Good morning, everyone, and welcome. Let me begin by acknowledging the traditional owners of the land on which we meet and pay our respects to all elders past and present. Today, I am joined by our CFO, Jatin Khosla, to present our financial results for FY 2025. The passing FY 2024, which benefited from the record $200 million Powerball, was always going to be a challenge, particularly with the subdued jackpot this year. Even so, we made the most of what we had to work with and still delivered our second-best result ever. Lottery retailing remains the cornerstone of our business, and even with softer jackpot cycles, we continue to see strong engagement and loyalty from players. Our refined marketing playbook, which we kicked off in the second half, is delivering measurable gains in both acquisition and retention. Meanwhile, charity and proprietary products are building momentum.
Our unique offering is something competitors can't match. Our SaaS segment is growing, recording TTV of over $250 million and revenue exceeding $10 million. Multiple partners are achieving their best demo results, reinforcing the value we bring. Today, we hold an estimated 24% share of the Australian lottery fundraising market, clear evidence of our leadership and our ability to grow market share while delivering for partners, players, and communities alike. Overseas, our Managed Services operating model is gaining traction with stride, delivering above expectations and good momentum in the U.K. Our focus remains on growth and operating leverage. Turning to capital, we have a strong balance sheet and are focused on shareholder returns. The Board has declared a final, fully franked $30.5 per share dividend, which is the highest dividend Jumbo has ever paid in a half-year period.
This takes the total FY 2025 dividend to $54.5 per share, matching last year's dividend, which highlights Jumbo's ability to deliver shareholder returns even through a low jackpot cycle. We also spent approximately $8 million on our ongoing share buyback during the year. Lastly, M&A remains a key focus as we look to expand our B2C presence internationally. While the progress has taken longer than I would have liked, this is not due to a lack of effort but reflects our disciplined approach. We remain committed to this strategy and are confident it will deliver the right outcome. I appreciate the market's patience as we work to do what's right for Jumbo over the long term. Moving to the numbers, which were impacted by the subdued jackpot environment, Group TTV and revenue were down 5% and 9%, while underlying EBITDA and NPATA both decreased at 11% and 9% respectively.
Free cash flow reflected these dynamics, but cash conversion remains healthy at just over 100%. As I said in the first half and would like to reiterate, we've been selling tickets online for over 20 years, and it's not the first time we've seen a down cycle. In my experience, this is usually followed by a mean reversion with the jackpots coming back stronger. Last year, we provided the market with clear EBITDA guidance ranges. I'm pleased to report that we not only delivered within or above these ranges, but we did so while navigating a much more difficult jackpot environment than anticipated. When we set expectations, we do our best to meet them. Even if jackpots don't go our way, we still find a way to deliver. This is due to our flexible operating model that enables us to respond rapidly to change.
Let's look now at our lottery retailing segment in more detail. The new marketing playbook, which started in the second half, has returned market share back to normal levels. We did have a dip in the first half but responded quickly and put things back on track. Looking at the large jackpots graph, we've aligned with TLC by updating the definition of large jackpots from $15 million- $30 million. There are two key takeaways. The Division 1 prize pool decreased 21% from $1.9 billion- $1.5 billion, seeing the average jackpot reduce from $60 million- $49 million. The second is the absence of jackpots over $100 million, which is something we haven't seen since 2021. Together, these two factors explain the decline in TTV year- on- year.
These ups and downs are all part of the lottery cycle, but over the long term, the fundamentals have not changed. The key metrics that drive our lottery retailing business remain robust and provide a platform for solid growth. Pleasingly, digital penetration increased to 41.8%, underpinning the general trend to digital, which is in line with our expectations, even in a subdued jackpot environment. Over the past year, we have continued our rebalancing of our marketing approach by focusing on player quality and lifetime value. This shift is coming through the numbers. While the absolute number of players has decreased, this is due to the record jackpots in FY 2024. We are also focusing on higher quality players who are more engaged, higher value, and remained active. The increase in average spend is evidence that it's working.
