Flutter (FLUT) Q3 2025 Earnings Call Transcript

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DATE

Wednesday, November 12, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Peter Jackson
• Chief Financial Officer — Rob Coldrake
• Operator

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RISKS

• Group net loss — Reported net loss of $789 million, primarily due to a $556 million non‑cash impairment charge from legislative changes in India, a $205 million payment to Boyd for revised U.S. market access, and increased amortization costs.
• Guidance lowered by $280 million in adjusted EBITDA as a result of customer‑friendly sports results in September and October, which management emphasized are transitory in nature.
• Ceased real-money operations in India following regulatory changes, with Jungli now offering only free‑to‑play content.
• Surrendered Nevada gaming license in connection with the launch of FanDuel Predicts, although "we didn't have any retail or B2C operations there."

TAKEAWAYS

• Group Revenue -- $16.69 billion guidance midpoint for 2025, reflecting a decrease of $570 million due to updated outlook.
• Adjusted EBITDA -- $2.915 billion guidance midpoint for 2025, down $380 million from prior projections, now expected to deliver 19%-24% year-over-year growth.
• Q3 Group Revenue Growth -- Up 17% year over year, led by outstanding organic iGaming gains and completed acquisitions.
• Adjusted EBITDA Q3 -- Increased 6% year over year due to organic iGaming strength and acquisition benefits.
• Q3 Net Loss -- $789 million, compared to $114 million in Q3 2024, mainly attributed to a $556 million non-cash impairment relating to India, a $205 million payment to Boyd, and elevated amortization, offset by a $27 million Fox auction benefit.
• Adjusted EPS -- Grew 29% in Q3 2025, while loss per share increased by $3.91 from $0.58 in Q3 2024, driven by non-cash and one-off items.
• U.S. revenue in Q3 2025 -- Rose 9%, as iGaming revenue surged 44% and sportsbook revenue declined 5%.
• U.S. adjusted EBITDA in Q3 2025 -- $51 million, down from $58 million in the prior year, impacted by competitive sportsbook dynamics and temporary NFL results.
• U.S. iGaming GGR Market Share -- Achieved 27% in Q3, supported by adding over 500 new slots titles and exclusive content launches.
• U.S. Sportsbook NGR Market Share -- September share reached 47%, as reported by management.
• Average Monthly Players (AMP) -- Over 14 million, with U.S. AMP growth of 8%, iGaming AMP up 30%, and sportsbook AMP up 5% year over year.
• International Revenue -- $2.4 billion in Q3, reflecting 21% growth, with 18 percentage points from acquisitions and organic iGaming growth of 10% driven by Turkey and Italy.
• International Adjusted EBITDA -- $505 million, up 10%, as portfolio diversification offset variable market conditions.
• Operating and Free Cash Flow -- Decreased by $81 million and $87 million, respectively, reflecting the Boyd payment.
• Leverage Ratio -- 4x, or 3.7x pro forma including SNAI, with commitment to medium-term target of 2x‑2.5x.
• Share Repurchases -- $225 million in Q3 and $245 million in Q4, totaling $1.12 billion since inception; Q1 2026 authorization planned for up to $250 million, progressing toward $5 billion target.
• FanDuel Predicts Launch -- Product launches in December 2025, targeting U.S. states without legalized sports betting, with strategic partnership alongside CME Group.
• FanDuel Predicts Investment -- Expected fourth-quarter incremental EBITDA cost of $40 million‑$50 million, and annual investment of $200 million‑$300 million in 2026.
• Nevada License Surrendered -- Company confirmed surrender of license linked to FanDuel Predicts but highlighted lack of existing B2C operations in the state.
• India Real-Money Gaming Exit -- Jungli transitioned to free-to-play only after legislative changes caused a $556 million impairment.
• Guidance Factors -- Updated outlook reflects customer-friendly sports outcomes, U.S. sportsbook investment, FanDuel Predicts costs, India real-money cessation, and tax effects in Illinois.
• Boyd Payment Savings -- $205 million paid for U.S. market access is projected to yield approximately $65 million in annual cost savings.
• UKI Technology Replatforming -- Migration of Sky Bet to the Flutter UK platform completed, enabling new product features and pricing enhancements.
• SNAI Integration -- Remains on track for H1 2026 migration, aiming for synergy and enhanced content delivery in Italy.
• UK Market Environment -- Management anticipates potential gaming tax increases in the upcoming budget, but expects Flutter’s scale to help "mitigate the impact."
• Brazil Performance -- Delivered record iGaming revenues, and sportsbook focus remains on product and pricing improvements ahead of the next World Cup.
• Illinois Tax Response -- Reduction in number of bets observed; handle per bet increased, with management viewing the changes as a tool for potential tax mitigation in high-tax jurisdictions.

SUMMARY

Management confirmed Flutter (NYSE:FLUT) maintained its leadership in both online sportsbook and iGaming, with iGaming revenue expanded by 44% year over year in Q3 and delivered a 27% GGR market share in the U.S. in Q3. In International, revenue grew 21% year over year in Q3, supported by acquisitions and double-digit organic iGaming growth. while SNAI integration and the technological replatforming of the Sky Bet brand proceeded on schedule. Group guidance was revised downward based on customer-friendly sports results and investment in FanDuel Predicts, with cash flow reductions attributed to the Boyd payment for improved U.S. market access terms. Significant one-time impacts, including regulatory-driven cessation of Indian real-money gaming, contributed to the net loss and major impairment charges, while strategic capital returns to shareholders continued through share repurchases and a stated goal to return $5 billion over coming years.

