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Operator: Hello, and welcome to the FDJ United Half Year 2025 Results. My name is George, I'll be your coordinator for today's event. [Operator Instructions] Please note this conference is being recorded. I will now hand the call over to your host, Madam Stephane Pallez, Chairwoman and CEO; and Mr. Pascal Chaffard, Senior Vice President and CFO. Please go ahead.
Stephane Pallez: Thank you. Thank you very much. So good evening or good afternoon to everybody according to your time zone. So thank you for joining us for the presentation of FDJ United's 2025 half year results. So I will start by commenting the key highlights and then hand over to Pascal Chaffard to cover half year results in more detail and comment on the outlook of the second half. And we will then, of course, conclude by a Q&A session. So let's turn to H1 key highlights. So as you know and as you have seen, this first half has been very busy for us with major milestones on our identity strategy. So early March, we launched our new corporate identity, which reflects the group's new dimension reach with the acquisition of Kindred, both internationally and in terms of gaming verticals. And end of June, we held the Capital Market Day to present our new Play Forward 2028 strategic plan. And on this occasion, we affirmed our ambition to assert our leadership in Europe as a unique sustainable lottery, gaming and betting operator. Of course, during this Capital Market Day, along with our strategic road map, we communicate our new medium-term objectives beyond 2025, which is obviously a transition year and we'll come back to that. So we aim in the medium term to deliver an average annual organic revenue growth of around 5% over 2025 to 2028. We target a recurring EBITDA margin above 26% in 2028, and we are committed to continue to increase the dividend year after year with a minimum payout ratio of 75% of adjusted net income. At the same time, we intend to remain best-in-class regarding sustainability commitments. As we explained during the Capital Market Day, we intend to continue to grow our voluntary contribution to society and the environment from 2.7% of reported net income in 2024 to 5% by 2030. And as the only operator with clear targets for reducing the share of revenue from other players we will communicate early 2026, our new targets to quantify this objective. So with this brief recap of our key midterm targets, let's now turn to key H1 financial highlights. So in terms of revenues, we were at nearly EUR 1.9 billion, up 31% on a reported basis and down 2% on a restated basis, as if we had integrated Kindred on the 1st of January 2024. I think it's worth noting that Q2 2024 was Kindred's best quarter ever which is setting, obviously, a tough comparable base for this year. Hence, this 2% revenue contraction year-on-year. However, we saw already a sequential improvement in the second quarter with revenue of EUR 942 million, up 2% versus EUR 925 million in Q1. Turning to EBITDA. Recurring EBITDA was EUR 441 million. It was down 10%, which is a 23.6% margin, but it's important also to note that it would actually be 24.4%. If you exclude the one-off impact of our successful employee share ownership plan, which accounts for EUR 14 million and which is, of course, something quite exceptional. We also made good progress on the execution of our cost efficiency plan, and we, of course, reiterate our target of EUR 20 million for this full year. Net income reached EUR 136 million. I think two important impacts. One is, of course, that net financial income was impacted by the Kindred acquisition financing. Therefore, we switched from EUR 23 million in H1 2024 plus to a net loss of EUR 37 million. again, new financing structure. And of course, corporate tax takes -- has to be taken into account with a one-off of EUR 20 million additional tax on large foreign companies that is also a one-off impact since it doesn't seem to be in the plans of government to go on and it was accounted fully in H1. So when you calculate the adjusted net income with adding back the amortization of price purchase allocation net income reached EUR 222 million, down 5% on a reported basis. So on this basis, and we'll explain further why we are definitely confident in our capacity to achieve our full year guidance. Those H1 results are in line with our expected statutory for the full year. And given the positive second half outlook that Pascal will detail later, again it is consistent with the achievement of our full year guidance, which, of course, is detailed here with stable full year revenue versus 2024 pro forma recurring EBITDA margin above 24% and a reduction in net financial debt of more than EUR 150 million. And of course, this first half was also significant as always in terms of continuous sustainability achievements. Of course, with the Kindred acquisition, we revised slightly our corporate purpose and it was included in our bylaws in our Annual General Meeting in May. On the responsible gaming front, we started deploying FDJ Protect within our iLottery business in France. It is a best-in-class proprietary tool that is designed to monitor player behavior and alert on at-risk gaming practices in real time. So that is very critical in our plan. And regarding environment, we again obtained the highest carbon score A, from responsible finance from Axylia for the fourth consecutive year. And we also invested in a new nature-based solution fund, EUR 5 million. Again, this is part of our midterm trajectory to generate high-quality carbon credits. So in H1, there was also -- and I mentioned this in terms of financial impact. There was also a