Flutter Entertainment plc Price & Performance (FLUT)

Also in our remarks or response 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. Where I will now hand you over to Peter. Thank you, Paul. I'm delighted to provide an update on what has been a fantastic year for Flutter. Our strategic positioning provides a compelling investment opportunity. This includes access to significant growth markets and a scaled and diversified portfolio of local hero brands who win in their local markets you're accessing our unique differentiator, the FlutterEdge. In 2024, we capitalized on these opportunities as we strengthened our leadership position in The U. S. Market, while globally, our local brands qualified their number one positions and took share in key markets, including The UK and Italy. We also grew into new markets, with a very successful Sanjure launches in North Carolina and Vermont along with the addition of MaxFet in our international business. We've achieved this by leveraging the FlutterEdge deliver the best product for players. Our pricing capabilities give our player an access to the leading same game parlay products across multiple geographies, driving both engagements, and continued expansion of our market leading structural gross revenue margin.

Our high gaming product proposition is gaining the strength with the creation of Blizzard Studios which we believe will better harness our games development capabilities, and which complements the addition of further Tier one supplier content. Altogether, this translated into excellent financial performance. With revenue growth of 19% and adjusted EBITDA, $482,000,000 or 26% higher in 2024. For leverage near within our medium term guidance range, after declining by nearly a turn in 2024, we will truly see the benefits of being an end business 2025. Firstly, we expect Fanjuel's fantastic product pipeline drive continued organic investments in player acquisition to sustain our leadership position in The U. S. Secondly, a newly formed international division, we expect to add the Sny and NSX acquisitions in the first half further enhancing the scale and diversification of the group in high growth markets. And thirdly, we'll get the full year benefit of the share repurchase program, with up to $1,000,000,000 of repurchases expected across 2025. Turning now to our performance in Q4. In The U. S, we exited the year in a position of unparalleled strength with the Scores book GGR market share of 43% and an iGaming TGR market share of 26%.

This means we close the year as a clear number one online sports book operator in The U. S. A position we have consistently maintained. And we have now also undertaken other multi brand competitors become the number one iGaming operator This market leadership position has been delivered and maintained through our laser focus on first innovation, combined with the disciplined customer acquisition strategy, The strong performance in the quarter somewhat masked by the well documented adverse sports sales. As we saw some of the most customer friendly NFL results on record. While these short term results led to a change in outlook for 2024, the transitory nature of these impacts which are part of operating a sports book, has no bearing on the long term position of the business. As we have absolute confidence in our leading pricing, and risk management capabilities, and in the structural growth and net revenue margin targets, which we outlined at the Investor I've been really pleased with the strength and trajectory of The U. S. Business. Existing player cohort growth remains encouraging and the opportunity to acquire new customers remain very compelling. With payback periods of less than fifteen months and well below our two year threshold for investment Our focus on product innovation helped to drive our structural gross revenue margin to 14.5% in the quarter.

Powerline penetration continues to increase with NFL up 500 basis points from the high base, as our market leading same game parlay products continue to resonate very well with our customers. Our product pipeline is stronger than ever, with a number of new sportsbook features launched in Q4 leveraging our market leading pricing capabilities, These included increased betting markets across all major sports, a new live activity tracker at NFL, which has seen good early adoption rates, and greater ability for customers to tailor the general SKUEL receipt. Than Ross to come in June twenty twenty five. We also continue to trial our revolutionary new with all states having access to this new, customizable way of betting NFL in the quarter. And we are now in the process of rolling out your way MBA Markets. Although it's really early stages, engagement we've seen from customers has been very pleasing. On iGaming, product innovation has also delivered us to our number one position. Launches included sports themed games, such as NBA Super Slam, who we expect will help drive sportsbook cost out and exclusive titles by Samurai eight eighty eight Kenji. We know access to exclusive games appeal to our direct kai gaming customers in particular as we laid out our design best today.

We improved our iGaming rule proposition with the introduction of a new jackpot functionality on our daily fries mechanic, [indiscernible] as well as trialing our new Fanjal rewards club loyalty program, Combined, these features helped to deliver exceptionally strong and growing up 37%. Our fundamental drivers are taking good momentum into the new financial year. The NFL season ended with a great Super Bowl, As we look into 2025, I feel very confident about FanDuel's prospects. From a regulatory perspective, The UK The U. S. Continues to be a dynamic market. Our new state opportunities, we continue to push MAP expansion for both sportsbook and iGaming. We also note the recent developments on prediction markets and opportunities that may arise for us there. We are also monitoring proposals for state gaming tax increases within the regulated sports betting market, And we're working closely with advisors and regulators alongside our peers, to ensure the impacts such changes can have on the regulated market are well understood. Irrespective of what means states may use to manage their budget debt As the largest operator in North America, we believe that we are in the best position within the sector to mitigate impacts should they arise.