• Peter Jackson said, "FanDuel Predicts in December. We will immediately unlock a significant incremental addressable market by offering a compelling sports product to the vast majority of the U.S. adult population in those states currently without sports betting."
• Rob Coldrake disclosed that the full-year outlook now anticipates group revenue and adjusted EBITDA of $16.69 billion and $2.915 billion, "representing 19-24% year-over-year growth."
• FanDuel Predicts' initial product offering will not include parlays, but management stated these will "fast follow" in early 2026.
• Boyd payment, while weighing on near-term earnings, is expected to yield approximately $65 million in annual cost savings to the group.
• The company remains committed to disciplined investment in customer acquisition, prioritizing "CAC to LTV dynamics" as per management commentary.
• Surrender of the Nevada license represents a regulatory adjustment but is not expected to affect existing U.S. operations due to lack of B2C presence there.
• Share repurchases accelerated and will continue into 2026, with $1.12 billion returned since inception, targeting $5 billion cumulatively in the years ahead.

INDUSTRY GLOSSARY

• AMP (Average Monthly Players): Unique active users who wager or participate in real-money gaming products during an average month.
• GGR (Gross Gaming Revenue): Amount wagered by customers minus the winnings paid out, before operating expenses.
• NGR (Net Gaming Revenue): Revenue remaining after promotional costs, bonuses, and tax deductions; reflects real earnings from gaming operations.
• SNAI: Italian gaming brand acquired by Flutter; referenced as a key contributor to International segment growth and integration synergies.
• CSAIL: Flutter's proprietary Italian business platform, responsible for sportsbook and iGaming product delivery and retail customer onboarding in Italy.

Full Conference Call Transcript

Peter Jackson: Thank you, Paul. I'm pleased to report a good third quarter. The continued momentum in both our U.S. and international businesses during Q3 saw over 14 million average monthly players engaging with our products, driving revenues 17% ahead year over year and adjusted EBITDA 6% higher. While we reported a net loss for the quarter, this is driven by the non-cash impairment charge following the regulatory changes in India and the previously communicated payment to Boyd for improved U.S. market access terms. Customer-friendly sports results in September and October, which, as we've previously outlined, are transitory in nature, mean we are reducing our full-year outlook 2025 by $280 million in adjusted EBITDA. But the underlying business is performing well.

And I'm really pleased with the strong positioning of Flutter's core business as we continue to execute in the final quarter of the year. Before I provide an update on the Q3 performance of the U.S. and international businesses, I'd like to share how we're strategically positioning FanDuel to capture the emerging prediction markets opportunity. I'm very excited to announce our expansion into this market with the launch of FanDuel Predicts in December. We will immediately unlock a significant incremental addressable market by offering a compelling sports product to the vast majority of the U.S. adult population in those states currently without sports betting. Entertainment and financial prediction markets will also be available.

Flutter is exceptionally well-positioned to capitalize on this opportunity through our strategic partnership with CME Group, combined with FanDuel's nationwide brand presence, market-leading sports betting expertise, and two decades of our own experience operating the Betfair exchange. FanDuel Predicts will also accelerate the acquisition of customers into the FanDuel ecosystem ahead of the state legalization of sports betting. Furthermore, the strength of our world-class pricing and risk management capabilities is at market-making opportunities we continue to assess. We believe the sports prediction opportunity lies solely in those states currently without sports betting access. As we can clearly see, prediction markets are having a negligible impact in the states where FanDuel Sportsbook is already available to customers.

The opportunity to extend the FanDuel footprint into these new states is significant. And our aspiration is to be the clear market leader. Our investment will therefore be meaningful while maintaining the disciplined approach that has served us so well since the inception of sports betting in the U.S. In summary, I believe this is a hugely exciting opportunity for FanDuel and one that we will seize. We have successfully demonstrated that we have the capabilities to win in sports betting and iGaming, and I firmly believe this will also be the case for prediction markets. This is all in addition to our existing regulated business.

In the long term, we firmly believe that it is state-regulated sports betting and iGaming that remains the most valuable long-term opportunity in the U.S. The importance of having the best quality sports betting product combined with the ability to price increasingly complex sports products accurately cannot be overstated. These are both areas where Flutter and FanDuel excel. And as demonstrated by international precedent, long-term success in the U.S. gaming sector will be achieved by those operators with scale positions and the highest quality sports betting product. Turning now to our existing business in the U.S., we maintained our clear position as the number one online operator in both sportsbook and iGaming.

AMP growth of 8% year over year is encouraging, driven by strong iGaming AMP growth of 30% and accelerating sportsbook AMP growth of 5%. From a revenue perspective, we delivered growth of 9%, led by exceptional iGaming performance, where our revenue was up 44% year over year, delivering 27% GGR market share in Q3. We added over 500 new slots titles during the quarter, with our proprietary Flutter gaming platform enabling faster content delivery. Exclusive content continues to drive customer engagement, including new Wonka and Samurai titles, and the latest Huff and Puff installment, Puff and Lots of Puff, was our most successful game launch to date, setting record engagements in GGR levels.

With population penetration currently well below long-term expectations, we see significant runway for growth in existing states with further state legalization of further incremental opportunity.

In Sportsbook, while September and October have been impacted by customer-friendly NFL sports results, we are clear that this is just the normal ebb and flow of sports outcomes. And we maintain our absolute conviction in our pricing accuracy. The NFL has a very concentrated schedule, and this drives intense customer engagement and a small number of events. Average handle on an NFL game is typically five times that of an NBA game, increasing to more than 10 times the standalone games. This can result in greater variability in the short term, as we've seen in recent history. But we are confident that our reported margin will revert to expectations in the longer term.

The start of the NFL season consistently sees heightened levels of competition in the market. In Q3 of this year, it was even more pronounced than in previous years, with September characterized by an exceptionally high level of competitor generosity. These dynamics temporarily impacted FanDuel's NFL handle growth and same-game parlay penetration in the opening weeks of the season, as we deliberately chose to not match these uneconomic offers. This disciplined approach helped deliver an NGR market share of 47% in September. While market competitive intensity has moderated from the NFL season start, it still remains at elevated levels.