very important feature for the company with a new employee share ownership plan is up that is called FDJ United Invest, it was, of course, accessible to more than 5,000 employees in 13 countries, the whole group. And we definitely thought it was an important milestone to give the opportunity to all our employees to be part of group's ambition and performance. It was a great success with the take-up rate above 50% for total equivalent to 1% of share capital. And as a result, our employee represents now around 4.5% of our share capital. So now let's look at our two main business units, starting with LSF lottery and retail sport betting activities in France under exclusive rights first. So total revenue for LSF reached EUR 1.3 billion, up 4% year-on-year. It's a combination of the lottery revenue debt grew by 6% to nearly EUR 1.1 billion. And it was actually driven by all our games, grow and instant games and our two channels of distribution. So draw games, of course, benefited from an excellent EuroMillions performance as we saw EUR 27 million gross jackpot got over EUR 75 million, of which EUR 18 million over EUR 130 million and instant games also growth were driven by a number of new games and also by our core games. I won't quote all the names. But at the same time, we were very satisfied by the growth of the iLottery, which has been particularly strong with revenue up 16%, and online penetration is now at 15% versus 14% 1 year ago. And of course, EuroMillion contributed to that in terms of recruitment, but we are now in, I think, in a good momentum with online players achieving 6 million players for the first time in FDJ history. At the same time, point-of-sale growth remained good with revenue up 4%. So very good performance of the lottery. Retail sports betting revenue were down 6% which is mainly explained by the decrease in the operating margin versus H1 2024. due to unfavorable sports results of the operator, notably because of the strong performance of French football clubs, particularly Paris Saint-Germain. Actually, the new tournament format of those -- the leads supported a 4% increase in stake. So the underlying activity is actually quite good despite a year-on-year comparable base with the Euro 2024. So we definitely think that there is a good trend, a positive trend, which, of course, could give better results in the second half in terms of return to players. So on this basis, recurring EBITDA for LSF was EUR 464 million up 5% year-on-year. EBITDA margin reached 36%, owing to, again, a good business model with strong operating leverage in iLottery and cost efficiencies into the due surcharge. So on OBG, we have a more tough comparable basis that I will try to make it clear. So OBG, which is online betting and gaming which is open to competition. As H1 revenue down 12% year-on-year on a restated basis. I think there are two important elements of context to bear in mind. First, that Q2 2024 with Kindred's best quarter ever, thanks to the Euro 2024 tournament which has contributed to the 21% increase, the number of sports betting active players versus the previous year. Therefore, it is definitely very challenging days of comparison for Q2 this year. However, we saw in Q2 versus Q1, an improvement of 2%, which we think is a positive indication. We also, I think, need to look at what it would have been without U.K. and Netherlands that you know are both strongly impacted by regulatory headwinds. And actually, if you exclude those, you have a 5% growth year- on-year on H1 with notably strong growth in France, where our business is performing very great. So of course, we are -- we have launched a number of initiatives to sustain growth in the future. And for the second part -- to have a better trend in the second part of the year. In sport betting, we released several new features, and we improved a lot from user interface -- user interface with the launch of the match of the day of the day, of the on screen for instance. In Casino, we delivered a complete refresh of our casino lobby with better visibility. We launched new exclusive games developed by Relax such as [indiscernible] so we think we have again set the base for a better trend in the second part of the year. As for EBITDA, it was actually -- it was down. The regulated margin was only 20.3%. I think you have to bear in mind on that, that actually, we reduced marketing spend by 8% to adjust to the reduced level of activity. We also reduced personnel costs by 6% as an impact of the performance plans that was launched by Kindred. But at the same time, IT service costs increased by 15% as we continue to roll out KSP in parallel with the consolidation of our different platform in France. So you have a definite high level of IT service costs in those numbers. Talking about Kindred integration, it's worth underlining that the integration is well on track. And particularly, of course, the deployment of Kindred proprietary Sportsbook Platform KSP, we aim to achieve full end-to-end product control by the end of 2026 with KSP for the Sportsbook and PAM leave for life for all brands in all markets. It's a very strategic project, and it is well engaged. We have started to migrate some of our countries on KSP and KPAM at the end of 2024, such as Estonia we also migrated 32Red U.K. for Casino in Q1 this year and all this worked well. And in France, we have been consolidating our player account management, PAM platforms, and we merged Kindred Sportsbook and PAM to be in the best condition to migrate by the end of 2026 on KSP. So we are, again, well on track and very focused on achieving that. I'm now going to hand over to Pascal for more details on our financial performance.
