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DATE

Wednesday, May 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

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

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RISKS

  • Net Income Decline -- Net income decreased by $126 million due to interest expense and higher depreciation/amortization, signaling earnings pressures despite revenue growth.
  • Gross Margin Compression (U.S.) -- U.S. gross margin fell by about 200 basis points year over year, "One would be tax increases year on year from a state perspective—New Jersey, Illinois, and Louisiana—which total approximately 220 basis points. That is the main moving part."
  • Free Cash Flow Decrease -- Free cash flow declined 46%, with management explicitly linking this to increased capital expenditures and changes in the timing of prior-year spending.
  • Early Stage Prediction Market Revenue -- Prediction market revenues in Q1 were characterized as "modest, reflecting the early stage of the journey," with management highlighting ongoing regulatory and product rollout challenges.

TAKEAWAYS

  • Revenue Growth -- Group revenue grew 17%, reaching $18.3 billion at guidance midpoint, primarily driven by SNAI and Betna Finale acquisitions, and favorable sports results.
  • Adjusted EBITDA -- Adjusted EBITDA increased 2%, totaling $2.865 billion in guidance, as investments and margin headwinds moderated operating leverage.
  • U.S. Segment Revenue -- U.S. revenue advanced 6%, with structural revenue margin and KPIs improving sequentially from Q4 2025, despite all-market average monthly players (AMPs) being 1% below prior year.
  • iGaming Revenue -- Total iGaming revenue rose 28% group-wide, highlighted by 19% growth at FanDuel, and 10% AMP expansion in the U.S., supported by loyalty program features and exclusive content.
  • Sportsbook Performance -- Group sportsbook revenue grew 10%, bolstered by improved margin mix, market-leading SNAI performance in Italy, and product enhancements in the U.S., including loyalty initiatives and promotions.
  • Net Income -- Net income declined by $126 million year over year, driven by a $71 million rise in interest expense and a $122 million increase in depreciation and amortization, partially offset by an $88 million non-cash Fox option fair value gain.
  • Free Cash Flow -- Free cash flow, including financing capex and excluding player funds, fell by 46% year over year, with capital expenditure higher due to prior-year phasing effects.
  • Operating Cash Flow -- Net cash from operating activities increased by $142 million, or 76%, as higher player funds inflow outweighed increased tax, interest, and advocacy payments.
  • Leverage -- Period-end leverage stood at 3.7x, with guidance to decrease toward 2.0x-2.5x over the medium term after a transitory Q2-Q3 uptick in line with normalized seasonality.
  • Cost Efficiency Program -- The group’s international cost transformation remains on track to achieve a $300 million annualized run rate by year end, with U.S. cost initiatives focused on payment efficiencies, supplier rates, and process optimization.
  • Shareholder Returns -- $190 million of a planned $250 million buyback was completed by May 1, with buyback flexibility maintained for the remainder of the year.
  • Management Changes -- Amy Howe’s departure was announced, with Christian Genetski and Dan Taylor assuming expanded leadership roles to align the U.S. and international growth strategies; Peter Jackson said, "There is no change in our strategy or posture of the business."
  • SNAI Platform Migration -- SNAI completed migration of approximately 2 million accounts in April, supporting further operational synergies, parlay product involvement, and margin expansion.
  • UKI iGaming Trends -- Double-digit iGaming revenue growth was seen in UK & Ireland brands, though Sky Bet performance lagged expectations post-platform migration, but saw strongest customer acquisition in five years during January.
  • Brazil Segment -- Betano Latino’s AMPs exceeded 40% growth, with integration of proprietary pricing and new parlay products scheduled before FIFA World Cup rollout.
  • Prediction Markets -- U.S. prediction market revenue remains modest; FanDuel One app launched nationally, while $40 million was invested in Q1 to build category presence—most spend and scaling is planned for H2, especially around the NFL season.
  • Guidance -- Group revenue and adjusted EBITDA guidance for 2026 is unchanged, with forecast midpoint at $18.3 billion and $2.865 billion respectively, incorporating only minor adjustments for U.S. and International sports results, and Arkansas launch costs.
  • London Listing Review -- A review of the London Stock Exchange listing is underway, with a Q2 update expected as the company considers consolidating dual listings.