Outside of The U. S, we had a strong quarter with revenue growth of 14% where access to our flood edge capabilities is driving share gains across the portfolio.

In UKI, we had another excellent year We've now grown our market share by four percentage points over the last two years. Product delivery continues to be key to that success. In the quarter, Paddy Power's expanded Supersub products drove increased pilot penetration and in turn structural gross revenue margin improvements. And engaging English Premier League has also driven high levels of player demand. Our iGaming proposition continues to improve with expanded free to play content, such as the Sky Vegas guaranteed prize machine, and a broader range of Tier one gaming concepts. In Italy, [indiscernible] quickly resulting in record price calls and showing the direct benefit of access to the Butter Edge. Details compelling on the channel offering helped drive a 33% increase Italian hands during Q4 with omni channel players generating over 1.5 times more online revenue compared to online only players. Given this large omni channel presence, we look forward to welcoming Snai in the second quarter. Positive momentum continues across our key consolidating diverse markets, demonstrating the benefits of our diversified portfolio and our capacity to invest for long term growth. This is demonstrated well in India, where we continue to invest through the impact of tax changes introduced in October 20 which temporarily impacted growth rates.

The underlying [indiscernible] [indiscernible] on a year over two year basis. In Australia, player driven momentum in sports remains a positive tailwind against the known softer racing market, with underlying trends playing out in line with our expectations during the quarter. Finally, and in summary, we believe that the group is very well positioned for 2025 and also to deliver our 2027 goals. That we set out at our Investor Day, We have excellent momentum in our global businesses, and we are delivering against our PlayWell ambitions. FanDuel has made a strong sum to the year We expect to materially expand our fair base due to our market leading products. The reorganization of our ex U. S. Businesses into our new international We enhanced our strategic focus on winning in our local markets. While our cost transformation programs will ensure we maximize shareholder value. I will now hand over to Rob to take you through the financials and our guidance. [indiscernible] It's great to be talking to you today about another strong quarter. The group delivered revenue and adjusted EBITDA growth 144% respectively. Despite the impact of the customer friendly sports results in The U. S. The group generated net income of $156,000,000 which is after the combined non cash expense of £346,000,000 for amortization of the acquired intangibles and the fair value movement on the FOX option Earnings per share increased by $5.59 to $0.45 in Q4 benefiting from the recognition of a tax credit on historic U. S. Losses and an impairment charge in the prior year impact comparative period.

Adjusted EPS, which now excludes certain fair value movements, primarily the impact of the revaluation of the FOX option, increased 67% due to the tax credit Turning now to the financial performance for each of the segments. In The U. S, revenue was 14% higher with adjusted EBITDA the hundred and $63,000,000 This included continued strong iGaming growth of 43% driven by the product improvements Peter outlined.

Driving excellent player growth engagement during the quarter. Sportsbook revenue growth of 8% reflected the adverse impact of sports results. As well as a moderation in handle growth to 12% As anticipated, the sequential handle trend was lower than Q2 and Q3 due to various factors, the timing of state launches in the current prior year, a greater number of NFL games in Q4 twenty twenty three, and the continued migration of our customers to higher revenue margin products are typically also lower handle wages We estimate customer friendly sports results cost approximately $550,000,000 in revenue and $360,000,000 in adjusted EBITDA in Q4. This is before factoring in one off cost mitigations and any recycling benefits. I will summarize our estimate of the net impact on 2024 when I walk through our 2025 guidance. From a cost perspective, we continue to deliver excellent operating leverage despite the impact of sports results on revenue the incremental taxes year over year in Illinois and the opportunity to continue to invest in customer acquisition Outside of The U. S, revenue grew 14% while adjusted EBITDA increased 6%. UKI had an excellent quarter with revenue growth 20% driven by a strong performance in both Sportsbook and iGaming.

Which were 31% up and 16% up respectively. Sportsbook revenue was aided by the positive year over year swing in sports results. Of three ninety basis points combined with a further 110 basis points expansion in our structural gross revenue margin as players engage with our expanded same game parlay offering.

In international, constant currency revenue growth of 23% was driven by a 22% increase from existing consolidated and first markets, and Maxpept also contributed eight percentage points to the year over year growth. Dicel had an exceptional quarter in Italy highlighted by online revenue growth of 41%, as we took share in the market and benefited from a favorable swing in sports results. India, Turkey, Georgia and Brazil all performed strongly in the quarter demonstrating the benefits of our diversified portfolio In Australia, revenue was 8% lower reflecting softness in the racing market although AMP growth has been encouraging at 7% Cash flow growth in the quarter was underpinned the growth in our business with net cash from operating activities up 67% and free cash flow growth of 175%. Cash flow also benefited from the comps versus prior year, which included increased CapEx relating to the acquisition of our new U. S. Office in LA and increased transaction costs associated with our U. S. Listing. Cash flow conversion over the year as a whole was excellent. With free cash flow of $941,000,000 a $600,000,000 increase year over year despite the $428,000,000 headwind relating to assessment of derivatives in 2023, 2024, The significant expansion in group adjusted EBITDA of $482,000,000 over the last year and FX movements drove a $635,000,000 reduction in our net debt over the equivalent period.