Pascal Chaffard: Thank you, Stephane, and good evening, everyone. I'm on Slide 14. And since Stephane has already commented most of the KPIs that are decided, I suggest dialing into our H1 in more detail immediately moving to the Slide 15. So H1 revenue reached nearly EUR 1.9 billion, down 2% year-on-year on a restated basis. As Stephane previously commented revenue of our two largest BU, I'm going to say a few words about the two others, namely international lottery and payments and services. Revenue from these totaled EUR 111 million down EUR 17 million to H1 2024 restated. While payment services revenue was nearly flat year-on-year, international lottery revenue was impacted by the following: First, the forecasted disposal of Sporting Group's B2B activities at the end of 2024, it was totally anticipated. And it has a positive impact on EBITDA. We will see that in a minute. And regarding PLI, year-on-year growth resumed in Q2 after a challenging Q1. We have explained that during our call in April, mainly because of nonrecurring factors, particularly an unusually high number of major lottery winners that has impacted the turnover. Overall, PLI recorded high single-digit revenue contraction in H1. Solely due to the Q1. But again, the growth is back to normal since the beginning of Q2, and it's still true in July. So now let's move to the EBITDA. The recurring EBITDA of EUR 441 million was down 10%, implying a 23.6% margin. Here, again, I'm going to come back to -- not going to come back to LSF and OBG, as Stephane commented it. So I will have a comment on the two other views and the central costs. beginning by the two other views international luxury recurring EBITDA was EUR 15 million, up EUR 6 million year-on-year, thanks to the accretive impact of the disposal of B2B activities, as I said before, and also to the positive impact to the performance plan that has been put in place in PLI since 2024. The BUs recurring EBITDA margin of over 18% was up significantly from less than 9% a year ago. So it has doubled. The Central cost totaled EUR 130 million versus EUR 113 million in H1 2024. These are broadly stable, excluding the EUR 14 million cost of the employee share ownership plan that Stephane has also commented on. Now let's consider on the Slide 17 the bridge from revenue to recurring EBITDA at the group level. Cost of sales amounted to EUR 790 million, an increase of 2%. This includes EUR 536 million in retailers remuneration, up 4%, driven by the increase in U.S. stake in France and in Ireland. Marketing costs totaled EUR 160 million, down 8%, reflecting a decline in online betting and gaming activity due to the regulatory constraints we have talked about and the IT services reached EUR 88 million, up 6% as we continue to roll out notably KSP, as it has been mentioned by Stephane and consolidate globally all our platforms. The personnel expenses remain perfectly stable at EUR 302 million. And finally, the general and administrative costs, mainly comprising consulting fees, central function and building costs rose by EUR 4 million to EUR 85 million. Half of this increase is related to the employee share ownership plan, Stripping this out, the year-on-year increase is only 2.5%. As a result, the recurring EBITDA amounted, as I said, to EUR 441 million, a 10% decrease compared to the restated first half of 2024. The recurring EBITDA margin was 23.6% compared to 25.7% a year ago. Excluding the employee share ownership plan cost this margin would have been 24.4%, a better reflection of the underlying performance of the group in H1. Now considering the rest of the income statement, on a reported basis. Depreciation and amortization increased by EUR 86 million to reach EUR 171 million, mainly due to the amortization of intangible assets recognized as part of the Kindred acquisition. Nonrecurring costs amounted to EUR 10 million less than EUR 21 million in H1 2024. And if we recall those numbers were reflected by the cost relate to the Kindred acquisition, which is not the case in 2025 indeed. I would expect H2 to be broadly like H1 this year if I want to help you to make your forecast. We switched from net financial income of EUR 23 million in H1 2024 to now a net financial loss of EUR 37 million, reflecting the debt financing of the Kindred acquisition. But I would expect a net financial loss below EUR 70 million for the full year. So it's not exactly doubling. We have some one-off impact in H1. The group's income tax expense amounted to EUR 90 million -- you will see it quite heavy sales, EUR 90 million represented an effective tax rate of 40% for H1 2025 compared to 27% in H1 2024. And this increase is mainly due to the one-off additional income tax on large French company that has been put in place for only 2025. so far, for which a EUR 21 million charge was recorded solely on H1. So it will not be exactly the same impact on H2. Because of how these tax is calculated, as