Good morning, and thank you for joining Aristocrat's half year 2026 results presentation. I'm James Coghill, General Manager, Investor Relations. I'm joined by Trevor Croker, Chief Executive Officer and Managing Director, and Sally Denby, Chief Financial Officer. Trevor will start by covering some key highlights from the first half and in each of our businesses. He will discuss strategic progress and how we are strengthening Aristocrat's foundations through AI deployment. Sally will take you through the group's financial results and balance sheet in more detail and discuss our outlook. This will be followed by a Q&A session. Unless otherwise stated, all figures are presented in reported currency. Please note the usual disclaimer at the back of the presentation. With that, I will now hand over to Trevor.
Thanks, James, and good morning, everyone. The first half of FY 2026 was another period of clear progress for Aristocrat. We delivered a strong first half performance, gaining market share across all key segments and setting us up well to deliver on our full year commitments and to continue to grow into the future. Our focus on active and disciplined capital management continued in the half, including accelerating our on-market share buyback program. This morning, we announced a further AUD 1 billion increase to the current program and extension through May 12, 2027. We also continue to deploy our capital to support future growth, making several targeted strategic investments that support Aristocrat's long-term growth and resilience and improve our ability to service the evolving needs of customers and players. In Interactive, momentum is building.
The executive leadership change last year and the recent addition of high caliber talent has positioned us well to deliver on many growth opportunities, and I'm highly encouraged by the recent progress. While there is still work to be done, we remain focused on delivering our FY 2029 $1 billion Interactive revenue target. We look forward to sharing more details about Interactive at our investor briefing on July 1. Across the group, we remain focused on delivering operating leverage and scale benefits by focusing on efficiency and operating as One Aristocrat. To this end, we expect to realize AUD 100 million in annualized savings during FY 2027 while continuing to invest in growth.
Finally, our ongoing focus on embracing AI as a positive force for change across the company accelerated over the period, strengthening our foundations, enhancing our strategic advantages, and opening up new opportunities with our customers. Slide 3 highlights our underlying results for the period in constant currency. Aristocrat delivered a strong half year result, achieving 19% EPSA growth, driven by continued operational execution. This reflects strong underlying constant currency revenue growth across all 3 of our businesses, with over 70% recurring revenue across the group. We also achieved profit margin expansion at the group level, leading to 16% NPAT-A growth or 8% in reported currency. During the period, we capitalized on market conditions, buying back almost AUD 680 million of shares, and we retained significant capacity to continue returning capital to shareholders in the second half.
Overall, we're pleased with our first half performance, particularly as several key product launches fall in the second half. Looking ahead, we see strong momentum in the business and expect to deliver NPAT-A growth for the full year to 30 September 2026 on a constant currency basis. Let me provide some highlights of our divisional performance. Strong revenue growth across the group, combined with continued cost discipline and gains from our successful IP defense, led to a group EBITDA margin uplift of 220 basis points. In gaming, we achieved market share gains in all key regions with exceptional performances in outright sales in North America and ANZ.
Gaming operations saw continued gains led by Buffalo Mega Stampede, and our pipeline remains robust with high levels of customer interest and strong early performance in recently launched premium games such as MONOPOLY Big Board Bucks, Spooky Link Grand, and Lightning 10 Year Storm. Margin remains strong with a small reduction reflecting product mix given the exceptional outright sales performance. Product Management has delivered an impressive performance with continued share gains and profit margin expansion, reflecting focused investment in user acquisition, high-performing content, and effective execution of our direct to consumer strategy. In Interactive, iLottery and content delivered strong growth, partially offset by platforms which was impacted by our decision to exit the white label business in the year. Excluding this, revenue growth was 11%. Turning to an update on strategy. Our long-term strategy remains focused on delivering sustainable growth and superior shareholder returns.
Over the past six months, we've made meaningful progress strengthening our competitive position by continuing to invest in content and capabilities that will expand our global footprint, deepen customer engagement, and underpin long-term value creation. Our content is recognized as the best in the industry. We are building on that strength through our global studio model, enabling an enterprise-wide approach to game development and accelerating distribution across channels and markets. We remain focused on improving our speed to market across platforms to enhance monetization, as evidenced by our second half plans to launch Lightning Link in Interactive, as well as additional high-performing land-based games. At the same time, we are focused on expanding in under-penetrated markets with a particular focus on North American adjacencies, EMEA, and the opening of the UAE in 2027.
Our platform strategy represents a critical enabler of future growth, presenting new distribution opportunities, as well as integrating advanced analytics, mobile connectivity, and real-time player engagement capabilities. These strategic technology investments will allow us to deliver more personalized data-driven experiences to customers and players alike. Our recent acquisition of Awager provides a new platform through which to distribute our content. We also acquired Gaming Analytics earlier this year, a provider of AI-powered tools for real-time player analytics, slot optimization, and marketing automation designed to operate on top of traditional casino management systems. As we grow, we expect to benefit from our One Aristocrat operating model, which drives greater alignment, scalability, and decision-making effectiveness across the group, ultimately enhancing operating leverage and improving profitability. Along with our operating model is a deep commitment to sustainability and compliance necessary to support a vibrant industry.
Meanwhile, our financial strength provides flexibility to execute our strategy through diverse environments. Further supporting our strategy are investments in organizational talent and AI. Over the reporting period, we've continued to lift capability and drive change across Aristocrat in response to evolving strategic needs and opportunities. In February, we announced the appointment of Bob Serr, Chief Technology Officer, and Dafne Guisard, Chief Operating Officer, EMEA, to the executive leadership team. Bob previously held senior roles at Microsoft, Amazon, and DoubleDown Interactive. He brings deep expertise in AI, emerging technologies, and delivery of enterprise-level innovation, helping us to significantly accelerate our technology agenda and AI implementation. Dafne was most recently COO at Entain and has decades of commercial and operational leadership experience across multiple global consumer industries. She brings dedicated focus to our growth strategy in EMEA and AI implementation experience.
