Good morning, ladies and gentlemen. This is the Chorus Call conference operator. Welcome, thank you for joining Lottomatica Group's First Half 2023 Results Conference Call.
As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. Before starting, I remind you that the presentation contains forward-looking statements, which are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict, because they relate to events and depend on circumstances that will occur in the future. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely. Therefore the Company actual results may differ even materially from those expressed or implied in any forward-looking statements.
At this time, I would like to turn the conference over to Mr. Guglielmo Angelozzi, CEO at Lottomatica. Please go ahead, sir.
Thank you, operator and g ood morning, to everybody. Let me start with a long list of good news from page two of the presentation. We continue growing double digit in Q2, 15% up on revenues compared to the same period of 2022. 22% increase in adjusted EBITDA, with an improvement of two points in margins. We achieved EUR 143 million EBITDA in the quarter, compared to EUR 180 million in same period of 2022. Also we decrease leverage from 2.4, adjusted for the IPO at the end of March 2023 to 2.2, and this includes also the one-off costs for the IPO and the refinancing.
Online is 60% of the margins, compared to 43% in the same period of 2022, and online is the strongest contributor to the growth of the business. This is on the back of a very healthy market growth, which continues in Q2, and of the outperformance of Lottomatica, which continues to gain market share, and even more importantly, it gains market share consistently in all business segments and across all brands. We also have additional growth initiatives, which are progressing as of plans, and that are going to contribute to EBITDA to grow going forward. We will see them one- by- one in the next few pages.
Last but not least, we continue to see a positive regulatory environment with the Legge Delega, which has been long awaited by the sector and by the industry, which is likely to be approved by the parliament by August this year. Then after that, the government has -- sorry, by the parliament, and then after that, the government has 2 years to complete the reform, even though they can ask, it can ask for additional time. Just to remind everybody, this is clearly a prerequisite for the next tenders.
On the back of all these, we increased the guidance for 2023 to EUR 1,630 million, the lower side of the range for revenues to EUR 1,690 million at the highest end of the range for revenues, and EBITDA from EUR 570 million-EUR 590 million. The highest part of the previous guidance become the lowest part of the new guidance, and then we have EUR 20 million range, up to EUR 590 million EBITDA.
Going to the next page, as I mentioned, all business grow, but as you can see, there is a sequential acceleration from Q1 to Q2 and the key driver is clearly online. Online grows on a pro forma adjusted EBITDA of 41% compared to last year, this compares very nicely to the 31% growth of Q1. When I say pro forma, this means that this is really like- for- like, so we are considering Betflag acquisition as this has happened 1st of January 2022. Also, sports franchise grows very nicely and gaming machines do their part, even so, at a slower pace than in Q1.
This is on the back of strong demand in the market, especially in the online, increase of market share, again, the online is particularly relevant from this point of view, and a series of actions which we'll detail later, which relate basically to all the businesses from sport franchise to gaming machines. When we go to focus on the online performance, this is particularly driven by our omni-channel approach, which is coupled with continuous product expansion and technology improvements. When I talk about product expansion, I mean, just to give you a few examples, more than 800 games added in casino in just one quarter, and 10 new additional providers added to the offer in the quarter.
I mean, additional type of bets, which increase the engagement of the players in our new to the market. I mean, additional products, taken from our library and brought onto the various assets of the groups. Just to mention one, the virtual betting product, which historically was owned by Goldbet, we have moved that to Betflag, and it's performing very strong. Technology innovations means, for example, new loyalty programs, new loyalty tools, again, to improve engagement, to improve the effect -- effectiveness and the efficiency of acquisitions, but also, artificial intelligence-driven models, to predict risk, on sports betting and improve margins. All this together is driving -- is leading us to beat records in terms of market share in every brand and in every segment of the online business.
We now go to page number five. We touch base on the increase of the market, which is in line with Q1, roughly 20% w hich compares to the other performance of Lottomatica, which is 33% in Q1 and raises to 39% in Q2. You may remember that in the IPO prospectus, we reported some external market research, which was projecting a 13% CAGR for the online in the period 2022- 2027, whilst the overperformance of Lottomatica, i t's because of our key assets, which we continue to lever, the multi-brand approach, the omni-channel, the increased effectiveness of CRM activities on the back of new tech and new tools.