I said just now, the full year impact is strongly H1 Q, and I would, therefore, expect our full year effective tax rate to be around 33%. It should then come down to below 30% in 2026 and after that, 2027. So as a result of all that, the net income was EUR 136 million. The adjusted net income as defined in the appendix of this presentation, but mainly it's excluding PPA amortization reached EUR 222 million, down 5% year-on-year. So now let's conclude this section for -- with a few words on our financial position, starting with the first bridge on top of this slide, we are on Page 19. Gross financial debt of EUR 2.354 billion decreased by EUR 120 million compared to the 31st of December 2024, reflecting debt repayments Available cash and cash equivalents declined by EUR 267 million, mainly due to the EUR 379 million dividend payments, also the EUR 97 million additional equalization payment following the EC decision and the EUR 91 million of unclaimed winnings paid to the French state as it is done each H1. As a result, net financial debt stood at EUR 1.964 billion at the end of June 2025 compared to EUR 1.818 billion at the end of December 2024. With the second bridge at the bottom of the slide, you can see this net debt variation during the first half. The positive free cash flow of EUR 430 million was more than offset by tax for EUR 81 million as a part of those is seasonal, as I already explained. Other items for EUR 56 million, dividends for EUR 379 million and a share by related to the employee share ownership plan for EUR 60 million. It's important to note that these two last items are markers of seasonality. Dividends are always paid in H1. And in this year, cash will be received for employees in exchange to their FDJ United shares. Therefore, we remain confident, totally confident in our ability to reduce net debt by at least EUR 150 million year-on-year at year-end, which is part of our guidance. So now moving to the outlook. I'm going to provide you a more detailed outlook for the second half of the year as announced by Stephane beginning of our presentation. So I've moved to Page 21, and I will start with a couple of slides regarding OBG complementing what Stephane has already shared regarding both current activity and more broadly, our second half outlook, which underpins the reiteration of our full year guidance. On a restated basis, H1 '25 revenue was down 11% versus H1 '24, but up 5%, excluding the U.K. and the Netherlands. To normalize strong growth recorded in H1 2024, notably, thanks to the euro. Let's compare 2025 with 2023 using Q1 '23 as base 100 on the graph. You can see both Q1 '25 and Q2 '25 total OBG revenue are above Q1 2023. By a high single-digit percentage by more than 20%, excluding the U.K. and the Netherlands. You can also see the sequential improvement Q2 '25 versus Q1 '25 with a growth of 2%, both with or without the U.K. and the Netherlands. We expect to reduce the cap versus 2024 in the next quarter and to be back to growth versus 2024 in Q4. Moving to the next slide. We will now focus more specifically on the U.K. and the Netherlands. These two graphs illustrate the expected lapping of regulatory measures as we enter in H2. Gradually throughout H2 in U.K. and specifically from Q4 in the Netherlands. You can see also stable revenue in both countries, Q2 '25 versus Q1 '25. Finally, and more importantly, you can see strong active players momentum in both markets, even more so in the dividend, growth resuming gradually in Q3 and more in Q4 on those two jurisdictions, plus growth momentum maintained or increased thanks to various marketing and promotion initiatives in other jurisdictions are the key levels of the expected performance in H2. So to conclude now on Slide 23. Here is an overview of all the reasons for a positive second half outlook and the reiteration of our full year guidance. Regarding lottery and sport betting retail, we have a strong H2 pipeline with over 10 instant game launches. The launch of Crescendo, a new draw game, various special lotto and EuroMillion growth. We also expect growth in retail sport betting. Regarding OBG the lapping of regulatory restriction, as I've just mentioned, and for the most part in Q4 in the Netherlands as well as various initiatives as multi-licensing in Sweden and the launch of 32Red in Romania. International lottery will continue to benefit from the margin uplift related to the exit of sports B2B activities and the normalization of PLI player payout ratio after the exceptional high number of lotto jackpots winner in Q1. Finally, at the holding level, we will continue to rationalize costs while H2 will compare more favorably versus H1 without the EUR 14 million of the employee share ownership plan. So as we've said before, 2025 is a transitional year and it's developing as expected. So I thank you very much for your listening. And with Stephane, we are now ready to answer your questions.