This slide shows Jumbo's market share over the past three years for Powerball and OzLotto draws, Division 1 prize pools between $10 million and $30 million. Each blue dot represents our estimated market share for an individual draw, while the orange line reflects the half-year weighted average. Market share naturally fluctuates based on factors such as draw size, game, jackpot sequence, jackpot fatigue, and broader economic conditions. That said, you can see we've held a steady share through FY 2023 and FY 2024. You can clearly see that the second half of FY 2025, on the right-hand side of the graph, has materially stepped up following the new marketing playbook I referenced earlier. This turnaround, together with the recently announced Powerball price increase, which I'll discuss later, position us well moving forward. Moving at SaaS, where positive momentum continues with underlying TTV and active players up 12% and 5% respectively.
Lotterywest was impacted by the subdued jackpot environment and saw TTV decrease 9%. However, we're still pleased with how this channel is performing. Jumbo submitted a response to the Lotterywest request for tender in the second half. We remain in a good position and await the outcome later this financial year. Our charity partners increased TTV by 17%, highlighting the effectiveness of our software platform. We renewed a number of partners and saw a number of new partners go live during the year, and we remain upbeat on the future of this segment. Turning to Managed Services, as I mentioned earlier, this segment is firmly on track, and the recent wins we've celebrated are a clear sign that momentum is building. While Managed Services currently represent around 10% of earnings, it plays an important strategic role, giving a valuable foothold in both the U.K. and North American markets.
With that, I'll hand over to Jatin to take you through the financials.
Thanks, Mike, and good morning, everyone. Starting with the usual underlying EBITDA waterfall, underlying EBITDA was down 10.8%, driven mainly by lower lottery retailing revenue, which reflects the softer jackpot environment. This was partially offset by a lower cost of sales and lower operating expenses, which I will cover on the next slide. The underlying group EBITDA margin was 47%, with Australia achieving a margin of 51.6%, both within our guidance range. Pleasingly, Managed Services achieved an underlying margin of 26.7%, well ahead of the expected 21%- 23% range. The overall cost base was 1.9% lower than the PCP, reflecting disciplined cost control. Traditional marketing costs were equivalent to 2% of lottery retailing TTV, at the top end of the historic 1.5%- 2% range, reflecting the deliberate rebalancing in our marketing approach that Mike spoke about earlier.
While traditional marketing costs in absolute terms were lower than last year, this was offset by increased investment in promotions, which include the Daily Winners loyalty program. This contributed to increased player loyalty and the trend towards a higher- margin product mix. We also achieved meaningful savings across several other cost categories, including insurance, electronic ID verification costs due to lower new player count, and corporate costs, resulting in a leaner, more efficient business. Turning to the segments and starting with lottery retailing, TTV was down 15.9%, reflecting the softer jackpot environment, particularly for Powerball, which typically represents around half of our portfolio. Revenue declined 12.5%, reflecting the lower TTVs, partially offset by a stronger revenue margin, which was up 0.9%, driven by changes to product mix, including the positive impact from our non-TLC portfolio.
Operating costs were higher, reflecting increased promotional investment and a reallocation of people and technology costs from SaaS, following organizational changes and improved cost attribution. The underlying EBITDA margin was down slightly to 33.2%. Moving to SaaS, where underlying TTV and external revenue grew 11.5% and 7.5% respectively, reflecting continued momentum across the platform. The revenue margin was lower due to mix, specifically a decline in Lotterywest TTV and the revised license fee structures under the Mater and Lotterywest agreements. The improvement in EBITDA margin to 68.2% reflects disciplined cost management, as well as the reallocation of costs I mentioned earlier. Turning to the Australian P&L, which reflects the aggregate performance of lottery retailing, SaaS, and corporate, and is consistent with the margin guidance framework we provide. Removing the net positive effect of one-off items, the underlying EBITDA margin of 51.6% was within our 51%- 53% guidance range.
Moving on to Managed Services. In the U.K., revenue grew 8.2% and EBITDA rose 6.8%, reflecting solid momentum supported by positive FX translation effects. In Canada, despite some lottery contracts being transitioned or discontinued, Stride rebounded with new lottery wins and expanded service offerings. As a result, revenue declined only 5.8%, and with strong cost discipline, EBITDA remained broadly flat on the PCP. Overall, Managed Services delivered an underlying EBITDA margin of 26.7%, ahead of our 21%- 23% guidance range. Turning now to the balance sheet, where we continue to maintain a strong position with available funds of $65.6 million. This combined with our $50 million debt facility provides us with significant liquidity and flexibility to support growth as well as shareholder returns. The board has declared a fully franked final dividend of $30.5 per share, taking the total dividend to $54.5 per share, in line with last year.