FanDuel's scale as the number one operator in the U.S. has subsequently enabled us to take action to strengthen our market leadership. We responded in a strong but disciplined way at the start of Q4, with increased investment in customer acquisition and retention. And we've been very pleased with the momentum that this has driven. The NBA season launched in late October, and we're off to a good start. Customer engagement, handle, and same-game parlay penetration are all tracking strongly in the early weeks of the season, giving us confidence that growth this season is shaping up well.

We're also excited to see what our new strategic NBA partnership with Amazon Prime can unlock, including a range of merchandising product integrations. Our International division delivered a good performance with revenue 21% higher year over year, including the benefit of our Snai and Betnafnail acquisitions. We delivered organic iGaming growth of 10% with strong performance in Turkey and CSAIL's Italian online business. Organic sportsbook performance was encouraging against a strong prior year sportsbook performance, which benefited from the Euros and more favorable sports results. In Italy, we launched My Combo and CSAIL, the only four same-game parlay products available in the market, in time for the start of the Italian soccer season.

Customer engagement has been strong, with over half of sports customers placing a MyComboVet during the first seven rounds of the season. The integration of Flutter Studios into the SEA Italian online platform has enabled in-house content to be offered to our Italian customers with a strong pipeline of future content. The SNAI integration has also been progressing well. We've enhanced the iGaming proposition, optimized retail gaming machines and commission structures, and increased customer acquisition volumes by deploying CSAIL's proven retail sign-up program. The migration of SNAI online customers to the SEA online platform remains on track for H1 2026, keeping us well on course to deliver our synergy targets while bringing our leading platform capabilities to SNAI customers.

In the UK and Ireland, the successful migration of Sky Bet onto our shared Flutter UK platform has enabled the delivery of new products and improvements for our Sky Bet customers. This included the launch of our highly popular SuperSub offering and the new Squad Bet proposition, powered by our next-generation pricing capability. There's been much speculation around potential gaming tax increases in the upcoming UK budget. We remain engaged with policymakers and expect decisions to be based on economic merit, taking into account the industry's substantial contribution to UK tax revenues and employment. We await the outcome in the budget later this month.

However, should taxes increase, Flutter's unmatched scale and market-leading position will help to mitigate the impact we have demonstrated historically. In Brazil, an expanding portfolio of games and improved general delivered record iGaming revenues. On Sportsbook, we remain focused on integrating Flutter's in-house pricing capabilities and generosity functionality to materially elevate the overall customer proposition ahead of the World Cup next year. Outside of performance during the quarter, the sudden registry change in India was extremely disappointing. Flutter has invested significantly in India for the last number of years, responsibly delivering innovative skill-based games to Indian customers. Zhengli will now only offer free-to-play content as we assess our medium-term options in the market.

Looking ahead, I'm extremely excited about expanding our U.S. portfolio to include FanDuel Predicts, and I'm confident that our market leadership and diversified international business positions us well for the remainder of the year and into 2026. I'll now hand you over to Rob to take you through the financials.

Rob Coldrake: Thanks, Peter. Group revenue increased by 17% and adjusted EBITDA grew 6% in the quarter, driven by excellent organic iGaming growth and the benefits of our recent acquisitions. Group net loss was $789 million for the quarter, compared to $114 million in the prior year. This was primarily due to three significant one-off items. First, a non-cash impairment charge of $556 million related to our Zhengli business following the legislative change in India that meant we had to cease real money operations there. Second, the previously communicated $205 million payment to Boyd for revised U.S. market access terms, which will deliver approximately $65 million in annual savings going forward.

Third, increased amortization costs related to our recent acquisitions and business transformation. These were partly offset by a $27 million year-over-year benefit from the Fox auction fair value adjustments. Adjusted earnings per share grew 29%, while loss per share increased $3.91 from $0.58 in Q3 2024, due to the impact of the mainly non-cash items I have just outlined. Turning to the U.S., revenue was 9% higher with exceptional iGaming growth of 44%, offsetting a sportsbook revenue decline of 5%. This led to adjusted EBITDA of $51 million compared with $58 million in the prior year. Sportsbook performance reflected the competitive dynamics Peter mentioned, with customer-friendly sports results and heightened competitor generosity as the NFL season starts.

We are pleased with the momentum in the business at the start of Q4. Handling AMP growth has been strong, and the NBA season has started positively. In international, revenue of $2.4 billion reflected growth of 21%, with our acquisitions contributing 18 percentage points of this increase. On an organic basis, iGaming performance was very strong, particularly in Turkey and Italy, with sportsbook performance reflecting tough prior year comparatives from the European Championships. Adjusted EBITDA increased by 10% year over year to $505 million, demonstrating the resilience of our diversified portfolio. I'm really pleased with the progress we're making across our $300 million cost transformation program, and we continue to identify further efficiencies beyond our original targets.

The delivery of the UKI technology replatforming, the redesign of our UKI organizational structure, and the excellent progress we are making on the SNAI integration are all good examples of our disciplined approach to driving incremental efficiencies. Operating cash flow reduced by $81 million, and free cash flow reduced by $87 million year over year, reflecting the Boyd payment for improved U.S. market access terms. Our leverage ratio was 4x or 3.7x including SNAI on a pro forma basis, and we remain committed to our medium-term target of 2x to 2.5x. We continued returning capital to shareholders with share repurchases of $225 million in the third quarter, and a further $245 million repurchased in the fourth quarter.

This completed our authorized program for 2025, bringing the total cash return to shareholders to $1.12 billion since inception, representing 2% of our issued share capital. The program will continue into 2026, with a Q1 2026 repurchase of up to $250 million as we make good progress towards our total commitment to return $5 billion over the coming years. Moving now to the outlook for 2025. Q4 has started very well and is in line with our expectations on an underlying basis.