Very importantly, I'll talk about it in a minute, the turnaround of Better.it and Lottomatica.it, which are the brands that we acquired some time ago. You can see the progression on the right part of the slide of the market shares, and how we continue, we've become, and we continue to be number one in each segment of operations in the online.
And now, in the next page, page number six, there is the focus that I was mentioning on the turnaround of the acquired brands Better.it and Lottomatica.it, which is another key milestone that we have achieved and was part of the investment thesis when we bought these assets. Now all brands growth, all brands in our portfolio growth after the migration of Lottomatica.it and Better.it to the group tech and product stack. And I think this is particularly impressive when you look at iGaming, where we used to be number two last year, and we are solid number one. You can see that after the turnaround and the migration to the group stack, all business grow according to the same speed. The market share slope is very similar for all brands.
Now, this leads, and you see that on page number seven, the result of this strategy and the execution of this strategy is that not only we perform very well in terms of increase of market share, but we perform very nicely vis-a-vis our key competitors. And you can see the progression going from full year 2022 to Q1 2023 and to Q2 2023, across both sports and iGaming. We are gaining market share in relative terms in a very clear and consistent manner across products.
I was mentioning additional initiatives, we are at page number eight. Here in this slide, you can find the, the four, say, most relevant ones. Two of these initiatives are already included in the midterm guidance, two are not, so they represent an opportunity going forward, and we start to take and disclose some commitments on these.
The first one is Project POS, which, you know, is the improvement of the optimization of the sports franchising network. It's about 300 shops, so roughly 10% of the size of the network. Those shops have all been contractualized. 25% of those have been activated, and 75% will be activated in H2. So, we are bang in line with the plan. This is a total of roughly EUR 30 million investments, which will give a contribution of roughly EUR 50 million EBITDA next year. There is the integration of Betflag, which is progressing at full speed.
Also here, we increase the synergies target to EUR 9 million from EUR 8 million. Clearly, it's not so much about EUR 1 million additional, which doesn't change much in the total picture. But again, this is another example of our approach in delivering synergies from the start of the deal into the integration. The original target was EUR 6 million. Now we are 50% above that, which is very consistent with what has happened with the previous acquisitions. There are other two very important projects, which are not reflected in the midterm guidance, both on M&As. As we mentioned, we told you in the past, we're very active on the consolidation of this fragmented market.
We have a total pipeline of EUR 50 million EBITDA contribution in the medium term, and we expect to complete the transaction in 2023, which will contribute EUR 15 million-EUR 20 million EBITDA in 2024.
Last but not least, the rollout and the development of the new omni-channel iGaming gaming omni-channel in the direct gaming network continues to progress very nicely, as you can see from the curve, and this is another big opportunity going forward in our plans. Just to recap, page number nine, the increase of the guidance, 2% at midpoint on revenues, 4% at midpoint on adjusted EBITDA, and 50% of that being the contribution of online and t hese all happens with unchanged CapEx.
Now I leave the floor to our CFO, Laurence Van Lancker, to walk us through the financial highlights. Please go, Laurence.
Thank you, Guglielmo. If we go onto page 11, we can appreciate here the strong growth momentum we've had in H1 2023, with bets up 20% on a pro forma basis, year-on-year, and revenues up 15%, totaling in H1 2023, EUR 820 million. This compares to 15% of H1 compares -- is pretty much in line with what we've seen in Q2. So Q1 and Q2 both performed at +15% versus last year. In adjusted EBITDA, we have an increase of 19%, where we achieved EUR 299 million of EBITDA in H1, which means a total growth in Q2, as Guglielmo mentioned earlier, of +22%. Just to note here that of the EUR 299 million of EBITDA, circa EUR 11 million relate to a positive impact of the payout, EUR 5 million in sports franchise and EUR 6 million in online.
Page 12, we can see the breakdown by business, starting from online, the performance is in terms of revenue growth, as being +27%, followed by sports franchise at +18% o f revenues and gaming franchise +7%. In terms of EBITDA, now online is up 35% in terms of the year-on-year, totaling EUR 149 million of EBITDA, which represents circa 50% of total EBITDA in H1, followed by, again, by a growth of 7% in sports franchise and 5% in gaming franchise.