This represents an 84.7% payout ratio at the top end of our targeted range. Our strong cash position, combined with a more proactive yield strategy, delivered $2.4 million in gross interest income, and we invested a further $7.8 million in our on-market share buyback, taking the total buyback spend to $11 million. Finally, moving on to the usual cash flow waterfall, where the strength of our cash-generative model is clear, with a free cash flow of $41.9 million and cash conversion above 100%. The reduction in free cash flow in the PCP was due to lower ticket sales and timing variances in the settlement of prize payments and staff bonuses. On the right-hand side of the chart, you can see the pro forma impact of the final dividend payment, alongside the liquidity available from our debt facility.
Together, these highlight our capacity to invest in strategic growth opportunities, as well as capital management by our on-market share buyback. I'll now hand back to Mike.
Thanks, Jatin. FY 2025 was another strong year for Jumbo, ranking second only to the exceptional FY 2024, which was boosted by record jackpots. Even with a modest jackpot profile this year, we are proud to deliver a full-year dividend that matches our record dividend last year. Growth has been a hallmark of Jumbo's history. With the exception of only a handful of periods, we've managed to deliver a long-term upward trajectory. The key drivers to the growth are still relevant today, as they have been in the past. Building a non-TLC business to improve diversification is, of course, a key priority. This business includes SaaS, charity resales, and now our own proprietary products and programs like Splash for Good and Daily Winners . This now represents $265 million in TTV and $18 million in revenue, with plenty of headroom for growth.
This compares to $440 million in TTV and $100 million in revenue for the TLC business. We are catching up. This year, we added two major charities to our reseller stable, the RSL and Your Town, and launched a premium tier to our Daily Winners loyalty program. I'm pleased to report that premium tier engagement has already exceeded 48,000 members, ahead of our original expectations. With a growing portfolio, strong partnerships, and compelling products and programs that resonate with players, we're building a foundation for scale, and we're only just getting started. Also, last week, TLC announced some game changes. Powerball base price is increasing by $0.20 per game. We'll match this price increase and are reviewing any further increase above the base price. We'll ensure any adjustments we make are sustainable, competitive, and in the best interests of our customers and shareholders.
This game is typically around 50% of our portfolio, so we welcome the enhancements and anticipate improved performance of the game. I'm pleased to provide an update on the Saturday lotto price adjustment implemented in late FY 2025. Pricing increased by 14%, and importantly, average weekly turnover grew by 20%. Turning to the outlook for FY 2026, starting with Australia, we are targeting an underlying EBITDA range of 46%- 50%. The year-on-year margin reduction is primarily driven by marketing costs, which are expected to rise to 2.5%- 3% of lottery retailing TTV. This is necessary to win back and maintain a sustainable market share. This has already been implemented and is clearly working, as can be seen in the second half numbers. We believe the 46%- 50% EBITDA margin is a sustainable range over the medium term.
In SaaS, we expect strong underlying TTV growth, with encouraging signs of increased interest across the domestic lottery ecosystem. As always, we'll manage our cost base in line with revenue growth. In Managed Services, we are simplifying our guidance from a margin range to an EBITDA growth, given the more stable nature. In the U.K., we expect 10%- 15% underlying growth, and in Canada, we forecast 5%-1 0% underlying growth. M&A is central to Jumbo's growth. While the process has taken longer than expected, this is due to our shift to a B2C model. We're actively advancing opportunities and are confident of achieving the right outcome for Jumbo. Our dividend policy remains unchanged, and with our strong cash position, we intend to continue the on-market share buyback. However, the first priority must remain M&A. In conclusion, FY 2025 was a solid year, all things considered.
The Jumbo team responded well to challenges with a new marketing playbook and innovations such as the premium tier of the Daily Winners program. Overseas is looking much better, and M&A is still a major focus. Jackpots don't stay live forever, and we're well-positioned to capitalize from a normalized jackpot run. Thank you. I'll now hand back to the operator for Q&A.