At the same time, we've consolidated marketing as a global function under the leadership of Barry French to optimize impact and efficiency across our brand portfolio aligned with our One Aristocrat strategy. As previously announced, we also appointed Dylan Slaney, CEO of Aristocrat Interactive. Dylan is a proven iGaming executive with over 10 years of global leadership experience in the sector and a track record of driving operational excellence and a customer-first approach that delivers transformative growth. We continue to focus on developing and recruiting leadership capability with diverse experience to support the delivery of our strategic objectives. In summary, we believe our strategy and scale positions us well to deliver on our ambition to continue to gain market share across the business and our $1 billion interactive revenue target.
Combined with our disciplined approach to managing costs across the group, we are well-placed to deliver margin expansion and ultimately long-term shareholder value. While the macro environment remains volatile, historical trends demonstrate that gaming is resilient during periods of economic uncertainty. This pattern is evident in current performance with North American GGR growth in the first half remaining stable overall. Some softness has been observed in destination markets, which are typically more sensitive to discretionary travel and high-end spending. However, these represent around 5% of our North American revenues and have been more than offset by steady performance in regional markets, which benefit from a more consistent local player base. At the same time, operators continue to express a positive outlook, with capital expenditure plans remaining intact, signaling confidence in the sector's medium-term growth trajectory.
This resilience is further reinforced by Aristocrat's diversified product portfolio that allows us to serve players wherever they choose to play. We operate in over 65% of regulated gaming markets across North America. We have market-leading positions, including exposure to several of the industry's fastest-growing segments. Notably, we have a higher weighting toward regional and tribal markets, which historically demonstrate greater stability when destination markets face pressure. In addition, our digital businesses across both iLottery and Product Madness provide complementary growth, with revenues largely driven by micro-transaction. These digital revenue streams tend to outperform during periods when broader consumer spending is constrained. Our confidence in Aristocrat's sustained growth and consistent strategic execution stems from a set of unique differentiators that form a powerful ecosystem providing resilience across business cycles.
These strategic advantages have enabled the group to navigate challenges from COVID to geopolitical volatility while continuing to outperform and strengthen our market positions. At the core is our market-leading portfolio of content, brands, and proprietary IP, built through discipline and sustained investment in design and development. Our deep library of proven game mechanics and iconic titles have driven consistent market share gains over time. This strategic advantage is reinforced by a globally integrated network of creative studios and world-class talent. Aristocrat is able to truly leverage its content and IP across multiple established distribution channels, enabling us to service a wide range of land-based and digital operators, consumers, and governments. Ongoing technology investments to streamline cross-channel porting will strengthen this edge, further supporting our scale and long-term customer partnerships. Aristocrat's deep regulatory expertise also represents a critical advantage.
We operate in highly regulated markets, maintaining over 350 licenses globally, a substantial pillar of the ecosystem that limits disruption. Our proven compliance capabilities, governance standards, and most of all, trust of regulators, customers, and players built up over decades is a meaningful differentiator and reinforces the company's social license to operate. This trust has forged long-standing customer partnerships, which are amplified by our scaled commercialization capabilities and global sales and distribution network, resulting in superior customer service and consistent share gains across markets. This is further supported by global scale product delivery capabilities and an extensive network of local service technicians. Sustainability and responsible gameplay underpin all these benefits.
A strong focus on governance, empowering safer play, and community impact enhances resilience and reputation. Looking ahead, AI deployment represents a significant opportunity to further strengthen each of these differentiators, positioning Aristocrat to compete from an even stronger vantage point. AI implementation is rapidly becoming the expected standard across the technology and gaming sectors. Aristocrat's advantage lies in how we apply AI to enhance our core strengths and evolve to drive compounding returns across the business. While we see benefits throughout the organization, we are focused on 3 key areas. First, enhancing creativity. AI is significantly improving the productivity of our own creative and engineering teams through improvements in process, faster prototyping, and creation of base level artwork and animations. Our studios are able to test consumer insights and adapt art packages almost in real time. This is building capacity to focus on high-value concept development and innovation.
Importantly, our differentiation remains grounded in proven game mechanics, creative instinct, deep player understanding, and exceptional commercialization capabilities. Capabilities AI cannot replicate easily. The impact is already evident. Where, for example, at Product Madness, we've more than doubled creative productivity, enhancing Live Ops development and personalization without headcount growth. Second, we're improving velocity to market. AI is reducing time spent across prototyping, testing, quality assurance, and cross-channel porting. This is enabling faster product delivery and increased output across jurisdictions. Some examples are our code conversion platform, which has reduced conversion from 16 weeks to 1 week, and regulatory automation, which has cut product preparation time in certain processes from 8 weeks to 3 weeks. Third, advancing AI-powered insights and optimization. We are leveraging extensive data sets across land-based and digital to drive growth and enhance player experiences.
For instance, Gaming Analytics is a customer-focused AI business delivering real-time reporting and insights to support decision-making to operators, strengthening our long-term partnerships. We expect to see further benefits across the group as we integrate these differentiated capabilities. AI is becoming a core capability, enhancing performance today and improving enterprise process into the future, which will ultimately benefit both our top line and profitability. I'll now hand over to Sally, who will take us through a summary of the group results and outlook.