We've seen an impact from customer-friendly sports results in the initial week of the quarter, and we're therefore updating our full-year guidance to reflect the following factors: first, trading performance in Q3; second, the impact of sports results in Q3 and Q4 to date across both our U.S. and international businesses; third, increased Q4 investment in U.S. sportsbook, which has already strengthened our leadership position; fourth, our strategic investment in FanDuel Predicts as we launch this exciting new product; fifth, the cessation of real money gaming in India; and finally, tax costs associated with the Illinois wager fee.

In aggregate for the group, this represents a decrease of $570 million in revenue and $380 million in adjusted EBITDA, with group revenue and adjusted EBITDA now expected to be $16.69 billion and $2.915 billion respectively, at the midpoint representing 19-24% year-over-year growth. Additional information on 2025 guidance is available in today's release, including additional income statement and cash flow items. Finally, as Peter outlined, we are very excited about the prediction markets opportunity and plan to invest meaningfully to harness the growth we believe that this can deliver. At this early stage, we anticipate an incremental EBITDA cost of $40 million to $50 million in Q4 2025, and between $200 million to $300 million in 2026.

We will closely monitor returns with a priority on building value for the future while also maintaining the flexibility to accelerate investment where performance warrants. With that, Peter and I are happy to take your questions, and I'll hand back to the Operator to manage the call.

Operator: Thank you. And we'll now begin our question and answer session. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue. And our first question comes from the line of Jeff Stantial with Stifel. Your line is open.

Jeff Stantial: Hey, good afternoon everyone. Thanks for taking our question. Maybe just starting off on the $200 to $300 million planned investment next year for FanDuel Predicts. Peter, could you just maybe talk a little bit more on the return algorithm for this product, meaning are you planning to acquire users with similar payback thresholds as sports casino or adjust to reflect some of the higher uncertainty for this product? And then when you think about LTVs and return on that spend, does strategic positioning ahead of eventual traditional sports betting regulation and cross-sell opportunity factor into that calculation? Are you restricting just to gross profits from the prediction wagering?

Peter Jackson: Hi, Jeff. Look, we're very excited about FanDuel Predicts. The ability to take their sports product into the half of America that you can't currently avail as the selling products, I think, is something which is tremendously exciting. And the ability to partner with CME and leverage all of the expertise they have, we've had and built over the years with the Betfair exchange, I think, means we're going to be a very audible investor. And we have to put money behind it. Now from a customer acquisition perspective, we are going to maintain a very disciplined approach as we always have done since operating in the U.S., and we will be carefully monitoring the CAC to LTV dynamics.

Ultimately, we do want to see as many states passing legislation to introduce sports betting as possible, and then we'll be able to migrate those customers onto sports betting. But look, I think it is important that we put strong behind this. I think we've got an incredible brand. We're going to have a great follow-up in the launches in December. And I think we'll have the market-leading product by the time we get to Q2 next year.

Jeff Stantial: That's great. Thanks for all that color there. And then maybe shifting gears over to some of the higher, I think you call it rational competitor generosity that you saw early on in the NFL season as moderated, though it's still elevated here. Just I guess, could you add a little bit more color? How widespread was this across multiple operators? What do you see as sort of the rationale, I don't know, from some of your peers on raising spend this year specifically?

And then thematically, I guess, how do you think about the risk that the broader industry maybe starts to drift more irrational in a type of prisoner's dilemma type exercise, you know, following some of this spend? Thanks.

Peter Jackson: Yes. We've historically seen a lot of generosity at the beginning of the season when customers are trying to reactivate their customer bases and get them back onto the platform. And look, this year, we saw a heightened level. And there was a lot of irrational behavior. It's not the first time we've seen it. We can all call out the difference of competitors in the past who have spent a lot of money trying to acquire customers. What's most important is to have the best product in business, and that's what we have. Best pricing for customers. So look, when we look at the performance into Q4, we're very comfortable with the level of customers we've on the platform.

We're comfortable with the level of sort of same-game parlay penetration that we're seeing as well. So people are having they spend a lot of money, but they haven't really managed to move the needle themselves. At some point, people will realize that it's not worth pursuing these offers because it doesn't deliver for them. Thanks very much.

Operator: And our next question comes from the line of Paul Ruddy with Davy. Your line is open.

Paul Ruddy: Hi, Peter and Rob. Thanks very much for taking the question. And just if you wouldn't mind, would you be able to give us just a little bit more color on trading in September and into Q4 in the U.S., please? And then just secondly on Predictive Markets, on the investment next year, would you expect it's a tricky question because you don't have full oversight maybe. But would you expect that investment to be the entire investment, i.e., you'll do all the unregulated states within that next year? Thank you.

Rob Coldrake: Yes. Hi, Paul. I'll pick up on this. First part of the question. Maybe Peter will pick up on the Predictive Markets investments. So as Peter mentioned, we did see a lot of competitive action at the start of the new NFL season with some very uneconomic offers in the market. We maintained our discipline, our investment posture as we tend to do. So that there was some handle and SGP share that we lost the first couple of weeks of September. But we were pleased with the way that we managed through September and subsequently our performance into October. If you look at September share data, we actually took 47% of the NGR share in September.

I think which reflects maybe some of the value that others were getting for some of the investment that they made. We have seen a moderation of that competitive intensity, but it still remains a little elevated, I would say, from normal levels. But we're really pleased with our momentum into Q4. We've got a record number of AMPs on the platform. We've got double handle growth, and we've got a really strong sports and bet mix with the NBA season starting well. So we're quite pleased with our momentum.