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 are on a speakerphone, please pick up your headset to request your question. The first question is from David Schmidt with Macquarie. Please go ahead.
Good morning, Mike. Good morning, Jatin. I've got a few questions. I'm just trying to understand the marketing strategy going forward. I can see the charts in the pack, which shows that the higher spend is driven by higher market share. I guess with the second half share, can you kind of explain how much was driven by mix given key games improved sequentially and how much you're kind of attributing to your marketing initiatives? To follow with that, I mean, how should we think about market share going forward? Do you keep winning market share with the current spend that you're guiding to, or do you expect it to stabilize at levels we saw in the second half?
Yeah, the second half did benefit from slightly better jackpots, but it was primarily due to the new marketing playbook. The reality is with digital penetration now close to 42%, we're getting close to 50% now. The balance needs to shift towards retention and reactivation while also continuing on some acquisition. To put it simply, the good old days of 20% digital penetration where customers were easy to get, things are still good, but they just are a bit more expensive going forward. The second part, just remind me of the second part, David.
Yeah, I mean, you've guided to that increased market share from the second half. My question there is, can you keep winning market share with the spend and the playbook, or does it stabilize at a second half exit rate?
I think over the medium and long term, we're looking to stabilize it. We can win market share, you know, TLC is a good operator, and, you know, I think where we're at and what we're doing, we're just looking to maintain the market share. If we do have a down period like we had, then we think we can win that back. I really don't think we can climb up to very high levels, you know, based on the market here in Australia, hence the focus on non-TLC growth.
Yeah, got it. Just with the buyback, I mean, the stock came off sharply from the Fed result. You stopped buying back stock on 15th on May . Appreciate that you've got the M&A strategy, but why was it stopped on 15th on May , if you can answer that? Is there any reason why you can't be back in the market in the next two or three days buying stock again?
I want to answer, David, because it's all linked in with our M&A strategy. Like I said, we're very active in the space, and we have multiple opportunities that we're following and everything like that. We are a bit limited as to when we can do the share buyback. When we can, we will, but our number one priority is to follow the M&A that we're doing.
Yeah, got it. I mean, one last question from me then, just on that M&A strategy. I mean, when you were buying the Managed Services business, you gave us a bit of a steer on where you thought valuation multiples were for those targets. Can you talk about where valuation multiples are for the B2C businesses so we can maybe think about what kind of accretion might be possible depending on what you might pay for something?
A couple of things I can say. The multiples will be slightly higher, but not too much higher. Secondly, they will be profitable. We have focused on profitable businesses. We're not looking at buying businesses that are pre-profit. We are looking for a certain level of maturity. Similar to the B2B businesses we've bought, maybe a slightly higher multiple, but really what we're looking for is the higher growth, and that's what we're finding on the B2C side of the market.
Got it. Thank you very much. I'll leave it there.
Thanks, David.
The next question is from Ben Wilson with Wilsons Advisory. Please go ahead.
Thank you, and morning, Mike and Jatin, and congratulations on the strong result given the press jackpot market. Really good to see the growth coming through in Managed Services. Just first, a few questions, but firstly, just on the new Australia EBITDA margin guidance range. Obviously, the higher marketing costs for the full year are driving that primarily. Are you expecting a bit of a pickup in corporate costs? I just wanted to double-check as well. Are you baking in a bit of conservatism in terms of your digital market share with that range as well?
Perhaps a bit of conservatism, but we're trying to look in the medium term. You know, we are seeing a shift in the market, but we're also seeing opportunities in which we can get cheaper marketing. We're just trying to establish a range which everybody understands that we can work within and still do what we need to do.
Thank you. Sorry, just on the corporate costs, any sort of material pickup there?
Hi, Ben. It's Jatin. Look, no material pickup on the corporate costs. We'll look to keep those in line or very low single-digit growth given inflation.
Great. Thank you. Just moving on to Powerball, you've obviously spoken to the price increase there. Just interested a little bit further on the ancillary fee. Can you give any indication as to your current thoughts? I mean, your current premium is about 20% as a proportion of the subscription price. Are you a little bit concerned about potential demand elasticity or losing market share if you maintain that premium at the finished terms?