To bring leverage within our medium term target range at 2.2x. This anticipated reduction unlocks the capacity to repurchase up to $1,000,000,000 in shares across 2025. In tandem with the acquisitions of Snipe and NSX. Totaling approximately $2,700,000,000 Moving now to the 2025 guidance we have published today. Which includes trading up to the February. In The U. S, we expect existing state revenue and adjusted EBIT midpoints. Of $7,720,000,000 and $1,400,000,000 respectively. This represents year over year growth 33176%, and growth at the midpoints of our Investor Day commentary, after adjusting for sports results in the 2024 base. Normalizing 2024 for sports results, U. S. Net revenue would have been around $6,300,000,000 and adjusted EBITDA approximately $800,000,000 This includes adjustments of one off costs we called out as mitigation in Q4. As well as our estimate of the benefit of recycling in the quarter. 2025 started really well. Underlying trends are in line with our expectations. With an acceleration in staking trends from Q4 levels as we lack a more like for like calendar period. Sports results for the year to date have been roughly neutral a great Super Bowl result offsetting adverse sports results in January. I'll now take you through some comments on phasing for the existing state guidance In the first half of twenty twenty five, it's worth remembering that the shape of 2020 was impacted by adverse sports results in Q1 and positive sports results in Q2 and therefore phasing year over year will look different.

We therefore expect revenue in Q1 to be roughly 24% or 25% of total revenue for the year. And Q1 adjusted EBITDA to be around 20% of 2025 adjusted EBITDA. Around 60% of our U. S. Adjusted EBITDA is expected to arise in the second half of twenty twenty five, with Q4 remaining our largest quarter of the year. New states and territory launches are expected to result in negative revenue $40,000,000 and an adjusted EBITDA cost of $90,000,000 reflective of a Q4 launch in Missouri and some prelaunch investment costs in Alberta, ahead of an anticipated Q1 twenty twenty six launch. Moving on to Group ex U. S. Guidance. We expect revenue and adjusted EBITDA midpoints of $8,250,000,000 and $1,850,000,000 respectively excluding M and A On a nominal basis, this is in line with 2024, that equates to growth of 6% to 10% of revenue and adjusted EBITDA respectively after adjusting for foreign currency movements and the gross profit results benefit in 2024, and is in line with our expectations.

Foreign currency exchange rates have moved against the dollar over the last few months to create a 3% year over year headwind at revenue and adjusted EBITDA of approximately $220,000,000 to $50,000,000 respectively. Quarterly phasing should be broadly in line with 2024 after allowing for the euros in Q2 and Q3. Along with very favorable sports results in Q2. Revenue growth is reflective of continued momentum in international and an encouraging outlook in Australia. As anticipated, growth in UKI is moderating from the highlights reported during twenty twenty four as we come against positive sports results, the European Soccer Championships in 2024 absorbing the impacts of the government white paper finally being implemented, and as we migrate SkyVector onto our global platform.

Overall, ex U. S. Guidance also reflects the initial benefits of our cost efficiency program, and we remain on track to deliver over $300,000,000 in annualized cost savings by 2027. 2025 is an important year for these programs and we are very pleased with our progress to date.

We expect to migrate Skydac customers to a single UKI platform across the summer and complete the program by the end of the year, Does our players now have access to PokerStars Poker liquidity pool? We expect Italian players to be accessing a combined platform later this year. From Q1 twenty twenty five, we will combine UKI, international and Australia into one view combined international segment.

This means the group ex U. S. Adjusted EBITDA midpoint guidance is split between 2,080,000,000.00 for the new International segment and $230,000,000 of unallocated corporate overhead. Finally, we have also guided on some additional income statement and cash flow items that you can find in today's release.

With that, Peter and I are happy to take your questions, and I'll hand you back to Regina to manage Our first question will come from the line of Ed Young with Morgan Stanley.

Thank you, My first question is on U. S. Guidance. You've been in a lot of detail there, so thank you. I wonder if you could pick up on the $90,000,000 of investment losses in new states. Can you just talk through timing movement on Missouri and Alberta? And if there are any other underlying changes within the guide? And perhaps more broadly, could you comment on the customer acquisition environment? And then the second question is on prediction markets. Peter, you mentioned it very briefly there. Just a bit into your main peer described there as more of an opportunity than anything else. Is that how you see it?

