We can start. So, good morning, everyone, and thanks for joining us today for our 2023 Full-Year Results. I am Per Widerström, and I joined as CEO of Evoke in October last year. Today, it gives me huge pleasure to tell you about the significant progress we have made since then and how excited I am about our value creation plan for the coming years. We have the agenda for this morning's presentation on slide two here, and today is really about the future: our obsession and commitment to value creation, and as a result, that is where we're going to focus our time today.
So, after a quick introduction from me, Sean will give a short overview of our 2023 results, and this will give the context of why this is such a critical and exciting time for the group and why we are acting actively and with pace to ensure we reach our full potential. I will outline our new strategy for success and provide some details about our value creation plan. This is our promise to our shareholders and explains what, how, and where we will deliver value in the coming years. Sean will then outline the financial aspects of our plan before we open up to take questions. For the Q&A session, I'm pleased to say that Sean and I will be joined by Vaughan Lewis, our Chief Strategy Officer. So, let's turn to slide 3.
So, I wanted to start by saying this is the beginning of a new chapter in the history of this business. We are resetting the business and embarking on a transformation journey to unlock our full potential. I mean, we still possess the same great attributes you already know about. We operate in fantastic markets and enjoy leading positions in the growing total addressable market with high and rising barriers to entry. We have the key ingredients for success. I mean, namely, robust proprietary technology and some of the strongest betting and gaming brands in the world. However, it was my incoming belief that this business was not performing anywhere near the level it could and should. That's the reason why I took this job. We have a fantastic opportunity ahead of us, but we must make bold changes to ensure we reach our potential.
Before and after I started, I took the time to visit nearly all of our offices and met with many colleagues across various departments. It was clear that there was a burning hunger for change, particularly in terms of our ways of working due also to unclear roles and responsibilities. It was also clear to me that we needed to strengthen our group executive team with first-class people who knew and who know what world-class looks like and have deep understanding of how to get there. There was a clear message from all the colleagues about the need to become a one company with a clear, united strategy, mission, and vision. Our new strategy and value creation plan is all about defining what success looks like and how to get there.
We are taking these key ingredients of success and building a robust execution plan based on key value creation drivers. We now have the right team in place and are building the capabilities to maximize the opportunities that these foundations give us. This is a new plan. It will be delivered by a new team obsessed about value creation, and we will have a new corporate identity and name. So, let's turn to slide four. I would like to outline some of the immediate actions I have taken to set us on the right path. I set an ambitious plan when I began my role, and this instilled a real sense of urgency for me and the business. I wanted to move at high pace and with boldness.
We have quickly established an almost entirely new group executive team with outstanding skills and track record, and this to ensure we can successfully drive execution for value creation. In a short time, we have totally reset our operating model. This new operating model will set us up for success with the removal of duplication and inefficient ways of working. We now have the right spans and layers of control with clear accountability to drive value creation. It will also deliver around GBP 30 million of cost savings. We initiated a strategic review of the US B2C business, and I look forward to updating you on the outcome of this as soon as we can. The plan here is to free up tech and marketing resources to invest at high returns consistent with our value creation plan and the strategic focus to be in sustainable market-leading positions.
We have taken decisive action on the destination product and tech platform and the roadmap to get there, including bringing in exceptional talents to support this transition. All of this has been underpinned by the creation of our strategy with a clear strategic framework and consideration that drives our focus on sustainable, profitable growth, and these combine to underpin our value creation plan. So, turning to slide five, I mean, this gives a snapshot of my new top-class executive team. Many businesses have an attractive strategy, but success is driven by execution, and this is the team who will be executing and delivering this plan. Most of the team have significant industry experience, but crucially, whether in the industry or not, I mean, this team has a very strong track record of creating value, executing change, and delivering success. So, for example, you will hear from Sean shortly.
He's someone who has spent over 17 years as CFO across public and private equity companies. He has a proven experience of delivering value creation, including highly leveraged companies. Ian and Rik, on the product and tech front, are at the top of the game, having made a significant, lasting impact on the success that Paddy Power, Sky Bet, and the wider Flutter Group have enjoyed in recent years. Mark Kemp and Stephen Sheridan are the most recent joiners, having just started this month. Mark brings a wealth of experience from the industry and knows the UK market inside out, having worked at the top of Ladbrokes, Ladbrokes Coral, Tote, BoyleSports and DAZN Bet. Stephen adds huge knowledge and capabilities from outside the industry, having delivered value creation across highly regulated, multinational, multi-product businesses.
He brings an excellent track record of delivering process improvement, automation, AI, and management of large, diverse operational teams. But beyond the executive team, we have also strengthened the core capabilities of the wider leadership team, bringing in world-class experience in areas like intelligent automation, AI, martech, and customer lifecycle management. It is a new team for a new business. We are sometimes called 888, sometimes 888 William Hill, sometimes just William Hill. I mean, these are great customer-facing brands, but we need a corporate brand that brings together everything we do and speaks to our combined brand power and shared values. We need a new company name that is memorable, translatable for our business, and helps us tell the value creation story for our shareholders, our colleagues, and one that stands out from our competitors. On slide 6, we have our proposed name, a new corporate identity.