On page 13, we look at CapEx on the left-hand side, where we start with the recurring CapEx. We've spent in the first half, EUR 32 million, which is on track with our guidance that we've given for the full year of EUR 65 million. We've paid EUR 10 million of concession CapEx. These relate to sports, and this is half of the sports CapEx that we have in plan for the full year, and remaining EUR 15 million of extraordinary CapEx that mainly relate to Project POS and deferred consideration. On the right-hand side, you can see the operating cash flow, which equates to EBITDA minus recurring CapEx, minus concession CapEx. As a result of the growth that we've experienced in the first half, we've increased our total operating cash flow from EUR 206 million in H1 2022 to EUR 257 million in H1 2023.
Moving on to page 14, we show the effects of the refinancing that we've completed in June, and for which all the notes have been redeemed on the 17th of July, after they have -- after taking them out of escrow.
The -- on a pro forma basis, we've showed you a net financial debt, pro forma for the IPO of 1,276, so EUR 1,276 million, equating to a net leverage of 2.4x in -- on the 31st of March. And on the 30th of June, pro forma for the, for the [refi], you know, the 1,276 equates to EUR 1.216 billion of net financial debt, or 2.2x of leverage. As a result of the refi, we can see that the notes, the maturities from 2025 have all been pushed to 2028 by the issuance of the floating rate notes and the senior secured notes for EUR 1.115 billion.
Page 15 shows the bridge between the net financial debt pro forma for the IPO that we've shown in with the Q1 results of EUR 1,276 million. Here you can see all the various components. You have adjusted EBITDA of EUR 143 million in for Q2. Changes in net working capital of providing positive cash flows of EUR 86 million.
This primarily relates to the deposits of the 0.5% that we've received in the month of May, and the accumulation of the imposta unica throughout the course of Q2. We've paid EUR 76 million of taxes, part of which relate to the balance of, for 2022. EUR 33 million of CapEx that we've illustrated earlier. Financial expenses that primarily relate to the leases and guarantees there's been, and a small portion for the July 2020 notes. And then o ther of EUR 15 million. And finally, the refinancing adjustments of EUR 32 million. These are all the transaction costs, the net transaction costs related to the refinancing that occurred in Q2 this year. That said, I think we've completed the deck, and we can go to questions.
This is the Chorus Call conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. That's star and one. We will pause for a moment while participants join the queue. The first question is from Fabio Pavan with Mediobanca. Please go ahead.
Yes. Hi, good morning, all. Thank you for taking my two questions. The first one is on online. I guess performance is impressive and also the way you are gaining market share. Do you think this is a trend which may continue in the coming quarter? First part of the question. Second part is, is there any brand which is leading such a strong performance? And the second question refers to the new initiatives you have just announced. Could you just provide us some more color on the bolt-on acquisitions you are exploring? Thank you very much.
Sorry, here it is. So, Fabio, I'm taking this one. On the online, we're certainly working on continuing growing in terms of market share. It's always very hard to predict that because that also depends on what others do clearly. But we think we've put in place all the actions necessary to make our proposition to customer strong and leading to this market. As I said, from the omni-channel, which is a key asset, to the product expansion, which will continue to the CRM investments and tools, where we're putting a lot of additional focus also in the coming months.
So, we've not finished with this. We'll continue to deploy actions on these levers, and we'll see where these actions will bring us, will take us. In terms of brands, all brands are performing, all brands are contributing to growth, and this is probably the most important, one of the most important points that we want to stress in this quarter. With the turnaround achieved of Better.it and Lottomatica.it, all, all brands are traveling in the same direction, with different dynamics, because there are different customer bases, different positions, different strategy to manage them, but the contribution is coming f rom all of them.
On the bolt-ons, it's, a mix of things. We're working pretty much of all -- we're working on deals which span from AWP distribution [in sourcing] to VLT gaming halls, to sports betting. It's really a mix of things. You r emember, this continues to be a very fragmented market. We have a model, we have, let's call it technology from business model to contracts, to, to, to continue this integration of the market.
Our counterparts do like the model we propose, and so we have a pipeline, we're delivering on that.
Very clear. Thank you very much.
The next question is from Ed Young with Morgan Stanley. Please go ahead.
