Thank you for standing by, and welcome to the Aristocrat FY2020 results briefing conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Trevor Croker, CEO. Please go ahead.
Good morning. Welcome to Aristocrat Leisure Limited's financial results presentation for the 12 months to 30th of September 2020. My name is Trevor Croker, Chief Executive Officer and Managing Director of Aristocrat. It is a pleasure for me to be presenting today along with Julie Cameron-Doe, our Chief Financial Officer. Thank you for joining us. Before we begin, please note the usual disclaimer statement on page two of our investor presentation pack. Turning to slide three. Full details of the results are contained in the operating and financial review document released this morning. In today's session, we will first address our business's response to the challenges of COVID-19 during the reporting period, including the refinement of our group growth strategy.
We'll then step through a summary of our group results and performance across our two operating businesses: Aristocrat Gaming, formerly referred to as our land or land-based business, and Aristocrat Digital. I'll close by saying a few words on our expectations for the 2021 financial year before opening the line for Q&A. For clarity, all references to prior corresponding period or PCP represent the 12 months to 30th of September 2019 and are expressed in reported terms unless otherwise specified. Normalized results refer to the reported results excluding the impact of certain significant items during the period.
As set out in the materials released today, these are: COVID-related government benefits, contingent retention arrangements related to the acquisition of Plarium, an onerous lease obligation with the Big Fish business, an expense related to the legal settlement disclosed in May this year, and recognition of a deferred tax asset of over $1 billion in line with the group structure changes announced in November 2019. While the group was on track to deliver growth in line with our plans before the pandemic hit, results in our gaming business were materially impacted by customer venue closures and the implementation of social distancing measures that have been in place across key gaming markets globally since March 2020. In the context of this unique, challenging year, I'll begin by speaking to our COVID response, the progress we made, and how Aristocrat has positioned heading into the 2021 financial year. Turning to slide four.
At the outset, I want to express my deep appreciation and respect for the resilience and commitment shown by our people over the past 10 months. Their care for each other, their focus on our customers and players, and their absolute determination to deliver have been critical to getting us to where we are today. Their safety and well-being, and the safety and well-being of our customers, suppliers, and other stakeholders remain our first priority. It's never been more clear that our people are the heart of our business, our most important responsibility, and our biggest asset. Our 2020 sustainability disclosures will be published to our website at the end of the month, and in it, we are sharing just a few of the inspiring ways our people have risen to the challenges we've faced this year.
I'd encourage everyone to review the report, and in the meantime, to the more than 6,000 Aristocrat people around the globe, let me simply say thank you. While today's results demonstrate the impact of the pandemic during the period, they also highlight the group's strengths and the effectiveness of our business's response over the past 10 months. As always, we've focused on what we can control to protect and extend our strategic advantage and position the business for future growth. We've accelerated our diversification over the past several years. We're entering more adjacent markets, segments, and game genres. We've also driven scale in digital, adding a material B2B operational engine to the group and delivering further diversity to a revenue base that is now almost 80% recurring rather than one-off in nature.
The benefits of this diversification are evident in our results for the period, during which we have maintained revenues in excess of $4 billion at group level while protecting the business and maintaining investment behind our strategic differentiators for the future. Throughout 2020, we confirmed our commitment to our industry-leading D&D, or design and development organization, while also maintaining strong investment in digital games and user acquisition and continuing to commit capital to further grow our gaming operations footprint. We also invested more in strategic capabilities, including customer experience, cybersecurity, and data capability, among other priorities. At the same time, we took the opportunities presented by this crisis to improve. Aristocrat pivoted to an explicitly people-first focus, energizing our culture and offering more support, flexibility, and recognition to our people. An average engagement score of 8.5 was achieved through the reporting period, which is significantly above industry benchmarks.
We also experienced no loss of business momentum despite the disruptions and remote working arrangements. We made difficult but important decisions to further support our liquidity. This included a significant rebasing of our Big Fish business, which is now poised for more profitable, sustainable growth. We chose to reinvest a portion of the $100 million savings in operating expenses identified in the second half of the fiscal year 2020 compared to the PCP behind growth drivers such as our customer service, product development, and user acquisition. In addition, we sharpened our operational priorities in gaming and focused on supporting customers with higher levels of service, flexibility, and tailored commercial options to help them recover as quickly as possible. Furloughed staff were brought back to work early to help customers prepare to reopen safely and underline our commitment to being partners of choice to our customers.
Aristocrat's long-term focus on lifting our competitiveness through its outstanding people and products positioned us to benefit in digital and in gaming as demand began to return through the later half of the reporting period. This is evident in the share gains achieved by our gaming business in key markets over the year, along with outstanding customer feedback and industry data on portfolio performance, particularly in our largest markets in North America and in Australia. Our digital business also took share across core genres, reflecting our investments in improving the product management portfolio and scaling the world-class title Raid: Shadow Legends, along with broader portfolio performance and COVID-related tailwinds. At period end, Aristocrat had excellent liquidity, low debt, and a balance sheet that provides the group with full optionality. We have a revitalized team and people-first culture.
Our strategy has been reaffirmed, and we are focused on accelerating it and making the most out of the opportunities presented by disruption. While we continue to manage the near-term impacts and volatility driven by the pandemic across global markets, we believe we are ideally placed and will continue to be proactive, ambitious, and focused in our response to these unique challenges. I'll now turn to a summary of our group growth strategy on slide five. During the year, we took the prudent steps of reviewing our growth strategy in the context of COVID. Our strategy aims to deliver high-quality, sustainable profit growth by continuously improving the quality and breadth of our product portfolios. We achieved this by investing in great people, product, and capability, building on foundations of strong culture, governance, and financial rigor.
Our approach is summarized in the diagram, iterations of which have been shared with the market previously. We took the opportunity to retest our short and long-term assumptions and consider potential changes in underlying trends as relevant to our business, customers, players, and broader markets. In summary, the review confirmed the soundness of our strategy and its ongoing relevance in that COVID-impacted world. We have expanded and reordered some priorities, and in some cases, we've been encouraged to move faster in executing our plans. The text in red represents new language demonstrating some of the refinements implemented as a result of the review. For example, we're placing more emphasis on upskilling leaders and broadening new strategic capabilities. We're also bringing a deeper focus on people, drawing on the lessons of COVID, and embracing opportunities presented by the changing nature of work.
Customer experience leadership, or CX, as we describe it, is all about unlocking new value streams by delivering customers and gaming patrons connected products and services in line with their changing needs and underlying consumer trends. With the benefit of a dedicated CX team, we're increasingly leveraging our strong customer partnerships, compelling content, and growing capability to deliver seamless experiences beyond the gaming floor. During the reporting period, CX successfully launched our first mobile loyalty products for a major U.S. customer. In the context of COVID and with the encouragement of our customers, we'll continue to significantly escalate our focus on convergence products and services in the period ahead. We are also emphasizing our readiness to invest to accelerate our progress. Where we see quality opportunities, we will consider unlocking them through organic investment, M&A, or internal synergies and collaboration.
