Good day, and thank you for standing by. Welcome to Aristocrat Management Roundtable Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, James Coghill, General Manager, Investor Relations. Please go ahead.
Morning, everyone, and thanks very much for joining us for another roundtable discussion with Aristocrat CEO and CFO today. Before we begin, I'm pleased to acknowledge the traditional custodians of the land upon which we meet today, the Wadawurrung clan of the Eora people. We pay our respects to elders, both past and present, acknowledging them as the traditional custodians of this land. I'm here in Sydney, and our CEO and MD, Trevor Croker, and CFO, Sally Denby, are joining today from Las Vegas. We hold these roundtables to give you an opportunity to hear from us before we close out the current financial period, and it's an opportunity for you to ask any questions. Before we do that, I'm going to just hand over to Trevor, who'll just say a few opening remarks. Thank you.
Thanks, James, and thanks everyone for joining our call this morning and for your continued interest in Aristocrat. I'll make a few opening comments on the operating backdrop and also how our strategy is continuing to deliver for all stakeholders, followed by some Q&A. At the AGM in late February, we reiterated our November guidance, that Aristocrat expects to deliver NPAT A growth over the full year to September 30, 2024, on a constant currency basis. D&D is a percentage of revenue to be above the 12%-13% guidance range in the first half of the year, however, sequentially lower than the previous half, reducing to within the range for the full year, given investment phasing and operational efficiencies. Over time, we expect D&D investment to revert to our established target range.
Gaming's market-leading, market margin performance is expected to be weighted to the second half of the year. Turning to the three operating businesses and starting with Aristocrat Gaming, which continues to be underpinned by supportive drivers across North America. From a gaming ops perspective, Aristocrat has started the year well. Firm demand and further market share gains for our innovative premium lease products in North America. After reviewing recent December quarter results in the U.S. in the last few days, it's again evident that we are the only supplier generating meaningful growth in our install base, with lease unit growth that was multiples of the next units added by our major competitors. From strong game performance within our premium lease portfolios, delivering around 2.5 x over the December quarter.
We continued our leadership in the Class II with a strong proprietary portfolio of brands, IP, and games made specifically for the Class II bingo market, complemented with new successful themes that continue to evolve in this sector. We continue to innovate in this key segment of our business to support our customers. For outright sales, while noting lower trends in market surveys and the reduced units sold by competitors in the December quarter, demand for our core products sold on an outright basis also remains solid. Our strength is in broad-based in both Class II and Class III, and we have a long-term collaborative partnerships with our well-established commercial strategy with the majority of our customers. We continue to focus on innovation in both content and cabinets and superior execution, and this continues to widen the competitive gap over our peers.
This is demonstrated by the continuing to index around 1.4 x the floor average across all our games, comfortably ahead of our competitors. The NFL is a great example of our focus on innovation, launching a portfolio of six games over the course of the 2023 and 2024 NFL season, including both Class III and Class II options. While it's still early days, we note the strong performance and robust uptake from customers and players, and the new players that we are bringing to the casino floor. While we remain a partner of choice for licensed product, we're also successfully developing new proprietary themes like Blockbuster, supporting the depth of the portfolio. It is the breadth of Aristocrat's portfolio that has underpinned our consistent leadership position. For ANZ, it remains competitive in what is a relatively mature market.
We remain committed to investing behind the future in the Australian marketplace by bringing innovation in both content and cabinets to the floor. Our international Class III business continues to perform strongly. Let me now turn to Pixel United, where the operating environment has remained subdued. Pixel United's performance has been resilient as our social casino portfolio in particular performed consistently in Q1 2024, achieving modest growth, although growth is tempered in the early months of calendar 2024. It has been offset by softness in the social and casual segments. It's RAID's fifth anniversary this month, and we're very proud of this milestone. Since the launch in 2019, RAID has surpassed $2 billion in lifetime revenue and 100 million downloads across all platforms.
Product Madness retained its market-leading position in slots in the first quarter of 2024, supported by its world-class slot content and live ops capabilities. Pixel United continues to focus on long-term creation and maximization of portfolio profitability. In 2023, we took action to efficiently manage our cost base to reflect the slower growth environment and to optimize user acquisition, or UA spend, to support appropriate returns while shifting spending towards retention drivers such as D&D investments, live ops, features, and content. Our focus on operational efficiencies continued into the current year, and we expect to deliver benefits in 2024 and beyond. Despite the current environment, we continue to invest for the future. We recently announced that Pixel United has entered into a multi-year agreement with the NFL to develop free-to-play social casino games.
