Earnings call transcript: Lottomatica Q2 2025 shows strong growth

Lottomatica Group SpA reported robust results for the second quarter of 2025, with significant growth in revenues and EBITDA. The company saw a 21% increase in revenues for the first half of the year, while EBITDA rose by 33%. This performance comes amid a positive market reaction, with Lottomatica’s stock price reaching $28.33, just 0.98% below its 52-week high of $28.85. The stock has delivered an impressive 94.32% return year-to-date, reflecting strong investor confidence. According to InvestingPro, the company shows several positive indicators, including expected net income growth and strong profitability metrics. The company remains optimistic about future growth, maintaining its 2025 guidance and exploring new opportunities in the online segment.

Key Takeaways

• Lottomatica’s H1 2025 revenues increased by 21%.
• EBITDA margins reached 37.4% in H1 2025.
• Online segment revenues grew 33%, with EBITDA up 41%.
• The company secured a 2% market share through new commercial agreements.
• Lottomatica confirmed its guidance for 2025.

Company Performance

Lottomatica’s performance in Q2 2025 was marked by strong growth across its key segments. The online segment, in particular, saw a 33% increase in revenues, contributing significantly to the company’s overall success. The sports franchise also performed well, with a 31% increase in revenues and a 60% rise in EBITDA. Despite a more modest growth of 2% in the gaming franchise, Lottomatica’s overall market share in the online segment reached 30.7%, outpacing the market growth rate of 9%.

Financial Highlights

• Revenue: Up 21% in H1 2025.
• EBITDA: Increased by 33% in H1 2025.
• EBITDA Margin: 37.4% in H1 2025.
• Online Segment Revenue: Up 33%.
• Sports Franchise Revenue: Up 31%.

Outlook & Guidance

Lottomatica has confirmed its guidance for 2025, expecting continued strong performance across its segments. The company is preparing for a new online concession framework starting in November, which is anticipated to further enhance its market position. Additionally, Lottomatica is exploring mergers and acquisitions to bolster its growth strategy and expects to realize synergies amounting to €87 million.

Executive Commentary

CEO Guillermo Angelouzzi emphasized the company’s strong market performance, stating, "We continue to outperform the market significantly." He also highlighted the successful completion of the PWO platform migration, noting, "We have completed the migration, which is always the most complex part of an integration." Angelouzzi expressed optimism about customer engagement, saying, "We are seeing a very good conversion rate, higher than the past."

Risks and Challenges

• Market Saturation: The gaming franchise’s low growth could signal market saturation.
• Regulatory Changes: Upcoming changes in the online concession framework may pose challenges.
• Competitive Pressure: Maintaining market share in a rapidly growing online segment.
• Economic Conditions: Macroeconomic factors could impact consumer spending.
• Integration Risks: Continued integration of the PWO platform may present challenges.

Q&A

During the earnings call, analysts inquired about the early signs of the PWO migration, which the company reported as positive. Questions also focused on potential bolt-on opportunities and the trajectory of online margins, which Lottomatica expects to move towards the mid-50s. Additionally, analysts expressed interest in how the company plans to address the declining gaming franchise market.

Lottomatica’s Q2 2025 results reflect a strong performance and a positive outlook, supported by growth in key segments and strategic initiatives. The company’s ability to outperform market trends and secure additional market share positions it well for future success.

Full transcript - Lottomatica Group SpA (LTMC) Q2 2025:

Conference Operator, Chorus Call: Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining Lotomatica Group’s First Half twenty twenty five Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

At this time, I would like to turn the conference over to Mr. Mirko Senezi, Head of Investor Relations at Lautomatica. Please go ahead, sir.

Mirko Senezi, Head of Investor Relations, Lautomatica: Thanks, operator, and good morning to everyone. Welcome to the Automatica Q2 results presentation. I’m here today with our CEO, Guillermo Angelouzzi and our CFO, Lorenzo Vallancker. Now the floor is directed to Guillermo for the presentation. Guillermo, please.

Guillermo Angelouzzi, CEO, Lautomatica: Thank you, Mirko. Good morning, everybody. So let’s start commenting this the very good results of this quarter from Page two of the deck. The first comment is on the market, which grows 9%. There’s, of course, the effect of the Euro cap, which last year, you’re going have this year.