For example, in the period, we concluded two deals to acquire access to more world-class game development capability in digital. Investments in the proven game studios Neskin and Proteus signal our intent. We have the balance sheet strength and the track record to support bold moves as well as incremental ones. These are changes in emphasis and, in some cases, priority, but the foundations of our approach will not change at all. We will continue to grow our market-leading portfolios with strong investment in gaming D&D, digital pipeline expansion, and smart user acquisition. We will continue to focus on taking share wherever we choose to play whilst driving strong operating cash flow, good governance, balance sheet strength, and operational excellence remain core along with our commitment as a group to grow strongly and sustainably.
Taken as a whole, COVID has helped to confirm our strategic direction as a business while sharpening our focus and highlighting our priorities. Moving to a summary of Aristocrat's performance for the 2020 financial year on slide seven. Aristocrat's group results for the 2020 financial year were materially impacted by COVID-related headwinds as previously flagged. Normalized profit after tax and before amortization of acquired intangibles, or IMPACT A, of $476.6 million represents a decrease of 47% in reported terms and 49% in constant currency compared to the $894.4 million delivered in the 12-month period to 30th of September 2019. Revenue decreased by 6% to approximately $4.1 billion, with COVID impacts on the gaming business partly offset by strong growth in digital, again demonstrating the benefits of our diversification strategy. Earnings before interest, tax, depreciation, and amortization, or EBITDA, fell around 32% compared to the PCP to almost $1.1 billion.
Fully diluted earnings per share before amortization of acquired intangibles of $0.747 represents a 47% increase compared to the PCP. Operating cash flow of over $1 billion was achieved, reflecting a relatively modest decrease of 5.8% compared to the PCP. This demonstrates the business's strong underlying cash flow capabilities enhanced by targeted COVID responses. Balance sheet quality was once again a feature of Aristocrat's results. Net gearing at period end was 1.4 times, flat on the PCP. This was driven by positive cash flow generation throughout the period. Liquidity was further enhanced by proactive measures, including increasing the group's revolving credit and term loan B facilities and canceling the interim dividend. In view of Aristocrat's effective COVID response and confidence in our strengthening performance, the directors have authorized a fully franked dividend of $0.10 per share, $63.9 million in respect to the period ended 30th of September 2020.
This represents a decrease of 82% or $0.46. The record date will be 2 December, and the payment date will be the 18th of December. The underlying operational strength of the business was evident during the period, with a further lift in share and market-leading fee per day for the North America's gaming operations segment. Digital performance reflected our success in building the competitiveness of our social casino portfolio through investment in live ops, features, and new slot content, as well as the momentum of Raid: Shadow Legends and new games launches. Performance also benefited from the tailwind of COVID stay-at-home mandates. As I mentioned, we took a strategic decision to maintain industry-leading D&D investment through the period to protect our core advantages in product, fuel expansion into new adjacencies, and position the business for longer-term growth.
We experienced no loss of momentum in our product organization, with high productivity and full focus on recalibrated priorities. Over the 2020 full year, D&D investment fell fractionally in absolute terms by $2.5 million to $49.8 million. This is a strong result at the top end of the range of 11-12% of revenue the business has allocated across recent years. At the same time, we invested aggressively in user acquisition, or UA, to support growth in digital at a time of opportunity. UA investment of just under $450 million represented 28% of segment revenue, up 1.7 percentage points compared to the PCP. I'll now invite Julie Cameron-Doe, Aristocrat's Chief Financial Officer, to take us through further details of group result, beginning on slide eight. Julie.
Thank you, Trevor, and good morning, everyone.
I will first go through the composition of Aristocrat's reported IMPACT A performance of $476.6 million, normalized for significant items, and reconciled to the PCP. As Trevor mentioned, this result represents a 47% decrease, or 49% in constant currency compared to the PCP, and has been fundamentally driven by COVID-related impacts across all regions of the gaming business, partly offset by strong growth in digital. IMPACT A performance was also supported by a range of prudent cash preservation measures Aristocrat implemented across our non-digital operations in response to the pandemic. Stepping through the chart from the left-hand side, profit in the America's business fell $414 million compared to the PCP. This reflected a material reduction in capital spend by customers and lower overall gaming operations revenue due to venue closures and the impact of social distancing measures experienced since March.
In the outright sales markets of ANZ and International Class 3, profit fell $112 million and $45 million, respectively, compared to the PCP, reflecting COVID impacts as well as the broader economic impact of bushfires and drought in ANZ. Underlying performance remained robust, with leading ship share sustained across key markets. The digital business delivered almost $130 million in incremental profit, demonstrating strong portfolio performance, as Trevor mentioned, including growth in social casinos, the ongoing success of Raid: Shadow Legends, and new game launches. Corporate cost and interest increased by $12.3 million compared to the 12 months to 30th of September 2019, largely driven by lease interest. D&D represents the business's investment in talent and technology to drive long-term differentiation and sustainable growth.
We continue to invest strongly in D&D over the year with deliberate and rigorous prioritization of resources, resulting in a modest $9 million reduction in spend compared to the PCP. A decrease in the group's effective tax rate from 27.5% to 24.9% compared to the PCP drove a $10.9 million reduction in cost with the recognition of a deferred tax asset of approximately AUD 1.1 billion. This reflects the impact of changes in group structures announced in November 2019. Finally, favorable foreign exchange movements reflecting a weaker Australian dollar increased profit by a further $16.4 million compared to the PCP. Turning now to slide nine, net debt for the full year of just under AUD 1.6 billion compared to net debt of around AUD 2.2 billion reported at 30th of September 2019. This represents a net debt-to-EBITDA leverage ratio of 1.4 times in line with the PCP.
As of 30th of September 2020, Aristocrat had total liquidity of just under $2 billion, comprised of cash and $277 million in available credit. This reflects the number of steps taken during the year to optimize our liquidity, including an increase in the group's revolving credit facility limit from $150 million to $286 million in April 2020 and issuance of a new $500 million incremental term loan B facility in May. Our debt facilities remain competitively priced at a weighted average of Libor plus 217 basis points. Credit agreements remain covenant-like and provide the group with ample financial flexibility. The business also maintains stable credit ratings through the recent volatility. The group's balance sheet strength and debt profile continue to provide us with financial certainty, flexibility, and full optionality going forward.
