Good morning, everyone. It gives me great pleasure to bring you the first half FY26 update on BetMakers Technology Group. Presenting today is myself, Executive Chair and President of the company, and accompanied by Jake Henson, Chief Executive Officer. The real pleasure here is to be able to deliver results from a technology-driven turnaround that has allowed us really to start compounding on the great work that the team have done over the last two years. You can see this directly in the numbers today, but we'll also talk through the products and the customer impact and our competitive positioning in the marketplace. From the numbers, you can see we delivered the first 6 handle on our half year EBITDA result with AUD 6 million. It's quite the turnaround from the AUD 1.3 million loss in the first half of FY25.
This is driven in part by a double-digit top line revenue growth of AUD 46.1 million and expanding gross margins by another 10% to 66.5%. Reflecting the great work that the team have done to make this business more efficient and deliver better return on our invested capital. A lot of this is driven by existing customers, but also by new product and new technology. There's no better example of the benefits and the market perception of that than demand by customers. Over the last six months, we've signed up phenomenal customers such as Stake as well as CrownBet, and continuing to deliver, you know, a significantly strong pipeline of customers going forward. In addition to that, we've also closed on our acquisition of LVDC, and we think that opportunity unlocks an enormous amount of additional customer benefits throughout the U.S. market.
On the back of that, we will give you some commentary around our recent deals and strategic opportunities that we see in the company as we move forward. Let me hand over to Jake to walk you through the company update.
Thanks, Matt. Thank you to any shareholders dialing in for today's call. BetMakers' mission is to become the central interconnected platform for horse racing betting. We do this through a number of ways. Firstly, with our market-leading cost per bet, which has really emerged from recent technology upgrades and enabled us to structure flexible commercial solutions. We achieve this by cutting out intermediaries, owning our entire platform, and streamlining operations. Core to what we do is solving complex problems for our customers and allowing them to operate lean and at scale. We drive efficiencies across trading, risk management, pool betting, and generosity, leveraging our proprietary form and content for even greater engagement. We are a fully integrated racing ecosystem covering fixed odds, platform, tote, and data, and the only scaled operator globally with this coverage. The BetMakers technology moat. It's not just a SaaS model.
It's a hybrid variable model with deep vertical integrations and opportunities to success share with our customers. We've built a resilient and widely deployed global tech stack covering the racing wagering lifecycle end-to-end. We're operating under a global license in all of our major markets. We work closely with rights holders and racing bodies. We're also now capturing and generating our own bespoke data. The combination of AI-powered innovation and our global racing expertise is how we will build that scalable moat for future growth. Covering on the BetMakers expanded global footprint. With over 300 staff and customers across six continents, we're building a truly global network, pairing the market leaders in both tote and fixed odds horse racing betting. We've built out a diverse customer base across racetracks, racing authorities, wagering operators, both digital and online, and land-based, media partners, rights holders, and regulators.
We're expanding our reach and penetrating into new markets with a broad product suite that is now built for global expansion and scale. Matt will now walk you through some of the key financial highlights from the half before we move on to growth.
Thanks, Jake. One of the benefits of being a technology-driven turnaround is not just we're not just a cost out story. We are a product-driven business now, and that's showing up in our revenue. Double-digit top-line revenue growth, going from AUD 40.5 million to AUD 46.1 million for the first half compared period on period. This is driven broadly right across the business from our digital data content and tote hosting. Very proud of the team to be able to do this, and we think this is a sign of the power of the technology platforms and products and how they're being received in the marketplace. We can see a very strong pipeline of additional demand coming through over the next half.
Some of the metrics that we look for here, we've split out the two different divisions that we run. The Global Betting Services, very strong growth here. Global Tote, also a respectable level of growth. We are very comfortable that Global Betting Services will continue at this pace. It looks like we have delivered the right products into the marketplace, and not just from our customers, but their customers. We're seeing better metrics right across the board. On the tote side, this business will benefit dramatically from our focus on LVDC, putting Las Vegas and Nevada right at the center of it. We expect to see further benefits as we upgrade that technology in the same fashion that we did with the GBS system.
When you dig deeper into the business and look at exactly what's driving this turnaround, gross margin has been an area of focus for the team. That is a combination of the data service that we ingest, but also the content that we acquire. As we build out the business, we have told the market that our long-term goal is a 70% gross margin percentage. We are well on track to deliver that, and you've seen that actual metric improve every single quarter over the last 8 quarters. We're very comfortable that we're doing the right thing there. I think there's more to go, and we should have a very, very efficient business once we're through the major product deliveries. In terms of the COGS, we've broken down from cloud content and other.