Peter Jackson: Paul, with regards to the sort of investment levels around prediction markets, we'll know a lot more next month when we launch the product and we see how much traction we gain. I'm excited to think about all of that marketing that currently lands nationally for customers who can't avail of the sports betting product. Suddenly, get a better download FanDuel Predicts and find that they've got access for the sort of sat in California or wherever they are. We think that the figures that we quoted for investment next year, it will be more sort of back-end loaded towards the launch of the football season.

But as we've done historically, we're going to be prepared to invest at levels whilst we continue to see great returns and paybacks. We'll know a lot more in the first couple of quarters next year once we get some traction and see what the LTVs look like. How they compare with our experience of operating Betfair globally. And I think that will really help inform how hard we can push.

Paul Ruddy: Okay. Thanks very much. Really helpful.

Operator: And our next question comes from the line of Ed Young with Morgan Stanley. Your line is open.

Ed Young: Good evening. My first question is on prediction as well. You've talked in the release about extensive engagement with regulators and tribes, tribal lands being ring-fenced, also they're not offering the product should the state regulate. I think it's probably further along than many expected to be able to get access to the whole U.S. in one form or another. Can you perhaps give a little bit of color to the extent you can on the nature of those conversations and how they developed? And does it give you any more optimism in terms of the liberalization path for other states to regulate sports betting going forward?

And then second of all, just to get a bit more color perhaps on the NBA. You talked Amazon, but that's clearly forward-looking, you've talked about much better engagement. You see much more happy with the performance this year. Can you just give a little bit of color on what lies below that? Is that the nature of the sort games in the leagues this year in terms of unpredictability? Or was it product upgrades that have driven that change in performance related to last year? Thanks.

Peter Jackson: Hi, Ed. Well, let me take the Prediction Markets one, and then Rob can talk a little bit about the NBA. We have obviously been having extensive engagement with stakeholders. As we get close to launching the FanDuel Predicts Markets product. As you well know, sitting in the UK, as a prediction market, it's not in the same ballpark as a fully-fledged sports betting product. Breadth of product offering, generosity, and a bunch of other things are nowhere near as good. So pragmatically, this is the financial predicts policy has been very exciting for the half of America who can't currently access sports betting.

If you're sat in a state and you're getting close to passing legislation, you won't want to miss out on the tax dollars. So look, we hope that this does accelerate some of the legalization of states that were previously in the pipeline for launching sports betting, because ultimately that's what we'd like to see as many states having that as possible, because I think that means consumers will get a much better offer.

Rob Coldrake: Yes. So picking up on the second part, question around the NBA, there's a few things that we're finding very positive and exciting. One is we're definitely seeing an enhanced handle from where we were at this point last year. And as I alluded to, kind of double-digit growth in the season so far. It would also appear the new television deals that are out there are getting good traction. There's some data showing that the viewing figures are up. Our new partnership with Amazon Prime, we're very excited about the integrations that are working well for us. From a financial perspective, we've seen significant improvement in the NBA parlay handle mix year on year.

So, I don't think over 1,100 basis points improvement year on year, which is flowing through into a healthy product mix as well. I think the other thing as well is just engagement with the product. I think at one point last year, there was potentially less engagement with the NBA product. There seems to be excellent engagement with the NBA this year. I think if the, you know, the 100 or 80 to 100 matches so far as reading the stat yesterday, half of them have gone down. There's been five points between them in the last kind of few minutes of the game. There's some really good engagement around it, which is good to see.

Operator: Thank you. And our next question comes from the line of Jordan Bender with Citizens. Your line is open.

Jordan Bender: Hey, everyone. Good afternoon. Thanks for the question. You still have the 2027 targets out there, and prediction markets, obviously, weren't in those numbers when you provided. So as we start to layer in the prediction market and the capital outlay that's going to happen over the medium term, is there any kind of sense on your end of do you feel any worse or better about the EBITDA and margins that you laid out during your Investor Day? I guess my follow-up or the second question here, would you look to get FanDuel traders involved in prediction markets? And I guess, does this present an opportunity just given the volume that you're seeing?

Rob Coldrake: Let me pick up on the 2027 guidance point, Jordan, and then Peter can pick up the second point. So we're obviously not providing any updated guidance for 2027. Building on what Peter said earlier about prediction markets, we're incredibly excited about it. The additional TAM that's opening up for us. We need to see how the investment next year plays through, but from my perspective, it will be a very good scenario if we invest more than we planned because that will be demonstrating that we're seeing good returns on that investment spend. We're quite excited about where that can go.

A couple of other things probably just to bear in mind, we've done the Boyd deal this year, which delivers some cost of sales savings through to '27. We finished 2024 with a larger business, but we also had some tax increases. So there's a number of things in the mix, but if you take a step back from the detail, probably the thing that I'm most excited about is the prediction market opportunity.

Peter Jackson: So, Jordan, in terms of being a market maker for prediction markets, there's a lot of complexity to do to be a market maker on a CFTC regulated DCM. I think but if you look at what's required for that, I mean, the ability to price complex correlated outcomes accurately is something that we do every day in our core business. Look, it is something that we're actively evaluating. But in the immediate term, our focus is the B2C launch of FanDuel Predict next month.

Jordan Bender: Understood. Thank you very much.

Operator: And ladies and gentlemen, we ask that you now please limit yourself to one question, so we may take as many questions as possible. Our next question comes from the line of Jason Tilchin with Canaccord Genuity. Your line is open.

Jason Tilchin: Good afternoon. Thanks for taking my question. Yet another one on Prediction Markets. I'm just curious from a product perspective, you're viewing the ability to take learnings from Betfair operations overseas versus maybe what you're planning to do differently based on the different product features that have resonated in the U.S. market with traditional markets to date?