Turning now to cash flow on slide ten, the group's cash-generating fundamentals remain strong despite the impacts of COVID, with operating cash flow of over $1 billion for the period. This represented a modest 5.8% fall compared to the PCP. This again highlights what is a core strength for Aristocrat and also demonstrates a further increase in the proportion of recurring revenues in our total group revenue mix. Capital expenditure decreased almost 22% from around $317 million in the PCP to just under $250 million, reflecting investment in hardware required to support growth in the North American gaming operations installed base. This expenditure reduced significantly in the second half of the period compared to the PCP due to the impact of COVID. As Trevor mentioned, significant items in the period are detailed in the OFR document released this morning. That concludes the summary of group performance.
I will now pass back to Trevor to comment on operational performance and outlook for the 2020 financial year. Trevor.
Thanks, Julie. I'll now share more detail about our operational results, beginning with our gaming business, previously referred to as land-based operations. Over the course of 2020, Aristocrat Gaming continued to execute its growth strategy and took further steps forward in terms of portfolio breadth and performance. Despite the disruptions driven by the pandemic, a relentless focus on people, portfolio competitiveness, and customer engagement was the hallmark of our operational response across key gaming markets and segments. As I mentioned, at the end of the pandemic in March, our gaming business took the opportunity to sharpen product portfolios and double down on customer service. We chose to not furlough D&D staff and maintained our product development momentum throughout the period.
Our commercial teams also made the most of opportunities to deepen partnerships, bring forward new solutions, and help customers prepare to reopen safely. Customer feedback suggests that significant goodwill was generated by Aristocrat being first among competitors to bring back service staff safely and engage proactively. We are already seeing early benefits in terms of increased strategic customer dialogue and new commercial opportunities, particularly in North America and ANZ. While financial results were materially impacted by COVID in the reporting period, we also saw sustained underlying momentum that will position us to maximize opportunities and return to growth as conditions continue to improve. Focusing firstly on Americas and turning to slide 12. In local currency, Americas revenue decreased around 31% and profit fell over 52% to approximately $935 million and over $356 million, respectively, over the reporting period compared to the PCP.
As I referenced earlier, North American gaming operations business continued to grow with our Class 3 premium gaming operations footprint expanding by 5.9% to over 24,300 units at period end, drawing further share growth despite market conditions. This performance was fueled by a combination of market-leading cabinets with strong growth in Mars X and powerful game content. Dragon Link remained the number one premium game family, supported by the scaling of Dollar Storm and Buffalo Diamond in the period. In Class 2 gaming operations, placements grew 0.3% over the full year to over 25,300 units, driven by growth in the second half off the back of continued strength in the mechanical install base, coupled with increased ovation performance. Key titles included Hunt for Neptune's Gold, Buffalo Extreme, and Welcome to Fantastic Jackpots.
On a combined and adjusted basis, Aristocrat's average gaming operations fee per day improved 1.1% to over $51, driven by portfolio strength and resilient demand. On an unadjusted basis, average fee per day for the period was $35.55 and remained market-leading. In Class 3 outright sales, revenue decreased 46% and volumes reduced 44% compared to the PCP, reflecting COVID impacts. Mars X Duel continued to be an outstanding performer, driving over 40% of all cabinet shipments supported by strong titles including Buffalo Gold Revolution, Fudai Liang Liang, and Multi Cash Ultra. Aristocrat also revealed the most anticipated title, Buffalo Chief, on the Helix XT cabinet. The average sales price declined 5% compared to the PCP, reflecting the impact of our expansion into lower-priced strategic adjacencies. Aristocrat continued receiving outstanding customer feedback in North America, consistently ranking as the leading gaming equipment supplier across a number of key casino customer surveys.
For the second year running, Aristocrat was a named top land-based supplier at the Global Gaming Awards and was the most awarded supplier overall. The business also won Land-Based Product of the Year for Mars X Cabinet, along with Slot of the Year for Dollar Storm. Strong game performance enhanced by the new hardware releases also saw Aristocrat claim 14 of the top 25 premium lease games in North America, according to a report released by Islas in September 2020. Turning now to the ANZ International Class 3 results on slide 13. In ANZ, in constant currency, revenue decreased 38.5% to AUD 280.5 million, while profit decreased 72.5% to AUD 58.8 million, respectively, compared to the PCP. Again, this result reflected challenging market conditions, mainly COVID-related, as well as the impact of droughts and fires on customers and the broader economy earlier in the year.
ASP reduced to $20,786 from the $21,252 achieved in the PCP, driven by the maturity of the product portfolio and changes in the selling model mix as a result of COVID. The ANZ business sustained its market-leading ship share performance in financial year 2020 as it focused on providing flexible and responsive service and support to customers to position them for recovery. International Class 3 revenue and profit decreased around 38% and 56%, respectively, to $126 million and $32 million compared to the PCP, again reflecting the material impacts of COVID-related shutdowns, social distancing restrictions, and travel restrictions across Asia and EMEA. I will now provide more detail on the performance of our digital gaming segment on slide 14, and please note the figures on this slide are in U.S. dollars. Over the course of the reporting period, we made further significant strides in Aristocrat Digital Operations.
Under the leadership of a dedicated Aristocrat Digital executive team, the business focused on pipeline and portfolio growth, maximizing booking performance and continuing to invest in marketing and efficient UA to scale. Aristocrat Digital generated over $1.6 billion in bookings during the reporting period, a 31% increase on the PCP, while revenue increased 29%. The business delivered almost $500,000,000 in segment profit, up almost 34% compared to the 12 months to 30th of September 2019. Average bookings per daily active user, or ABDAU, increased almost 44% to $0.59, with the portfolio benefiting from strong investment in game development, including live ops, features, and new slot content in social casino, and continued portfolio diversification. This momentum was supported by marketing investment and the tailwinds associated with COVID-related stay-at-home mandates.
We've previously referenced our focus on increasing the efficiency of our UA spend by implementing a common platform and dynamic investment based on clear return metrics. I would highlight that in the period, we delivered almost 34% uplift in profit off the back of a 1.7 percentage point increase in UA allocation as a percentage of revenue, demonstrating the material efficiency and effectiveness benefits we're now capturing. Overall, UA allocation increased to 28% of revenue in order to continue successfully scaling Raid, as well as new games including EverMerge and Undersea Solitaire Trypix. Segment margin increased over 1 percentage point to 30.8% over the full year compared to the PCP. Social casino benefited particularly from the successful rebuilding of performance in the Product Madness portfolio over the past year.
Investments in live ops, features, and new slot content drove Aristocrat to strengthening its number two position globally in this important genre and delivering $815 million in bookings in the period. Meanwhile, the strategy and role-playing genre, or RPG, contributed $539 million in bookings, reflecting significant growth in RAID. The social casual genre delivered $258 million in bookings, a decrease of 11% on the prior corresponding period. Newly launched titles improved top-line performance, legacy games continued to contribute to profitability, while the business maintained its focus on daily active users, or DAU, quality. Total DAUs at 30th of September 2020 decreased to 6.7 million from 7.5 million in the PCP. However, ABDAU increased significantly from 41 to 59 cents over the same period, again underlining our progress in focusing on DAU quality and building long-term engagement.