You can see that there's been an improvement right across the board there. We think there's additional work to be done here, so we're not resting on our laurels. That business, that aspect of the business is in very good shape today. In terms of the operating cost base, this chart is a fabulous chart. I think it tells a lot of the story. Again, it's not just about cost out, but this is a technology-driven turnaround. The benefits of that technology, though, is that this business is cheaper to run today than it was before, and we are driving more revenue today than ever before on the back of a lower cost base, which I think is a very powerful position to put the business in.
We're continuing to see the benefits of our new technology and in particular, the embrace of AI-driven technology production that is further lowering our costs, but also allowing us to deliver high-quality product faster and better with lower error rates than we have before. This is quite the story. I think the team continue to excite me every time I see product demos of what's coming through. We feel we're definitely on the right end of this curve. I expect to see this continue to come down slightly, even though we continue to grow top line in double digits. The combination of top line revenue growth, expanding gross margin, and managing our OpEx so that our operating cost base is continuing to come down, delivers a beautiful chart here where our EBITDA is going up and to the right.
This is the first example, I think, where investors can really see the operating leverage in the business. What we think is today we've done a great job of getting to here, we know that this business can continue to grow a significant rate at its top line while maintaining a very reasonable cost base. You should really see and continue to see that show up here in the EBITDA line. Quick snapshot of our P&L. We've gone through most of the line items here. D&A and finance costs are something that we're looking at at the moment as well. I don't think that there's too much really to talk about here. Jake, did you have anything in particular you wanted to touch on?
No. Outside the commentary, listed on the right-hand side, particularly as it relates to some of the historical terminal purchases. Going forward, that's becoming less and less of a framework of our business, and we're structuring deals with customers, where we basically service and supply, the ongoing support around the terminals as opposed to sort of the ownership model and the purchase. We do believe, that'll flush through the P&L over the next few halves a little bit further. As part of the long-term story, that's becoming less and less of the overall.
Perfect. No, that's exactly right. We're focused on being a capital-light business and unwinding some of the commercial deals and product deals that we did embark upon several years ago. You're continuing to see that improve in the business as we are very disciplined in terms of what new opportunities we take on board as we grow the company. Let me hand back to you, Jake, just to walk us through those growth opportunities.
Sure. Thank you. The first half, sorry, of FY26 was highlighted by major commercial milestones, and the also the completion of our LVDC transaction in Las Vegas. Firstly, the CrownBet agreement. A landmark and exclusive five-year deal to power the relaunch of crownbet.com.au into the Australian marketplace. That brand went live into the market just last week. CrownBet will be leveraging our full stack Apollo platform, including trading and risk technology, RaceLab content, where we're providing critical wagering infrastructure and connectivity to the best payments, KYC, CRM, and sports providers in the industry. The hybrid terms of the deal align our incentives with CrownBet and establish a tier one partnership with Crown Resorts. Secondly, it was the Stake agreement. A three-year extendable deal for our RaceOdds+ product.
Trading, pricing, BetS tream, RaceLab, content management, as well as leveraging our proprietary Global Tote Hub to access key international tote pools. This is a truly exciting deal leveraging all of the global infrastructure BetMakers has to offer. Secured via a global tender process, and currently go live is slated for Q4 of FY26. Contract terms here involve a hybrid revenue mix and support Stake's international racing push into new markets around the world. LVDC. We announced during the first half the completion of the SPA and actually got the keys fully on February 1 of the LVDC business. Since then, we've set about setting up that Las Vegas office as our major North American hub. We see significant opportunity to leverage the Las Vegas market as a showcase for BetMakers solutions, both retail and digital.
On digital, the Nevada digital racing market is currently severely underserviced, with just around about 5% of bets versus 50% across US statewide average, struck via digital means. That shows massive untapped potential for us to deploy our GTX turnkey solutions into the market and help racing and our customers capture a much greater share of wallet and do so at higher incremental margins for us. We're working closely with the likes of Caesars, MGM, Wynn, South Point, and Stations to roll out new product in the market and modernize key wagering journeys, both online and also in their venues.