Thanks, Trevor. Good morning, everyone. I'm starting on slide 10, our group results summary. Aristocrat delivered NPATA of close to AUD 800 million over the half, an increase of 8% or 16% in constant currency. Revenues and segment profits increased by 6% and 7% in constant currency, respectively. While operational performance was the key driver of our NPATA growth, I would like to call out some other items further down the P&L. D&D expense increased 7% on a constant currency basis, in line with our mid-single-digit full-year guidance, as we continue to invest in content and technology to enable future growth, including increased investment related to recent acquisitions. Corporate costs benefited from a AUD 45 million legal cost recovery relating to the Light & Wonder settlement, as well as ongoing cost discipline and other benefits.
Net interest expense benefited from lower average debt balances, partially offset by lower interest income, mainly due to the buyback. The effective tax rate was 27%, in line with our annual guidance. EPSA increased close to 11% or 19% in constant currency, reflecting the solid operational performance and accretion from our share buyback program. Finally, the directors have authorized an unfranked interim dividend of AUD 0.50 per share for the half year ended 31st of March 2026, representing a payout ratio of 38.8%. Turning to our profit reconciliation, the uplift in NPATA compared to first half 2025 mainly reflects the strong operating performance in gaming, as well as Product Madness, partially offset by Interactive, which was impacted by the reclass of D&D expenses noted at our full-year results and the investments in recent acquisitions noted at the AGM.
Improved corporate costs was driven by the legal cost recovery, the strengthening Australian dollar was a key detractor. Turning to further detail on our divisional operations. Gaming delivered strong growth, with revenue increasing 12% and profit up 10% in constant currency. This performance was driven by exceptional execution and share gains in North American and Australian outright sales, alongside continued momentum in gaming operations. Growth was underpinned by strong demand for the Baron cabinet across all regions, supported by our industry-leading content. In North America, performance was led by an outstanding outright sales contribution. Unit sales increased 15%, average selling prices rose 6%, and ship share reached 31%, up 260 basis points year-over-year. This was driven by a sustained demand for Spooky Link on the Baron Portrait cabinet.
Adjacencies also performed well, supported by an ongoing expansion in Georgia COAM. Gaming operations added over 2,000 units during the half, increasing market share to over 43%, up 70 basis points sequentially, with Buffalo Mega Stampede, Dragon Link, and Phoenix Link being the main drivers. Fee per day remained stable during the half, with sequential improvement expected in the second half, supported by the strong product pipeline, including Lightning 10 Year Storm, Spooky Link Grand, and MONOPOLY Big Board Bucks. We remain confident in our ability to add 4,000-5,000 net units for the full year and now expect net unit growth at the upper end of this range. The modest decline in North American margins reflects the higher mix of outright sales in the period. In the rest of the world segment, performance was supported by a sustained recovery in Australia.
Strong demand for the Baron Upright and key titles such as Fabulous Golden Spin Jackpot, Heaven and Earth, Jackpot Chill, and Cashcorn drove ship share to approximately 48% for the half. The Baron Portrait Cabinet with compelling content is scheduled to launch in Australia in the second half, exclusively on the hybrid model with strong customer interest. Softer performance outside ANZ primarily affects timing, with the Baron rollout planned for the second half. Product Madness delivered another strong half, with social casino revenue increasing 5% in a market that declined 11%, resulting in share gains of 240 basis points. Growth was driven by continued investment in content, player-first innovation, live operations, and features further enhanced by increased use of AI. User acquisition investment increased from 18% to 20% of revenue, with targeted investment to support bookings worth and share gains.
Margins expanded by 240 basis points, primarily reflecting the exit of the lower margin Big Fish business and the continued migration to direct to consumer channels, partially offset by higher user acquisition investments. DTC penetration reached 24% of social casino revenue. Excluding Big Fish, margins increased by 100 basis points to 46.7%. Interactive delivered strong performance in iLottery and content, partially offset by platforms which was impacted by the previously announced exit from the white label business. Total revenue, including our iLottery JV, increased 7%. Margins declined 530 basis points year-over-year, impacted by acquisition-related investments and the reclassification of technology operation costs from D&D expenses into Interactive. Adjusting for these factors, margins would have increased by 280 basis points.
iLottery grew 14%, including the JV, driven by continued strong performances in North Carolina and Virginia. Focus remains on the upcoming Massachusetts launch in July, the largest U.S. retail lottery on a per capita basis and the 3rd largest globally. Michigan will also transition to an exclusive interactive contract in July. Content revenue increased 25%, supported by expanded market access and new launches with major operators. The business is now live in 6 of 7 U.S. regulated iGaming states, with Rhode Island expected to launch in the second half. Market share increased 190 basis points to 3.7%, driven by strong performance from land-based franchises such as Mermaid and Bao Zhu Zhao Fu. The launch of Lightning Link in July is expected to be a key growth catalyst. As noted at the AGM earlier this year, content growth has been slower than expected.
With foundational technology investments largely complete and new leadership in place, performance is expected to improve. Platform performance reflects the exit of the low-margin white label business. Excluding white label, revenue was broadly flat, with stable casino systems performance and continued traction with the PAM platform. White label revenues contributed $36 million in FY 2025, with the exit expected to be complete in the second half of the year. We continue to make encouraging progress in Interactive and have full confidence in our plans. We intend to unpack Interactive during our July 1 investor briefing and plan to provide further details on the pathway to $1 billion as well as our recent investments. Moving to slide 15, operating cash flow generation remains strong, reflecting continued operating momentum, partially offset by effects.