SUMMARY

Flutter Entertainment (FLUT +1.10%) delivered 17% revenue growth and initiated key leadership transitions to sharpen U.S. and group focus. Strategic investments drove iGaming and sportsbook growth across multiple regions, with notable platform integrations and new product features advancing customer engagement and retention. The launch of the FanDuel One app established a national presence in prediction markets, but revenues remain at an early inflection point, and future regulatory dynamics introduce uncertainty to the category. Management maintained full-year revenue and adjusted EBITDA guidance, while addressing near-term earnings headwinds due to higher interest expense, depreciation, and capital investment. Progress toward targeted leverage reduction, cost efficiency milestones, and shareholder return commitments were reaffirmed, underscoring an emphasis on long-term, sustainable value creation.

  • Anticipated sequential improvement in U.S. sportsbook performance is contingent on loyalty program rollout, NFL season dynamics, and structural margin actions, rather than an overall strategic change.
  • Exclusive content and product enhancements in iGaming segments were credited for outpacing competitor growth, although management cautioned that overall market growth rates may moderate as the U.S. gaming base expands.
  • European operations, specifically Italy’s SNAI and the UKI region, benefited from account migrations and proprietary product launches, and are positioned to absorb increased iGaming taxation by leveraging cost discipline and market share opportunities.
  • Short-term operating cash flows benefited from the reversal of a prior-year Sisal lottery payout, while investment flexibility is preserved for prediction markets and core business expansion pending observed returns.
  • The ongoing London listing review may result in simplification of dual-listed status, with an outcome update expected in the second quarter.

INDUSTRY GLOSSARY

  • AMPs (Average Monthly Players): Total unique active players per month used to measure engagement and customer activity within a digital platform.
  • Prediction Markets: Betting markets where participants wager on future events, sometimes operating in regulatory grey areas distinct from traditional sportsbooks.
  • BetProtect Plus: A proprietary customer feature allowing users to insure bets for the full game duration for a fee, supporting engagement and retention.
  • SNAI: Flutter’s Italian gaming brand, referenced for recent major platform migrations and integration milestones.

Full Conference Call Transcript

Peter Jackson: Thank you, Paul. I am pleased to share our Q1 results and update you on the progress made against the key strategic objectives we outlined in February. But first, I wanted to address the management changes we have announced today. Amy Howe will be leaving the business. I would like to thank Amy for her contributions to Flutter and FanDuel, and recognize the impact she has had on the business since joining in 2021. We wish her every success for the future.

Looking forward, the U.S. market and FanDuel’s number one position within it represents one of the most significant growth opportunities in our industry, and it is essential that we have the right structure and leadership in place to fully capitalize on it. Dan Taylor’s track record of driving growth and executing on complex strategies makes him ideally suited for his expanded role. Christian Genetski has proved to be an exceptional leader, instrumental in scaling the FanDuel business and market leadership. These changes will sharpen our focus on the U.S. sportsbook, strengthen the connection between our U.S. and international divisions, and fully leverage the group’s expertise, capital, and strategic ambition.

I am confident this gives us the right structure for long-term success and strengthens our ability to deliver sustained long-term growth. Now turning to the results in the quarter. In the U.S., we saw encouraging signs in underlying growth in Q1. Overall AMPs were 1% behind last year, and revenue grew 6%, with headline KPIs improving as the quarter progressed. As outlined in February, overall sportsbook performance was adversely impacted by NFL trends observed in Q4, with persistently high gross revenue margins negatively affecting customer activity, leaving us with a smaller player base as we entered 2026. We outlined our sportsbook and generosity improvement plan to maintain our leadership position in these areas, and we are now executing against them.

From a generosity perspective, we are focused on delivering a truly customer-first proposition. Examples include the launch of early win promotions through March Madness—an opportunistic pair to capture the social side of betting, which aided engagement. Mets fans will know what I mean. In April, we began rolling out our sportsbook loyalty program, which has had a very positive response from the initial cohort of customers. To gain access to the program, we also launched BetProtect Plus, an industry-first generosity mechanic allowing customers to insure their bets for the full game for a small fee. Initial response has been excellent, with adoption rates double our expectations and continuing to grow.

From a sportsbook perspective, product enhancements in the quarter included expansion of our popular Path to Leg feature to Super Bowl, more personalized and simplified NBA same game parlay building with bettors, and full-screen streaming for key sports. These changes are gaining traction with our customers. Underlying trends across our headline KPIs have been positive, with AMPs, handle, and structural revenue margin all improving through the quarter. Looking ahead, we have a strong pipeline of improvements planned. This includes significant expansion of our new loyalty program through Q2 and Q3, ahead of the full rollout for the NFL 2026–2027 season, and new soccer product features ahead of the World Cup.