As part of our ongoing growth strategy, we're also planning to expand our platform into key adjacent verticals, where we're leveraging our network, our global connectivity and infrastructure to grow into and facilitate the provision of additional services that can drive high incremental margins to BetMakers. Beyond racing, that is things like sports wagering across fixed odds, managed trading, in-play sports, and also sports tote pools. It's leveraging iGaming integrations into our platforms and our tote ticketing system for lotto and keno products, as well as virtuals, of which we recently announced a partnership with global virtual racing provider Kiron. We look forward to updating the market a little bit more on this segment over the upcoming halves with some really exciting initiatives in the pipe at the moment.
With that, I'll just pass back to Matt for any closing comments before we work through some of the Q&A.
Thanks, Jake Henson. With this technology-driven turnaround now firmly in pace, we're looking forward to driving future growth on a sustainable basis with a very strong focus on disciplined costs as we continue to drive the business. Major new agreements coming through the pipeline. We announced, obviously, the CrownBet deal and Stake. CrownBet was announced and contract executed in December last year. The company launched that business in February 26th. That's a rapid turnaround for a tier one operator and another example of the benefits that this company's able to deliver with world-class technology and an operating platform. We'll continue to focus on gross margin expansion with this target of 70%. That comes from disciplined renegotiating of existing contracts, but also the scale and size this company can achieve as we grow the top line.
Operating leverage to drive free cash flow has been one of the key components I've focused on, particularly at the exec chair role, and how we've structured the incentive for our executive management team. We'll continue to deliver on that. That is a function of growing top line, maintaining costs where they are, and delivering great EBITDA margins as we continue to grow the business. With that, let's open up to some Q&A. Jake?
Yeah. Thanks, Matt, and thank you to Connie for helping us moderate some of these. I'll try and group a few for the Chairman to start off. Firstly, at a macro level, how does recent economic and geopolitical instability impact the industry in your view and the wider BetMakers business?
I'll take that, Jake. Yeah, gaming and wagering is typically quite resilient as we go through different economic market cycles. We tend to say the gaming is recession-resistant. It's not immune, but it is very resilient as we go through these cycles. Right now we're seeing both, well, actually all key markets that we operate in, the European, North American, and Australian markets continue to show good, strong consumer growth. We're a beneficiary of that. The fact that we deliver the vast majority of our product via digital channels allows us to continue to gain from that expansion. We're not seeing much in the way of any pullback from consumers from the global macro and geopolitical situation.
In fact, people are probably enjoying a little more relaxing entertainment, more so today than ever before. We feel very relaxed about that dynamic.
Very good. What would need to happen for you to consider H2 a successful one? That one's directed directly to you, Matt.
Perfect. Look, this business, we've tried to dial down the noise and focus on what really matters to investors, and that is driving double-digit top-line revenue growth, expanding our gross profit margin, and controlling our costs. I think if we deliver that again in the second half, I'll be very happy. We have clearly delivered the best technology platform in our market. Highly competitive. We're winning world-class contracts on the back of that. I think the team have got momentum on their side. We have wind in our sails, and we'll continue along that path. This is not about rocket science. This is about just delivering good high-quality product to our customers and ensuring that their end customers are satisfied and happy and continue to do business with them.
The team are doing a great job, and I'll be very happy to deliver results along those lines. Obviously we have some fairly exciting high-level projects on the go, not just LVDC, which brings in half a dozen of the market-leading operators in the U.S. market as direct customers, but also to deliver against the Stake contract, Betfair, and our other customers.
Thank you. There's a few on the financials that I'll cycle through. First is around the specific items that need to be met for our gross margin to get beyond the 70%+ target. I think there's a few different levers here. One is certainly the ongoing restructure of the cost base. And we've floated a few things that would impact that, one being the restructure of our PENN arrangement for content that we'll start to see the benefits of through the first half of this year. Secondly, it's just continuing to do what we've been doing in terms of adding new high-higher incremental revenue, and staying disciplined in terms of how we service that.
Finally, I think we've still got to see a little bit more of the full run rate of what we did during H1. Obviously we've got some of the benefit flowing through into that normalized 66.5%, but I believe it would actually be a little bit higher if we had the full run rate of the half. There's 3 items that will help drive us there, and certainly as we move towards FY27, we see a clear path to be beyond 70%. The next one's what can we expect from the cost base for the rest of the year?
