seen the majority of our games. I think that's simply because we've been fixing some of the issues that we knew were there in the product, but also bringing some of the innovations to markets such as the sort of daily free-to-play mechanics that we've now been successful elsewhere.

In terms of how we will utilize the PokerStars brand, we now have clarity around the future of that and the ownership structure of it. We've had it in market a while. Clearly, it's been focused on -- we're primarily focused on something (inaudible) first, and we're pleased with some of the performance we have. But we're not adverse to running multiple brands. And look, we will figure out how we utilize that in the most effective way moving forward.

Our next question is coming from Joe Thomas from HSBC.

Peter and Paul, a couple of questions, please. Firstly, Australia, margins, I think, down 950 basis points in the first half, down to recall about 25% or so. Can you just -- [currently] 26.4% looking at the slide, is that business long term [impaired] now? And if not, how do you expect to get back towards that sort of 30-plus percent level? That would be the first question, please.

Second question really regards the U.K. obviously, a very good U.K. performance despite having removed some generosity around things like (inaudible) guaranteed. Just wondering if you can give a bit more clarity about you think is driving that in particular? And is it sports or casino?

Yes, Joe. Apologies if that's impacted you in terms of the changes to the (inaudible). But look, I think from a U.K. perspective, we are very pleased with the product changes we made. The bet builders does have a profound impacts on customer engagement. We've been really pleased. I think as we mentioned in the presentation, 90% of customers who -- betting on the World Cup are still on the platform, which I think is a good testament to the product uplift we've made. And it's not just in Sports TV -- we've made a bunch of changes in gaming as well, whether that's some of the Paddy Power branded slots and some of the live products we bought on stream for Vegas as well.

We've also made a heap of changes to the way in which we tackle and present generosity to customers, which we think is really important. It's a very large cost item for us. And we know around the world, how important it is to drive the performance of the business. I think all of those product changes have helped getting ahead of the safer gambling stuff in comparison with our competitors, I think, is also sort of in good (inaudible) as we've been able to sort of work out how to manage the business in this new environment and other people are having to sort of jam on the handbrake to trying do it.

So I think that's what's contributing to the performance. Look, the team in general, we've got our mojo back just [delighted] of what's happening from a U.K. perspective. Look, in Australia, and Paul will give you some more specific (inaudible) context. Yes, I think we need to remember, we've sat in a similar situation to the 1 that we saw in 2019 where there's a step-up in taxes at that point. But what we saw happen as a result of that was there's a bunch of generosity changes, there's some consolidation in the market and there was also a bunch of competitors not us, they made changes to their overrounds trying to protect their positions.

Ultimately, scale the most important attribute in the market. And we have, by far, the best position in the Australian market with Sportsbet, the market-leading brand and the size of the customer base.

George, I think that's done for questions there. So thank you very much to everybody for participating.

Thank you so much, gentlemen. Ladies and gentlemen, that will conclude today's conference. We thank your attendance. You may now disconnect.