The first initiative under this deal is an exciting NFL-themed mobile slots app being developed by the team at Product Madness. We look forward to providing more details on this in the months ahead, sorry. Moving now to Anaxi, our online RMG business. We remain very excited about this opportunity and see it continuing to contribute strongly to the future growth. Its game performance has led the market, elevating Anaxi into the top 10 suppliers within the first six months of releasing content. We're also recognized by the EKG Awards as the top-performing omni-channel slot for retail and online for Buffalo in the recent awards in March.
As we expected, our leading land-based brands are resonating with iGaming players in North America, and as our distribution grows and our distribution into Europe through Roxor Gaming, we continue to build our presence in these iGaming markets. We are well-advanced in obtaining the regulatory and gaming pre-approvals for the proposed NeoGames transaction before the end of April 2024, and expect it to close shortly after that. NeoGames will add significant capabilities that should further accelerate our growth. As most of you will have seen in the results last week, NeoGames performed well through calendar 2023, with a double-digit revenue growth in its major segments and two key iLottery wins in the U.S. since we announced the proposed acquisition. We are focused on scaling our early relationships and driving better relationships across the U.S. and globally in 2024.
Year-to-date, Anaxi has rolled out 16 new games and added 270 new gaming touchpoints, achieving currently encouraging market share gains in the US iGaming segment on the back of this increased distribution of our leading content. A few comments on strategy before I hand it to Q&A. I'm exceptionally proud of our operational performance in recent years, and even more energized at the tremendous opportunities that lie ahead. Our relentless focus on investing in competitive product portfolios to drive market share gains is our priority. We continue expanding in strategic adjacencies across North America, take share by bringing innovation and technologies to markets that have not seen innovation for some years. We focus on market-leading investment in D&D, differentiating it sustainably to build sustainable competitive advantage and remaining the licensing partner of choice for many outstanding brands.
Our largest opportunity, as I mentioned, is the growth and expansion into online RMG. Our early game releases in the U.S. has validated our hypothesis that Aristocrat land-based content and games would resonate well online, and we have a multi-year rollout plan ensuring a steady stream of new game launches in North America and into Europe. NeoGames, significant revenue opportunities to flow from this, with a combination of Aristocrat's leading content, strong relationship with customers, both commercial and tribal, and gaming regulators, and NeoGames' robust technology and talent. Aristocrat will continue to stay close to our customers, listen, and craft solutions that help them to succeed over the longer term. On a talent basis, we recently promoted Matthew Primmer to the role of Group Chief Product Officer, raising product leadership to the leadership team.
This is to complement Andy Hendrickson, who is our Chief Technology Officer, and we recently appointed Superna Kalle as the Chief Strategy and Content Distribution Officer. We will continue to develop, retain our internal teams, and also recruit new talent to accelerate our strategy and build strong and diverse teams at Aristocrat. Sustainability continues to be an important leadership position for us, and it's a fundamental expression of our company values. And we continue to invest for sustained growth, both in infrastructure to secure and scale our business, and also into new distribution through our integration center in Las Vegas to support our expanded pipeline. To date, we have closed almost $1.25 billion of the $1.5 billion buyback. So to wrap up, I'd just like to make a couple quick comments.
First of all, as we approach the close of the first half, our portfolio of scaled world-class assets is reflecting both our ongoing commitment to innovation as well as high-quality execution. Anaxi, with the proposed acquisition of NeoGames, adds further diversification to the group and another important channel through which we can leverage our leading and world-class content. With that, I'm happy to answer any questions, and I'll hand back to Maggie. Thank you.
Thank you. We will now be conducting the Q&A session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please be aware that you can also type your questions into the webcast. For the audio session, please note, we are taking only two questions. If you have further questions, please go back into the queue. Thank you. Please stand by as we compile the Q&A roster. Our first question comes from Matt Ryan of Barrenjoey. Please go ahead.
... Well, thank you. Good day, Trevor. Just wanted to start with the comments around the second half skew to land-based margins, and if you can give us some, I guess, color on, the different drivers of why that might be the case?
Yeah, thanks, Matt. I've got Sally here with me in Las Vegas, so I'll let Sally give you an update on that.