The performance of the Aristocrat Digital business over fiscal year 2020 underlined its gathering scale, momentum, and sophistication, and the excellent progress being made in leveraging best practice across core functions such as insights, data, and marketing. It also reflects the building out of core digital capabilities and focused leadership. The benefit of this growing BC engine to our group was amply demonstrated during the year, and we remain bullish about its potential and broader strategic significance, particularly in a post-COVID world. Turning now to more detail on our digital portfolio on slide 15. Charts on the left show the evolution in mix across social casino, RPG, and social casual games in terms of total bookings contribution between financial year 2019 and 2020. While overall bookings grew, a good diversity in terms of genre mix was also retained.
At the same time, the charts on the right demonstrate the mix of game titles that contributed more than $50 million in bookings over both 2019 and 2020. Over the course of 2020, established games such as RAID and Lightning Link further grew their contribution, while EverMerge and other new games also began to scale, improving overall portfolio strength and diversity. Turning now to slide 16, which provides an additional lens on our pipeline management and the quality of our digital portfolio. This slide updates a disclosure we have previously shared and demonstrated our investment in expanding and diversifying the portfolio over time. We continue to actively target new, high-value segments while also creating more player value within established franchises through content development and feature developments. An aggressive talent acquisition strategy underpins this progress, including the recent investments in Proteus and Neskin.
I'll now turn to a brief recap of our results for the 2020 financial year on slide 18. In May, we said that Aristocrat entered the COVID challenge in good shape. Six months on, and notwithstanding the uncertainties that remain, we believe we're well placed to emerge from this period in even better shape. Aristocrat's result for the year demonstrates that we have enhanced our financial fundamentals and further accelerated our underlying momentum, despite the exceptional challenges and volatility generated by COVID, on our business, customers, players, and people across the majority of the reporting period. Aristocrat Gaming performed well and in line with expectations through to mid-March, from which time all key markets were materially impacted by broad-scale mandated venue closures and social distancing restrictions.
Nevertheless, in North America, we continued to take share over the full year in gaming operations while maintaining a market-leading combined adjusted fee per day. We also maintained market leadership in ANZ with an increased focus on customer service and engagement. Continued investment in new hardware and games delivered superior performance and supported resilient demand. Aristocrat Digital delivered exceptional operational performance with strong double-digit growth in revenues, bookings, ABDAU, profit, and margin. The business continued to diversify and strengthen its portfolio and pipeline of new games, releasing two new casual titles in the second half, continuing to scale our world-class RPG game and investing in improving our social casino portfolio. The business experienced further growth in social casino while also growing or entering other attractive genres and making significant strides in organizational scale, capability, and effectiveness.
We also enhanced our strong financial underpinnings with liquidity of just under $2 billion as at 30th of September 2020. In addition, we delivered an operating cash flow result above $1 billion for the year, strengthened our balance sheet, and held leverage at a prudent 1.4 times. The group also recognized a $1.1 billion deferred tax asset, which will reduce cash tax over the long term and further enhance our ability to invest aggressively behind our strategy and high-quality long-term growth. We have reviewed and confirmed our strategic direction as a business. While sharpening our focus and highlighting our priorities in the context of COVID, Aristocrat has effectively managed what we could control over the 2020 financial year and implemented a proactive and successful COVID response and recovery plan. We are well positioned to weather volatility and to take advantage of opportunities presented in the period ahead.
This brings me to the outlook for the 2021 financial year. Turning to slide 19. Aristocrat plans to continue growth over the 2021 full financial year, reflecting the following: maintained or enhanced market-leading positions in gaming operations measured by the number of machines that are operating and game performance. Sustainable growth in floor share across key gaming outright sales markets globally. Further growth in digital bookings with user acquisition (UA) spend expected to remain between 25%-28% of overall digital revenues. Continued D&D investment to drive sustained long-term growth, with investment likely to be modestly above historic levels on a percentage of revenue basis. An increase in SG&A across the business as we continue to scale and deliver our growth strategy. This includes continuing to identify adjacencies and expand our capabilities to create new business and growth through product distribution and investment.
For non-operating items, additional detail is provided on the table in the slide. While we can't predict how the pandemic will affect our operating environment in the months ahead, in terms of what Aristocrat can control, we're pleased to be entering the 2021 financial year with excellent operational momentum, a proven strategy, strong team engagement, and belief. We believe we're well placed to maintain our long-term trajectory of high-quality sustainable growth. With that, I'll conclude the formal presentation and open the line to any questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Ryan with UBS. Please go ahead.
Hi, Trevor. Hi, Julie. My first question is just on the digital guidance, and I see that you're guiding to growth in bookings, which I think is encouraging given the tough comp that you've achieved in the 2020 year. Can you talk about what you've assumed within this guidance for market growth over the next 12 months and also what you've assumed in terms of new titles being successful in order to achieve the guidance?
Yeah, thanks, Matt. I appreciate the question, and thank you. The way we looked at it is the way we finished the 2021 year was off the back of a number of changes. First of all, we implemented the live ops, the features, and the new slot content into Product Madness, which was an important part that we've been talking to the market about addressing for around 12 months now, and that's a good momentum in our portfolio. We also, through the year, were able to scale RAID and continue to scale that business and make that a strong business through investing in UA. Mike and the team also addressed Big Fish both structurally, but also around the priorities around genre and markets in which to enter.
That's what's driven a fair component of what we thought has contributed to our performance this year, and obviously the tailwinds of COVID coming through behind that. We expect the market rates to moderate into 2021, and it's a little bit hard to pick them at the moment, but we expect them to moderate, and they certainly won't be at the levels that we saw in financial year 2020. We continue to see games like EverMerge scale, and we have a number of games. We have about five games in soft launch now, plus another portfolio of games that we're looking to bring forward through the year, and that's been phased across the year. As you know, soft launches don't necessarily generate straight into worldwide launch, so there is a component of test and retesting until we actually go to market.
We have a pipeline coming through for this year and further development as well.
Thank you. This might be a question Julie might be able to answer. I'm just trying to think through, I guess, the margin outlook from here. I know that you haven't given any margin guidance specifically, and we can all see that the land-based margins in particular were impacted a lot from COVID. Is there anything structural which might stop you from getting back to historical levels of margins that you used to achieve in the land-based segment? Given the level of growth that you're sort of talking about in your guidance statement, which is largely around revenue, is that an amount of revenue which would allow for you to see those sorts of margins that you did historically?