Peter Jackson: Hi, Jason. Yes, look, we were able to get a bunch of the team who've been working on the Betfair exchange for years involved in developing the products we have. We'll be launching in December for FanDuel Predicts. So we can take the learnings and expertise from Betfair. We can clearly have a very good understanding of what U.S. consumers want through the experience of FanDuel. And we'll be launching an exciting product next month, and we've got some fast follow features we'll be bringing. And I'm very confident by Q2 next year, we'll have the leading products in the market.

Operator: And our next question comes from the line of Shaun Kelley with Bank of America. Your line is open.

Shaun Kelley: Hi, good afternoon everyone. Thank you for taking my questions. Peter, whoever wants to take it, wondering if you could give us a little bit more color on how you're underwriting the revenue side of the prediction market formula. I think we all know there's going to be some J curve and early investment involved. But just how are you thinking about the fee structure here? That environment seems like it's very dynamic in the U.S. So how price sensitive do you think customers are going to be? And just how are you kind of thinking about the top line function and maybe your cost structure that sits underneath it?

I'd obviously should be much better given the lack of state-level taxes, obviously. Thanks.

Peter Jackson: Well, Shaun, one of the nice things about offering prediction markets, as you see with the Betfair Exchange, is you're not subject to the vagaries of sports results. You're right, it is a commission-based structure. So we'll launch in December. We'll get early indications of how customers are behaving. But we're excited to see how we can build out the lifetime value models. That will make sure that we can maintain a disciplined approach to acquisition in the market.

Shaun Kelley: Thank you.

Operator: And our next question comes from the line of Bernie McTernan with Needham and Company. Your line is open.

Bernie McTernan: Great. Good afternoon. Thanks for taking the question. Just a follow-up. Peter, twice you mentioned that you expect the product to improve by Q2 to have a market-leading product. So just want to get some more specificity there in terms of what kind of product you're launching with and then the major improvements we should expect in the coming months. Thank you.

Peter Jackson: Bernie, I don't want to tell my competitors everything we've got planned, right? But look, we're very confident in our ability to deliver a winning proposition. I mean, I think in the short term, we'll have a great product offering available to consumers. Obviously, we're not going to be ready for the start of the NFL this season, but we're really focused on making sure that when we get to the 2026 NFL season, we'll have a very compelling offer for customers. And look, I think we've been able to increment and deliver exciting features on our sportsbook, and I think we'll be able to do the same for prediction markets. We've a clear roadmap.

And some of the stuff that people love, like the player props and things, that they see in the sportsbook, will be available next year.

Operator: And our next question comes from the line of Barry Jonas with Truist Securities. Your line is open.

Barry Jonas: Hey guys. Nevada just put out a notice saying you've surrendered your gaming license in the state due to FanDuel Predicts. Can you talk about the ramifications here? And are there further risks we should monitor for current or future state gaming licenses now, or was Nevada really the main risk? Thank you.

Peter Jackson: Sorry, Barry. We, you know, we as I've stated, we have had conversations with different stakeholders over time, and Nevada was amongst that. And we did have a license in Nevada, but we didn't have any retail or B2C operations there. We were supporting Boyd as part of our legacy arrangement. Look, once we're it's sad to have to surrender the license, but that's what we've done. Nevada is protecting their interests. We need to protect our interests. And FanDuel Predicts will allow us to go after the half of the market that we haven't previously been able to go after.

Barry Jonas: Thank you.

Operator: And our next question comes from the line of Clark Lampen with BTIG. Your line is open.

Clark Lampen: Maybe for the sake of variety, I'll switch it up and ask a question about iGaming. Your growth accelerated a little bit this quarter, 45% in the U.S. Just curious how you guys think about product differentiation beyond what you've already done with exclusives and the rewards framework? And then maybe bigger picture, where do you think about whether it's U.S. or for the full business, iGaming revenue mix going? Thanks a lot.

Peter Jackson: Look, I don't think we should underestimate how important some of those pieces are exclusivity of content and I mean, I think the third installment in the Huff and Puff series was the most successful one we've had to date, and we're very excited about it. The reward programs, which have been key for us in other markets, and I think we're demonstrating how important it is in the U.S. market. And also work we've done from a jackpot perspective. So some of the stuff is really hard to replicate. And so the team did a brilliant job executing. And there's loads more improvements and changes to deliver. And it's not just in the U.S. market as well.

We're taking our capabilities. I know that the team here in the U.S. is spending time with our colleagues in Italy and in Central and Eastern Europe. So we're sharing best practices around the world. And that's what's allowing us to stay ahead of our competitors.

Operator: And our next question comes from the line of Jed Kelly with Oppenheimer. Your line is open.

Jed Kelly: Hey, great. Thanks for taking my question. Just as we look out to next year, obviously, with prediction markets, but has anything changed in the underlying earnings power that you see ex-prediction markets over into next year? Anything with promotional velocity, taxes that you just sort of could touch on? Thanks.

Rob Coldrake: Yes. Let me pick up on this, Jed. I mean, as we mentioned earlier, we've got some really good momentum in the business at the moment, and our focus is on exiting 2025 with the strongest business possible. We've got a real level of confidence that we'll continue to grow into 2026, both in the U.S. and internationally. We're not taught on this call much about our international business yet, but we're really confident about the growth profile that we've got there next year. Especially from an EBITDA perspective with some of the transformation initiatives that we're delivering. So there's not anything that is particularly front of mind.

Obviously, the prediction investment will be incremental to what we previously looked at. But as we've said earlier, we're very excited about that and what that will potentially mean for us in 2027 and beyond. No significant changes to 2026.

Jed Kelly: Thank you.

Operator: And our next question comes from the line of Brandt Montour with Barclays. Your line is open.

Brandt Montour: Thanks, everybody. So my question is on the fourth quarter. Sort of sportsbook investment. Could you give us a sense for if that's all NFL or if that was NFL and NBA? I think the more important point would be, if you do see good returns on that investment, would you be looking to sort of keep that going or is your number one priority to sort of get back to the levels that you were at prior?