We have to be concerned about it because the Powerball is our biggest game, so it's not something that we take lightly. Hence, the need to do a lot of research and run some models and everything like that. It would be not good for us if we just shot from the hip on that one. We are looking to add an ancillary fee. We want to maintain our margin. The question is, could we go a bit further? Keep in mind that there was a very large increase back in May 2023, and there are a lot more factors at play. We just have to be really careful about it. Like I said, the Powerball's our biggest game. There's no room to get it wrong. We really have to go through the analysis. We've got a lot of data to work with.
We've had a pretty good run in predicting the elasticity. We've just got to make sure we do it right.
That makes sense. Thanks, Mike. In RSL and Your Town, that's really encouraging to see those retailer agreements. Obviously, I think the two largest charity lotteries in Australia. Could that be a precursor to a full-blown SaaS agreement if that all goes well? Can you just give a bit of an update there?
Look, possibly. We've been aware of them for a while, and they've been aware of us for a while. We've been targeting them and presenting to them, and we've got them onto the platform on a reseller capacity. We are trying for a SaaS deal as well, but we'll see how that goes. They're large organizations. They need to look through things very carefully, so they do take their time. We'll give it one again.
Thank you. Sorry, just lastly, can you give any sense of the terms of those reseller agreements, in terms of revenue margin?
It'd probably be similar to prior agreements that we've had in the past with others.
Okay, thanks very much .
The next question is from Rohan Gallagher with Jarden Group. Please go ahead.
Yeah, hey Mike, hi Jatin, good morning. Good morning everybody. Just in regards to Powerball jackpot, obviously you're doing the analysis, Mike. Can you just talk about your historic price retention and if you just assume the TLC price increase, the potential impact on TTV as a standalone basis, most likely second half weighted?
Look, if we didn't apply an extra ancillary fee, we would slightly dilute ourselves. Like we're sitting around about 21%. We have pushed that up from 17.5% to where it is now, about 21.5%. We have made some gains. We don't really want to lose that. We could either do nothing, we could add around about 5%, we could add around about 10% and increase the margins. You know, exactly where we fall in that range is what the analysis is targeting.
Rohan, it's Jatin.
I'll just add, look, in terms of retention, it's been pretty good. We've done May, in May 2022, we did the U.S. lotto change. In May 2023, we did a universal price change across the portfolio. Where I'd guide you to is if you just look at the Saturday lotto change that we've put through, I think the price went up 14%. So far, while it's still early days, we've seen a 20% increase in average weekly turnover. Pretty good so far, keeping in mind it's early days.
Excellent, thank you. Gentlemen, the Lotterywest RFP finally has happened. Thank you. Hopefully, you get a good outcome with your relation to that. Can you just comment on the potential quantum of the financial benefit and the timing? Obviously, it's dependent and outside of your control, dependent on the WA government. I'd be interested in just sort of looking at the sort of earnings sensitivity on an annualized basis, acknowledging that you'll probably have to do some investment.
Yeah, look, it's probably a bit too early to talk numbers, but it would be certainly material and significant for us, and even on a strategic basis, to get a government-level lottery to use our platform. Timing, it's a little bit hard to tell with the government process. We are jumping through the hoops with them at the moment, and they're saying over this next financial year, so it may happen in a few months. It may spill over into the new calendar year sometime around there. You know, I know we've been talking about it for a while. We've put a lot of effort, a lot of resources into it. That's obviously an indication of our confidence. Still, we have to go through the whole process. We've got some formidable competitors in there as well.
Outstanding. Thanks, guys.
No problem.
The next question is from Rohan Sundram with MST Financial. Please go ahead.
Hi, Mike and Jatin. Most of the questions have been answered, but just keen to hear your thoughts on how you're seeing the consumer environment, whether you're seeing any improvement or green shoots more recently, and maybe any comments you're happy to make on the regulatory environment at present, just on the back of Lotterywest's comments in their recent call. Thanks.
I'll let Jatin take the regulatory question. In terms of the consumer, there was a bit of softening through the financial year, especially in the first half that kind of added to the issues with the low jackpots and everything. We are seeing some green shoots. I mean, lotteries typically don't get affected too much, eventually you do get affected at some point. We did notice a bit in the first half, and we are noticing an improvement in the second half. On the regulatory side, you have some comments, Jatin?