Good morning. My first question was on online share. You've flagged that June was higher than your Q2 number, but you've also said results were favorable during the period. Just to be clear, is that June a continued progression of sort of the month-on-month improvement you've seen throughout the quarter, and therefore, that's kind of a good baseline to think about for the Q3 and where it could go? Is that somewhat of an outlier, and therefore, we should be perhaps be a bit more conservative thinking about the Q3 and the forward-looking? The second question was just on M&A, actually, a follow-up there. Outside of the bolt-ons you've talked about, could you talk a little bit more broadly about your attitude towards M&A?
Clearly, you're executing well at the moment. Do you view M&A as a potential distraction to that, or would you be wanting to do some, and do you have the capacity for it? I wonder if you could talk sort of more broadly about your M&A ambitions, both in terms of scale and in terms of timing? Thank you.
Yeah. Hi, Ed. L et me start. No, June is not an outlier. We have shown a progression, which is full year 2022, then Q1, then Q2, and then we put June just as an indication that that progression is continuing, that there is really a progression. If May is higher than April, and June is higher than May, that's what it is. No outlier, no particular reason except to show that the progression is continuing.
In terms of M&A, bolt-ons are always on, and those are, kind of, easier to show and represent, because it's many deals of a smaller size, where, you know, they can be more predictable. But of course, we remain committed and focused to analyzing, examining all opportunities out there in the market. It's not a distraction. We've always done this, it's part of our business model. The business model has three legs: organic growth, bolt-ons, and, larger M&A. We've always done this, and we continue to do this.
Clearly, it's more difficult, it's impossible, actually to comment on larger size acquisitions, because that's on case-by-case situation, and typically, we comment on those when there is some news. But in terms of attitude, I want to be very clear on this, it's part of our strategy, and we continue to look at every interesting asset out there with the usual discipline that we always said in M&A.
Thank you.
Thank you, Ed.
The next question is from Domenico Ghilotti with Equita. Please go ahead.
Good morning. A few questions. The first is a follow-up on the bolt-on M&A. I wonder if you are seeing any change in, say, the price environment for the asset. Second question is on the synergies. I didn't see any comment on the IGT remaining synergies, so I presume that you will stick to your EUR 21 million residual target, and if you can give us some color on the timing to get there? The third question is on the gaming omni-channel strategy. We spoke at the IPO, it was just a few months, so if you can give us some more color on what's going on there, what is working, what is maybe needing to be adjusted would be great. Thanks.
Yes, Domenico. Hi. Let me start with one, and then go to three, and then, Laurence will comment on the synergies. Bolt-ons, no, we don't see any relevant change in price actually. So, it's pretty much in continuity with the past. In terms of gaming, omni-channel, what's working, what's not working? It's been a matter of, as you can also say from the curve, in finding the right model, in cracking the model, right? You cannot just take the omni-channel model that is based on the betting retail and move it to the gaming franchise.
There was quite a period of time, a few quarters, where there were no substantial improvements, because we were fine-tuning the model, which we cracked, let's say, at the end of last year, w hich is basically -- and which was basically about understanding what the clients in the gaming channel want, and what do they want? They want you to be providing them a more immersive experience when they play. They want you to be more caring, like in terms of comfort, additional services. It's very different from sports betting omni-channel.
They want you to be fast, in payments when you withdraw your money in the shop from the game account, which is a slightly different dynamic from the betting omni-channel. It's a long list of, you know, of things. It goes on to the product, how you provide the online version of certain casino products, for the omni-channel player, which is something you don't find in the betting omni-channel. It's exactly the same product. So it's about cracking the model. This model, it's, cracked, but it's always -- there's always room to improve it.
So, we're working on to improving it on one side, and the other side is the expansion of the network. This has been deployed to a certain number of shops. There are more shops to deploy this. This takes time, and you also want to do it in the right manner. I would say this will increase as we enlarge the number of shops where this is applied. I t's a matter of volumes, and on the other side, it's a matter of the product and the service adjustments that we do to the model as we learn more. So these two things will be driving.
This is also the reason why, for example, bolt-ons were not included in the guidance, but now we are taking a commitment here. On the omni-channel, we know it's a big thing. We're working on that. It's a priority, but we yet, we not yet, disclosing number at this stage.