I think, Matt, thanks for the question. At a high level, we'll see a positive impact from mix, but we're expecting it to be to offset in the first half by a number of cost-related items, which won't all reoccur in the second half. I think, as you can appreciate, there are many variables that go into the, the cost, the cost line and ultimately our margin. And if you look at our history, you can see that there is some movement between the halves as we actually work through the business, and again, it's dependent on volume, mix, and a number of other factors that, that roll into there. I think what's really important to note is that we haven't changed our overarching FY 2024 guidance, and that's that we'll continue to see strong profit growth from the, from the gaming business.
Okay, any chance we can get some color on what sort of costs move around from half to half? Is it, anything in particular?
There's a number of different elements, Matt, and I think the last time I spoke about some of these, that I've lived to regret it. So there's a number of accounting adjustments. It really depends on the mix, the volume of mix against the different products. There are many different variables, so I wouldn't call out one specific. I think the important factor is that, you know, our margin at around the circa 55% is still where we think we will ultimately be as we continue to drive this business forward.
Okay. Thank you. And just with the closing of NeoGames, which I think you've sort of talked about a May close, or that's your expectation at the moment, just keen to get an understanding of sort of what happens after that in regards to integration and just what the first, I guess, 6-12 months looks like, as that business comes under Aristocrat.
Yeah. Thanks, Matt. There's a full integration plan going on, as you'd expect. A couple of first things is obviously we've been working to build the technology platforms to integrate our games onto the Pariplay network, and that is actually rolling out now and starting to roll out through Europe. Pariplay has also been approved and is building customers in the North American market, which we'll be able to put our content onto their platform in North America. So there'll be content that will start to flow onto the technology platforms. Obviously, building partnerships and conversations with customers both in Europe and in North America, and other markets that are looking for content access. Working with the Neo team around their technology and scaling their technology into new jurisdictions.
At the same time, working with the iLottery part of the Neo business and looking at continuing to expand that iLottery, noting that they have had two iLotteries approved since we announced the acquisition. So a lot of work going on there. A lot of work of integrating with our customers, working with regulators, and streamlining our technology, and to increasing our product flow into their portfolio, and also leveraging the product from Roxor at the same time.
Thank you.
Thank you. Our next question comes from Rohan Sundram from MST Financial. Please go ahead.
Hi, Trevor and team, just the one from me. With regards to the gaming business, the land-based side of things, Trevor, how would you rate the growth outlook and the runway ahead for that business? Because we've had so many years of good growth, but how do you see the outlook from here?
Yeah. Thanks, Rohan. Look, I still, I still feel that the, the gaming ops opportunity still remains there, and, and our opportunity to take share in gaming operations is there. And, you know, we've put together three years of circa 5,000 incremental units over the last three years, and I feel confident that we continue to see the opportunity to take share in gaming operations. I think, adjacencies, you know, there are new adjacencies that we'll enter, this year. COAM is one of them, expansion of HHR, more penetration in New York Lotteries, plus the VLTs. So those are, are, are opportunities. I think it's fair to say the market has started to soften the total size of the opportunity in the last quarter reporting and brought it back sort of under the 80,000, if you look at, expansions and new openings.
I think it's still lower than that, frankly, more back to our historical rates. We didn't see the number of new openings in the first quarter that we saw in the first quarter last year, but I still see that there's solid demand there. We've got a good pipeline of games coming through, which are at the top of the charts, and we've seen a good pipeline of orders from customers. So it still remains solid. I don't think it's at the same levels that potentially the industry's been calling it at.
Thanks, Trevor.
Thanks, Rohan.
Thank you. Our next question comes from Rohan Gallagher from Jarden. Please go ahead.
Trevor, Sally, good morning. Good morning, everyone. A couple of questions, if I may. Trevor, obviously, in the last quarter, we've seen the proposed IGT-Everi merger announced, and obviously I know you focus on what you can't control, but can you just talk us through what you perceive to be the opportunities and threats for the company over the short and medium term, please?
... Yeah, thanks, Rohan. Appreciate the question. Look, I'll just make a comment on behalf of us. I think, you know, their own opportunities are different. I think what happens in market consolidations is those companies that are strong and that are well-positioned take advantage from that, and I think there's an opportunity for us to take advantage through that period of time. I do think that we are well-placed in that when you look at just the momentum that we've got and also the focus that we've had for a number of years on continuing to take share, and we've been a share taker now for a number of years. So from my perspective, it is probably likely to trigger other consolidation going on in the industry.