Rob Coldrake: Thanks, Brandt. I think the point we'd say is we've got flexibility and agility around where we invest, particularly from a generosity perspective, and, you know, we can tweak and be agile with that as we move from week to week depending on what we see in the market. As we've said on a number of occasions previously, we've got a disciplined set of economic parameters that we invest to in terms of paybacks, ROIs, and CACs. That model has worked very well for us consistently, and that's not something that we're going to materially diverge from.

As we said earlier, the start of Q4, we've seen some very compelling opportunities to invest and lean in and potentially where some others went in very hard early in September. Retraced a bit. But as we said, we are seeing some elevated levels of generosity in the market. So we're very confident with our posture, what that will deliver, and the size of business that we'll exit 2025. We do anticipate, as Peter said earlier, that in the medium to longer term, the generosity in the market will moderate, and that's what we've experienced in many other markets around the world historically. That's what we'll see at some point in time.

And in the meantime, we're very confident with our generosity posture.

Brandt Montour: Thanks.

Operator: And our next question comes from the line of Ben Shelley with UBS. Your line is open.

Ben Shelley: Hi, thanks for taking my question. Could you share any early learnings the measures you took in Illinois and the impact on player behavior there? And how does this guide your response to strategy on potential tax hikes going forward?

Rob Coldrake: Yes. Hi, Ben. I can pick up on Illinois. So obviously, with the structure that was introduced in Illinois, as you'd expect, we're seeing a reduction in the number of bets there. But increasing handle per bet. When we look to the September data, Illinois is definitely behaving in line with other states, so we saw no impact on our Q3 numbers. However, we do still kind of monitor this very closely, we're looking at the market data closely at the start of Q4 and what that may or may not mean.

When you take a step back and approach this higher level, we definitely feel that this is another lever or tool that we've got in our armory to potentially mitigate taxes in high-tax jurisdictions moving forwards. We're hopeful that the regulatory landscape potentially accelerates with some of the prediction developments as well as we discussed earlier. But yes, this is certainly something that we'll have in our toolkit moving forward and we'll consider elsewhere where appropriate.

Ben Shelley: Thank you.

Operator: And our next question comes from the line of Ryan Sigdahl with Craig Hallum. Your line is open.

Ryan Sigdahl: Hey, good afternoon, guys. Curious if you're willing to comment kind of on the initial product launch and predictions if that will include parlays. Your largest competitor in the U.S. that's forthcoming also in prediction markets that they're going to have some prepackaged stuff just to help on the liquidity side. But curious if you're willing to comment on what offerings you're going to have on the Parlay side?

Peter Jackson: Hi, Ryan. Look, we are not going to launch Parlays next month when we launch FanDuel Predicts. But you can expect us to fast follow with this early next year.

Operator: And our next question comes from the line of John DeCree with CBRE. Your line is open.

John DeCree: Hi. Thank you. Another one on iGaming. It's probably harder to discern, but curious if you've seen any more competitive, aggressive behaviors in the promotional environment for iGaming in the U.S., probably easier to see during NFL season, but curious, you had great results in the quarter. But was that equally as competitive as sports betting?

Peter Jackson: Hi, John. We you don't quite see the same sort of externalities driving iGaming as you do sports. Where obviously you have season launches and big games and stuff like that? We've heard a lot from competitors about how focusing particularly on the direct casino space, which is something that we've been focused on for a while. But the team have been focused on what they can control. Is things like lots of exclusive content, which we're very excited about. It's not just Huff and Puff. We've got Wonka and Samurai titles. We've got Vegas, Matt, Blackjack in Q3. So there's lots of stuff that we focused on. We've had 500 new titles in the quarter.

If I look at the business, we've got AMP growth 30% year over year. So I think people are trying to focus on this, but I think the team has got really good momentum in the business. And I think there's exciting plans in the pipeline.

John DeCree: Thanks, Peter. All very helpful.

Operator: And our next question comes from the line of Robert Fishman with MoffettNathanson. Your line is open.

Robert Fishman: Good afternoon. Back to the competitive landscape in the U.S., do you think the new partnership with ESPN and DraftKings will change any future competitive dynamics? And are you looking to pursue any other media partnerships, any update would be welcome with your Fox relationship and the equity stake there? Thank you.

Peter Jackson: Hi, Robert. Yes, as you'd expect, I mean, I don't think there are many partnerships that emerge in the U.S. market that we haven't looked at. And as a scale player, if we want to do these deals, we've got the resources to make them happen. We've been very pleased with our Amazon partnership, the tip-off of the NBA season, the odds integration and stuff that you can do from a consumer perspective, and also you see on the screen, I think, worked really well are going to resonate very well. But ESPN struggled to get their best product to work. We've seen a number of these media deals struggle because of the quality of the product.

We have the best product in the market, and we think that's what stands us in best regard in terms of continuing to grow and be number one in America.

Operator: And our next question comes from the line of Joe Stauff with Susquehanna. Your line is open.

Joe Stauff: Thanks. Peter, I was wondering if you could comment on the viability of the Parlay product on FanDuel Predicts and whether or not you guys expect to use it to hedge maybe any of the local concentrated bets that you might have in your sportsbook?

Peter Jackson: Yeah. Hi. Hi, Joe. Look, we were excited about the launch of FanDuel Predicts. I think as I stated, we're going to make the parlay product available early next year. I don't think you should underestimate quite how hard it is to bring parlays to life on these platforms, and they can only really be delivered in a prepackaged way. You're never going to get the same degree of choice or depth of markets. And that's one of the challenges and why the prediction markets are not in the same ballpark as a sports betting product.