Acquisitions and divestments reflect the acquisition of Awager, a new digital distribution channel for our land-based content and Gaming Analytics. I will touch on CapEx and shareholder returns over the next 2 slides. Aristocrat allocates capital to support our long-term growth strategy and optimize shareholder returns. We prioritize consistent investment in D&D, CapEx, and UA to drive organic growth alongside a disciplined approach to strategic M&A. We remain committed and focused on returning excess capital to shareholders via on-market share buybacks and dividends. Last month, Aristocrat announced the refinancing of its debt facilities. The new facilities were issued at attractive rates, reflecting our investment-grade credit profile. The $1 billion revolving credit facility in the new structure significantly enhances our flexibility to manage capital while continuing to invest in long-term growth.
During the half, Aristocrat returned almost AUD 680 million to shareholders through on-market share buybacks, and today we announced a AUD 1 billion increase in extension to our existing program, taking the total authorization to AUD 2.5 billion, of which we have executed almost AUD 1.3 billion to date. The program runs through to May 2027. In total, AUD 981 million were returned to shareholders through share buybacks and dividends over the half, with AUD 5.1 billion returned over the last five years, all while investing for growth. We remain committed to returning capital to shareholders to optimize total shareholder returns.
Investments in organic growth remain pivotal to drive long-term revenue and share gains. Total organic investment has generally tracked at around 24%-27% of group revenues, with flexibility to adjust in response to business needs and opportunities. CapEx largely reflects expansion of our gaming operations install base, a high-return investment. This fluctuates based on variances in growth installs. As previously discussed, U.S. spend increased to support business momentum while maintaining a clear focus on efficiency and return on marketing investment. D&D expense remains our single most important driver of long-term growth. As previously noted, D&D is now reported across two discrete categories, product and technology, rather than by division. This is aligned with our One Aristocrat strategy, whereby D&D is now being coordinated to ensure better strategic alignment and content leverage across the entire group.
During the half, Aristocrat invested AUD 407 million in D&D, representing a 7% increase over the PCP on a constant currency basis, in line with our full year mid-single-digit growth guidance. We remain in an investment cycle as we continue to position the business for future opportunities. In Interactive, this includes technology and product investment in iLottery, with Michigan and Massachusetts going live in July. Investment in distribution and capabilities included Awager and Gaming Analytics. These businesses are currently early-phase startups which require investment to scale and extend our product offerings, strengthening our customer partnerships and service capabilities. Turning to operating leverage. Margin expansion remains a focus as we continue to scale the business. Aristocrat has delivered consistent improvement in both segment profit and EBITA margins over time across the portfolio, reflecting the strength of our operating model, scale benefits, and focus on efficiency.
As the business grows and we implement our One Aristocrat operating model and deploy AI, we see continued opportunities to proactively manage costs across the group. Our ongoing cost optimization efforts are expected to achieve approximately AUD 100 million of savings during FY 2027. Disciplined cost management, combined with strong operating cash flow, continues to create capacity for strategic reinvestment across the business. Turning to our outlook on slide 19. Aristocrat continues to expect to deliver NPAT growth over the full year to 30 September 2026 on a constant currency basis.
Noting that in gaming, we now expect net unit growth at the upper end of the 4,000-5,000 units target range in gaming operations, with no other material change to our other divisional comments or modeling inputs. We look forward to providing greater detail on our strategy and opportunities at our investor briefing on the first of July. Overall, we are pleased with our first half results and confident in the momentum we see for the second half. I will now hand back to the moderator to start the Q&A.
Thank you. We will now begin the question and answer session. Our first question comes from the line of Matt Ryan from Barrenjoey. Please go ahead.
Thank you. I just had a question on the full year guidance. I think previously you were talking about a second half performance skew, which doesn't appear to be sort of called out anymore. Just interested if you could give some color on whether you're assuming, I guess, more of a 50/50 weighting now. Then just digging into that, you know, we'd expect that gaming ops and interactive have a stronger second half. If you could just comment on what sort of offsets within the divisions or corporate costs might work against you in the second half.
Thanks, Matt. Appreciate the question. Certainly, when you look at the momentum in the gaming business, with Lightning Link 10 Year and Buffalo Mega continuing to perform in the back part of the first half, and then the launch of Spooky Link Grand and also MONOPOLY Big Board Bucks. Certainly, the pipeline and the performance of those games is very pleasing for us. We see them running into the second half. Likewise, in the ANZ business, portfolio of games, we showed a strong portfolio of games at AHG in March, and the performance to date in the market of Cashcorn and other new games gives us confidence around the release of those products into the second half of the ANZ business.
We are at the G2E Asia today, launching Baron and new content into the Asian market, which we see running in for a second half for the gaming business. The key story in Interactive is the pending launch of Lightning Link, which is on track for launch in July this year. Lightning Link in the Interactive business going live in North America. The scaling of the opening of the Massachusetts and the Michigan lotteries, the scaling through those in the second half of this second half, so the last quarter of the year. Overall, our confidence around the second half skew comes from the operational momentum we're carrying into the half, and we can see strong pipelines and good performance behind the products that are driving that as well.
Great. Anything working against you in the second half? Just any comments on corporate costs?
Yeah. Obviously, the corporate costs benefited from the legal settlement in the first half. As you're aware, Matt, we always see some phasing across corporate costs between the halves. We think without the litigation costs going forward, our win rate is circa AUD 150 million. So you can expect, you know, circa AUD 75 million for the half will be elevated from that a little bit.
Okay, great. Just with the One Aristocrat AUD 100 million cost out, just trying to sort of think through how we might factor that in. Just interested in how incremental that cost out is because I think on slide 18, you have sort of highlighted a few different areas like DTC and sort of interactive. Are we sort of to assume that that's an incremental AUD 100 million above and beyond what we might have already expected from those sorts of trends from those things on that slide?