But we feel very confident in where we want to be and the opportunities that this will create, whether it's in adjacencies, whether it's in just share taking in core markets and continuing our momentum.
Thank you. And Sally, from a capital management perspective, you know, obviously, you've got an unlevered balance sheet even after the NeoGames is complete, and we know the number for NeoGames. Can you just talk us through, what options are on the table as far as, capital management to sort of get you back, at least at a minimum, in line with your targeted gearing ratios, please?
Yeah, look, I think we said at the year-end, we're aware that post Neo, we still won't be at our target of 1-2x EBITDA leverage, and we will continue to generate strong cash flows. Our strategy remains the same in terms of focusing on the organic growth first, always exploring inorganic opportunities and what we can do in M&A, and then ultimately returning shareholders via the dividend and now with the ongoing buyback program, which, as Trevor said before, we're at AUD 1.248 billion of the AUD 1.5 billion tranche that we have out there. That's about 83% closed, and our aim is to keep buybacks as an ongoing part of our strategy.
Fantastic. And if I sneak one in, Trevor, just because you touched on it, on talent, great appointment with Matt being elevated to the ELT. Can you provide us an update regarding any game designers or key executive changes, pending or otherwise, and potential impacts to the change of strategy? I'm thinking about, you know, for example, the open role at Pixel, for example. Thank you.
Yeah. Yeah, thanks, Rohan. There's no, there's no changes to what's going on from our perspective. We continue to stay focused, as I said, on developing, retaining and engaging our talent and also looking for new talent. We are well progressed on an internal and external review for the CEO of Pixel. We are looking at someone that's got operational and digital experience and obviously someone based in London. And I feel comfortable that the progress on that is appropriate. And at the same time, the Pixel business is delivering what we would expect as a consequence of the changes that we've made in 2023, around UA optimization, focus on live ops, and cost management. And I feel confident about its ability to deliver the numbers in 2024.
That's excellent. Thank you for your time. Appreciate the access.
Thanks, Rohan.
Thank you. Our next question comes from David Fabris of Macquarie. Please go ahead.
Hi, Trevor. Hi, Sally. Look, just to start off with, can we explore those prepared remarks on, on NFL? I mean, you called out that it's still early days, you noted the strong performance. Are you open to providing some performance metrics on NFL? And then, I guess with the installed base, you know, is it at peak currently, or do you still think there's room to install more NFL product in the North America market?
Yeah. Thanks, David. There's a few questions in there. I'll try, I'll try and go backwards. First of all, it's not at peak. We still see an opportunity to place more games. I know you're probably thinking, "It's the end of the NFL season, what are you talking about?" Well, draft starts in a couple of weeks, so we do see the opportunity to continue to place games, and we have a pipeline to place games. Performance is varied, there's no two ways about it. You know, Super Bowl Jackpots has been a great, great launch. Others haven't been as strong, but across the portfolio of games, they're still resonating. I was in the Strip on Saturday, noticed people playing our games on Saturday, NFL games on Saturday, and still enjoying them from that perspective.
The Class II games are going well, particularly because of the math models and the type of games that they are. I think the thing to think about NFL is every season, there's a new range of games to come with it. And that's the opportunity that we have here, is while the 2023-2024 season's effectively over, we now start to go into draft and then ultimately into another range of products, so we're able to refresh our fleet with games.
And so I still believe that there's a pipeline for penetration for that, and I'm very happy that the data we've got that suggests that it's bringing new players to the casino floor, which I think is a great thing for our industry, and it's something that we've all all manufacturers and operators have been looking to do over the last years.
Yeah, got it. Understood. And probably a tougher question here. I mean, with the legal proceedings, I guess you're going to be limited on what you can say. But ultimately, what I'm trying to understand is, firstly, are there any precedents for success with these cases? And then, then secondly, say you are successful, I mean, can you try and help us understand what you, what you want to do here? Are you trying to pull the game from the market, or would you be looking for a monetary settlement?
I really can't get into both of those. First of all, it's a judgment call on the first one, and the second one return really requires on some outcome of the first one, to be frank with you. I think what we're saying here is that we've alleged that Light & Wonder has engaged in some wide-ranging campaign to copy Lightning—no, Dragon Link, sorry, since early 2022, through a series of games including Dragon Unleashed, Jewel of the Dragon, and most recently, Dragon Train. So that's what we're alleging, and we're saying that we've taken this position because of our analysis, and, you know, it's really in front of the courts now, and we'll see how that pans out.