In iGaming, FanDuel delivered another strong quarter of growth, with AMPs up 10%. Expansion of our direct casino player base, coupled with improved frequency amongst higher-value categories, drove revenue growth of 19% year over year. This was driven by enhanced rewards delivered through our loyalty program, including daily reward boxes and a continued rollout of new exclusive content. In April, we migrated PokerStars customers to the FanDuel platform, unlocking improved products and cross-sell liquidity for poker customers. Turning now to prediction markets. First, we continue to see limited cannibalization impact from prediction market operators on our sportsbook growth.

We believe this is a function of the fundamental differences in product propositions between sportsbook and prediction market platforms, customer age profiles, and the concentration of prediction market activity amongst entertainment-first and low-value users. However, we continue to monitor the impacts of prediction market operators in the broader sports betting ecosystem. Second, in terms of the opportunity, we continue to view prediction markets as an attractive incremental customer acquisition opportunity ahead of sports betting regulation in new states. A fast-moving and complex regulatory environment has at times made product delivery timescales challenging. However, we are prioritizing new product rollouts focused on building the operational flexibility required to deliver our ambitions.

In March and April, we widened our range of sports markets, and early testing of our generosity capabilities saw encouraging returns with strong app downloads through March Madness. We launched the FanDuel One app in April, dynamically serving customers sportsbook in regulated states or prediction markets in non-sportsbook states. Critically, this now allows us to leverage FanDuel’s strong nationwide brand awareness by giving customers one app that delivers access to an increasingly compelling sports experience. While Q1 revenues were modest, reflecting the early stage of the journey, we are focused on delivering the improvements needed during 2026 to serve customers an exciting sports-led experience by Q4.

The 2026–2027 NFL season launch will be a major milestone, with further improvements planned for the FIFA World Cup. We believe our world-class proprietary pricing capabilities can also unlock a significant market-making opportunity. We began market-making services on a major third-party prediction platform in April. Early indicators have been encouraging, and we expect to launch the initial phase of our market-making platform in the coming months. Turning to our International segment. Our performance in Italy has been extremely strong. We are the clear number one operator online, outgrowing the market and our main competitors.

This performance is even more remarkable given the drag from our SNAI business, which, while in growth during the quarter, had yet to benefit from the migration onto the SNAI platform, which successfully completed in April, transitioning around 2 million accounts. SNAI’s market-first MyCombo product saw excellent engagement, with multi-leg bets contributing half of pre-match soccer handle and over 30% of bets carrying five or more legs. This drove a significant step-up in parlay penetration and structural margin. In iGaming, SNAI benefited from the continued rollout of exclusive content. I am very excited about the outlook for the rest of the year in Italy, SNAI’s ongoing exceptional performance, and the unlocking of Sisal’s market-leading product following the platform migration.

In the UKI, strong double-digit iGaming revenue growth was delivered across Paddy Power, Tombola, and Betfair, driven by new slots content and robust retention. Although Sky Bet’s performance has been behind our expectations as customers adapted to the new user interface post migration, momentum has improved with the highest customer acquisition volumes in five years in January, and underlying sportsbook revenue returning to growth in March. Market competitiveness remained stable ahead of the UK iGaming tax increase of 40% on April 1. We now expect less profitable operators to begin adjusting marketing and general strategies.

As the leading UK operator, Flutter Entertainment plc is well placed to deliver material first-order mitigation as previously outlined, and to benefit from second-order market share gains over time. In Brazil, performance remained encouraging, with Betano Latino AMPs over 40% higher year over year. We will soon integrate our proprietary pricing capabilities, unlocking a best-in-class parlay product and promotional improvements ahead of the FIFA World Cup in June. In APAC, we saw modest year-over-year growth in sportsbook AMPs and handle, and racing, excluding greyhounds, was still declining year over year but was ahead of our expectations. We also welcomed advertising restrictions announced in April and believe Sportsbet is well placed to build on its market-leading position.

Overall, I am pleased with how we have executed on our priorities across the group, and particularly in the U.S. we have made significant progress embedding improvements discussed in Q4. FanDuel Predicts is building momentum, and I am excited about our market-making opportunity. Internationally, our SNAI and LSX integration is progressing well. We are investing with conviction in Brazil. We now have the right organizational structure in place to deliver against our strategic priorities, giving me confidence in the outlook for the year and our ability to deliver sustainable, long-term shareholder value. Finally, I wanted to note our plans to review our London Stock Exchange listing as we consider streamlining the dual listing.

We expect this review to conclude during Q2 with an update on our findings at that time. I will now turn the call over to Rob for the financial results.