The way that I would think about it is really about cost optimization that will drive from both segment profit, D&D and corporate costs, really focusing on how we execute more effectively. We will probably reinvest a portion of that to continue to support the organic growth, but it's really just an ongoing momentum on our focus on the scaling of the organization and driving more efficiency. Doesn't really play into things like DTC. It's more about the actual cost base of the organization.
Okay. Thank you.
Thank you for the question.
Thanks.
One moment for the next question. Our next question comes from Mark Wilson from RBC. Please go ahead.
Thanks very much, Trevor and Sally. Look, just looking at the operating efficiency targets there, I guess, you know, are there any programs that are different from what you are currently undertaking to drive that amount? Is this just a continuation of what we have seen over the last sort of 12 to 18 months?
It's a continuation, but with a focus on a very specific target. Really looking at driving the efficiency across the organization, so looking at how we execute, looking at our organization. We spent a chunk of last year looking at our operating model. This is now really ramping up to drive the scale and efficiency from that One Aristocrat operating model.
Okay. Thanks. Then just in relation to Product Madness and Interactive, it looks as though both units were impacted by either recently divested or exited businesses. I know you did give some indication of the revenue impact of the exit within Interactive. Just, you know, in terms of an earnings impact, approximately what do you think that was in the half?
I think what I'd say for both of the businesses, both Big Fish and White Label, which were the businesses that you're referring to as exits, their bottom line contribution was negligible. It's more a revenue top-line impact.
Okay. Thanks. Thanks very much.
Thank you for the question. One moment for the next question. Our next question comes from Andre Fromyhr from UBS. Please go ahead.
Thank you. Good morning. I just wanted to ask about in the ops business, the drivers of fee per day. I think in previous results you sort of talked about how much has been mix and pricing and other things. In particular, I'm fascinated by Class 2 install base. Was another 6-month period of marginally negative. I'm interested in why that's showing up in Class 2 and the role that it's played on the fee per day.
Thanks, Andre Fromyhr. Just on the fee per day piece. You know, fee per day is a mix of the install base, and we continue to grow install base in the half and see us now heading towards the top end of the 4,000-5,000 for the full year. I'm very confident around the shape of that. As far as fee per day goes, we continue to manage fee per day, which is near control. Looking at the products that are now coming to market, such as Spooky Link Grand, Buffalo Mega Stampede, the NFL games coming in time, plus 10-year Lightning Link and MONOPOLY, all priced above our current pricing. Again, higher performing games on higher performing cabinets are seeing that price for fee per day increase.
We continue to see the ability to improve our fee per day over time, but it is across a large install base and, you know, feel confident that the releases and the structure of the portfolio is taking proactive steps towards managing fee per day going forward. As far as the class 2 goes, that was really due to a decline in a class 2 to a class 3 conversion within a property. I would call it not, you know Yes, it was down, but it was only down a couple of 100 units, and that is really just conversions of class 2 to class 3. Install base and floor space remains the same from the company's perspective, and we still see opportunity to place more class 2 product going forward.
From my perspective, it's just a case of moving from class 2 to class 3. Overall, net installs have gone up, and we're confident we'll be at the top end of that 4,000-5,000 at the end of the year as well.
Okay. If you don't mind, I was just gonna ask about interactive as well. I mean, you've reiterated the $1 billion US revenue target today, you've also you know, that's been in the market for a little while now. Is it fair to say that progress to date has probably been behind plan and, you know, what gives you that confidence that you can catch up in the remaining years before FY 2029?
Yeah, it's a good question. I think we've owned it in the last 6 months or so that we are behind where we wanted to be on the target for Interactive, but we remain convicted to it. I think the things that are, that have been slower than we anticipated was the rate of the U.S. market opening, some of the regulatory changes in the U.K. market, and also some of the execution, the time it's taken us to execute through the portfolio, both from a technology and games approval perspective. What we do feel confident about is that we do see scaling of land-based franchises in digital, and we've seen that already with some of the land-based games, and we're obviously excited about Lightning Link coming through.
We're also focusing on as these markets open, being ready to open with them. We are in all markets except for Rhode Island at this stage, but we expect to see Rhode Island and Maine and other Canadian provinces open. At the same time, we're now at 94% access to the market, and we feel that we've built the leadership team under Dylan and other executives we brought in that are bringing in the capacity to drive towards that $1 billion. Your comment is fair. We're behind where we wanted to be, and we own that.
We also believe that between the content work that's going on, also the iLottery business, obviously Massachusetts and Michigan coming online in July, Colorado, which is an open RFP at the moment, and continuing to scale those businesses, we see those as great ways to drive towards the AUD 1 billion target. The platforms business, you know, it's a good stable business, but adding in incremental capabilities such as Gaming Analytics, we see as a way to enhance that business and to create more momentum towards that AUD 1 billion. In summary, you know, we've got a sharpened focus on this. We've recruited the right talent execution, we've organized our commercial teams, and we've got line of sight on the things that we know we can control to get towards that target.
Okay. Thank you.
Thank you for the questions.
Thank you.
Our next question comes from Adrian Lemme from Citigroup. Please go ahead.
Good morning, Trevor and Sally. Are you able to firstly give a bit more color around this exit in white label in iGaming? What was it about and what drove that decision, please?
The decision on white label was a couple of things. First of all, we continue to look at the portfolio on where we are allocating capital, where we are allocating resources to businesses, and we look at the returns profiles on that. When you look at some of the changes that have happened in the white label market, particularly in the U.K., with game structure, taxes, operating regimes, we deemed that that was not a good investment for our company, and we're reprioritizing investment into other parts of the interactive business. It was a choice to actually refocus our investment around the areas that are important to us and where we have a good opportunity to win and to lead.