Thanks, Matt. In terms of the margin, I mean, I'll help you understand it in a few different ways. Obviously, the outlook statement we've put out there is in relation to FY2021, so we're trying to help people understand our expectations for FY2021. We're not trying to talk about the full period of recovery that we anticipate for the land-based business. If you think about what we've seen in the Americas and the ANZ businesses in terms of those margin declines in the year, there's a good chunk of that, obviously, that's down to operating deleverage because, obviously, we had significant margins, and given the impact of COVID during the period, that really hurt us.
There is an element of some of the provisions we've had to take in the year to balance out the debt for inventory and some of the sort of necessary sort of pruning and fertilizing we've done with our workforce as we've gone through this as well. That has impacted. If you think about the overall declines in the margin, I'd say there's about 80% of that's down to operating deleverage, and about 20% is down to some of those impacts of some of those one-time or specific items that have gone through there. In terms of the go-forward, in terms of the margin expectations for the future, certainly as we grow, we do anticipate that we'll be able to recapture operating leverage, and obviously, we'll cycle over some of those more some of those provision-type items.
I would say that as we grow, there's a higher expectation on us from a kind of social license to operate and also from just a case of just being a mature business now where the cost of things like cybersecurity, privacy, good governance generally, headwinds from things like insurance premiums, those are the kind of things that will sort of hurt us from a margin perspective, but they're absolutely the areas that we need to invest in as we grow the business. We talk about the investments we're making in people and in different skill sets, and obviously, we see those as long-term investments to grow the business sustainably, but clearly, from a short-term perspective, they would have an impact on the market. That's from a land-based perspective.
If we think about the margin for the digital business, you'll have seen an improvement in the margin this year, and clearly, we've had a fantastic year, and we've had significant growth in social casino, which has improved the share of casinos as part of the overall digital portfolio. As you're well aware, the margin for the social casino business is higher than social casual, so given that mixed shift, we've had some strength there. Long-term, as we grow that portfolio, we should expect that margin to moderate because we wouldn't expect social casino to continue to be such a high share.
Thank you.
Okay.
Thanks, Matt.
Our next question comes from Larry Gambler with Credit Suisse. Please go ahead.
Hi, yes, am I coming through? Can you hear me?
We can hear you, Larry.
Great, thanks. I'd like to extend on Matt's question, if I can, around digital. Trevor, you had very good growth in ARCDAU to $0.59 from $0.41. That perhaps suggests the exit rate for the year might have been as high as $0.75-$0.80. I'm just wondering, to what extent do you think that ARCDAU could be maintained through FY2021, or do you think COVID may have artificially boosted that, and we might see some retracing?
Yeah, thanks, Larry. First of all, I think there's a little bit of abnormality in these numbers. I think when we spoke to you in May, we were talking about seeing strong signs, early days of both DAU and ABDAU growth as a consequence of work-from-home or stay-at-home orders. More recently, we've seen the DAU moderating and coming back, and you can see that in the overall numbers. From that perspective, we think that the ABDAU that we've finished the year with is a solid ABDAU. It is a mix because, as you know, there's higher ABDAUs across the three genres in which we're in. Obviously, RAID has scaled to become a much bigger and more significant part of our ABDAU mix as well, and so it's an important part of driving that. What does it look like going forward?
I wouldn't necessarily give you a number because I think we're still looking at what are the benefits of or not the benefits, the impacts of the game changes that we've made, the investment in UA, the new features, and then what's happening with the tailwinds from COVID as to whether they're moderating. We think that they are going to moderate over time, and that the ABDAU that we finished the year with was a reflection of both the portfolio strength, the investment that we've made in the portfolio, both from features and games and the diversification, and some tailwind from COVID, but I haven't got a future view on ABDAU.
Can I just ask whether the exit rate's higher than the average?
I'd say you'd have to, based on your math, yes.
Okay. Again, similar, if I can continue some questions around digital, with DAU, is the declines in users more related to casual or social?
It's actually some of the legacy games, so it's more in the casual market. Things like Lost Island, which had large numbers of DAU, things like Toy Story, which had large numbers of DAU, we've started to see those games because we don't see them as investable games going forward, so it's more in the casual aspect of it. There are some legacy games too that are no longer investable from a UA point of view, but actually seeing some of the legacy games starting to slow down as well. The degradation in social casino, which I think we've been talking to the market about for a number of years now on the basis that we saw that gradual decline, that has actually slowed.
Okay, great. The new studios you guys purchased in digital, I was looking at Neskin. It does look like it comes with some games and some users. Is that going to materially influence margin and some of these statistics like DAU and ARCDAU?
I might just make a couple of quick comments on. First of all, Neskin is the company behind EverMerge, so they are the ones that have actually made EverMerge, and the investment there is around focusing on talent and then helping us build our content pipeline. I might just ask Mike Lang, who's the CEO of Digital, on the call just to make a couple of quick comments on that studio and talent. Mike.
Thank you, Trevor. Larry, nice to meet you. In regards to Neskin, we saw it as a really great opportunity for us to not only invest in talent but invest in a group that was in Eastern Europe and could provide some low-cost capabilities for us like we've really successfully achieved with Plarium and in terms of its business. As a result, could help us then take the EverMerge business going forward, given, as you know, so much of the game as you're starting to develop, it is not just the original launch but the ongoing features and live ops that need to be created.
I think you're going to see us do more of these very targeted investments where we can bring in the right talent to help kind of accelerate our product pipeline and really drive the business, as you've seen this year, and drive future growth.
Okay, that makes sense. Okay, thanks, guys. I'll let somebody else have a go.
Thanks, Larry. Appreciate it.
Our next question comes from Bryan Raymond with Citi. Please go ahead.
Good morning. My question's just on digital as well. Just thinking about RAID, now you've got more than 400 million on your line booking there. How do you think about that one in terms of break-even in the second half of 2020? Did it quite get there? If you can just talk about how that contributed to your UA spend over the period, whether that was still the majority or a very large portion of that overall UA spend, the second half?
Yeah, thanks, Bryan. Appreciate the question. First of all, RAID was modestly profitable in the second half, and now, as we're switching away from scaling that into towards new content, live ops and features is what we're doing. I think if you look at the rough numbers, RAID's annualizing at about $368 million, somewhere $360-$368 million at this point in time. Really what it was is we invested around about 50% of the UA in driving RAID and driving that growth because it was a scalable and investable app and still remains that. That ability to continue to scale now is somewhat less possible. There are still, as we know, long-term value in apps through building in live content, live ops and features to sustain profitability longer term or to increase profitability.
Great. Just to confirm on that, was that 50% in the second half 2020 or full year 2020? I recall it was something like that in the first half as well. I'm just trying to confirm.