Operator: [Operator Instructions]. Our first question is coming from Estelle Weingrod of JPMorgan.
Estelle Weingrod: Just to start on the top line momentum in France. Lottery was quite supportive, I think, around 7% growth in Q2, just to understand a bit better how to expect this to evolve in H2? You mentioned a strong pipeline, but comp seems actually a bit challenging in Q3? So that's my first question. I've got a second question on the Netherlands, I mean clearly a market that has been difficult. Any incremental color on what's happening there in terms of, I don't know, regulation obviously since the CMD. That's it for me.
Pascal Chaffard: Okay. Maybe I can take -- yes, I will start with the lottery and retail sport betting outlook in H2. In H2 what we expect is to continue to have globally in lottery and sport betting, the same kind of growth that we had in H1. In H1 it was 3.6% overall. But taking into account two elements. First, we will have a more important growth in sports betting retail. It was a decline of 6% in H1, but we expect a growth in H2. The decline in H1 was solely due to the payout ratio. And it will normalize in H2. And we will have, therefore, a slightly slower growth in lottery but all that -- above all that, you have to take into account the fact that since the first of July, we have to face the increase of the tax rate in France so, it will reduce by 2 points, the growth that we can have in H2 in lottery. So if you do the calculation. We should expect the lottery between 1% and 2% growth in H2. And second issue was regarding Netherlands, there is no news about any regulatory changes in Netherlands. It's globally stable to date. And we have seen that also in our numbers. We have stabilized our numbers and still working on how we can better work on the way to get our customers be ready to give the elements that they have to give to us, to the operator, to be able to go over the tight threshold limits that have been put in place.
Operator: Our next question will be coming from Ed Young from Morgan Stanley.
Edward Young: First of all, you mentioned there the pipeline broken down into instance Crescendo and then special draws. I wondered if you could just give us some color on which of those is the most meaningful or which is sort of something that will continue to build into next year? And I wonder if you could touch on when your new sort of multichannel arrangement might become meaningful? Is that sort of a story for next year more than anything? Second is, you said throughout H2 for the U.K., I do wonder if there's any more specificity on timing around moving to more even footing in line with the voluntary code stance, i.e., are you expecting a settlement to be done soon? Or is that just out of your control and that you can't comment. And then the third is, Stephane, I think you appeared at a Senate hearing earlier this month discussing the prospects for online casino. I think your temperature is perhaps a bit lower than some others in [indiscernible]. Could you say sort of whether you think there's any scope for the consultation to be relaunched soon? Do you think there's appetite for that? Or is this kind of very much a long-term visibility around online casino in France?
Stephane Pallez: Okay. Maybe I can start and Pascal will complement me. On the last one, which is an online casino consultation, I think it's fair to say that whatever you think there is, I don't think, very low probability of consultations to come back at this point. I would say more because of the political environment than anything else. So I think you can think about what you would like to do the type of region you want to have, but to have a public consultation now with a short-term some little vote by the parliament, I think, is rather unlikely, again, given the political context. I think that's basically in my comments. So second, on instant -- well, on the lottery I think Crescendo is a very interesting, of course, feature of our program of this year in terms of complementing and renewing our broad-based game for the future. It will, however, have a very minor impact on 2025 because it's going to be launched in Q4. I don't remind the exact date right now, but it's basically in Q4. So it's more an investment for the future and a good investment for the future. And that's how we will, of course, we will manage it. But it's not very significant in terms of change of our trajectory for this year. I think your other question was on our...