Rob Coldrake: Thank you, Peter, and good afternoon, everyone. The group delivered 17% revenue growth in Q1 2026 with adjusted EBITDA up 2%. This reflected contributions from our SNAI and Betna Finale acquisitions and a positive year-over-year swing in sports results. Performance included 10% sportsbook revenue growth, with excellent underlying momentum in SNAI, and the U.S. showing encouraging signs of improvement, as Peter outlined. We also delivered continued strong iGaming performance across the U.S., SNAI, and UKI, with total iGaming revenue growth of 28%. Net income of [inaudible] declined $126 million year over year, driven by a $71 million increase in interest expense and a $122 million increase in depreciation and amortization.

These were partially offset by an $88 million non-cash year-over-year benefit from the Fox option fair value adjustment. Earnings per share and adjusted earnings per share declined to $1.23 and $1.22, respectively, reflecting the factors mentioned above and a $61 million year-over-year noncontrolling interest benefit as we lapped the prior period. This included an expense reflecting Boyd’s 5% ownership of [inaudible]. Net cash provided by operating activities increased by $142 million, or 76% year over year, primarily driven by a positive year-over-year swing in player funds of $153 million—from an outflow in the prior year related to a Sisal lottery payout to an inflow in the current quarter.

This more than offset higher tax and interest payments and a super PAC contribution in the period to support our U.S. advocacy initiatives. Capital expenditure was higher year over year due to lower prior-year phasing in the quarter. As a result, free cash flow, including financing CapEx and excluding player funds, declined by 46%. There is no change to our full-year 2026 capital expenditure guidance. Our disciplined capital allocation policy provides flexibility to respond effectively to evolving market conditions and emerging opportunities. We continue to prioritize organic investment in our core business and strategic investment, including emerging opportunities such as prediction markets, which we continue to view as an optionality-driven investment within a defined cost envelope.

Deleveraging is now a priority. Buybacks also remain an important part of our capital allocation policy. At our Q4 earnings in February we communicated our plans to return $250 million to shareholders commencing in H1. This program began in Q1 and remains ongoing. As of May 1, $190 million has been returned to shareholders. Consistent with our flexible approach, we will continue to evaluate the buyback program as we progress through the year. From a leverage perspective, we ended Q1 with leverage of 3.7x.

We expect leverage to decrease by the end of 2026, initially increasing through Q2 and Q3 reflecting the profitability profile of the business, before reducing in Q4 and moving us towards our target ratio of 2.0x to 2.5x over the medium term. We also continue to drive efficiencies across the business and have already embedded significant cost savings through our ongoing cost transformation programs. Internationally, we are on track to deliver the full $300 million run rate from our cost efficiency program by the year end, with most major milestones already achieved. We are now actively defining the next phase of cost transformation into 2027 and beyond with a clear emphasis on sustained cost discipline and operating leverage.

In the U.S., we are equally focused on cost efficiency, with 2026 savings realized across initiatives including payment provider efficiencies, improved supplier rates, and overall process optimization. This includes the closure of our FanDuel TV racing network and FanDuel Picks product in 2026 in order to optimize costs and ensure investment is directed towards the highest-return areas. Moving to our 2026 outlook. We are pleased with the trading momentum in April. Our full-year guidance is unchanged on an underlying basis, adjusting only for unfavorable Q1 sports results in the U.S. and International, and launch costs in Arkansas not previously included.

Guidance also reflects the internal transfer of management of our PokerStars North America business from our International business to the U.S. Revenue is now expected to be $18.3 billion at the midpoint, with adjusted EBITDA of $2.865 billion for the year. Additional detail on guidance is available in today's release. To reiterate Peter's comments, I am encouraged by the positive operational signals we are seeing, which give me conviction in our full-year outlook. Peter and I are now happy to take your questions. I will hand back to the operator to manage the call.

Operator: We will now open the call for questions. Please limit yourself to two questions. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jordan Bender with Citizens. Jordan, your line is open. Please go ahead.

Jordan Bender: Hi, everyone. Good afternoon, and thanks for the question. I want to start with the management changes over the last couple of months, including today. From our perspective and from some of the questions we are getting, how should we be viewing these changes in real time? Is this an effort to get back to where we were at the start of the NFL season with Christian and Dan, or is this a change in strategy on what you are trying to do, including maybe willingness to spend on generosity? And then the second question, Rob or Peter: your 2Q EBITDA is about $104 million by my math. Can you help us with some of the inputs?

You have a lot of moving pieces in the quarter—just how we get to that number? Thank you.