I don't think that there will be the right type of depth of market for us to be hedging, and I'm not sure it's something we necessarily want to do either. We've got real confidence in our pricing and our platform. And that's not something that I'd be anticipating us doing.

Joe Stauff: Thank you.

Operator: And our next question comes from the line of Chad Beynon with Macquarie Group. Your line is open.

Chad Beynon: Afternoon. Thanks for taking my question. Wanted to ask about I guess, the swift, message or decision in India in the seizing of that market? I know you've seen openings and closings in different markets in your time. Does it feel like the parliament is vehemently against this industry? Or are they just looking to better protect the consumer? And if we see movement to the black market, something opens up in the next couple of years that's just more in line with what they want. Thank you.

Peter Jackson: Chad, I can give you a bit of perspective on this. Look, we're frustrated at the speed with which the bill that emerged came into law. Yeah. And I yeah. I would hope that in that sort of timeframe you talk about, we might get some more sort of legal clarity around the extent to which some of these games of skill may be able to come back. They had seventy years worth of constitutional protection in India. It's not that long ago that we saw Black Friday in America and look where we are today. Look, we're going to maintain the Jungli products on a free-to-play basis, and we'll see what happens.

Doing all the lobbying and legal challenges that you'd expect us to.

Chad Beynon: Thank you.

Operator: And our next question comes from the line of Estelle Weingrop with JPMorgan. Your line is open.

Estelle Weingrop: Hi, good evening. I've got one question on the UK. Please. How do you see the underlying market at the moment? I mean, sportsbook revenue remains negative year on year. Clearly, you're lapping some tough comps there, plus the Euros related comps, but iGaming also slowed quarter to a low single-digit number ex-FX. How should we look at the quarters ahead for both sports and iGaming assuming broadly normalized sports results? Thank you.

Rob Coldrake: Yes. Hi, Estelle. I think in summary, we're pleased with the momentum that we've got in the UK. As you said yourself, there's quite a lot of results in the mix because we had a very favorable Euros in Q3 last year. Which is impacting the comps on the sportsbook revenue. In gaming, we were 7% up. We've got some good new content there. But we've lapped some of the pricing initiatives that we had in last year. But we're feeling really confident we've completed the migration of our Sky Bet platform now onto our UKI platform.

When we did a similar transition with Paddy Power a few years ago, it really benefited the business and it acted as a real catalyst for growth in that business moving forward. So we're hoping and anticipating the same will happen with Sky Bet. They've already been able to launch a number of new products into Sky Bet this season. We've got super sub products on the sportsbook now. We've also got squad back in there. Which is something that's being powered off of our outcome-based pricing. So we're really encouraged. We're the market leader in the UK. We've got an exceptionally strong business, and we're very confident about what 2026 will bring.

Estelle Weingrop: Thanks.

Operator: And our final question comes from the line of Monique Pollard with Citigroup. Your line is open.

Monique Pollard: Hi, afternoon. Thank you for taking my question. It was just one on the commentary that you gave in the quarter about the lower than anticipated parlay mix at the start of the NFL season. So, I wonder if you could comment please on sort of what was going on there. As you said, it was transitory in nature. And related to that, how the YourWay product is going? Thank you.

Rob Coldrake: Yeah. Hi, Monique. Let me start on the parlay, next part of the question, maybe Peter can pick up on YourWay and what we're doing around outcome-based pricing. But as we've mentioned on a couple of occasions at the start of the season, there were a lot of quite uneconomic offers in the market of promotional spend, and a number of those were same-game parlay-based offers. We won't name them by name, but I think people are aware of some of the very generous offers that were in the market. As I mentioned earlier, these handle driving measures don't always convert revenue.

I think that transpired to be the case for some of our competitors to have these offers in the market at the start of the season. We did see a moderation of that later into September and also into October. Actually, when we look at our parlay mix now, in NFL and in NBA, we're really pleased with it. I alluded to the numbers earlier. So I think we're in a good position, and we're very pleased with our product mix.

Peter Jackson: Yes. And look, Monique, from a sort of YourWay perspective, you know, look, it's now available for all of our customers this season, including those in Canada. And the more sophisticated approach we have to pricing is helping improve an increase in bets cash downs, year to date, which is making a big difference. You've got to remember, it's a very fundamental sort of rewrite. So there's now a set matrix of, that's why it's called can be a basis of every eventuality that can occur. And so as the game is progressing, it means we've got a much broader array and set of products that consumers can select from.

And it even means that whilst the game is playing, we're updating and changing the odds of which team we think is going to win the Super Bowl. If you think about what that's requiring on a Sunday when you get a full slate of games going on, that's very, very complex. And so there's a bunch of sort of we can do around sort of daily specials, which we do in an automated way. Big improvements around sort of cash out and reductions in suspension. So it's improving speed of pricing updates. It's reducing latency. So we're excited. And of course, there's also the trials we've been doing around AI-powered conversational stuff.

So look, there's a lot of excitement around where it will take us.

Monique Pollard: Understood. Thank you.

Peter Jackson: So I think we've reached the end of the questions. And thank you very much, everybody, for joining the call. We spent a lot of time talking about prediction markets today. We've put a lot of effort into getting to this position we're going to be able to launch this product next month. Huge thanks to the team who've worked on this, but particularly to those folks who've been involved in the very constructive dialogue with lots of our regulators. Nick? Always said that we would never do anything to damage our existing businesses. Nevada is a little bit different. We don't have B2C operation there. But we're very excited about the launch prediction markets product next month.

And we're excited about what we've got coming down the line from a product perspective. But of course, it's not just we're seeing in the prediction markets. I'm very bullish about the existing business we have in the U.S., strong growth in iGaming and, of course, benefiting from the diversification we have internationally. A lot to be excited about into Q4 going into 2026. So thank you very much, everyone.

Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

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