Hey, Rohan. Not too much more to add. We'll echo the TLC comment. We welcome the 50% tax in the Northern Territory and are pleased to see that the Oregon Lottery is looking to ban out-of-state sales. Also, the fact that the WLA has raised concerns in terms of couriers and gray markets undermining regulated lotteries. Nothing more to add, but welcome those comments and look forward to some progress when we get the outcomes of the federal review.
Yep, thanks, guys.
The next question is from James Bales with Morgan Stanley. Please go ahead.
Hi, guys. Thanks for taking my questions. Firstly, Daily Winners, can you help us understand where your expectations are for the next 12 months and long term? Are you able to give us any color on churn rates and the potential for product innovation like, you know, multiple tiers, etc.?
Yeah, look, the Daily Winners program is part of a multiprong approach that we have to, you know, build out our non-TLC portfolio, and it's done well. It's gone from a standing start to 30,000 and now up to 48,000. You know, internally, we expect it to reach somewhere around about the 65%, maybe even 70% in the year ahead. There's a lot more that we need to do with it. Like I said, it's part of a multiprong approach. We've also got the charity partners that we're working with and trying to build them up, and that's working. We're also using the loyalty program to help sell more TLC products, so it has a benefit in that side of things as well.
Yeah, we are trying different things where we look very closely at what's happening in the U.K. as well as North America, and we're learning from those markets as to what's working and what's not working, and we're able to bring some of those learnings back to Australia. Still a lot of work to be done in that area, but it's an area that is working well for us.
Got it. Just on the U.K., the regulator over there seems to be keeping a very tight watch on what some of these players in markets where you've sort of flagged interest in doing M&A are doing and sort of called out the potential for further regulation. How does that play into your appetite to acquire in that space and the multiple that you're willing to pay?
Yeah, we are watching it closely, and it is an area that we're interested in in the price competition market over there, and the regulator has started to make some comments, which is good. It's only increased our appetite because our whole approach would be to make an entry and then help the business navigate into a regulatory environment, which we think is going to happen at some point anyway. With our experience in navigating regulatory environments, we would be the correct owner for one of those businesses to continue on in that market. Yeah, it's something that we expect. It hasn't dampened our enthusiasm or anything like that. We don't think it's going to be unregulated forever. We do think it's going to be regulated. We do take that into account with the multiples and everything. Hence, you know, why this is taking so long.
I suppose 15% of every dollar is kind of mine, so I do take it very personally, and I'll make sure that we get the best deal we can.
Great. One last one. Managed Services clearly exceeded expectations versus the start of the year. Can you help us understand what played out differently versus your initial expectations, and what you've extrapolated in terms of that outperformance into the guidance you've given?
Yeah, we did highlight some issues that we had to face, but you know, that's nothing new. We faced issues two, three years ago with Gatherwell. We fixed it up, and that's doing really well. We have some excellent management in place now. We've got Marina Avisar in Canada who's done a great job in turning that business around, and we've had a few client wins. It certainly didn't play out as bad as what we thought, but still we have to just temper our enthusiasm a bit that, you know, these are B2B style businesses and the overall growth is sort of in the guidance range that we've given.
While we fixed it up, it's not going to suddenly explode as a business, but it will give us that sort of long-term growth profile that we want from these businesses as we look towards the B2C to deliver the growth that we want.
Perfect. Thanks, guys.
Thanks.
Once again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. The next question is from Sam Bradshaw with Evans and Partners. Please go ahead.
Hey, good morning, Mike and Jatin. I just want to follow on from a question from Rohan. TLC mentions in their commentary that the older generations have held up quite well, but the younger generations have been hit a bit harder from macro factors. Is this something that you're also observing?
Yeah, it is. The younger generation is a lot more volatile, and we're weighted towards the younger generation, so it certainly has a much larger impact on us. Being 100% digital also plays to that. The younger generation is also a good cohort to have in our database because of their longevity. We just got to ride the ups and downs with them, and we all get older, and the younger generation will mature at some point and sort of start reaching that peak lottery spend in the years ahead. It is something that we've seen, but that's just part and parcel of our business model, and it puts us in good stead over the next 10 years.
Great. Thanks, Mike.
Sam.
There are no further questions at this time. That does conclude today's conference call. Thank you for participating. You may now disconnect.