Peter Jackson: Hi, Jordan. Good afternoon. I will take the first question; Rob will pick up the Q2 EBITDA one. In terms of the management changes, now is the right time for us to put in place new leadership in the business. I am excited to see what Christian and Dan can do. We are getting onto the front foot as a business. The sportsbook improvement plan is working. We started to see some of those sequential benefits in the quarter. I am excited to see what we can do with the loyalty program as it rolls out through the course of the year. I think we have been trading the business harder.

I mentioned the activity we have been doing with the Mets and other things to get on the front foot, which is working. And I am pleased with the progress we are making with BetProtect. There is no change in our strategy or posture of the business.

Rob Coldrake: Picking up on your Q2 question, Jordan: there is no change in our expectations for Q2 from where we were previously. If you look at our trading at the moment, we are in line with our expectations and have seen some slightly favorable sports results in recent weeks. I think if you look at consensus, there is potentially some adjustment needed to the phasing—slightly too high in Q2 and too low later in the year. The main things to consider in the year-on-year bridge for Q2 would be that the prior year included about $70 million from sports results.

We have some prediction market spend in the forecast for this year in Q2, which we expect to ramp up slightly from Q1. We also have some marketing around the World Cup that will kick off in Q2, in addition to the new states investment that will continue around Missouri and Arkansas. From an underlying perspective, as we saw in Q1, we started the year with a slightly lower player base, and that flows through. But ultimately, no change in Q2 from our previous expectations.

Jordan Bender: Thank you very much.

Operator: Your next question comes from the line of Barry Jonas with Truist. Barry, your line is open. Please go ahead.

Barry Jonas: Great. Thank you. The prediction legal environment remains pretty active. Curious to hear your expectations for how you think this plays out in the courts. And does that weigh into how you think about your investment spend going into next year and beyond? Thank you.

Peter Jackson: You are certainly right that there is a lot of noise around the legal position setting for these markets. I think it is important that we remember a few things. First, the team has made good progress recently—launching the market-making capabilities and the One app, which allows consumers wherever they are across America to access sports on FanDuel. That is important progress. We demonstrated the strength of our brand with the activity we did around March Madness. I am excited about the incremental opportunity this presents for us. Until we understand what the Supreme Court says, we will live with some uncertainty. In the meantime, we will continue to invest in the market prudently.

We are pleased with the early indications we are seeing. It is a good opportunity to monetize. For the core fixed product, we ultimately want to acquire as many sports customers as we can onto our regulated OSB products. Our intention is to build a great sports experience for customers wherever they are in America. That is what we are going to do with the One app.

Barry Jonas: Got it. And then just for a follow-up: a lot has happened since your 2024 Analyst Day, and Street numbers have adjusted. At a high level, how do you think about the path and timing to ultimately hitting those original targets?

Rob Coldrake: Ultimately, we still see a very compelling pathway to growth in the short to medium term. From the targets that we set out at the Capital Markets Day in 2024, it is right to assume some things have moved out to the right slightly given underlying changes in the business since that time. But if you think about the key structural foundations we set out, we retain confidence in our ability to increase structural margin. We continue to see higher penetration. We continue to see a move into new states in terms of regulated OSB; we said that would be about 2% a year, and we have broadly seen that since.

We said iGaming would take in the next three years; we are seeing some encouraging conversations and hopefully momentum moving in the right direction there. We are still very confident about the longer-term plans. We need to trade through the next couple of quarters and see where we are exiting 2026, and we will give more color then.

Operator: Your next question comes from Jed Kelly with Oppenheimer. Jed, your line is open. Please go ahead.

Jed Kelly: Thanks for taking my question. Going back to the market making—as you are able to integrate that into your product, does that give you the ability to merchandise that product better, either through customer credits or other things you can do to drive engagement? Can you talk about the importance of putting market making behind that?

Peter Jackson: Jed, you are right. Market making is an exciting opportunity, and it is a great way to showcase the quality of our pricing capabilities across the business. When we think about the opportunities, it is principally around combos, and we aim to be market making on as many platforms as we can. It is a good opportunity for us to monetize our pricing expertise. Your point about doing it on our own platform and changing the dynamics of a customer objective—there are interesting possibilities there that we are considering.

Jed Kelly: As a follow-up, philosophically in the U.S., how do you toggle maximizing for net win margin versus trying to drive more players? Do you ever think about toggling down the net win margins to get more players, and maybe net win margins in the U.S. might not be as high as other countries?