If you net that from that effect, that would have been a solid 12%, which when you look at the entire semester, again, stands the mid single mid double digit growth. We continue to outperform the market significantly. When you look at the reported number, the 9% of the market compares with a 16% growth of Lautomatica. And net of the EuroCup effect, the 16% becomes 19%. We have reached a very solid result in terms of market share in June, 30.7 on total online.

And you will see the dynamics within the brands in a few pages. Pages. This reflects nicely into revenues, which grew 10% quarter over quarter, I mean, Q2 25% over Q2 twenty four And even better, of course, because of the synergies on EBITDA, which grows 20% without the effect of the Euro cap. If you net that, that would have been three points higher, so 23%, pretty much in line with the delta with the difference in GGR increase. So this is a very good quarter, also considering with and without the Euro cap in both cases, which allows us to confirm the 2025 guidance.

Let’s now go on the key areas of development, Page three of the deck. There is a very significant progress on all key areas. Starting from PWO integration, the very good news is that we have completed the migration, which is always the most complex part of an integration. Both the online and the retail platform have been fully migrated. The process was even smoother than previous integrations, previous migrations.

We are seeing a very good conversion rate, higher than the past, a stronger retention than the past and a stronger satisfaction level of the customers that we’ve inquired to monitor the progress of the migration than the previous integrations. So, so far, a very good result also in relative terms compared to our previous experiences. This also reflects on the very good progress on synergies. 85% of the synergies of the increased synergies of €87,000,000 by 26,000,000 are already secured. And so we can say that we are on the final in the final stages of the PWO integration.

We’re basically collecting the results of a very successful project. Now the second area of hot area is the online market developments as a consequence of the new concession framework. You may have read that there has been a slight postponement of the start of the new concession from September 17 to November 12. I mean it’s a tiny change. The good thing about this is that the process is confirmed to be completed this year in November.

Everything is on track. And going to the opportunities that we have to consolidate to roll up the tails, a very good news is that we’ve already secured 2% of market share for future exploitation. Securing 2% means this is a mix of commercial agreements, which will fall under the TOTO C brand,

: some

Guillermo Angelouzzi, CEO, Lautomatica: transactions that we have done. But the end of the story is that we have put our hat on already even before the redistribution of the market shares, which will happen in starting from November 12, we put our hat on a pretty significant portion of the market share that we think will be available after Grapes due to the new construction framework. And we confirm the rest, the potential of the rest, between 710% potentially available after November. So, very good progress here. Bolt ons, the run rate of the twenty twenty four bolt ons is confirmed, and there are additional bolt ons in the works, which we will complete this year with a run rate impact expected next year.

And then you have the buyback. You know, the program has started June 2018, and we’ve already acquired, as of yesterday, 0.53% of the share capital. Now Page four, focusing on the dynamics of the online share by segment. IGaming grows very nicely at market level 16%, and we do better than the market, growing 23% in Q2. Ice sports is, of course, a bit softer because of the lack of the EuroCup.

The market shows us 7%, and we do more than double of that number at 15%. But of course, there is you have to average this out on H1, which will stand at 12%. So the main difference you will notice basically in June because the year to date in May would have been 18%. So that’s all the effect basically the calendar in the mix of payouts. Other online continues to grow lower than the other two segments, but still grows nicely.

So this results into the numbers that we’ve seen before, 12% for the market and 19% for Lautomatica, excluding the impact of the Euro cap. I’m not mentioning the positive impact of the World Cup, which has also been excluded, the World Club Cup because that is tiny. It’s absolutely immaterial. Now a quick comment on the evolution of the online market segments at Page five. This is all nonstaffed, but when you see that in a graph, it’s very telling.

Of course, iGaming is more is less volatile than iSports in its progression because it doesn’t depend much on payout and it doesn’t depend much well, it doesn’t depend at all on calendar sports events. So you can observe more easily the underlying trend, which is very clean. And so if you average that in the last six months, that is a solid plus 17%. When you go to iSports, you have historically high volatility of the GGR of the market because that is impacted by payout, as we all know, and by the sort of volatility of results in a nutshell and by the calendar of sports events. And of course, by some level of cross sell with the iGaming vertical.

But again, if you average these out on a six month basis, this is a plus 12%. So bang in line with our estimates for the iSports component. This brings to a total of, as I mentioned before, 14% in the last six months of overall online GGR evolution with a level of volatility, which, of course, is in between that of iGaming and that of iSports. But there’s a very solid mid double digit slope of the overall online GGR curve. Now going into our market share and how that relates, Page six, to the migration of PlanetWeed.