I think it was around about the second half, but we had a strong investment in the first half because it was actually scaling very aggressively from about November through, so it was a big part of the first half and around 50% of the second half.
Okay, great. Just thinking about the other investment in RAID outside of user acquisition costs, just thinking about that, other operating costs, which I noted for the overall digital business were up 20% in the second half 2020 despite some cost out and Big Fish restructure, etc. Can you help us understand the variable cost element within that bucket versus fixed costs? Also, what sort of incremental costing needs to happen in RAID as it scales further because I'm hearing from Channel Tech that there's some real server capacity issues and some additional investment required there to scale again further. Perhaps if you can just talk us through other cost buckets, please.
Sure, Bryan. I'll hand you over to Julie to give you some commentary around that fixed and variable costs.
Thanks, Trevor, and hi, Bryan. Yeah, in terms of the ongoing cost of RAID, I think you have to think about these games as we've talked about in previous years kind of live services. There is a real element of having the ongoing cost around the live ops and continuing to create the features and keep those games going so you continue to drive engagement and bring new users in and continue to engage with the existing users to keep that kind of virtuous cycle going within the game. There is definitely an element of that. As we look at how we can continue to develop new games and grow the business beyond where it's at today, we actually have to—we'll be investing more heavily in talent and in the product pipeline to be able to do that.
That will kind of, it's variable cost if you think about it from the point of view of we're bringing in resources, but I mean it's a fixed cost from the point of view of we'll be expanding in existing studios and building out larger teams to be able to do that. There's definitely an element of kind of ongoing cost and increased cost from that given it's such a big game. If you think about the success that Vikings has had and continue to have, I think Vikings has been going for over five years now. There's a dedicated team still that's very focused on Vikings, continuing to keep that game fresh and continuing to drive promotions and all of those live ops within that game. You'll see a similar situation with RAID.
Just any comment just to follow up there just on the server capacity issues in RAID at the moment, which is constraining spend for some players if they can't really add in more champions because of that capacity and what they can do. I know it's something on the forum that they're talking about adding additional capacity, but if you can talk about that tech investment piece rather than just people in order to create more opportunities to grow revenue and margin as well.
Yeah, I might just start that and then pass back to Trevor. I mean, overall, from a technical perspective, I mean, I'm not going to speak specifically to the reference you made to RAID, but I think generally one of the key things that we have to do as we now have this digital business of scale is make sure that we do not accumulate technical debt and that we are keeping our platforms current and investing in them. In FY2021, we do have commitments to invest in that area across the digital portfolio. I might hand to Trevor, to Mike, who can comment on the RAID technical difficulties.
Yeah, I'm not really aware, nice to meet you, Bryan. Not really aware of many technical issues that we have heard of, but clearly we're always on top of that and making sure that we're providing the best customer experience. I will say where there's significant investment is around the content capacity, and we've got a whole new set of new game features coming over the next 30-60 days that I think are going to have a major impact in terms of just improving the overall content experience and continuing, as Trevor said, this long-term opportunity of RAID that we have right here to make it truly a very evergreen and profitable product long-term. In terms of technical server capacity, we'll keep on track of that, but I've not heard much in terms of the big issue on that.
Okay. Just final one from me just then, just on land base. It's great to see some good performance there between gaming ops. Just thinking about sort of October and November to date, we've seen cases in the U.S., U.K. cases kind of triple from where they were at the exit rate from the year 2020. Just interesting, and there's been a few states that have increased some constraints or restrictions on the casino. Just interested if there's been any material change post-balance day around some of those trends that have been quite encouraging through the second half 2020.
Yeah, thanks, Bryan. I think it's a little bit too early at the moment. Certainly, we've seen a few venues closing, but I think it's also fair to say that most venues haven't been operating at 100% capacity. Our focus is really around making sure that we measure the number of machines that are switched on and then keeping our market-leading figure today, and we believe we can continue to do that. I'll hand to Mitchell Bowen as the CEO of our gaming business to make a couple of comments on how we've seen the market.
Yeah, thanks, Trevor. Bryan, yeah, look, it's a pretty fluid scenario at the moment. Obviously, our focus is making sure we keep as many machines switched on as humanly possible. The markets like New Mexico, Pennsylvania, Indiana, Colorado, which are talking about either closing for a couple of weeks or adding some of those additional restrictions, maybe down to circa 25% capacity and maybe shutting out some times, maybe from 2:00 A.M. to 10:00 A.M. type scenario. That doesn't materially impact the number of the fleet activation that we've got. Markets like Oklahoma, where we've obviously got a very strong footprint, remain pretty resilient in their approach to staying open. We'll keep everybody updated, and obviously, it's a pretty fluid environment at the moment. We don't see a material impact at this point.
Okay, thanks, everyone.
Thanks, Bryan.
Our next question comes from Desmond Tsao with Goldman Sachs.
Hi, thank you. Good morning, Trevor. Good morning, Julie. Maybe just firstly a question on land base, similar to the prior question. At the end of October, you guys noted 75% of Class 3 Premium and 90% of Class 2 Gaming Ops machines were operating. If you could just maybe remind us of how that has trended in the sort of prior months leading up to October, and then perhaps if you can comment on the run rate for the other bins per day in October in light of the machine-on commentary.
Yeah, I'll make some comments. I think the comparisons that we can give you at the moment, Desmond, and thanks for the question, is that we finished September at 73% of machines switched on in Class 3 Gaming Operations, which then went to 75%. I think that's a little bit about our performance of the fleet was a lot of that. The second part is some more openings during that period of time. In Class 2, that number went from 88% at the end of Class financial year 2020 in September to 90% in 2021. We're seeing gradual increases in the percentage of the machines switched on. We're seeing pretty stable fee per day from those periods of time.
If you think about it, the fee per day calling in seems to be standing at a pretty stable level, and we're just really getting a slow increase of the machines switched on. I think there's, as I said, consequence of good game performance, good technology investment. You would have seen that we actually increased our install base for both Class 2 and Class 3 in the year as well. Mitchell, if you'd like to make any more extra comments.
No, Trevor, I think that sums it up that it's trending in a positive direction.
Okay, great. That's very clear. Maybe just a question around digital slide 28. It's a very interesting one. Perhaps if you could flesh that out a bit more, maybe talk to anything you can on the vertical axis. I guess if there's any sort of differences across casual and casino games and whether or not this curve, I guess, has shifted over time.
Yeah, thanks, Desmond. I think it's an illustrative piece of work, and I think Rohan Gallagher, who's been communicating this with the market through the last 18 months, is probably best just to give you the flavor of this. So, Rohan.
Thanks, Trevor. Good morning, everybody. Essentially, this is really about the investment in user acquisition to demonstrate long-term growth. That user acquisition investment is dynamic, and it's really dedicated towards the key performance indicators to ensure that the lifetime value of each game delivers a great return for shareholders.