Okay. Should I pick up on the first question with regards to the new safe as mentioned, we're expecting to launch Missouri in Q4, especially around November and we're expecting Alberta not to be so Q1 twenty twenty six. As we've said previously, 1% of the population we think roughly equates to around $35,000,000 in contribution costs. In terms of the state of auction for six months, So that ended up being around $80,000,000 for Missouri as most of those investment costs are typically incurred upfront as we said before. And then in Alberta, we expect around $10,000,000 for a kind of pre live investment towards the end of this year. So that gets you to the $90,000,000 I think you asked about customer acquisition more broadly. We've been very pleased with the way in which we're now just to continue to lead into the market. We I referenced earlier, the sense which we're continuing to see good opportunities to acquire customers. We exited '24 with a bigger business than we [indiscernible] And I don't see any reason that we can't continue to push on and build as bigger business as With regards to your technical question Ed, we are monitoring the situation with these sports suites contracts.

Closely The regulation is very fluid. I think we'll understand that this CFTC is due to hold a roundtable on sports related event contracts the next month or so, and we get [indiscernible] [indiscernible] It could be an interesting opportunity, but I think it's worth recognizing that the products themselves lack the richness of a true sports book offering I think about The U. S. Products and exactly we're doing around the Super Bowl for that, It's a very compelling, very broad product And we need to remember that the production products are very vanilla in comparison. Thank you. Our next question comes from the line of Clark Lamppin with BTIG.

Thanks very much. Good evening, Peter. I wanted to follow-up on acquisition trends. Just very quickly, did you see any major delta in acquisition trends between say iGamingFirst customers and core sports book? And as it relates to iGaming product in sort of 2025 and beyond, You talked about launch of a rewards program and integration of new jackpot features into the product. I don't know if it's too early to comment, but I'm curious if you could give us on the product and rewards program, maybe a feel for what the expected benefits might be from those integrations over time?

Well, it's afternoon, Clark. It's certainly not near where I am, but look, from a customer acquisition perspective, I've made a point earlier about [indiscernible] We're seeing very strong growth in iGaming. You can see that in the app numbers year over year when you look at the fourth quarter and that's what's very strong revenue performance we saw in the quarter. It is a function of the fantastic things we're doing from a product perspective. The reward machine jackpots, which were live in I think you've been very important The FanDuel Casino Rewards Club, which is a flagship loyalty program. We did a beta launch in December to a subset of our customers There's a lot going on. There's a bunch of things that we've been doing over the course of this year, which I'm sure you've seen access, you've seen what we're giving customers access to some exclusive content, which I know the team are very excited about as well. So I'm delighted with what we're doing both drive the direct casino acquisition, but also to continue to support the the cross selling into the sports book as well.

Thanks, Steve. If I may, I have a very brief follow-up just on Italian lottery. Peter, you've previously expressed some interest in bidding for a second lottery contract. I'm curious if that's still an opportunity that's been focused or has that materialized maybe the way you might have expected I think you referencing, I mean, initially, there is an opportunity to bid for the Lotto contract It's a very different type of follow-up to the the Super Enelotza that we already run-in Italy. We've been very pleased by the way in which we've been able to run the SuperNorta products. I think CECL has done a brilliant job in terms of activating that driving cross sell inset the online channel and driving benefits in that is opportunity to bid for the Lotto. We are [indiscernible] putting our thoughts together on that, we've got a couple of weeks to decide what we're going to do.

But luckily, I think the extent to which we can make a good financial return on it, you'd expect us to lead into It is different to the sort of lottery products that we see in The U. S. Are more opportunities to drive you've got a bit more experience than anybody you want [indiscernible] [indiscernible] products that we've got with Emex Clarke has been performed fantastically well for the C cell business.

It's got a huge customer base. When you look at the Lotto product, it's quite different. Super and Lotto because there's more of a regional bias to it. Super and Lotto tends to be a national game for us look at the lot set, the 21,000,000 Italian people playing every week, which is over 40% of the of the population That's a lot. So we think there's huge opportunity there. [indiscernible] numbers make sense. It's something we're looking quite close to. Thank you.

Our next question comes from the line of Brandt Mott Montour with Barclays. Please go ahead.

So YourWay is rolled out to a a big portion of the system. I know it's been a very light touch with what you've put out there so far versus what you have aspirations to put out there eventually throughout through that product. What has the early learning been with what you've put out? Give us an update on that product, please.

I can talk a little bit about some of what we saw in the Super Bowl where the product was was available. We didn't particularly market this aggressively.