This is a very interesting set of graphs On the historical brands, all brands without the last acquisition, PWO, there is a continuous growth through the quarters and the years. Actually, you can see the 23.7% of Q2 twenty twenty five, which is materially higher than one point years ago, which is the starting point of the graph. And if you look at June 2025, it’s even higher. And so those are the historical blends. It’s a clean graph because you don’t have any migration or any integration activity on those brands.

Those have been clean. It’s a clean story in this one point years. When then you look into PWO, you can see that at the start of the migration in April, we had 7.2% of market share. Then, of course, in June, at the peak of the migration, we are at 6.3%, which is pretty much the same thing which has happened in the other big migration that we did some time ago, which is the was the Lotomatica and Better migration. It was 7.2% at the start of the migration in May 2022 and six point two percent in August 2022 at the peak of the migration.

But then it grew back. And basically, one quarter was the completion of the migration. It was higher than where it was at the beginning of the migration. So we expect that the full potential of the PWO brand will materialize in the next few months within the year now that we have the migration accomplished completed so that we can exploit the full potential of the group platform and product. Also considering that we have seen better KPIs, as I was mentioning, and a smoother process in the PWO replatforming.

So we feel optimistic about this. So with this, I leave the floor to Lawrence. Thank you.

Lorenzo Vallancker, CFO, Lautomatica: Thank you, Guglielmo. Moving on to Page eight. Here, we can see how we closed the first half with yet another quarter of strong growth. On the left hand side, you can see how revenues are up 21%. And on the right hand side, you can see the EBITDA is up 33% in H1.

So and if you look at in Q2, EBITDA is up 20% on a reported basis. Margins in EBITDA margins in H1 twenty twenty five totaled 37.4%, and the improvement is a result from the previous year as a result of the shift of the business mix towards online and the delivery of synergies. On Page nine, when we look at the financials by segment, we see that online continues to be the main driver of growth with 33 growth in revenues and 41% growth in EBITDA in H1 twenty twenty five. And Sports Franchise also has experienced strong growth, 31% in revenues and almost 60% in and 60% in EBITDA, clearly helped by the payout. Just to give you the measure also for Q2, Q2 reported growth has been 15%.

Gaming franchise in the low single digit growth, so plus 2% year on year, and this reflects the impact of the bolt ons that have more than offset the market softness in Gaming Retail. Moving on to Page 10, when you look at operating cash flows, we see on the left hand side CapEx recurring CapEx of EUR 47,000,000 in H1 twenty twenty five versus EUR 42,000,000 in H1 twenty twenty four. Here, we’re in line with guidance, which we had said that we would reach EUR 85,000,000 by year end. Concession CapEx of EUR 31,000,000, again, versus EUR 48,000,000. This is a timing of the concession payments.

Again, here, similarly, this is in line with guidance. Then when we look at the items in growth CapEx or one off CapEx, these include what we had indicated in the guidance earlier this year. This is carryover of bolt ons of 2024 of EUR 20,000,000 out of 2027 for the full year. Deferred considerations are for previous bolt ons of EUR 8,000,000 out of the EUR 11,000,000 for the total year and the integration CapEx of EUR 17,000,000. And when you look at on the right hand side, the operating cash flows defined as EBITDA minus recurring concession CapEx, we have seen an increase from EUR $228,000,000 to EUR $344,000,000, so an increase overall of EUR 116,000,000 year on year.

Moving to Page 11, you have the bridge for the net financial debt from March to June. So in addition to EBITDA, you have a positive inflow from net working capital, which reflects the seasonality of our business, where Q2 tends to be positive. Taxes paid of EUR 46,000,000, this is what we paid in June. CapEx of EUR 58,000,000. This is the these are CapEx for Q2.

Goldberg consideration of EUR 11,000,000. So this is we are almost complete with the payment of the deferred charges that we owed to the Gold Med shareholders. So we had EUR 10,000,000 in Q1. Now with EUR 11,000,000 in Q2, we reached EUR 21,000,000 overall, of which the remaining EUR 7,000,000 will be paid in due course. Financial expenses and lease of 54,000,000 and then clearly, the dividend paid of EUR 76,000,000 that we paid in May and then other items that include the refinancing costs that we’ve done for the refinancing that we’ve done in April and integration costs of EUR 14,000,000.