Okay, thanks, guys.
Thanks, Desmond.
Our next question comes from Anthony Longo with CLSA.
Good morning, Trevor. Good morning, Julie. Just a quick one on digital. Just looking at, I guess, the interaction between DAU and monetization. I do appreciate in the first half 2020, we did see a compression of that 10% in the DAU base, and we did see that again across the balance of the year. I do appreciate the legacy games and the things in runoff, but how should we ultimately be thinking about that DAU base going forward? Is there still much to run on that front before you get that appropriate DAU base to monetize off, or is there still some leakage that still has to happen?
Yeah, thanks, Anthony. Appreciate the clarifying question. Certainly, from where we're going at the moment, you have seen a decline over the last couple of periods in DAU in total, and that's been against our deliberate strategy of monetization, which is to find investable apps and continue to do that. We have done that this quarter. We have stabilized the decline in casual casino, as we mentioned earlier. I think what you'll see is you'll see growth from new products, so things like EverMerge. You've seen dynamic growth from Raid: Shadow Legends. You'll see growth from EverMerge, Undersea Solitaire Trypix to a lesser extent. The new portfolio of games that are coming through will also drive DAU growth, but it's really going to be driven by the new content coming through as older games become more into profit as opposed to investable games from a DAU point of view.
That's great. Understood. In terms of, just wanted to get a sense as to the slide where you essentially carve up the bookings of games. It looks like Cooking Craze has gone back a fair way year on year. In the other games, when you back out the numbers, it represents about $240 million. I just wanted to get a sense as to how EverMerge and Undersea Solitaire Trypix are contributing to that, and then also how those annualized run rates are looking at the current stage.
Yeah. Okay. Good question. Realistically, and I'll make a couple of comments, and then Mike, you might want to just step it up from there. Really, this is where some games are becoming legacy games, and they're actually starting to become uninvestable either because of the CPIs or because of the LTVs for those games. They then become what we call legacy, or they become part of our profit opportunity. If you look at what's happened from the new games, things like EverMerge, it's still very early, but the indications are quite positive. If you think about where EverMerge is competing, it's in the merge segment, which was really created by the Zynga Gram Games business. Circa about $250 million-$300 million per annum, and we think we can take a meaningful share of that and actually grow that segment going forward.
Trypix Solitaire is in a more congested segment, and it's nowhere near as well, it's actually larger, but the growth rates aren't there, so it won't be the same size as EverMerge. It'll be smaller, just the size of the amount of competitive games in that genre and also the type of game that it is. EverMerge is showing good early signs, and we continue to see ability to invest in it. Yeah, Mike, you just might want to talk about how you feel about the pipeline with those games.
Yeah, I think the one thing I'd add on EverMerge is it is the best launch that Big Fish has had in over three years. I think it's a great signal of the work that the team has done there to kind of restructure and focus its effort on new product, and with this first game being a great first step of that. Our hope is for more to come as we're able to find ways to develop new products in the casual segment that are not only comparable to what you see out in the marketplace, but starting to mash up various genres. That's where a lot of the success in the casual space seems to happen. On that particular, that's where I'd focus it. In regards to solitaire, I think Trevor says it right. I mean, it's a competitive market out there.
Some games work right away. Some games we have to keep tweaking and improving upon them to see where they're at. I think solitaire is one of those where it needs additional work to figure out how we can really differentiate within that segment. That is really what the strategy is, to get more opportunity to get the games out there in the pipeline to find success.
Sounds great.
Let me just—sorry, maybe one comment. Sorry, Anthony. Maybe one comment on that slide is just the size of the digital business now. It is over AUD 2 billion of Australian revenue, 30% margin. It is a very strong and very comparable part of our business now and complements our strategy around diversification.
Yeah, absolutely. Look, thanks, Trevor. Thanks, Julie. Congratulations on the result. I've got a few more questions, which I'll take offline, but I'll let a few others have a go. Thanks again.
Thanks, Anthony.
Our next question comes from David Fabris with Macquarie.
Hi, Trevor. Hi, Julie. Look, I've got a question for Julie, and then I'll follow up one for Trevor. I'm keen to understand the thought process around liquidity position. Is there a need to hold so much cash given the improving outlook, which is coming at a back cost given the drawn facilities? I mean, if we don't see M&A near term, could you possibly repay the Term Loan B facility and potentially arrange more attractive finance on an M&A deal?
Thanks, David. Yeah, very good question. We're pretty pleased with what we've been able to do with our liquidity and closing the year with almost $2 billion in available liquidity. We've got a very strong position to be in. Certainly, when we came into this situation sort of 10 months ago, we really were in a period of high uncertainty and not really clear what opportunities would be out there from a market perspective to raise liquidity. We were focusing on putting ourselves in the best possible position to come out of this. We know that we entered the position strong from a fundamentals perspective with a strong portfolio and a strong balance sheet, and we absolutely wanted to preserve and enhance that if we could. That's why we took the actions we did to raise the debt that we did at the time.
As you'll recall, we identified what our cash burn would be on a worst-case basis, and we've been able to really improve on that as we've gone through the second half. We see the debt that we took on as a kind of form of insurance given the uncertainty. If you think about what's going on currently, as we're heading into winter in North America, that uncertainty isn't over. We're comfortable with the optionality that having such a strong liquidity position gives us. In terms of the flexibility to pay down, certainly, on a long-term basis, we wouldn't expect to have a balance sheet with this level of liquidity and gross debt. In terms of the pay down with the TLB, we'll absolutely have the possibility to restructure and change that as we contemplate potential M&A in the future.
Yeah, okay. There is no intent to reduce that now, I guess, is the point you're making. I mean, just looking at some of your comments around expanding into adjacencies, is this more a land-based comment or digital as well? Can you help us understand where you see these opportunities? Is there anything close to commercialization within these adjacencies?
Yeah, thanks, David. There are two lenses to this. First of all, there is our current businesses in gaming and digital, where we're comfortable with our current position. As you know, we've made some talent plays and some studio plays in the digital business in the last 12 months. It's across both. We also see opportunities in the land, or sorry, the gaming business. There are adjacencies in the gaming business that we want to continue to focus on. There are adjacencies that we can enter naturally through normal product and access, which we'll do. There are also other areas where we can build on our organic growth and accelerate that by doing good and smart M&A. We will continue to focus on where is the right price and what's the opportunity. It's also really about how we listen to our customers.
Our customers are informing our views on this at the moment because some of the relationships that they have with their customers have changed, and they're seeking different solutions. I actually see good opportunity in our land-based business. I see good opportunity in our digital business, and I also see good opportunity for other expansions outside of that, which we've referred to in the past, which are natural expansions in things like R&G with online slots. We know our content is very good content, so it becomes opportunity for us longer term.