We saw around one in 20 customers use the product at the Super Bowl I think around 90% of the bets that people faced were bets that they couldn't have done without utilizing the customization that's available within the YourWay product We're seeing and I think it's I think around 25% of the customers have placed Harley bets with more than 10 legs. So we're seeing really strong engagement with it. People are really enjoying the the extent to which they can customize and find find bets that they couldn't have done otherwise. We're excited to see what we can do with this product as we continue to evolve it. You need to remember, we're solving two very complex things with Jewelry. One is just sort of enormous expansion of of markets that become available for customers and finding ways in merchandising and simplifying that back to customers so we can give them what they want to bet on quickly It's actually managing all the risk associated with that And I think the team has done a great job in cracking that, but we've just been very thoughtful and careful in terms of how we roll this out to the Thanks for that, Peter.

And just a follow-up on hold, you gave structural hold calculation for the fourth quarter of 14.5%. Hold for '25 given that fourth quarter number that you hit isn't far away from the 15% that you guys had sort of put out as a target for '27 recognizing there's some seasonality to it?

Yes. Thanks, Brian. Listen, we're not guiding specifically on hold for 2025. But what I would say is we laid out some targets structurally at the Capital Markets Day back in September.

We're making really good progress towards that. You can see that in the published data in 2020 We feel like we've got a very good start in Q1 this year.

And we're very much tracking in progress with those longer term targets. That we set out. So we're feeling quite sanguine about where the margins are at the moment.

Okay. Thanks everyone.

Our next question comes from the line of Bernie McKernan with Needham.

Great. Thanks for taking the question. Wanted to ask on tax rates. Just dealing with Illinois in the second half of twenty twenty four, what did you actually see on a gross impact and net impact in And was there any change in the competitive environment in the state because of the higher tax rates? Yes. So let me pick that one up, Bernie. So as we previously mentioned within another week's we said there was going to be circa $50,000,000 impact in 2024 and that would be $40,000,000 after mitigation It's broadly ended up resulting in a set of results for us that's in line with that.

We previously set for 2025 We're expecting to be able to mitigate circa 50% gross impact That's still where we're thinking. So in a broad, it's played out as we expected.

Understood. Then maybe just on the other side of regulation thinking about potential iGaming legalization, would just love any updated thoughts here in terms of potential momentum in states The beginning of the year is always the time we get a better read of what's going to happen over the course of the year. We don't want to to change anything at this stage, but we're excited that we'll be launching in Missouri in the fourth quarter. You remember the Investor Day, we talked about the parent renting spending a couple of percentage points of sports betting in each of the the three years and one new iGaming state, I think we remain confident that can happen.

Great.

Thank you both.

Our next question comes from the line of Jordan Bender with Citizens.

Good afternoon, everyone. We're getting questions around handle growth slowing in The U. S. And then continuing into January. I believe Parley handle growth comps are incredibly tough in the fourth and the start of the year. Anything else you could point us to to help us bridge from what we're kind of seeing today to your implied handle growth for the full year.

And then the second question unrelated, I'm seeing if you can expand on the broader strategy across South And Latin America The region is pretty untapped by any Flutter Flutter. So is the strategy there to kind of build your presence and brand in Brazil before potentially laying the groundwork to kind of further expand throughout the region Hi, Julian. Why don't I just quickly deal with that Latin America question question? We're excited to be Working with NSX, we have to get the deal closed next quarter. I think we've got a terrific team and the opportunity to be able to bring the flutter edge to bear there with our their products, expertise, technology and other scale benefits, I think will be very exciting As and when we find other opportunities across Latin America or Tatum, you need to remember we're in hands of business. So we're investing very heavily in organic customer acquisition and great paybacks, so eighteen months whether that's in. IGaming or sports here in The U. S. And other markets around the world, India, etcetera, We're also going to continue to do M and A and we've got this $1,000,000,000 of share repurchases So M and A will continue to be an important part of our strategy, but we have to make sure that the it's the right opportunities for us in terms of delivering the right financial returns, and us being able to bring the benefits [indiscernible] Yes.

Picking up on your handle question, John, say Q4 handle trends were broadly as we'd anticipated. So 12% up in Q4 We're expecting Q4 to be lower than the previous quarters partly due to the impact of state launches and some phasing around NFL games. But you look at Q4 specifically, it had one less NFL round and it also lapped Kentucky, which moderated kind of the sequential growth. As I mentioned in my remarks, we also talked about some recycling benefit, but that's not enough to kind of offset 2025 started really well as we stated, Ben, Q1 is in [indiscernible] as we lap this kind of like for like calendar period. So yes, we're quite pleased. I think the last point worth mentioning, we don't really kind of obsess about handle can be inflated by promotions and parlay penetration, which we're obviously keen to keep moving the dial on, tends to be a bit of a headwind to handle times as well, but we're pleased with where we're trending. I appreciate the commentary. Thank you.

Our next question comes from the line of Paul Reedy with Davy. Please go ahead.