All in all, this brings us to a net cash balance of EUR $271,000,000, which establishes our net financial debt at 2.1 turns, which is at the low end of our financial policy. And this is it.

Mirko Senezi, Head of Investor Relations, Lautomatica: You, operator. We are done on our side. I think we can open up to the Q and A.

Conference Operator, Chorus Call: Thank you. This is the Chorus Call conference operator, and we will now begin the question and answer session. Session. The first question is from Ed Young with Morgan Stanley. Please go ahead.

Ed Young, Analyst, Morgan Stanley: Thank you. I’ve got three questions, please. So on Slide two, you detailed the 16% online revenue growth ex PWO. So it seems like that’s been a relatively significant drag, at least a few points there. Given the migration is now over and the Lotomatica case study, should we be expecting a decent H2 acceleration in online growth?

Second of all, the 3% of operators you haven’t applied for renewal is probably a bit smaller number than was initially expected. Why do you think more fringe operators have gone in for licenses in the first case? Do you think there are others out there who’d be looking to be acquired or brought into commercial arrangements as you have done? And on that note, are you looking to do any more of those? And then third, your NGR, GGR conversion online improved the second quarter in a row sequentially.

How should we think about the trends there? And what can we make of the bonusing promotion environment to expect into Q4 around the online licensing event? Thanks.

Lorenzo Vallancker, CFO, Lautomatica: Sure. Let me I’ll take them in order. So if we look at the PWO for the market share, listen, I think so we completed now the migration to the platform. Obviously, we can’t give the guidance on the performance in terms of market share, but we the expectation from our perspective is that we will see a benefit in terms from PWO, an improvement in the market share for PWO. Now probably we’ll see this, yes, in the from now on, that’s what we’re clearly working on.

We’re not going to give a specific guidance on that, but we do expect an improvement in the remaining part of the year. For the third point on the NGR, so on the conversion from GGR to revenues. Yes, so there has been an improvement in Q2 versus Q1. We will see we’ll have to play a bit by ear here as well. We don’t expect necessarily a deterioration.

We may see some further promotional activity as we continue to do the sort of now we need to take care of all the relaunching the business of PW on the new platform as well as opportunistically taking looking at the sort of market conditions once the new online concession is awarded?

Guillermo Angelouzzi, CEO, Lautomatica: And so let me answer to the second question. So yes, probably the 3%, we would have probably expected a slightly higher direct opt out than the 3%. When you look at the total number, that doesn’t change the size of opportunity in the end because when you look at the other 7%, as we commented, and you go and look at the business model of the operators who are in the pipeline, who we have applied for the concession, then you discover that give or take off of that market share is based on a scheme model, which basically it’s potentially up for distribution. So you pretty much get to the same numbers with the different dynamics, different mix of upfront opt out and potential redistribution afterwards because of the scheme model. Why has the immediate opt out been smaller than expected, most likely because some of these operators have given it a chance to maybe do deals.

They know their financials are super stretched, but probably applying for the concession allows them to negotiate a deal. In a couple of cases, that’s what we’ve done. And we continue to explore the opportunity. We adapt our tools to the changing condition. We don’t think the size of the opportunity has materially changed.

So that’s the point.

Ed Young, Analyst, Morgan Stanley: Very clear. Thank you.

Conference Operator, Chorus Call: The next question is from Fabio Pavan with Mediobanca. Please go ahead.

: Yes. Hi, and thank you for taking my two questions. The first one is a follow-up on online. I was wondering if you may help us in understanding that the impact that this potential increase in market share may have on JGR grow for online over time? And my second question is on M and A.

I was wondering if you are still scouting external growth opportunities, if there is any color you can share with us on this point.

Guillermo Angelouzzi, CEO, Lautomatica: Yes, Fabio. Hi. So on the first question, what’s the impact of these deals of this 2%? Well, you can look at it as a step up, potential step up of 6% compared to our GGR pool because that’s what the 2% represents out of the 30%, 31%, 30.7%. So that could be seen as a 6%, give or take, uplift.

And then there’s no reason why the dynamics of this 2% should be different than that of the market. So that should be probably be growing afterwards at the same rate of the market. Then a different story is when that fully reflects into our contribution margin and how that reflects into our contribution margin because that depends on the type of the deal. It depends on whether we migrate those customers onto which brand, onto which model. So probably, there is an opportunity there compared to the deal at the moment we signed the deal to optimize the profitability of this market share, working that on working on the cost structure, working on the model, working on the brand.