But I, I will say, we will always defend our IP vigorously, and we will continue to do that, and we've done that in good conscience on this issue, on this one.
Got it. Understood. Thank you very much.
Thanks, David.
Thank you. Our next question comes from Simon Thackray of Jefferies. Please go ahead.
Thanks. Good morning, Trevor, good morning, Sally, and good morning, James. Trevor, in your opening remarks, you made a statement that you're the only supplier generating meaningful growth, I think, in the lease portfolio. I'm just sort of going back. I know surveys are just surveys, right? So they're not fully representative, but the Q4 US slot survey sort of suggested some weaker findings. I think Q4 purchases were 19% versus last year at 27%, and there were two Aristocrat titles in there in the top eight most anticipated premium lease games, and Light & Wonder had four of the eight, IGT two, and Bluberi one each. So I'm just trying to reconcile your comment about the share gains versus the survey. Just help me reconcile the differences, if you could.
Yeah, Simon, it was a bit hard to hear on a couple of things. I think we may have conflated data points. First of all, I'm making a comment on gaming operations. So we had a net install number of units. We had a multiple improvement over our competitors, and we had a meaningful install base in the first quarter as a consequence of game investment, hardware, and key themes and execution. And so, you know, everyone's reported numbers now for the first quarter, and we feel very comfortable that we've got that continued to make inroads into that market.
From a for sale point of view, which I think was part of the second part, we, we have seen, I think as everyone is saying, the market has been softer in the last quarter, and that's a consequence of comp prior year with new openings and expansions. But from a pipeline point of view, we still have a strong pipeline. We have a couple of good games at the top of the for sale list as well, which is a strength for us, and we are confident with our ability to continue to convert that pipeline.
That's, that's super helpful. Thanks, Trevor. And then just in Australia, your share's been amazingly strong, and as you've executed and supported the industry over a long period of time, and so share rebalancing sort of makes sense to me. But in the U.S., how are you thinking about floor manager conversations around the share of premium gaming ops machines, the floor share of linked machines, and your ability to hold that share?
Well, I think, first, thanks for the comment, compliment on Australia, but we've got to continue to work hard. You don't just get to that level and then stop, and we continue to remain focused on the Australian business, as I said in my comments. We're gonna continue to invest, and we've got a portfolio of games that we will continue to bring through from that perspective. In North America, we're just not at the same levels of penetration that we are in Australia, and I still see opportunity to take more share. You know, you might look at some of our numbers and say, "Wow, that's a big statement," but we actually still have great market share opportunities, and that's the good thing about the North American market for us now.
Whether it's gaming operations, whether it's for sale, whether it's going into new adjacencies or even just expanding into adjacencies room, we've already got new share that we haven't had. So I feel confident in the North American market, regardless of the size of the market, we'll continue to take share, and that's really what we invest in behind D&D and with new hardware, cabinets, and technology, and also focus on excellent execution with strong and deep partnerships with our customers. We have more customers now on longer term agreements and partnerships, and I think we're well placed for it, Simon, to be honest with you, and our job is to continue to take share.
Mm-hmm. No, that's super helpful. If I could just tack something onto the end of that, given your comment about adjacencies, they obviously seem for everybody to be an important growth market. What does that imply for our understanding of gaming margins going forward?
Yeah, look, I think the way you look at adjacencies is they're markets that are now becoming either more regulated or more accessible through regulation. And, you know, COAM is one of those, HHR expansion and then New York contracting. It is fair to say that those adjacencies are usually a lower ASP and usually a slightly lower margin, and I think that's some of the challenges you have with the fluctuations of adjacencies because they're not a straight pipeline like we would have in a for sale environment. They can be lumpy. You know, VLTs can take large orders one year and then not take any orders for another year. So I think there are some areas there we need to focus on from that perspective. So it can be a bit volatile.
It's usually a lower ASP, but we do see it as incremental and see therefore it's worthwhile investing and making sure we've got our cost synergies as we invest in those markets.
That's great. Thanks for taking my questions. Really appreciate it.
Thank you. Our next question comes from Andre Fromyhr of UBS. Please continue.