Peter Jackson: The biggest driver of our net win margin is the bet mix and the extent to which customers build same game parlay products. This is something people want to do, and we are meeting that customer need. You then have to look at the relationship between structural gross margins and generosity and get the balance right. If you do not, customers can quickly become dissatisfied. We have lots of experience around the world, and we are well placed in the U.S. to deliver great experiences for our customers.

Operator: Your next question comes from Trey Bowers with Wells Fargo. Trey, your line is open. Please go ahead.

Trey Bowers: Thanks for the question. I wanted to revert back to the cadence in the U.S. As I run the math on the second-half loading, it looks like Q2 expectation is slightly down revenue and EBITDA down 75% year over year, but then the back half is 25% revenue growth and 100% EBITDA growth year over year. Can you dig in another layer on expectations—around promotional activity or signposts that should give confidence that the back-half loading is doable?

Rob Coldrake: We set this up with our initial guidance with Q4 a couple of months ago. We anticipated sequential improvement as we move through the year on the top line, and we are starting to see that already. The best way to look at this is to view the year in two halves. In H1, it is broadly a continuation of the trends we saw as we exited 2025 with a slightly smaller customer base. We are seeing handle slightly down versus Q1. We have had some amendments year on year, albeit with some improvement in Q2, to structural margin impacted by the sports mix.

With new launches in Arkansas that we talked about previously, and also with Alberta in July and the World Cup, we will see slightly higher generosity in the first half. For the year overall, we anticipate a broadly similar generosity envelope. In the second half, we lap a weaker prior-year NFL performance and expect handle and structural revenue margin to move to modest growth year on year. We also expect significant efficiency in generosity as we lap the launch of Missouri last year and get the benefits from the loyalty program we have launched, where we are already seeing positive signs. Putting it all together, we feel very comfortable.

We always said we would have sequential improvement as we move through the year, and we are starting to see that at the start of Q2.

Trey Bowers: As a follow-up on prediction markets, you are upping the investment a little for the year. As we exit this year, what would you view as success in terms of user levels in the non-licensed states to prove out that the investment is playing out as you would like?

Peter Jackson: We are not upping the level of investment. There is opportunity to monetize this category through our market-making capabilities—particularly in combos—and you will see us do that. We are focused on delivery of the One app; it is in the market now and lets us leverage the FanDuel brand nationally. Wherever you are, you can open the FanDuel Sports app and access either regulated OSB if you are in a state like New York, or our fixed products in non-OSB states like California. We want to acquire as many customers as we can through that platform and leverage the national marketing we already have. The brand resonates very well.

We are improving the quality of our Predicts experience, expanding the catalog, and delivering a much better experience. That is our focus this year.

Rob Coldrake: As Peter said, we will remain very disciplined in our investment around prediction markets. We will invest more if we see opportunities to do so. It would be a great position to be in at the end of the year if we get real traction and want to lean in. Equally, we will follow the same rigorous framework that has driven our success in the sportsbook business, and we will continue to monitor returns and CAC to LTV as we move through. With the improved product in place for the World Cup and the start of the NFL season, we see exciting opportunities.

Operator: Your next question comes from Jeffrey Stantial of Stifel. Jeffrey, your line is open. Please go ahead.

Jeffrey Stantial: Good afternoon, everyone. Two from us. First, Peter, you mentioned some challenges shipping product for prediction markets at the velocity you would have expected given some regulatory constraints. Can you clarify where this bottleneck is most pronounced? Is this a function of the JV partnership? Is this more the lack of guardrails you are seeing from the CFTC? What explains the restriction in product development pacing? Second, a clarifying question: the release notes revenues were about $90 million ahead of your guidance in Q1 if you exclude the $45 million of hold impact.

Can you clarify where this $90 million came from—is this core sports, core casino, Arkansas, or prediction markets—and the decision not to flush this through to the guide?

Peter Jackson: I will pick up the Predicts product question first. We have made good progress in the first quarter. The fact that we are now aligned with our unified One app is important and a great step, and we have launched the market-making capabilities. We are working hard to improve the breadth of sports coverage we have, particularly around combos. There have been some challenges, principally around our ability to access the range of content we need, rather than a product front-end issue. I am confident our team has the capability to deliver great user experiences and products. If you look at the Betfair Predicts product in the UK, it is a fantastic example of what the teams can deliver.

There is a lot of work underway to expand the range of product, particularly from a combo perspective, onto our own platforms, and we will adapt as needed to win in sports.