Hi, good evening, guys. Just two questions for me. Firstly, on the Italy acquisition in tonight, just could you give any little bit more detail maybe on the timing of that coming in?

Just the second part of it, looks like that business may have lost some share in the second half of 2024. Just how quickly do you think when you absorb that business you can kind of start to turn that around get growth back. And then as a quick follow on from that, just if you can give any broad guidance on the expected contribution from the two acquisitions in twenty twenty five point five year basis? Thanks, Paul. So I can pick up on that. So we're still on track for Q2, we hope, with the snide completion. As you've noted in the Italian market share data with our CECL brand, we've been doing very well. So we've been taking share. So we're keen to get the Snyder deal completed and give them access to our products, capabilities and the Flutter and also get on with delivering some of these synergies, which will we're confident we'll be able to start realizing those quickly. [indiscernible] numbers around the acquisitions, as previously stated, in Brazil, we think the NSX, they'll be up to 100,000,000 of EBITDA losses this year.

Also hoping for completion of NSX at some point.

In Q2 and yet Snyder has previously guided as well. But yes, feeling very good about those acquisitions keen to get into the building and both can start making a difference.

Okay, great. And if I could just ask a second just to unpick the handle growth question for The U. S. A little bit more. Is it right to think about kind of a lower handle growth environment now as we go through 2025 as people as you to more of those recreational high margin product that are maybe lower bet sites and higher margin, maybe up some up upside on hold percentages and lower handle growth? Or how should we think that through? Is there kind of any broad guardrails you think about to handle growth?

I think I've come back to the point, just mentioned, Paul, which is we don't obsess about handle We're quite happy with where handle is trending.

But you can artificially inflate that with with promotions and other things. And actually, if you look at the underlying momentum we've got within the business in revenue, which is the key KPI that we look at, it's very strong. We're very pleased with it. So I said, in Q4, there's a reason that sequentially why the trend was slightly lower, but as we kicked off this year, we're really happy with where the business is trending. Okay.

That's great. Thanks, guys.

Thanks, Our next question will come from the line of Dan Politzer with Wells Fargo.

Peter and Rob. Thanks for taking my questions. First, I know you guys gave a lot of great detail on The U. S. If I look at your kind of normalized revenue and EBITDA for 2023 and for '20 sorry, for 'twenty four and 'twenty five, it looks like flow through is in the low 40s Is there any way to kind of give us a little bit additional color whether it relates to gross margins and being able to get some additional upside there relative the prior year or even leveraging kind of some of the fixed OpEx buckets Any additional detail would be helpful. Thanks.

Guys, is that the only question you had or [indiscernible] No, my follow-up is just another one on the Italian Flutter. Any puts and takes as you think about that concession, whether joining the existing concessionaire versus maybe competing against that incumbent in the bidding process? Just how you're kind of thinking about that high level would be great?

We're not going to talk about our bidding strategies commercially sensitive. We will be very the rest of the shareholders will be very disciplined and we'll if we go ahead, we will put on a as good a show as we can Yes. So it sounds like you dropped through a question. I mean, there's a number of dynamics playing into this as we've proved some sort of stuff. But you've got the existing states which are maturing and with the maturity of those states you might see some lower handle that you can see higher net revenue as the pilot penetration increases One thing that's important to say is that we are delivering operating leverage across all lines and you can see that in P and L in Q4. We expect that trend to continue into 2025. We're clearly making progress on cost of sales and marketing towards those targets that we set out in 2027.

I think the last point is, I said we don't obsess about Hamlet. We don't obsess about drop through even. Sometimes it isn't the best metric to look at.

We prefer to focus on revenue and EBITDA on those targets that we laid out at the Capital Markets Day.

Got it. Thank you so much. Thanks, Ben.

Our next question comes from the line of Jed Kelly with Oppenheimer.

Hey, great. Thanks for taking my question. Just circling back on handle because we're getting a lot of questions on it. Just where we when we look at it, where your iGaming growth has really strong, we are seeing some handle deceleration.

So is that some of your Flutter higher value players choosing to play gaming over over sports betting or is there anything else out there? And then just on the YourWay parlay, just to roll that broader to get a broader rollout, Are you more concentrating more on the merchandising or is it more still on the risk management? Thank you.

Hi, Dan. Yes, I think the Yes, I can talk a little bit about the the UAWAY products. And look, I mean, I think I can make a comment on iGaming and it handles I'm sure Rob will have some [indiscernible] On the YourWay product, we've got to get the merchandising right from a customer perspective. [indiscernible] the user experience of having a vastly increased array of products to become overwhelming and we have to make sure it isn't. So we've I think the team are doing a really nice job on sort of the user experience that we've made available. But it's no good taking bets on an array of new products if you actually haven't got the pricing risk management right at the same time. And so you've got to solve all of these [indiscernible] Very complex. But I think the team are doing a brilliant job and we're really excited to see where we can take this product It's worth remembering that I remember being in Australia when we launched the the Flutter revolution as it was then in 2016 and here we are nine years later facilitating and developing the product. I'm sure you're aware of something which is going to or will be similar.