Thank you. I was just hoping you could talk through the rollout of content through Anaxi. You mentioned that you've done 16 games so far. Just wondering if you could give a sense about how big you see the pipeline of your existing library that you would, you know, transition towards the Anaxi product, and over what time period do you think that happens?
Yeah. Thanks, Andre. Appreciate the question. So yeah, as I said, we've got 16 new games so far this year across 270 touchpoints, so that's new markets, new games, new operators. As I said at the start, we're now in six countries, eight jurisdictions, with about 80% coverage in the North American market. We'll continue to roll out both new games for the Anaxi portfolio and also bring our historical high-performing titles to the iGaming marketplace, and that's both in Europe and in North America, and over time, looking at some of the content coming from the Roxor portfolio into North America.
We're not disclosing the number of games, but, you know, we've got, you'd say we've probably got about 1,200-1,500 legacy games that we have the opportunity to bring to these markets over time, and we'll look to phase that appropriately to increase our penetration and performance.
Okay, and then I was just wondering if you could talk a little bit more about the shift in costs at Pixel, as we saw in the results last year, and as you commented earlier, that sort of reduction in UA or more targeting in your UA spend, but on the flip side, more investment on D&D for retention strategies. Can you just give a bit more detail about what you mean when you talk about retention? Like, practically, what is the change in player experience or, you know, the platform that leads to that better retention?
Yeah, sure. I'll put some boundaries around those comments. So first of all, on UA optimization, as games become more mature, both the cost of traffic becomes more expensive and the conversion of that traffic through to monetization is less. And so what we've looked at is what's the right UA investment and the right return on advertising spend for that UA? And we've recut that for the portfolio, but at the same time, we've also then reallocated D&D to that portfolio to create live ops and features. And if you have a look at the performance of Raid for the last couple of months with the Monster Hunter and the Xena Warrior activity, it's driven good downloads, and we're very happy with the performance of that brand as we go into its fifth anniversary.
So it's a rebalancing of looking at where we're acquiring players from, and we can still acquire players. It's just that we're being more disciplined around that as the apps are becoming slightly more mature, but then using other features, like other features and Live Ops, to improve the player experience, like I gave the example then with the RAID, but also looking at like, looking at that for social casino and other social games as well, with various features around, you know, whether it's St. Patrick's Day, Valentine's Day, et cetera, as a way to drive that. So building the player experience, being disciplined with the UA that we're spending to drive traffic to the apps, and making sure that we're focused on retention.
Okay, thank you.
Thank you.
Thank you. Our next question comes from Adrian Lemme of Citi. Please go ahead.
Morning, Trevor and Sally. My first question was just coming back to NFL. Yeah, we've noted, obviously, very strong growth in that title, which is great, but the performance that we can see in the survey is slowing from, you know, over 2 x to, I think, the last one was about 1.8 x. When we studied this previously, it looks like when games fall under 2 x, they start to see, you know, installed units fall away. You talked before, and we've talked in the past about how this is bringing in new types of players. I was just wondering if, yeah, we should sort of consider that 2 x benchmark not appropriate for this game, given it's a strategic bet by the casinos to bring in new players.
Just comment on that, please.
Yeah, thanks, Adrian. I thought your summary on this yesterday was very useful, just out of context. Look, I think where it sits at the moment, you're right, the stats are right. It's gone from over two down to 1.8, but it is still standing out on the floor, and it's a differentiator product. It's not just another theme. It's not just another proprietary game. It's got good jackpot structures, it's got good game integration. So I think that, you know, we're in a period now where we're now looking at how do we manage this through to the period of the next season? And we've got a whole suite of games to come through for the start of the new season.
I think what it does is, as you said, it differentiates the casino floor. It is bringing new players to the casino floor, different players to the casino floor, and it provides an opportunity to a different playing experience for people that may not have been traditional slot players. So the performance still is very good from our perspective, and, you know, to this stage, you know, operators haven't shared with us that there's a concern around the current performance. And as I said earlier, I still believe there's opportunity to increase our install base as well.
I appreciate those comments and feedback, Trevor. If I could just ask a second one, just on digital. We also observed that, yeah, the social casino portfolio sort of seems to be, you know, going backwards slightly in the last few months. And, you know, we've also seen this MONOPOLY GO! game, which, you know, is clearly not a slots title, but I think Sensor Tower includes it in their social casino definition. Are you seeing that it is detracting not only from obviously your portfolio in social casino, but just that slot genre in general, and is that also making you think about, I don't know, pulling back the UA further if that continues to impact it, please?