Got you. In the next 12 months, is there anything new that's going to commercialize, or is it just wait and see?
I won't go into it, but I can say that we have been very proactive for a period, and we've always been proactive in looking at what the options are, and we'll keep you updated on it.
Great. Appreciate the answers. Thanks, guys.
Thanks, David.
Our next question comes from Sacha Krien with Evans & Partners.
Hi, Trevor. Hi, Julie and everyone else. Just a couple of questions. First of all, on the cost base for Julie, and then I have a question for Mike on the digital business. Julie, just wondering, first of all, did you achieve $100 million of cost out in the second half of 2020 that you guys had originally flagged? I just noted you did seem to bring staff back on earlier in the U.S. in particular.
Yeah. Hi, Sacha. Thanks for the question. Yeah, we identified $100 million of savings, as you know, when we went into this in response to the COVID situation. As we went through the second half and we could see the reopening start to happen across land-based, we started to return people to work. Particularly, we really wanted to be there to support our customers. As our customers were reopening, we were the manufacturer that was available to actually get out there and help them reset their floors and get ready for opening. It was very important to us to do that. We chose to reinvest. While we identified the $100 million, those savings were largely temporary in nature. If you think about it, there would have been variable compensation costs in that.
There would have been the variable costs in terms of the furloughed employees, the pay cuts that we'd announced. There were some redundancies, but a big chunk of those costs that we identified were temporary in nature. We did choose to reinvest a portion of those through the year. We talk about reinvesting in UA and product development and in customer service, and I kind of talked about wanting to be there for our customers and bringing people back. Absolutely, we invested there, and we see that as really our point of differentiation and why our customers will come to us. It'll help us game share and grow the business sustainably over the long term.
Okay. Thanks. When I look at some of the, I guess maybe you'd call them one-off costs that were above the line, so the bad debt provisioning, the write-down of inventory, it looks like there's been some abnormal legal costs during the period. It looks like it adds up to about AUD 120 million. Just wondering whether we should be assuming that you're going to get a lot of much cost growth coming through in FY2021 when you back out that number. As you said, you've also had some redundancies during the period. I mean, I understand there is underlying investment going on, but that's going to have to be pretty significant in order to grow the opex base on FY2020 at this point, isn't it?
Yeah, I'll sort of start from the beginning. In terms of the above below the line, we take a principled approach, and really the significant items that we've identified in the period have to be, they have to be truly non-recurring and not in the ordinary course of business to go below the line. They've got to be material in size, and we look at how things like this have been treated previously. You'll see there's five different items that we treated as significant. We called out JobKeeper and the other stimulus because we wanted to make sure that the result was clean from that perspective. While we've highlighted what we benefited from it, we've pulled it out separately. We've got the one-time deferred tax asset recognition, which was significant in the period. Then we've got the contingent consideration for Clarion.
The owner is leased at Big Fish following the restructuring that took place at the end of the fiscal year there. Then the catered to McGowder settlement costs, which will probably be disclosed back in May. Those are the really significant items. If you think about what's gone through in the normal course of business, you've got the bad debt provision, you've got some legal costs, you've got the inventory provision. You will see also, and I think it's in note 1.3 of the accounts, you'll see what's called post-employment benefits other than superannuation, which actually means termination costs. You will see that there was an increase there as well. In all of those items, it's kind of tough to make the call as to how much is normal course of business and how much is related to what we've been through this year.
Clearly, an element of it is related to what we've been through this year. In all of those cases, we have those costs in the normal course of business, and they do tend to fluctuate period to period, which is why they've gone through the numbers. We like to think, as we look at the results this year, while we're disappointed in it from a quantity perspective, because obviously the numbers are well below where we've been in the past, we see real quality in the result we've been able to deliver because we've gone in there with the principle of preserving our strong fundamentals, preserving our balance sheet, and optionality to invest in future growth.
We have been able to get through this crisis with strong liquidity at the end of the period and continuing to have a strong balance sheet at the end of the period as well.
Okay. Maybe we'll discuss that a little bit more offline. Just a quick question for Mike. I'm just wondering, Mike, if you can talk a little bit about the changes the digital team has made or is making ahead of Apple's privacy changes next year and whether you're at all concerned about any impact on UA and bookings from those changes.
Sure. Nice to meet you, Sacha. Listen, it's still very early days in regards to the IDFA changes and what's happening there. We have our marketing brain trust across the organization looking at the issue, talking to Apple, talking to Google to try to figure this out. I think the other thing you have to keep in mind is there's a lot of interested parties within the marketing ecosystem that are also trying to figure it out, in particular, Facebook and Google. Many of the things that are going on with them will ultimately be a way to solve the various issues that may come out here. Clearly, we have to acknowledge there could be risk here. However, here's why I'm more comfortable.
First of all, it's clear to me that the scale and synergies that we have across our entire portfolio kind of puts us in a good position to manage that ever-changing situation, which typically happens in many media industries where you see certain things happening, you have to kind of adapt to it. Much better to have the scale and scope that we have related to that. Second, and this is happening even before IDFA, is there's going to be continued diversification in marketing channels. The Plarium team has had tremendous success with YouTube as a vehicle. There's been success in other vehicles like Snapchat. Who knows what other vehicles will come? As you go forward, you'll find different ways of diversifying and being successful.
I feel very good, although I have to—we all, like any publisher, have to look at it and say there could be a short-term risk. I think the final thing I'll throw out too is kind of a consequence of this is there could be, over time, seeing more and more consolidation of smaller players in the business because it just becomes tougher and tougher to compete with these big changes, which, A, is an opportunity for us for more share, but, B, also for M&A down the road. All in all, still a lot to learn, but I feel good about our long-term strategic position to respond and adapt based on what happens.
That is all the time we have for Q&A today. I will hand back for closing remarks.
Thank you. Thank you for your interest in Aristocrat Leisure. We very much appreciate the opportunity to talk to you today. I think Julie referenced the fact that this is a quality result. I think quality, whilst it's difficult with the results themselves, the quality is very strong, and the fundamentals are actually stronger. When we came into the COVID period, we saw ourselves in a strong position from a strategic point of view, from an operating point of view, and a financial point of view. In this period, we've taken time to address each one of those, and I believe we've come out of this in a stronger position. We're far more confident about our ability to continue to grow the organization and continue to maintain our growth stock status because we're looking at the sustainable long-term profitability.
We generate over $500,000,000—sorry, $1,000,000,000—of cash flow, which allows us to continue to reinvest and self-fund our growth and create capacity that we've got from our financial structures for further growth, whether it is inorganic or organic. With that, I would like to thank you for your interest in Aristocrat on behalf of the broader team, and we look forward to keeping up to date. Stay well and stay safe. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.