Well, I don't know if you want to talk about the iGaming Yes. I mean, in terms of the first question, Chad, we're not seeing that. So in terms of trends, we're going to take away from sports. But I think as Peter outlined earlier, had some fantastic product developments in iGaming, which are really kind of driving the performance of iGaming forwards. We're really pleased with that.

We're also continuing to see excellent payback in both sportsbook and iGaming, arguably even better in iGaming. The question for us is how much we keep really kind of investing behind that with [indiscernible] Casino Director and Van Joys. He's constantly asking me to invest more It's a good challenge to have, but again, we're really pleased with the [indiscernible] definitely not a drag on sports book from IP.

Thank you. Our next question will come from the line of Barry Jonas with Truist Securities.

Please go ahead.

Hey guys, thanks for taking my questions.

Given the Illinois mitigation efforts you've seen to date and you expect this year. Can you kind of offer any general guidelines around the mitigation targets we could see as more states talk about increases Is 50% sort of a good baseline target? Should it come to that? Thanks.

I think, it's a good starting point. I mean, We need to remember that as the largest operator, in the market by a long way, I think we're in the best place to mitigate this. But I think as a simple rule of thumb, it's all about starting point.

Great. That's really helpful. Then just a general follow-up. You think there was anything structurally different about the NFL this past year that led to abnormal holds? And I guess, did you learn anything from the season that you could take with you in the future? Thanks.

More favorites, one than would normally have happened. I think that's that's a simple answer.

All right.

Thanks so much guys. Appreciate it.

In the interest of time, we ask that callers limit themselves Our next question will come from the line of Jeff Stanjill with Stifel.

Hey, great. Good afternoon, everyone. Thanks for taking our question.

Peter, can you just talk a bit on the trajectory of promotional reinvestment in The U. S. Heading into 2025, do you expect reinvestment as a percentage of handle to drift higher as you allocate or share back a portion of your structural hold rate expansion back with players? And if that is the case, you just add some color on how you think about derivative market share impacts as your reinvestment strategy starts to buy bifurcate from peers who do seem to be managing promos either flat or lower in 2025? [indiscernible] The thing that we do, which is true for acquisition as well as deployment of generality is we look through a very we're very disciplined in terms of how we allocate and spend it. So we want to see a good return We talk about the two year payback for the marketing acquisition perspective and here we're eighteen months. It is true for deployments of generosity as well.

Making sure it gets to the right customer drives the right outcome is how we're really focused in the business and that's what that's how the team is set up to think about deployment. That are very big [indiscernible] Our next question comes from the line of Joseph Stott with Susquehanna.

Hi. Thanks, Peter, Rob. Wondering how you think about the impact of YourWay, both on structural hold in U. S. As well as your ability to kind of accelerate and say handle growth Just curious about do you see that as more accretive to your structural hold or what?

I think that the types of benefits we'll drive from your way are likely to be as you say, a lot higher hold. I think we should get better engagement. Increased customer frequency. I mean, we won't get all of them. We're excited to see what happens with it.

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

Thank you. Good afternoon.

I'm curious if you guys are seeing any signs of consumer weakness in your older vintage U. S. States for either sports betting or iGaming And then any lessons that you can take from the international markets that you can apply to FanDuel if in fact we do see any sort of macro U. S. Headwinds in the coming quarters?

Well, look, in terms of macro impact, traditionally, our experience is that the business is actually very defensive. So when we think about the impact of the financial crisis or other macro impacts of the business has actually been very defensive in the face of those. So we're not seeing any bearing on our historical cohorts here in The U. S. I wouldn't expect Yes.

And the same applies for international. So from my experience in international, businesses tend to be very resilient in times of economic downturns. So we're not seeing any signals at all at the moment despite the various volatilities The U. S. Economy. Our next question comes from the line of Chad Beynon with Macquarie.

Hi, good afternoon. Thanks for taking my question.

Wanted to ask one on The U. S. Business. I know there's some broadcast partnership deals that could be coming to an end and these are always fluid and particularly on American football, you guys have participated when it when it made sense. So wondering if you could elaborate a little bit in terms of How you view media rights, partnerships, if anything has really changed as the economics of these contracts is pretty dynamic? Thanks.

I think the team have done a thrilling job over the years of of negotiating good contracts. I mean, I think we have always been very disciplined in how we tackle these and we've been able to use our global experience to help us identify which ones are going to be most attractive I think the There is a lot of change happening at the moment. We are all aware of the fragmentation of rights and the increase in streaming. So we're thoughtful about how we continue to ensure that our customers can access the sports they want to watch, but I'm pleased. With the portfolio we have. Our scale helps us in terms of investing to acquire the right types of rights we've got a bigger customer base, we can sanitize those things across, which is important.