Yeah. Look, I think what I would say on Adrian is that, you know, the mobile game market has been disrupted post-COVID, and it hasn't had the same strong growth. So we've got a game that's come out in Monopoly Go, which has been very strong. I think it is shaping. It is changing the shape of the mobile market or influencing the shape of the mobile market in the near term. But we saw similar things when Pokemon came out. I'm gonna say seven years ago, and I'm guessing, but we did see it, and it was quite disruptive in that period as well. But then people reverted back to games and genres that they had, that they had played prior to moving into that. I think it's one of those sorts of trends. Social casino players have historically been pretty loyal.
They've stayed to the game, and that's why we continue to focus on innovating features and Live Ops and games. We're still able to buy good traffic with the UA investments and the return that we're looking at for our UA investment now, and we'll continue to do that until it's not in our interest. But we still have a good relationship between cost of acquisition and lifetime value.
Thanks, Trevor. That's very helpful.
Thanks, Adrian.
Thank you. Our next question comes from Rohan Gallagher of Jarden. Please go ahead.
Oh, hi, guys. Just to follow up from me, if I may. Thank you. D&D has obviously been a massive shareholder value creation for you. You're outspending your peers, both in absolute dollars and percentage of sales. 12%-13% of sales is sort of pushing AUD 850 million. I'm not sure whether this is for Trevor or Sally, but how are you ensuring the efficacy of such investment and, and to get similar returns that were done historically, given the significant size that you now are committed to?
Yeah, thanks, Rohan, and you know, I appreciate the comment and the point. I think a couple of things first of all, there was a step up with Roxor. So when we bought Roxor, we bought in a D&D cost that came with that. We have been continuing to invest in technology now, and we will continue to invest in technology where we have the ability to move games across our platform and across our technology more efficiently, and that is, that's an ongoing investment in the near term that will actually create efficiencies in the longer term. We do have internal processes and discipline, and as we announced, you know, Matt Primmer is now the Chief Product Officer.
He has visibility of all costs, for the D&D across the group, and at the same time, we're also investing to support the growth of Anaxi. You know, it's a build and buy strategy, and there is requiring investment from that perspective. So I feel confident that our historical measures and our historical management of D&D is in place, and we've now got both the management structure, the governance, and the strategic priorities to support that.
I think the only thing I'd add, Trevor, is that, you know, the second half of last year, and as you're aware, was high. It was outside of our traditional range. We are working effectively on that to compensate for these additional investments that we've been making. I think as we said at the AGM, we will be slightly above the guidance range in the first half of the year, but we will be sequentially lower than we were at the second half of last year, and aiming to get back within that 12%, 12%-13% range for the full year, driven by the phase in the investment and our ongoing management of the portfolio.
Awesome. Thank you very much, guys.
Thanks, Rohan.
Thank you. Just a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. We also have the webcast to ask questions. If you have any questions, please type your questions in the webcast. Just a minute for our next question, please. Next, we have Simon Thackray of Jefferies. Please go ahead.
Oh, thanks. Yeah, I'm just gonna steal two real quick follow-ups, if I may. Just on NFL, just help us understand what the current install base is in Class II and Class III. And secondly, just a real quick one, whether you think you took share in the fourth quarter of 2023.
So we're not disclosing the install base, but it was the fastest scaled install base for a new gaming ops product for us. And I feel comfortable that it's a good size number with potential to continue to grow this year and to increase over the years as we continue to refresh the content for that. The question, did we take share in Q4? Are you asking? What I would say is that we had a increase in our net installs that was a multiple of the published numbers of our major competitors. And it was a significant increase for us, consistent with what you'd expect us to deliver, given our performance.
Okay. Okay, that's great. Thanks, Trevor. Appreciate it.
No, thanks, Simon.
Thank you. I see no further questions on the call at the moment. I will now pass to James to see if there's any webcast questions.
So the most of these have been answered already. There are a couple that I will share, but I think we are looking good for a 45-minute close, unless any other questions come through the teleconference. So here's one, which also goes to the comments that you made on outright sales. Could you please expand on your comments around outright sales in 2024? Is this driven by indications from customers, or are you seeing some consumer demand softening?