There’s a bunch of things that can be done. But potentially, it’s an expansion of a step up of the GGR of six points and then that’s going with the same growth dynamics of the rest of market. As for M and A, we still consider it. As we said, the framework is always the same. It’s I won’t repeat it, it’s Europe, B2C and all the things that we’ve always shared with the market.

As we said, we’re in no rush. The point of the discipline is key for us. We are doing very well, and we think this is in the Italian market, and we think which is a great market both for the consumer dynamics and regulation. We think this trend is a long term trend, will continue for a very long time. So we have a lot of growth organic growth in front of us and then bolt on opportunities.

So and we’re doing the buyback, which is a way of reinvesting in this market. So the benchmark is high. We will look at every opportunity having this in mind, having no rush and maintaining full discipline. That’s it. So no changes in the strategy, a confirmation of the discipline through which we look at opportunities, which have to make sense, of course.

Lorenzo Vallancker, CFO, Lautomatica: Thank you

: so much. Very clear.

Guillermo Angelouzzi, CEO, Lautomatica: Thank you.

Conference Operator, Chorus Call: The next question is from Hugo Patternoster with Kepler Cheuvreux. Please go ahead.

Fabio Pavan, Analyst, Mediobanca: Yes. Good morning, gentlemen. Thank you for the presentation and thank you for taking my question. I may have two, if I may. The first one is a little bit of follow-up on the online concession market.

Just wanted to know if you could share some light about the economics of the 2% market share that you have already secured. I believe that part of it is under the Totosi brand. Yes, could you provide a little bit of more detail about what the level of negotiation are you engaged, the level of profitability that you expect to derive from those 2% market share? It would be the first question. And the second question would be on your guidance.

You have achieved, I would say, a high level of profitability in H1. And looking at your profitability guidance for the year, it seems to be a little bit conservative. Just wanted to have your thoughts on it, please.

Guillermo Angelouzzi, CEO, Lautomatica: So on the economics of Hugo, we won’t be able to say much at this stage. We wanted to share because we’ve been asked, of course, we wanted to share the where we stand to give a sense, but we don’t want to get into much details because this is a very competitive element at this stage as we are continuing to do these things. So we don’t want to get into too much detail. But I can tell you two things. The first one is that these are deals transaction which are clearly accretive.

So we do this deal just for the sake of growing the market share, but also to provide returns. The second point, which I somehow mentioned in the previous question, is that we start with something, but then we have room to work on the profitability of these initiatives. There’s probably room for cost optimization, value chain optimization, brand optimization, but they start as accretive, clearly accretive. We’ll be more specific on these ones once we think it’s not a competitive topic anymore. We’ll dig into that.

Lorenzo Vallancker, CFO, Lautomatica: On the profitability point, isn’t the first half we’ve had sort of margins in Sports franchise and in online that are slightly also higher reflecting better sort of higher better payout, more favorable for us. So on a normalized basis, clearly, you would see Sports franchise more in the mid-20s and the online slightly lower also for the even though the payout impact is lower. So that’s pretty much a function of payout, which you’ve seen in H1. So on a normalized basis, these come down a little bit.

Fabio Pavan, Analyst, Mediobanca: Okay. Got it. And you don’t assume any improvement from the PW synergies or you are not assuming either improvement from the end of the migration of this PW in your plan going forward as well?

Lorenzo Vallancker, CFO, Lautomatica: Yes. No, we’re seeing a bit clearly, we’re seeing the synergies come in, right? And that’s why you’re seeing overall margins improving. And there’s more to come because we’re still not seeing all the full benefit of the synergies in our P and L. So that should also that will also come in, in the second some of it will come in the second half, and the remaining part will come in 2026.

But so you’ll see some improvement there, of course, due to in relation to synergies. But I would say that the major swings that you’ve seen in first half are particularly in Sports franchise are predominantly driven by payout.

Fabio Pavan, Analyst, Mediobanca: Okay, got it. Thank you very much.

Lorenzo Vallancker, CFO, Lautomatica: Sure.

Conference Operator, Chorus Call: The next question is from Clark Lambton with BTIG. Please go ahead.

Hugo Patternoster, Analyst, Kepler Cheuvreux: Thanks. Good morning. I have two. Maybe first, I’ll follow-up on Hugo’s question on the synergies. Laurence, is it fair to think that the remaining sort of $12,000,000 or so of the 87,000,000 you’ve identified and sort of guided for is related to sort of identifiable cost synergies?