Rob Coldrake: On the underlying beat, there were a couple of factors. We saw strong NBA handle in the quarter, which helped offset the impact of slightly unfavorable sports results and the Arkansas launch. When we set out our guidance a couple of months ago, we said we were taking a sensible and measured view. It is early in the year. Encouragingly, we are seeing early signs that our plans are gaining traction, but given it is early, we are not updating guidance at this stage aside from the technical factors mentioned in the release.

Operator: Our next question comes from the line of Bernie McTernan with Needham and Company. Bernie, your line is open. Please go ahead.

Bernie McTernan: Thanks for taking the questions. First, a follow-up on the second-half ramp. Any building blocks you can give in terms of how you get back to year-over-year handle growth in the second half of the year? And since NBA is trending positively, can you share quarter-to-date trends on handle to compare versus Q1? And then I have a follow-up.

Rob Coldrake: As I mentioned, we are pleased with the momentum we are seeing. We are seeing positive year-on-year handle trends in NBA. As we have talked about many times, we are not obsessed with handle as the one metric—it is one factor and a building block for the full year. We do not need a huge incremental improvement from where we are in the year-on-year handle variance to hit the targets in our guidance. We are also anticipating a small amount of structural margin expansion as we move into the second half, helped by the mix of sports. For the overall generosity envelope, we expect it to be broadly in line for the full year.

In the short term, we are seeing encouraging trends, in line with our expectations and phasing.

Peter Jackson: When I look at the sportsbook improvement plan—the changes we are delivering and the benefits we are seeing in early cohorts—perception data clearly demonstrates the benefits from the very early cohorts on the program. I am excited to see what happens as we roll it out for the full year. The BetProtect product is getting real traction, so there are a lot of good things coming that we are already seeing benefits from. As we get to the back half of the year, we will see those in full rollout and get the full benefits.

Bernie McTernan: Thank you. Then one financial question. Gross margin in the U.S. was almost 200 basis points lower year over year despite revenue growth. What was the major driver—any one-timers? Was this just launch impacting promotional spending?

Rob Coldrake: A couple of factors. One would be tax increases year on year from a state perspective—New Jersey, Illinois, and Louisiana—which total approximately 220 basis points. That is the main moving part. Of course, when you look year on year, the sports results impact needs to be taken into account. We are making great progress on payments and fraud costs, and we have more efficiencies to come. But the main movement year on year in margin is down to the tax changes.

Peter Jackson: Got it. Thank you very much.

Operator: Your next question comes from the line of Ben Shelley with UBS. Ben, your line is open. Please go ahead.

Ben Shelley: Hi. Thanks for taking my questions. Two from me. One on U.S. promotions: excluding state launches, how did online sports betting promotions fare on a same-state basis in the quarter? And with regards to prediction markets and CAC inflation, are you seeing any inflationary impact on customer acquisition costs from prediction market-related marketing spend?

Peter Jackson: I will pick up the prediction market inflation question. We are not seeing any change in terms of market competitiveness. We have long-term deals in place for many of our marketing partnerships, so we are not subject to short-term fluctuations from others trying to spend more. It remains very competitive, but it has been for some time. The nature of our national partners and deals puts us in a good place.

Rob Coldrake: On generosity year on year, we have about 50 basis points from the new states. Our focus is on getting the biggest bang for our buck from our generosity across the customer base. As Peter outlined, we have seen really encouraging responses from the changes we have made. Customer feedback has been incredibly positive on BetProtect Plus and in the early days of the new sportsbook loyalty scheme we have launched. We have previously said our generosity envelope for the full year will be broadly in line with 2025, and we have not changed our view.

Ben Shelley: Thank you.

Operator: Your next question comes from the line of Brandt Montour with Barclays. Brandt, your line is open. Please go ahead.

Brandt Montour: Thanks for taking my questions. First on prediction markets: how do you think about the cadence of spend in 2Q, 3Q, 4Q, given the One app is not yet where you want it to be, and considering the sports calendar? Do you need to be there in a big way for the World Cup, or wait and save dry powder for NFL? How do you balance that?

Rob Coldrake: In Q1, it was really about testing and learning—generosity and marketing around our Predicts products, demonstrating our ability to acquire customers and establish presence in the category. We spent circa $40 million in Q1. It is early days, but we have always said we anticipate the majority of our spend in the second half. We will invest behind the World Cup and expect to ramp our spend slightly from Q1 into Q2, but we retain flexibility and will closely monitor returns on a CAC and LTV basis. We really want to get behind the start of the NFL season in the second half, provided we have the right product in place.

We will look at the prediction investment envelope alongside our core sportsbook. Our overall envelope does not change at this point, but it is evolving, and it would be great to be here at year end saying we are spending more because it is really taking off behind NFL.