Our next question comes from the line of John DeCree with CBRE. Please go ahead. Hi, thank you. One question on Brazil.

I'm not sure if I missed it earlier, but I know it's only been a couple months since the regulated market launched, but curious if you could walk us through kind of your investment strategy kind of in a in a launch? And is that happening already or what do we expect more investment when the NSX acquisition closes later this year? Thank you. John, it's worth remembering that Brazil is not like the launch of a U. S. State.

Those are very extensive market in operation before regulation arrives. There's a lot of advertising [indiscernible] principles of payment opportunities, it was a was a very functioning market.

And so it's not going to be like the launch of Missouri will be in Q4, whether [indiscernible] What we may comment on there, you've got experience of digital from your international Yes. So we've got lots of experience at Brazil from back in terms of EBITDA losses for this year. And we might see some slight phase in differences on that depending on when the the deal completes and Brazilian football season doesn't actually start until the end of this month, so we need to see what happens then.

Yes, there is going to be in this first twelve, twenty two months in terms of competition for meter assets. There were up to 200 different companies that applied for a license. We think the market will start to shake out quite quickly. But I think given our track record, given our capabilities, given our product We are very confident of our ability to succeed in the Brazilian market. We're very excited to get started with and if that's Our next question comes from the line of Ben Shelly with UBS. Please go ahead.

Hi.

If we take your normalized revenues and EBITDA The U. S. In 2024, they were meaningfully in excess of your original guidance in March. Can you just talk us through what you're forecasting underappreciated last year? And to that effect, where do you see potential upside to guidance in The U. S. In 2025? [indiscernible] [indiscernible] We ended the year with a much bigger business than we anticipated.

In terms of the number of customers we had on the platform particularly the progress we made in iGaming, and those things really helped support the numbers that you referenced, I think it's also fair to say that we raised [indiscernible] support the structural hole. All the things that we talked about actually [indiscernible] to explain.

I think that's the key point, Pete.

I mean, ultimately, we're very pleased with the progress that we're making towards those long term targets. We've got off to a good start. I think there will be different phases within this, but as when we see opportunities to continue to invest and continue growing the business at the kind of paybacks that we're experiencing, we will continue to do so. But it's a good start and we're on track to get towards what we outlined for 2027 at the Investor Day.

Thank you, team. Our next question comes from the line of Adrienne Desjardinshilher with Bank of America.

Hi, good evening. I'm just curious if you could decompose a bit for us the growth, the 22.5% U. S. Growth underlying you expect with between iGaming and online sports betting? We're not going to provide [indiscernible] for The U. S. Business. We're not breaking down into sports and games. Okay, cool. Thank you.

Thanks.

Our final question will come from the line of Brian Sigdahl with Craig Capital Group.

Hey, thanks for taking me in guys.

Just a bigger picture question to end. Looking at sports betting, the last couple of years have really been focused on parlays, enhancing the offering [indiscernible] Which has been talked a lot about, but curious what the focus on the the sports betting product roadmap would be for 2025 and even if you want to go beyond that? Thanks.

You might think we've only been talking about parlays in 2024. But as I said earlier, revolution really started in 2016. The Italian team are very excited about the introduction of the Parlay product to that market mix.

Sorry if it's been difficult to deliver from a regulatory perspective, but we're making progress. There's some great things that the UK team are doing. And of course, we've got the All Ways stuff in The U. S. There's a lot of there's a lot of products coming to Batterth for customers. I think the team do have brilliant job in terms of keeping our customers engaged and excited. And it's as true for what we do in iGaming as well. Did I You have to customers that are really interested in engaging or something from a player perspective, And what we can do with all the new markets and make some of the pie, because that's a bit exciting. But there's a whole heap of things around generosity, which we're evolving as well. And I referenced some of the things we're doing from an iGaming perspective earlier. There's a lot of exciting things to come.

I think maybe a couple of other things to add. We're really excited about the developments in live products. So there's been a bunch of stuff this year in terms of NFL in house game trackers, post product improvements. As Peter said, people are really following the player narrative as well.

So we've developed player experiences where people can go and look at the last five game stats of the players and there's some really interesting stuff that the U. S. Team are doing, which is really driving the sports book forward. So they're quite excited about what's to come in 2025. Okay. Well, look, I think we've come to the the end of the questions. Thank you very much, everyone. I'm the last half dozen or so. Are you needing a chance after that question? Myself and our team are around to help you. But thank you all for your time. We very much appreciate it.

That will conclude today's call. We thank you all for joining. You may now disconnect.