Thank you. Could I just ask a question on legal costs? Obviously, nice to see the cost recovery come through. Are they gonna stay somewhat elevated now as new AI-generated content is put out by competitors, which has the potential to infringe on your IP?
I think we've always defended our IP. That's not going to change. We have processes and protocols in place to do that. I would expect legal fees to come down with the litigation behind us. Obviously this year there's a little bit of a hangover as we go into the second half as we close out some of the settlement matters. We're not at this point anticipating elevated legal costs specifically to address AI IP infringement.
Thank you, Sally.
Thank you for the questions.
Thank you.
One moment for the next question. Our next question comes from Kai Erman from Jefferies. Please go ahead.
Thanks for taking my questions, guys. Just one on gaming margins. Just looking at the reported gaming margin, particularly in North America in this result. Could you talk about some of the drivers of that? Was that impacted by the mix from a strong outright sale result, or were there any other sort of factors driving that margin result?
No, you've exactly hit it on there, Kai. It is really just an over-skewing of the outright performance, which was an exceptional performance at over 13,000 units up to 31 market share for the half. It is really just a mix piece. I'm very proud of the results the team have achieved in full sales units through the half as well.
Thinking into the second half, given expectation is for some TPER day growth, you've obviously flagged some of the high-performing games you guys have released and the resulting gaming ops. Is it natural to assume that margins should sort of step up in gaming into the second half?
My view is when you're sitting at a profit margin in the 56%, 57%, I would guide to the fact that that's a strong profit margin and we're comfortable we can maintain that sort of level. I wouldn't be factoring in growth and profit margins where there's still opportunity out there to take share and also to place products. I feel very comfortable with the margins the company's returning in North America and also feel that we're able to hold that margin while we continue to grow the business.
I think if you're looking historically at where it's sat, when you're looking historically at where it's sat, it does sit between that 56, 58 kind of range, and it is highly dependent on the outright sales volume in any one period, including adjacencies, which are at a lower margin.
Great. Thank you.
Thank you for the questions. One moment for the next questions. Our next question comes from Justin Barratt from CLSA. Please go ahead.
G'day, Sally. Hey, Trevor. Just wanted to follow up maybe on Kai's question around outright sales. Obviously, another very, very strong half for you guys. When we look at, I guess, some data that we all have access to for purchasing intentions for Aristocrat look to be continue to be quite strong or elevated, I just wanted to see you giving some guidance, I guess, around how we should frame net adds expectations for the full year. How should we think about outright sales? Can this sort of momentum continue into the second half?
Thanks, Justin. I mean, we've now put together two halves between the last half and this half of around 13,000 units in core sales. There's a mix in that, which is adjacencies, and that sits somewhere between 21% and 25% of that market, and that can be somewhat volatile, as we've spoken to in the past. What I would guide you to is the outright sales strength in the actual replacements and new openings, we're seeing strong momentum there, which the team have converted on in this half. We've got a portfolio of games coming through in the second half that we see both hardware and games as the potential to continue to take share in the second half.
You're right, the anticipated share is strong for Aristocrat, and we feel confident we've got the portfolio, the hardware to come through in the second half and continue to have very strong outright sales numbers.
Sorry to come back to it, but just on the One Aristocrat program, I just wanted to, I guess, see if you could talk somewhat segmentally about where you think you're going to drive the benefits from that program. I guess you sort of called out interactive and DTCI Product Madness specifically as beneficiaries potentially of that program. Is it sort of across the board, or should we expect to see the benefits in certain segments more than others?
It's across the board, Justin. It's really enterprise-wide initiative. Looking at our One Aristocrat operating model and how we drive efficiency from our growing business, so that we work as effectively as possible in delivering the outcomes that we deliver to the customers and obviously to the market as well. It's not one targeted area. It's a holistic approach to our organization and how we actually execute as an organization.
Great. If I could just squeeze one more in. Just noting, for you, Sally, that the capital allocation framework, at least the presentation, of that framework has changed slightly versus the FY 2025 result. Just wanted to see if there is anything that we should be thinking about in relation to that change in presentation. Has there been any sort of subtle changes to the allocation framework that we should be aware of?
Have a go, Sally.
No, no changes to our allocation framework at all. I guess what we were trying to focus on is that we have simplified. You would see some of the tables have gone now into the appendix, are really focusing on how we allocate our capital and also the elevated shareholder returns that we've been able to achieve over the last five years. Nothing has changed in the way we think about capital and capital allocation across the organization.
Fantastic. Thanks, Sally.
Thank you for the question.
Thank you.
Please hold for the next question. Our next question comes from David Fabris from Macquarie. Please go ahead.
Good morning, Trevor. Good morning, Sally. To start off with, can you help us better understand the gaming ops commercialization strategy? Like, we know you target revenue growth, and I assume that you're making commercial decisions on fee per day versus installs. We're constantly hearing from your customers around discounts on legacy products, promos on new products, tribal compact changes. I'm curious, realistically, can you grow the installs and get fee per day growth sustainably going forward? Or do we need to think about this being one or the other and not both?
Yeah. Look, thanks, David. Appreciate that. I think what we look at is we look at growing our gaming ops revenue opportunity in the organization, so that can come through both install base and fee per day. What we've been addressing over the last 18 months is the mix within the product portfolio and bringing forward high-performing cabinets and games. We do still see an install base out there that is high-performing and very high-performing when you look at versus competitor fee per days. The way we think about it is how do we think about the incremental revenue we can generate through gaming operations each year, and that will come as a mix between both fee per day and install base. We see opportunity in both of those metrics to grow the business going forward, and therefore grow revenue as a whole for us.