Hi, Domenico. For regarding your second question, yes, all the synergies of IGT will flow through in the P&L this year. If you look at our LTM, basically what we're saying is that we're still missing EUR 7 million in the LTM. You'll we'll see that flow through the rest of the year.
Okay. Very clear. Thanks.
Sure.
The next question is from Andrea Bonfà with Banca Akros. Please go ahead.
Hello, good afternoon to everybody. My question are related to the items below the EBITDA and in particular on the financial charges and tax rate. Maybe these are a question for you, Laurence. I mean, in the second quarter, it seems that you booked EUR 73 million financial charges, and also the tax rate in absolute terms, was a little bit higher than my expectation. I wonder if you can guide us on what are your full year expectation for these two bag of items, financial charges and tax rate, for the year end, because I'm just to have more visibility? Thank you very much.
Sure. L isten, on financial charges, clearly Q2 has been pretty eventful in terms of extraordinary transactions, right? We've had IPO costs, we've had also refi, we did the refi. When you, there's an accounting element as well, when you reimburse a bond, when you redeem earlier, a bond prior to maturity, there are a number of non-cash charges that then flow through P&L, which is basically, you accelerate all the amortized costs, right? There's an element of that. I mean, there's roughly about EUR 62 million that flow through the P&L, of extraordinary financial expenses in the P&L.
You can see the details then in the financial statements, but that's the, the, the bulk of the increase is relates to, relates to the refi transaction and, and the IPO transaction. We've included also in the IPO transaction costs, as you will remember, the bridge fees t hat we had originally committed to push down the, to push out the maturities for, of 2025. That's in relation to financial charges. In terms of taxes, isn't clearly, you know, there's always, there are certain elements of -- in the P&L, so it's not precisely the, you know, a flat X% over profit before tax, because you sometimes have taxes, costs that are not deductible, like, for example, write-offs.
It's never super precise. We've always got it to the 31%-32%, more closer to 32%. It can be, it can be higher in certain instances, because, again, it really depends on the taxable, the taxable items, what taxable items are included in, in our accounts. We stand by sort of 32% tax guidance. There's also cash element that we need to, you need to be aware, that you're surely aware of. Clearly, as you know, every tax cycle, the cash taxes are different from the P&L taxes, because, you know, every year you pay the balance of the previous year in June, and you pay two accounts in June and November for the current year. C ash taxes are not exactly equal to the P&L taxes.
On this point, l et's say, on the cash flow, let's say, tax situation, it seems to me that you are progressing well, you are, let's say, deleveraging. What shall we expect for H2 in terms of, further progression of leveraging?
Sure. We're pretty much tracking guidance on all the elements that we've given. On CapEx, we've got it to EUR 65 million of recurrent CapEx. We've spent so far , EUR 32, so that's pretty much in line. In terms of concession CapEx, we spent EUR 10 in the first half. This is pretty much a schedule of all the concessions. We'll, spend the remaining EUR 35 in the second half. And in terms of other extraordinary CapEx items, we have, you know, the bulk of Project POS that is happening in the second half. You know, that expenditure is gonna be more back-ended.
Pretty, we're gonna follow pretty much this CapEx schedule that we've guided towards, and extraordinary items as well. On the deferred consideration, it might be the number that we've given, or it may be lower, depending on ultimately when we will settle all the deferred consideration for the previous acquisitions that we had guided to. T here's nothing -- there's no other sort of extraordinary costs. We don't have any more integration costs in starting from this quarter. That's, so that is out of the way.
These are -- then the rest is, you know, on the debt side, you know, we've got the coupons that we'll pay on, in relation to the new bonds we've issued. The, floater is quarterly and the senior secured note is, is paid semiannually.
All right. Thank you very much.
The next question is from Simon Davies with Deutsche Bank. Please go ahead.
Yeah, morning, guys. Can you hear me okay?
Yes, perfect.
Perfect. Just a couple from me. Firstly, I know this is difficult, very impressive by the share gains during the period. How much do you think of that have come from revenue synergies from the Lottomatica acquisition? I know that, that you never gave any formal guidance on this front, but I just want to get a sense of how much is this a one-off step change in the technology offering, the content offering, et cetera, and how much more there might be to go for over the next 12 months to 18 months. Second question, you talked about, I think it was EUR 11 million of benefit in terms of grace win margin or sort of sports results.