I think if you look at the GGR for the industry, the GGR still remains positive. It has been a little bit more volatile in the first half of this calendar year, but I know that's been something that's been reported by most both operators and manufacturers. We're not seeing a consumer change or a consumer sentiment change for gaming in North America that would change any view on the for-sale market. I guess, the comments I've made was more around where the industry survey was pre-Christmas, where it is post-quarterly results of the last week or two. We've just seen that it's come down slightly, and I think that after three or four years of very strong expansion and new market openings, that it's more reverting back to a more stable historical range.
That was really where my comments were around the size of the market. Still a nice-sized market to participate in and take share.
Okay, thanks. And a question on Pixel here: One of your competitors in mobile gaming has flagged M&A as a way to grow out of the soft market. Is this something that Pixel United is considering?
Yeah, thanks. Well, we look at M&A across the group, and it is an opportunity that is considered. Yet we have done some small tuck-ins over time to increase our presence in certain genres and subgenres. We're focused at the moment on operational efficiencies in the Pixel United business, as we've spoken earlier about UA optimization, focusing on our D&D investment to drive retention, and then also looking at our OpEx. With the right opportunity, we would consider it, but our priority remains to stay focused on closing the Neo deal and scaling that transaction, and then also preparing for future M&A. And we continue to look at the market and remain disciplined in our approach to M&A.
Thanks. A couple more have now come through the Webcast platform, so thank you to those who have asked. The first one is: Are you planning to launch a DTC platform for your social casino business? And if so, what sort of timeframe for launch?
Yes, we are, and we will give you some more detail at the half, but we're well advanced. And we've obviously got good learnings off the Plarium Play platform, which, as the investors and analysts will know, it's around 31%-32% of our Plarium bookings. So it's a good platform. We feel comfortable that we've learned from that over the last four or five years, and we will talk to you at the half about that. But we are planning on that, and we are looking at the way the platform, platform options are changing, so off-platform purchases.
Thanks. And another Pixel question: Within Pixel, are you talking about delivering cost savings in the second half of 2024 and into financial year 2025? Can you expand on this? Is this UA or operating costs?
Hi, it's Sally here. Thanks, James. I think as we stated at year-end, we took a number of actions towards the in the second half of last year, and we've continued to focus on controlling controls around the cost base, and we are talking about operating costs. So as Trevor spoke to before, focus on the return on the UA investment and making sure that we're spending it in the right areas, given the profile of the game. But we have also been taking steps to look at the costs and the direct resourcing levels in the business, so that we can continue to invest and sustain our growth in this market. So yes, there is a cost focus on the operating cost lens.
It started in the second half of last year and has continued through this year.
Okay, thanks for that, Sally. One last one on Pixel. This is a relatively short one, and I think we can go back to the moderator. Could you please share more on the timeline for the NFL app that you have flagged for Pixel United? Over what time period could we expect this to be rolled out?
Yeah, look, we're not disclosing that at the moment, but what I would say to you is we are—we have been progressing it well. We feel confident that we're building a strong product that will differentiate in the social casino segment, but we're not actually providing any more context on that at this point in time. It's a... As everyone will know, you know, making games is a live process, and it requires iteration. And we're well progressed, but we won't be sharing when it'll be released.
Okay, thanks, Trevor. One last one has popped in here, so we do have a little bit of time before the full hour. So I will ask it, and then hand back to the moderator. So the question is: Do you see an opportunity for cost reductions in land-based business? And do these have the potential to lift your current land-based margins?
I think from a cost perspective, I think if you look at the business holistically, I think cost management is just good business as usual activity, and it's something that we have a lens over on an ongoing basis across all of the business, not just Pixel or gaming or Anaxi. It goes across the whole business, and we just class it as business hygiene, and we're always gonna try and drive as much efficiency as we can across the business. With regards to margins, we're always focused on doing the right thing, and that's not just operating costs, that's from a supply chain perspective and many other areas, and we're always gonna be doing what we can to drive and maintain our margins.
Thank you, Sally. Back to the moderator.
Thank you. Thank you everyone for all the questions from the web and from the call. I would like now to hand back to Trevor for closing remarks. Thank you.
Well, thanks again for your time to join us for our roundtable this morning, and thanks for your questions. We look forward to speaking to you again and seeing many of you at the first half results in May and at our Investor Day in June. If you have any further questions, please don't hesitate to reach out to our investor relations team. Thank you for your time, and we appreciate your questions and your interest in Aristocrat. Have a great day.
Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.