Matt touched on this a little bit. Certainly there's a little bit of full run rate benefit for us there in the sense we were still taking out some costs through the first half of FY26. We've got some major customers that we do need to scale up in some way, shape, or form for. For the most part, what we see is the go-forward margin of those customers being much higher than the current base. Any increase in costs, certainly over the short term, we expect to be somewhere around CPI and not much more than that, unless really material opportunities present themselves, of which we'll obviously update the market as to why we've slightly changed course there.
Another question around the cost base is just additional investment required in relation to LVDC to get it beyond breakeven or to that breakeven point. It's a good question. It's something we haven't, we haven't put out a lot of commentary on yet, we'd like to probably at the next quarter as we get to understand the business a little bit more. I think it's not necessarily investment required, it's more focused time and resources internally. What I mean by that is leveraging our team and our technology and our global infrastructure to make that business run more efficiently. Also to deliver more of the product we have as part of the wider BetMakers ecosystem into that Las Vegas market.
It'll be a key focus area over the next four to six months, and we're confident we've got a nice runway of wins there, and we'll update the market as we progress through those. Finally, Matt, before I pass on back to you, is just how material the CrownBet deal is expected to be on revenue. What we can say is there's a hybrid element of a fixed underscored fee and a variable upside, and the combination of what we've seen so far in that minimum fee, we think they'll be at the higher end of our Australian market customers. Just how high, we need to see a little bit more data before we advise on that.
Certainly a really material customer for our Australian business and, as you've mentioned earlier, fantastic to get them into the market so quickly. Switching gears a little bit, Matt, there's a few coming through around M&A. Firstly, at a high level, how do you think about M&A now that the business has upgraded a lot of its technology?
That's a great question. I think what we've proven now is the operating model that the team have put in place, coupled with the technology platform that we have, allows this business to run very efficiently. We're very comfortable we can support a much higher revenue number on the back of the operating model and technology that we have. I note that the overall international racing industry from a B2B perspective is still highly fragmented, and we think that presents significant opportunity for us as we start to expand our thoughts on international opportunities. There's quite a bit going on, and I feel very comfortable that we're well-placed to benefit from that. Clearly, we'll take a very disciplined approach to any opportunities, both commercial as well as M&A driven, and we'll update the market as and when needed.
Thanks, Matt. Couple of other ones here coming through that I'll just try and group together. A few around the Stake contract and how BetMakers was able to win that contract. I think, as I touched on it, the structure of the deal really captures everything within our ecosystem. The 24/7 nature of our business across trading, tote platform and support, our proprietary data internally and also, where we're taking the Apollo solution now in its modular fashion. Sports books with their own front end can leverage everything we have inside our platform infrastructure but still customize their own front end, was a key component of the deal.
Certainly, BetMakers' global reach and the ability to take the Stake solution to the next level by adding in some of the key international tote pools as well, I think is an exciting part of that deal and certainly, where we see the future for the growth of the pari-mutuel business as well. One here just around Tabcorp that I can cover off on. We note that BetMakers said discussions have ceased, however, are discussions still ongoing around expanded services? Absolutely. The...
You know, we're not doing our job if we're not trying to sell BetMakers solutions to everyone in the market, of which, you know, they're one of the largest operators here in Australia and happen to have products in the market that certainly overlap with some of our technology across platform trading and tote. Absolutely we'll continue to try to expand on our existing commercial relationships there to deliver more product into those guys and anyone else in the market. Finally, I think, Matt, here, unless there's any others that pop up, just to comment on the U.S. market more broadly, particularly as it pertains to sports books, prediction markets and how fixed odds could intertwine with all of that.
At the moment, the conversation at every bar and club here in the U.S. is around prediction markets, allowing the gamification or wagering on pretty much any event. Look, we think that's very much a net positive for BetMakers. We think it's forcing sportsbooks to consider a broader spread of products to stay competitive. Clearly BetMakers has a great set of products both from a tote but also from a fixed odds betting perspective. We continue to engage in those conversations. Part of it is proving out the product and making certain we have reference clients live with it. The team are doing a great job there.
I think we, you know, we can obviously bed down on the back of the LVDC position in Vegas as well. Yeah, continue to focus on that. I think we will see some innovation around new products, and I think the industry's ripe for that.
Very good. No more questions to cover off at this stage. If there are any other questions that investors have, please feel free to shoot them through by the investor hub links or investors@betmakers.com. I think with that, we can draw to a close the webinar, and thank you for everyone for dialing in.
Thanks for your time today, everyone. Appreciate it.