Yeah. Okay, okay. A few questions just on AI. Have you set up a dedicated hub, or how have you structured that across the business?
No, we haven't set up a dedicated hub. As we spoke earlier, Bob Serr, who has joined us from Microsoft most recently, has come on board and is leading the implementation of AI. We have been working with AI for a number of years, so we've been looking at it at various aspects of how it benefits and enhances our products and our business and our operations. Bob is really the guy that brings practical application of that. Dafne also comes to us with a proven track record in AI implementation in global matrix organizations. We are using both the internal knowledge of our capability, also our own skills and capability, but also those externals and those new leaders to help us develop AI as a core capability across the organization.
We see it sitting, as we said earlier, about enhancing creativity, improving the velocity and the speed to market, and then powering insights and optimization as the real drivers for AI at Aristocrat. There are obviously going to be other areas that are more organizational, but they're the key drivers for us within Aristocrat for AI.
Yeah, that's helpful. Because if I'm then thinking about the AUD 100 million cost benefit program, is AI supportive in 2027 or we really see that to start to support cost in 2028?
We don't link AI and cost. We see it as two separate things. We see one as productivity and one as efficiencies. You can maybe define that differently if you'd like, but the way we think of AI is it's about enhancing an ecosystem, an ecosystem which is defined by a strong regulatory environment, strong customers, important brands and IP, great talent and innovation at pace. We believe that ecosystem is an important ecosystem to advance and grow our organization and also to create better games, excuse me, better games, better experiences for our players now and our operators. We don't link the two together.
There will be opportunity to improve our efficiencies, but the productivity program that we're talking about is actually around our organizational model and the way we operate, as Sally has said earlier.
Got it. Sorry, one last question from me. Just on the buyback, can you clarify when you can be back in the market? I recall at the last result, there was a nuance that stopped you getting in pretty quickly.
We can be in the buyback from tomorrow.
Okay. Thank you.
Thank you for the questions. One moment for the next question. Our next question comes from the line of Angus Hewitt from Morningstar. Please go ahead.
Hi, I've just got a follow-up question on AI. Appreciate the slide you had there on the opportunity you see, but could you touch on how you view the threat? We're seeing competitors invest in AI, and you're enjoying cost efficiencies already. Do these efficiencies narrow the gap you have over competitors, particularly in D&D, effectively elevating weaker competitors? Thanks.
Thanks, Angus. I guess the way we look at this is that, as I said, it's a bit about an ecosystem. That ecosystem includes, you know, a strong regulatory framework where regulatory environment actually requires certain levels of compliance and structure that are in place. Obviously, customers. Having strong and good relationships with our customers and continuing to be customer-centric. Our brands and our IP is that, you know, the brand and portfolio of Aristocrat is the best brand and portfolio in the gaming industry, and the IP behind that is the best performing IP as well. The talent. Our talent has embraced AI as a way to enhance the way that they make games, as we said, enhancing creativity. The innovation is continuing to be at an innovative pace.
We see that Aristocrat is well-positioned to be a leader in AI in the gaming industry. Also, we don't see it as a way that is going to diminish our competitiveness. In fact, we see it by embracing it as a way to become more competitive and continue to lead in the greatest content delivery.
Got it. Thank you.
Thank you for the question. One moment for the next question. The next question comes from the line of Rohan Sundram of MST Financial. Please go ahead.
Thank you. Hi, Trevor and Sally. Just the one from me regarding your North America or even your global land-based business. How would you describe your forward order visibility at present in terms of, say, weeks or months? Has it improved over time?
Hi, Rohan. Our visibility is very good. I'm very comfortable with what we can see in our pipeline, both from a product delivery point of view, customer opportunity, manufacturing and supply chain. We've embedded a lot of systems across the group globally now that gives us greater visibility and predictability of our performance. I feel confident or we feel confident sitting here talking to you about how we see the full year finishing. That confidence comes from a good ability to see games, hardware, and product being released into markets and the visibility of the pipelines. I feel comfortable about it.
Thanks, Trevor.
Thank you for the question. One moment for the next question. Next question comes from the line of Liam Robertson of Jarden. Please go ahead.
Thanks. Morning, team. Just 1 quick one on the cost savings. Just interested if you're expecting to see any in the second half of 2026. Just conscious on what the run rate needs to look like as we exit this financial year to deliver those savings into 2027. Thanks.
Probably there will be an element in the second half, but there will be actions that we need to take that may also actually drive some costs. It's really a focus on FY 2027.
Okay, great. Thanks. Just quickly, I mean, follow up on North American market. Clearly really strong performance in the outright sales, both units and ASP. Just interested in how, I guess, dependable that ASP growth is into the second half of 2026. Thanks.
A couple of things there, Liam. From an ASP point of view, first of all, I think performance is what drives premium ASP, so both hardware and game performance, and we've got a strong portfolio of games that are performing well and a portfolio of games to be released in the second half, which we expect to see perform well. I think the other part there is you've probably seen some of the commentary about the One Big Beautiful Bill around the way that that has been considered by some of the operators. We don't see that as a negative, but see it as a positive for gaming placement in the ability to expense capital costs straight away. From our perspective, performance, hardware will drive ASP, and we're confident in both of those.
Great. Just last one on AI. I mean, appreciate the color you provided today. Just maybe on the improving velocity to market, are there any hard metrics or proof points that I guess you can provide us with? I mean, what I'm really interested in maybe is, you know, around the gaming business, the historical cadence of new game releases and, you know, what was that through the half? Has that already improved? You know, where do you think you can get that to? Thank you.