Pascal Chaffard: Settlements on the...
Stephane Pallez: No, no. There was question on distribution channel. I think as we explained at the Capital Markets Day, we already focus to implement this extension of the type of channel we are present. But it is something that will not become very significant in this year. So I think we'll be more able to see a potential impact in the years after '25. Again, we started, we did some. We're at the beginning. And we think it's a good start, but it's not very significant in terms of numbers. at this point. And settlement..
Pascal Chaffard: Yes, that's on preview. You can -- yes. What we expect is that it will be done by the end of Q3. This is the expectation that we have. So it means that we will not give all the details, but it means that it's going on quite confident on the fact that it will be okay by the end of Q3.
Operator: [Operator Instructions]. We'll now move to Sabrina Blanc of Bernstein. Please go ahead.
Sabrina Blanc: Yes. I have 3 questions from my part, if it's okay. The first one is regarding the cost evolution. And notably, we have more color on the cost evolution in OBG. And the question behind that is, when shall we see the impact of the -- really the initiatives that you have taken. The second key question is regarding the regulatory environment. You have mentioned that in Netherlands looks like stable, but could we have more color in the U.K.? And have you seen any further pressure recently. And lastly, regarding the deployment of KSP, I would like to have more details regarding the slide what we call keener integration to see which country is going to meet great before the end of this year.
Stephane Pallez: I think on cost evolution in OBG, Pascal do you mind to take this one?
Pascal Chaffard: Yes, yes. So cost evolution on OBG, what you have seen in our figures is that we have a decrease on the marketing cost. We have a stabilized decrease on personnel cost and an increase on IT cost, and it will continue like that for a moment. And your question you said was to have a sense of when we will see the impact of the cost reduction, it will be more in 2026 -- beginning in 2026 because it is related to two very important triggers. The first trigger is in France, the merger of the offer of Unibet and [indiscernible]. And the second figure is the end of the rollout of KSP, the sport betting platform, which will, at the same time, lower the investment on IT and also lower the external cost that we are spending today with Kambi until the end of the KSP migration, we have not yet reduced sales the cost of Kambi. So it will be done by the end of 2026. So you will see gradually in 2026 and more heavily in 2027 full year the impact of the major measures that we have taken to obtain a cost reduction medium term.
Stephane Pallez: For your question on regulatory environment, well, I think actually they are not -- as we said, well, we just commented the U.K. where we think we'll be able, as Pascal was saying be to move to the application of the code of conduct for the industry, which will be, of course, a positive element in the management of this business. In the Netherlands, as we stated earlier, there is no news or no new rumors. So it's really how we can stabilize the situation and implement in the most efficient way, the affordability, the controls that we have to put in place and we've been progressing on that. But again, no change to the regulatory to the application. As a matter fact, in the Netherlands the figures that have been published show that this illegal market has grown to a very, very high percentage, which should not be an incentive for the regulator to become more stringent on the contrary, but we don't expect it to move in a positive way, but we don't -- again, we don't see any change. So really, I would say, stable, which is a good news, which is good news. And on KSP, I think we did not -- we did not say. And of course, I understand your curiosity, we did not reveal country by country the date on which we will deploy KSP. But actually, we have a number of big markets that are going to move in beginning of 2026 actually. But I don't think we've been giving a lot of details on this at this point.
Pascal Chaffard: Yes. We have from H2 and others H1 next year. but we don't provide the detail of market by market for obvious competition reasons.
Sabrina Blanc: Thank you very much.
Operator: As we have no further questions at this time. I turn the call back over to Ms. Pallez for the additional or closing remarks. Thank you.
Stephane Pallez: Well, thank you very much for listening to us I hope it was helpful. And again, we are very determined and confident in our capacity to reach our guidelines. And with that, I want to thank you for attending this call. And of course, we are at your disposal to answer further questions, if any. And see you soon, and have a good summer. Goodbye.
Pascal Chaffard: Thank you.
Operator: Ladies and gentlemen, that will conclude today's conference. Thanks for your attendance. You may now disconnect. Good day, and goodbye.