How much of that is down to favorable results and how much do you think might be structural improvement, from improved trading capabilities, from the product mix, et cetera?
Yeah, I'll take the first one. The market share improvements, I would say there's a, it's really about, it's not about, you know, synergies. Of course, when you put the brands and the assets together, you exploit what you have on one brand onto the other. I mentioned the example of the virtual betting product of Goldbet, which we moved to Betflag, and then which we have moved to Better also. But that is very much about, it's about, you know, continuing the positive track of Goldbet and Betflag, which have always had a positive track, which has even improved on the back of improved product offer and tools, services.
When I mentioned the turnaround of Lottomatica.it and Better.it, I was talking about the fact that those two brands were, you know, not exactly performing at the best, and they've had material shift in the direction after we brought them onto our platform and product stack. I wouldn't call that synergies. It's a material improvement of the offer to our customers. In the case of Better.it and Lottomatica.it, there was also some customer base which was lost across time, where the brand had lost share of wallet, which is being gradually recovered through a better product offering and better service. I wouldn't say it's a one-off.
Clearly, the change of the direction is a one-off, but it's a material improvement. We haven't finished yet.
Yeah.
Because clearly, you know, for example, Betflag. Betflag is pretty much flat on sports. We're working, as you know, on improving the offer there, bringing them onto the group platform, and that will drive a similar opportunity, we believe, also on this brand. But, I wouldn't call that synergies. It's about giving the proper offer in a very competitive and top offer to clients.
Great.
With regards to the payout, listen, we've -- t he way the 11 million is calculated, is we look at the, you know, a 3-year period, the H1, average H1 payout for a 3-year period, historical period. We disclose that because obviously we can have reversals. And we do assume that that number typically reverses when we budget our -- do the budget for our financials. How much of that is structural and how much of that, we'll see that over time, as we as time progresses. If we see that , it less reverses over time, over more -- over a year's period, then we may consider that structural.
I think it's early to say, and it's harder for us to say that how much is structural. We are clearly -- It doesn't mean that we don't continue to work on all the initiatives to reduce the payout, and without impacting our top line. There's a number of initiatives, as you know, that we're doing, that we continue to do, and we'll see this result over time. I think as we continue -- that will average itself out i n the following quarters.
I'm sorry, can I just sneak in a third question, which is on, o ne of the online, you're talking about improved bonus spending optimization. Can you flesh out those comments a bit? What, what exactly are you doing, and how much is there to go for it [in the] optimization?
Yeah, for example, there is an increased, an improved number, a more detailed number of -- I'll mention just a few actions, just as an example, of segmentation of the customer base, which is very much, also initiative based. We have a test and learn approach, which is being used more and more. So, you test various type of initiatives on different segments of the customer base, you use sensitivities, and you then take the most performing type of actions in your library for the future, which means basically that, either you spend less to achieve the same result, or with the same money, you get higher results.
This is very high level, but those are probably two meaningful examples of what we're doing. Clearly, the fact that, for example, that-- well, it's not an example, that with the exception of Betflag now, but all the brands are onto the same platform, this is making this possible, easier and more meaningful, because we work on the same tool on the customer base. That's, that's basically about it.
And a prerequisite for this was the migration to the same product stack, and then, you know, which we did last during last summer, and then we started delivering all these CRM related initiatives, which have improved, you know, variables like churn, acquisition. You can go throughout all the list of KPIs. That's it.
Okay. Thank you very much.
Thank you.
The next question is from James Rowland Clark with Barclays. Please go ahead.
Hi, good morning. I've got a few questions, please. On the online share gains, sorry to come back on this again, I know you've talked a lot this morning about product expansion and the impact of bringing Betflag gains to your other brands and vice versa. Can you just help us, perhaps sort of quantify where we are on that journey, to bringing, you know, the products across the different brands, you know, to the other brands ultimately? Maybe you can sort of quantify that in terms of Betflag gains that are now available, to your other online brands as well. So a follow-up question to that would be, what are you seeing in terms of the number of users who are using multiple brands?
Has that changed significantly versus your sort of IPO expectations or multi-product brands as well? Then finally, on sort of M&A, you mentioned that you're not really seeing, valuations particularly, you know, different at the moment. Are you saying not really different to the historical valuations of deals that you've done? A little bit of color there would be helpful. Thank you.