Brandt Montour: Separate question on iGaming. The U.S. market slowed a little sequentially and a key competitor hinted at a tougher competitive environment, yet you outgrew the market and gained share. How sustainable is that performance? Has the market gotten less growthy or more competitive sequentially?

Peter Jackson: We were really pleased with iGaming in Q1—AMPs up 10%, revenue up 19%. Revenue growth from direct casino customers was even higher. Our performance was impacted somewhat by coming into the year with a smaller sports business. Our focus on our rewards club—now in its second year—more exclusive content, and our relationships with key influencers have been important. The team is executing well. As for market growth, it cannot keep growing at the same percentage rates as the base gets larger, so some slowdown is natural. But market penetration still has a long way to go. We have the leading position in iGaming and are performing well.

Operator: We now ask that each analyst limit themselves to one question. Our next question comes from the line of Joe Stauff from Susquehanna. Joe, your line is open. Please go ahead.

Joe Stauff: Thanks. On your generosity reinvestment in FanDuel OSB, is it fair to say that largely started in March? I am wondering if AMPs grew in April. And for the World Cup, Peter, you mentioned another exchange that you could plug into. Will you be plugged into that more than the CME going into the World Cup?

Peter Jackson: I will take the World Cup question first. We want to make sure we have as compelling sports offerings for our customers as we can. We have a very exciting set of products that we will bring to our regulated OSB, leveraging the Flutter Edge and our global expertise in soccer. We are excited about the opportunity to bring customers onto the platform. From a Predicts product perspective, we do have the right connectivity with other venues. It is something we are focused on, and the timing is tight, but we will see where we can get to for the World Cup.

Rob Coldrake: On your first question, from an AMPs and generosity perspective, we are laying down a number of new initiatives, and we are very pleased with the traction we are seeing. We are seeing sequential improvement across a number of KPIs from Q1 into Q2. We are not getting hung up on any one metric, but across the board we are seeing a lot of green on the dashboard. There is some noise around March Madness—last year was very customer-friendly—so you always get some noise around handle as you move through that period. But we would take the March Madness we had this year over last year every day of the week.

We are pleased with the momentum we are seeing into Q2.

Operator: Our next question comes from the line of Ed Young with Morgan Stanley. Ed, your line is open. Please go ahead.

Ed Young: Good evening. In your shareholder letter, Peter, you said you have a clear plan of improvement for the sportsbook and laid out a lot of product iterations. Can you help us step back and diagnose what has gone wrong? You have made some changes, which is good to see, but on a bigger-picture level, where has the business not done what it should have been doing? And beyond organizational changes, any macro change in how FanDuel needs to approach the market in terms of competitive or promotional intensity? It does not sound like that is what you are saying, but you are also saying Dan Taylor is coming in to review and oversee the business. Please share your diagnosis.

Peter Jackson: Good evening, Ed. We have been clear about the issues for us from a sports perspective in the U.S. As I described, the team’s intention is to get back to a customer-first approach. We have seen that with how we have been trading the business in the last quarter. I mentioned the activity around the Mets—some good justice refunds the team has been doing. It is engaging and gets you on the front foot socially, which is important and something we do around the world. The BetProtect product was important to deal with injuries, which have been a real challenge.

We have a great solution in place, and we have seen double the level of engagement we expected already, with plenty of ways to evolve it over time. One way is integration with the loyalty or reward program—for example, tiers where we can give customers access to BetProtect. Integrating all aspects of the product is important to offer great value. There is no need for a big step change in strategy. We are also executing many small enhancements: iOS launch time is now less than two seconds; we have full-screen streaming for key sports; upgraded live betting with simplified same game parlay building; and you can track bets on the lock screen.

There are lots of small enhancements that we will continue to roll out. The cadence of delivery is improving with our investment and focus in AI, and throughput from a product perspective is stepping up materially. It is exciting to see that translate into what customers experience. There is no change in strategy. We have clarity, we are putting customers first, and we are getting back on the front foot, with sequential benefits emerging. If we look at revenue, it was up 9% on a normalized basis in March, compared with flat for Q1 as a whole—good sequential improvements in sports. From a gaming perspective, we are also making progress.

We had the highest customer acquisition volumes in five years onto the brands. Sky Gaming now has more than a million customers for the first time as of March, and the app was highly ranked by third parties for interface and accessibility. There has been a strong step up in customer perception.

Operator: Thank you. This concludes our Q&A session. You may disconnect.