We've referenced the fact that we are doing game conversions now, which is an original game into an alternate market. We've reduced that from 16 weeks down to 1. Now AI won't increase the regulatory approval time frames, but it will improve in the migration from market to market. It also will improve testing and prototyping as far as speed goes. We are seeing that starting to flow through the organization now, and we see that as an opportunity to be able to move games into markets, adjacent markets quicker. That's where our focus is from an AI perspective, is building that capability within our organization. Noting that the regulatory framework is largely unchanged around testing and approvals from that point of view.
Great. Thank you.
Thank you for the questions. One moment for the next questions. Our next question comes from the line of Sam Bradshaw from Evans and Partners. Please go ahead.
Hey, good morning, Trevor and Sally. Just wondering if you can give us a bit of color on the international outright sales cadence. Obviously the first half appears to be a little bit out of cycle. Wondering if you can give us a bit more color on what we should expect in the second half and potentially into FY 2027 as well.
International is a little bit more volatile, Sam, to be honest with you. It's a smaller part of our business and it tends to be a little bit more volatile, largely driven by new openings from an international perspective. What we saw in the first half was basically no new openings, and we saw the same in the first half of last year from a Europe's point of view. When we look at second half, obviously we're looking towards, you know, expectations around what might happen with the Wynn rack opening, but that is somewhat being delayed at the moment. We do see into FY 2027 a number of markets in Europe that are seeing expansion and that we will be ready to participate in those expansions.
In the rest of world, there was effectively next to no new openings in the first half. We do expect to see some in the second half in Asia. We're not clear on what's going to happen with Wynn at the moment. We are ready and capable to do that, but we're waiting to see what happens with the opening of that property.
Great. If I can, I just ask, how MONOPOLY is going? It's been one of the most hyped games that I can remember in my time. Wondering if you've got any early feedback for us on that game?
Yeah, it's going really well, thanks. We're very happy with the performance of Monopoly. It's come out of the blocks very strong on the floors. Certainly looking like about a 3 times floor. We're very happy with the way that it's come to market. We're also very excited about not just the performance of the game, but the pipeline that's behind it. We've got a very solid pipeline supporting that. The social media and interest around the game on casino floors has been very well received as well. Monopoly is, you know, very happy with where that sits. Similarly, you know, Buffalo Mega Stampede has been the number one game, new game now for 6 months, probably 7 months next week. Continues to have very strong performance.
You know, it's been a great game for us in the first half, driving a lot of our momentum as well. You know, Lightning Link, Ten Year, and also Spooky Link are both performing well from our perspective. Overall portfolio performance is very happy with it at the moment.
Great. Thanks, Trevor.
Thank you for the question.
Thanks, Sam.
We will now take the last question. The last question comes from Sriharsh Singh from Bank of America. Please go ahead.
Yeah. Hey, Trevor. Hi, Sally. A couple of questions from me. One, is there a realistic chance of you exceeding the 5,000 gaming ops net adds for 2026? Where we're coming from is you've added 2,000 machines in the first half. You're about to enter a new product cycle. You dominated April, new premium games rankings, and you can probably add 1,000 machines on Monopoly in second half, which is just starting. What is there an element that may prevent you from not adding 3,000 machines in second half?
Yeah, thanks, Sriharsh. A nice question for today. I would say is when you see the Eilers-Fantini report, which will come out very soon, you'll see that we've had a very strong April, and we feel very confident around our pipeline for the next five months to close out the full financial year. If we are looking like we're going to change or go beyond that number, we'll naturally update you. We feel confident in saying that we're at the top end of the 4,000-5,000, and we have the confidence around the portfolio, the commercialization, the customer relationships to deliver that.
Awesome. That's great. Second question, a little bit more long-term around your $1 billion iGaming revenue target. Could we talk a little bit about the European iGaming content opportunity? I think the U.S. opportunity is pretty well understood, but Europe is something we talk less about, but the TAM is 3 to 4 times bigger. You've got minimal market share there or content share there. Is that part of your $1 billion revenue scale-up? Can you get to high single-digit content share in European iGaming in 3 to 4 years? Thanks.
Thanks, Sriharsh. I think, first of all, when you have the opportunities that we have in front of us in iGaming, it's important to stay focused. We've really focused on the North American market, the Canadian market, and the U.K. market. Your hypothesis around Europe is right. There are some moving pieces in Europe around the way the tax regimes in various countries are changing. Some of the access is changing as well. We do believe that our land-based content will resonate in iGaming, and we've seen that initially, and we expect to see that be very, very confidently reinforced when we launch Lightning Link later this year. We do see Europe as part of that.
We are focused on getting our rightful share in North America and Canada, which are close to our core markets, and continuing to build in Europe, both from our land-based gaming business point of view, where we hold sort of 22 share of install base, getting a stronger position in iGaming in the markets where we can compete effectively. It is part of our geographical opportunity in the $1 billion, yes.
Thank you. Thank you for that.
Thank you for the questions. That concludes the Q&A session. I would like to hand the call back to Trevor for closing remarks.
Thank you. I just wanted to reinforce to all of you that the team at Aristocrat remain focused on delivering high-quality growth for shareholders. We're focused on continuous and sustainable market share growth and also shareholder returns. Thank you for your ongoing interest in Aristocrat. We remain committed to delivering high performance and high quality for you as shareholders. Have a great day. We appreciate your time.
That concludes today's conference call. Thank you for your participating. You may now disconnect. Goodbye .