Yeah, look, on online share gains on the product side, on I would say it's -- we're basically done when you talk about Goldbet, Better, and Lottomatica.it. We're not done on Betflag. We're progressing on that. So, it's going to be H2 2024 project milestone, having the full set, the same product set, same product stack of the group onto Betflag, which -- so w e are done with the virtual betting there. With the rest of sports betting, that is an H2 2024 project, and we believe that will be able to give a significant uplift to the competitiveness of Betflag in that segment.
As for the vice versa, the casino, we are on one side continuing to increase with the usual strategy, the portfolio of Betflag, but at the same time, we are working on to aligning the portfolios of Lottomatica.it and Goldbet.it to that of Betflag. Clearly, there is still a lot to do. I would say that most of these is a 2024 activity. I mean, it's in place, but material uplift in terms of size of the library will come in 2024. That's the area where there is still a lot to do, not because there is -- i t's just a matter of, you know, time required for the delivery of the assets.
In terms of M&A, it's, I mean, just, I don't know what -- I mean, there's not much probably to add to what I said, unfortunately. The type of deals that we are seeing, which are also negotiations with, that had started, some time ago, right? It's, we don't see anything different than usual. Also, because, I mean, it's small assets, which valuations are driven by so very different type of, considerations, that you would see in, larger assets or, for example, there is generational change, there is, the necessity for these people, to find a larger ecosystem, in which they can see a future. So they are usually willing.
The deal is just larger than just selling the company. It's like many times, the entrepreneur staying in a different role, so there's a larger set of considerations to be done for these type of deals than simply the price. This is also because there is some level of insensitiveness -- inelasticity, sorry, that we observed. That's pretty much about it.
Thank you very much. Can I just have a very quick follow-up on the online share gains? Are you assuming online share gains in your raised FY guidance for this year, or are you assuming that you just grow in line with the market, your whole share, given the strong exit rate you've got in Q2?
James, I'll, I'll take this one. Listen, if you look at the implied growth for the second half, it's basically on the EBITDA level, the midpoint is year-over-year, 15%. Let's see how the market goes, but we, we're assuming right now that we're staying at constant market share, but then if we continue to increase, we'll see that in the second half.
Sorry, James, I, I forgot to answer you to the cross brand pre and post migration. It's actually increased. It's actually increasing, which is part of the strategy also, and, you know, i t's materially increased.
Great, thank you.
The next question is from Estelle Weingrod with JP Morgan. Please go ahead.
Hey, good morning, everyone. There's just one question left from our side -- from my side. Could you just give us more color of what's happening behind the trends you're seeing between GGR growing pro forma 9% in H1, year-on-year, versus 15% at, at the NGR level? Just want to understand a bit better what's happening in between.
Sure. That's, between GGR and revenues, that's effectively the -- and If you look, you see bets at + 20%, you see the GGR + 9%, that's predominantly the mix effect of gaming franchise that has a different, different payout, right? If you look at bets + 20%, compared to rev, GGR + 9%, it's all driven by the difference in payout. And gaming, the gaming franchise business has a, just a higher level of payout. Clearly on the gaming franchise business, you have to sort of remember also that there is a -- when the effect of the distribution and sourcing is seen then in at the revenue level.
The more we, the more we continue doing distribution and sourcing, the more clearly it accretes to our revenues. So the bets and revenues don't necessarily go at the same rate in gaming franchise.
Okay, thank you very much.
For any further question, please press star and one followed by [one] on your telephone. We've got a follow-up from Domenico Ghilotti with Equita. Please go ahead, sir.
Thank you. Just a follow-up on the model. When I look at your slide number 18, I see so D&A excluding PPA that are stable year-on-year. I would have expected, say, a pickup due to the fact that you mentioned that you are starting to pay concession CapEx, and so I thought that they would have flown into the P&L as well. It's something that should we expect for the second half?
Yeah, you should see a pickup i n the second half in D&A as a result of the concession costs , the concession CapEx that come in.
Okay. Okay, thank you.
Gentlemen, there are no more questions registered at this time. I give the floor back to you for any closing remark.
Thank you, everybody, for attending, and seeing you for the next quarter results on November 7th. Thank you. Bye.
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