And then if so, as we’re thinking about the opportunity in sort of ’twenty six, is there any way of either qualitatively or quantitatively framing for us, one, either the time line for realizing revenue synergies or I guess some way of thinking about the significance, whether maybe it was better, I guess, if that’s still a regional corollary to use for benchmarking, how much you achieved there? Second question I have is sort of going back to the 7% to 10% licensing opportunity. Is it right to think that the sort of 2% that Totosi has already secured is included within the 7% to 10%? And then if so, maybe you could frame for us for the seven to 10%, is that an initial estimate of the opportunity? And then if so, is this more broadly an opportunity that’s going to be addressable in phase, I.

E, could that number go up over time as certain cohorts become you wade through the skin opportunity and then maybe there’s consortiums beyond that. Any framework for that would be appreciated. Thank you.

Lorenzo Vallancker, CFO, Lautomatica: Sure. Listen, on the synergies, maybe going back to the two items you mentioned. On the cost synergies, the EUR 12,500,000.0 that we this increase the increase that we’ve had in the that we’ve announced previously this year. The those predominantly relate to the those are identifiable, absolutely, and we are executing on those. And that relates to the renegotiation of the contracts with the franchisee network of PWO.

So that’s in process. So we will see that will roll in as we complete the renegotiation of all the contracts. With regards to revenue synergies, I would say that we have EUR 10,000,000 of revenue synergies as an impact on EBITDA. That’s how we quantified it. We will see that is what we estimate based on sort of how we think PWO can perform basically on the new platform.

As we’ve with all the new features, it’s clear that at some point in time, you have to drop the synergies and then they’re going to be called growth, right? There is definitely an uplift that we’ve quantified initially in EUR 10,000,000. And then after that, we would hope that PWO can reach its full potential leveraging our tech platform as well as all well as the product features that we have and the new product that we will have in the for the Planet Wind brand. But there comes a point, I think, where we’ll stop they’re not going to be called synergies anymore, and they will be simply called growth, stand alone growth of PLANET WIN. That opportunity, we don’t feel at this point in time to sort of give a higher guidance that we have already included on the EUR 10,000,000 related to revenue synergies.

It’s clearly but I and I don’t we’re not I don’t think that will ultimately change, but there will be cold growth from there on in 2026.

Guillermo Angelouzzi, CEO, Lautomatica: So on the second point, Clarke, yes, the 2% is part of the 10%. So that’s basically as we have secured a part of the already a part of the pool before, let’s say, redistribution, which basically happens with the switch off of the current concessions. As for consortiums, they’re out of the 10%. So there’s been a couple of notable examples of players who have teamed up, but these are not included in the 10%. So that is already a net figure.

So the 7% to 10% is really the opt out, the three percent opt out plus the guys who have applied, we think have a significant stretch in a sustainable have a significant financial stretch. And so their position is either not sustainable because of the business model, so see the presence of the skin model in 50% of the business or the sustainability of the economics, so they will have to find another solution. That’s how we that’s how that is composed. So the consortium, we think they are at least in the short term, they are stable. So there’s no reason to think differently and to include them in the 710%.

How this plays out? So how much more we can preempt? How much will be the redistribution? How quickly the how the scheme model will exit the market, will be redistributed. It’s all variable, all moving parts.

And as we said, we will see that basically as the current concessions expire. But we continue to work to preempt as much as possible of good market share within that basket before the redistribution happens.

Hugo Patternoster, Analyst, Kepler Cheuvreux: Very helpful. Thank you. Welcome.

Conference Operator, Chorus Call: The next question is from Praveen Gondhaleh with Barclays. Please go ahead.

Clark Lambton, Analyst, BTIG: Hi, good morning. Thanks for taking my questions. You talked about the online margin strength in Q2 and the drivers behind that. But is there anything else outside the synergies and favorable payouts there that drove that margin strength in second quarter, given it is expected to be a seasonally softer quarter on margins? And then secondly, how should we then be thinking about the margin trajectory in medium term given the strain that we have just seen and the PWO synergies coming through?

And then finally, on PWO, I realize this is these are very early days. But if you can talk about the PWO user behavior, how does that look on app users’ frequency, spending behavior, gaming uptake, etcetera, on the new platform compared to the legacy platform? Thanks.

Lorenzo Vallancker, CFO, Lautomatica: Can you hear me? Yes. In the first half, there have been favorable impacted by payout. So you’ll see them slightly lower probably in H2. But that’s I would say that’s the there may be some timing of costs as well.

But I would say that lower margins slightly lower margins in H2 is reasonable. In the medium term, listen, we’ll see, okay? We’ve always said, so probably they will come in not too dissimilar to where we are today, maybe some further improvements, we’ll see them over time. And as we had said previously, sort of going trending towards the mid-50s in the medium term, also benefiting from operating leverage?

Guillermo Angelouzzi, CEO, Lautomatica: Yes. On the probably now on the PWO migration, I mean, the we can summarize that. It’s very early still, but we can summarize the good signs, the positive signs basically in a higher and faster activations of the courts, which have been migrated compared to the previous experiences. So in a shortened time, we have more people who have completed the journey and played, which is a very solid indicator of the fact that the migration is going in the right direction. Leave aside the customer surveys, the customer satisfaction, that’s a hard indicator of so this has reflected in a higher GGR in the same period of time of the courts who have been migrated compared to the courts who have not been migrated.

Now this is a rolling process, so you cannot make a super clean comparison, but it is another strong indicator or a positive strong indicator. Now it’s very early on, so we’re not giving numbers on this. We will have to see. But it’s a bunch of when you compare it basically with previous migrations, which is the first KPI that I mentioned to you, And you compare that within the same migration, the courts that have not migrated and the courts who have migrated, those converge to positive. So this is again, I’m not commenting on the numbers, what’s the delta in GGR and so forth, but both vis a vis the previous migration and within the current migration, migrated and non migrated, the signs are going in the same direction, which is positive.

So this is the situation. We’ll have to see that in the numbers. Now we have all the retail and all the online customer base, which is on the new tech and the new product. We’ll basically see that in the coming weeks as the championship restarts. That’s going to be the real test.

But so far, so good.

Clark Lambton, Analyst, BTIG: Thank you. Very clear. Thanks.

Guillermo Angelouzzi, CEO, Lautomatica: Thank you.

Conference Operator, Chorus Call: The next question is from Domenico Gilotti with Equita. Please go ahead.

Praveen Gondhaleh, Analyst, Barclays: Good morning. Three questions on my side. So the first is a follow-up on the online margin. So if I look at Q2 alone, so I’m not the payout actually was quite normal and you were very close to 55%. So I’m trying to understand there was some, say, particular positive cost situation?

Or if really this can be, say, with a normalized payout and normalized seasonality, a sustainable level with then upside coming from the synergies? Second is a clarification on the bolt on that you are mentioning in terms of new targets that you are looking for. Are you referring to sort of the online or is still mostly the gaming franchise? Just to understand that if you are changing a little bit also the targets in terms of opportunities. And last question is on the gaming franchise.

We have seen sort of the decline in GGR. Should we assume that the decline will continue? Do you see the trend deteriorating, stabilizing? So what is your view on the trend for the market?

Lorenzo Vallancker, CFO, Lautomatica: Going in order, think, listen, the online margin, half of the benefit of the payout in Q2 is attributable to online, so it’s not insignificant. And then there’s always timing of costs throughout the quarters that we need factor in. As we said, H2, we would probably expect margins slightly lower in online. For with regards to the second question for bolt ons, when we talk about bolt ons there, we talk predominantly in the gaming we talk about gaming franchise. So the other transactions that we’ve done in that account for the 2%, these fall outside of the bolt on the scope of the what we call the bolt ons, and those are the separate ones.

Then number three, this on gaming franchise, we continue to see the same trend, right, on the mid single digit decline. It’s around to date, we’ve GGR decreases around six percent faster in AWPs and a slower decline in VLTs, we expect that trend to continue.

Fabio Pavan, Analyst, Mediobanca: Okay. Thank you.

Conference Operator, Chorus Call: The next question is from Estelle Weingroth with JPMorgan. Please go ahead.

Mirko Senezi, Head of Investor Relations, Lautomatica0: Good morning. Just two questions, please. The first one is the usual question on the progress regarding the retail concessions and where we stand at the moment. And the second question, I wanted to check on the potential removal of the full ad ban. If this was to happen, how do we expect this will impact the competitive environment and the automatic gas positioning, please?

You.

Guillermo Angelouzzi, CEO, Lautomatica: Hi, Estelle. So on the retail concessions, there is I think we commented on that, there is a draft coming from the government side, which will have to be discussed with the regions. The government has extended actually, the parliament has extended upon request of the government the duration of the vehicle of the legal vehicle to do this with other things, which was set to expire August year. Actually, it has been extended, give or take, one year. So this will take additional talks between the government and the regions also because now the deadline allows for that.

My comment is the same. I mean the framework is very balanced, is in line with the same principles that we’ve seen in the online reform. It’s a very well structured bill, a very well structured reform. Now it has to be agreed with between the government and the region. That’s basically the topic.

So that’s where we stand. But it’s very comprehensive. So it has as you may have seen, it has everything inside. It has the distribution rules. It has the product rules.

It has the tender rules. So it does everything, the stability of the taxation. But of course, it requires an agreement with the regions. Now the removal of the advertising ban, it’s not a topic we’re particularly which we think is particularly relevant to us. We remain of the same opinion.

We simply don’t care. This is not going to change anything in the competitive dynamics. I mean, they do that or not,

Conference Operator, Chorus Call: it’s

Guillermo Angelouzzi, CEO, Lautomatica: totally irrelevant, we think, to the market, to our competitive position. Just to be clear, the omnichannel model is not working because of the advertising ban. That was a few years ago. It’s working because of bunch of other reasons that we have discussed with the market based on for the ban. Also because we can I mean, there’s plenty of ways to reach customers that the market already uses?

So I mean, we’ll see what happens, but not a particularly relevant topic for us strategically.

Mirko Senezi, Head of Investor Relations, Lautomatica0: Okay. Thank you.

: Thank you.

Conference Operator, Chorus Call: The next question is from Andrea Bonfa with Banca Acros. Please go ahead.

Mirko Senezi, Head of Investor Relations, Lautomatica1: Hello. Good morning to everybody. Most of my questions have already been answered. Just a detail, if I may. The 2% that you bought on the online is initially a minority.

What’s the timeframe before you start consolidating those assets and to see an impact on your P and L?

Guillermo Angelouzzi, CEO, Lautomatica: No, it’s not a minority. It’s a mix of things. There’s a couple of commercial deals, so that will flow into Otosi even, I think, before the start of the new concession. There’s control, straight control solutions, which will then also be relevant to some of our brands. And then there are path to control, so minority then along the way, turning into something else.

That depends pretty much for by the way, for every of these noncommercial transactions, we’ll have to wait. You remember, there is the awarding of the concession, the start of the new concession, and then there is a period of time for the migration of the systems. Of course, we will wait for that. You don’t want to mess up that process. That is at least six months after the awarding of the new concession.

So this is something that falls into basically next year. But there’s ways to potentially regulate the speed at which these transactions there’s already provisions to regulate for the speeds at which these transactions and the minority or majority components happen. Basically, that will depend on what we decide to do along the way. But the key point here is, I think, the fact that, that profit pool is kind of secured. So we as I said, we put a hat on it.

Then we’ll have to from case to case, we have to decide whether we migrate that onto TOTO C onto another brand and how we optimize the cost structure. So there’s a lot of value to be extracted from these deals on top of the just plain acquisition of the target, let’s put it this way.

Mirko Senezi, Head of Investor Relations, Lautomatica1: Okay. Thank you very much.

Guillermo Angelouzzi, CEO, Lautomatica: Thank you.

Conference Operator, Chorus Call: The next question is from Chiara Pampurini with Intermonte. Please go ahead.

Mirko Senezi, Head of Investor Relations, Lautomatica2: Hi, thank you. Good morning. I have a question about the gaming franchise performance in the second quarter because I have seen that DGR was still down 5% on the same trend of first quarter, but in the second quarter, we saw higher revenue, 3% higher year on year and adjusted EBITDA up to 6% year on year, while in first quarter, it was quite flat or slightly lower. If you can explain the reason for this performance in second quarter where I expect to reverse. Thank you.

Lorenzo Vallancker, CFO, Lautomatica: Sure. That’s the bolt ons. Let’s say, in a nutshell. It’s because some the transactions that we’ve finally closed in the beginning of this year, you’re seeing the results then now in Q2. That’s the short answer.

Thank you. Sure.

Conference Operator, Chorus Call: Gentlemen, there are no more questions registered at this time.

Mirko Senezi, Head of Investor Relations, Lautomatica: Thank you, operator. So I think thank you all for participating. We can close the call. Thank you very much.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.

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