Evoke marks the start of a new era, a new direction, a new sense of purpose. As Evoke, we come together to go further and faster, to make life more interesting, to evoke delight in our customers with world-class betting and gaming experiences. Our new name is a clear signal of our new direction. We are embracing the strengths of our past but building on this for a much brighter future. I am incredibly excited for the future, and I have no doubt it will be a positive one. So, turning to slide seven, an introduction to our new strategy. As Evoke, we know what success looks like. We know how to outperform the competition and win in the market. We are clear on what we focus the business and resources on and what we are not going to focus on.
Our clear vision and mission unite the company and mean we will focus on driving sustainable, profitable growth and building market-leading positions. I will return to expand on this, but before that, I'd like to hand over to Sean to run through the financials for 2023 and how the changes in the finance function are setting us up for future success. For Sean.
Thanks, Per, and good morning, everyone. I'm Sean Wilkins, the CFO, and I'm delighted to have joined this business in February. This is a hugely exciting time for the group as we embark on a plan to deliver material value creation. Before we talk about the future, I'd like to spend a few minutes running through the financial results for 2023, which start on slide 9. On a reported basis, we saw 38% revenue growth and 41% adjusted EBITDA growth, driven by the acquisition of William Hill in the middle of 2022. In the appendix to this presentation, there are some more slides on reported results, including details of the exceptional items and adjustments, being mainly the purchase price allocation, amortization, and integration costs. I believe it's more representative to look at the results on a pro forma basis, including William Hill in both periods.
On that basis, revenues were down 8%, impacted by regulatory and compliance headwinds, and adjusted EBITDA was about flat, with those pressures offsetting some of the positive gains from synergies. On the right-hand side here, we see we show the main items in the bridge between 2022 actuals to pro forma results and then to 2023 actual results. Retail revenues are GBP 16 million higher, primarily reflecting the benefit of the CapEx spent in the last two years, which has included a completely new till system and over 3,000 new proprietary SSBTs going into our shops this year to both replace legacy ones and increase density. UK online revenues are GBP 59 million lower, reflecting both the impact of the player mix shift towards lower-spending customers and the short-term top-line hit from the removal of lower-return marketing spend.
International revenues are GBP 96 million lower, mainly reflecting the impact of regulatory and compliance changes, but also the refined focus of marketing in sustainable markets. On the bottom, you can see the same bridge for adjusted EBITDA, with similar drivers to revenues I've just described. The notable difference being UK online, where despite the GBP 60 million drop in revenue, EBITDA was up GBP 40 million, reflecting strong synergy delivery and that shift in marketing approach I discussed. You'll also note corporate costs are up GBP 14 million, but it's worth noting this is not a real increase in costs as such, and more harmonization of accounting with a decrease in the capitalization rate, meaning more expenses to the P&L. On slide ten, we see the revenue and adjusted EBITDA by segment on a pro forma basis.
I've just talked through the drivers, so I won't repeat myself, but you can see overall UK pro forma revenues were down 3% in 2023, reflecting good trends in retail being more than offset by the structural changes in our online business that I talked about. For our international business, revenues were down 16%, but we ended the year with a smaller but higher-quality business. Over the last two years, the business has absorbed an incredible amount of change, with regulatory, gaming tax, and safer gambling changes impacting EBITDA. We are under no illusions that this financial performance has been disappointing and means that at the end of 2023, our financial leverage of 5.6 times was above where we want it to be. While the financial performance has been difficult, it means the business has already absorbed a lot of external shocks and has a higher-quality base to build from.
Our value creation plan builds on this history and will establish a foundation for profitable growth. Crucially, the growth potential ahead of us, I know that our leverage position will soon be seen as a positive, with its impact enhancing the returns on equity that we deliver in the coming years. Turning to slide 11 and our cash flow. Net cash, excluding customer balances, dropped by GBP 48 million in the year.
Our Adjusted EBITDA was GBP 308 million, and this generated GBP 165 million of underlying cash after reflecting tax, net working capital, CapEx, and rent. During the year, we incurred approximately GBP 65 million of exceptional costs, which were primarily costs to achieve synergies or restructuring charges, together with the payment of the legacy regulatory settlement in the UK for William Hill of GBP 19 million and a GBP 3 million settlement for the Gibraltar regulator related to the Middle East issues last year.
We then had GBP 172 million of interest payments, and while this was partially offset by GBP 42 million of non-core asset sales, the net impact was a reduction in the cash position of GBP 48 million. Our debt position moved a little due to forex movements, and this meant that we ended the year with net debt of GBP 1.717 billion, slightly lower than at the start of the year. Turning to slide 12 and to cover current trading. The first quarter of 2024 still has some of the headwind impact from the regulatory and compliance measures I just talked through, as we only fully lapped these during February. We expect revenues to be around GBP 420-430 million for the first quarter, broadly flat sequentially and down mid-single digit relative to the first quarter of 2023.
Within this, gaming should be slightly up year-over-year, which is good considering the dot-com timing headwind I just mentioned. The drag is coming from the betting side, and this reflects a tough comparative in terms of win margins as well as significant investment into our Cheltenham offer, which drove over 750,000 actives up around 66% on the prior year. This investment, together with the increased marketing, will support growth through the remainder of the year, and we expect a return to year-on-year growth in Q2 2024 onwards. We are seeing strong trends in actives and player days and have turned the corner on revenue. With our new team and plans in place, we are well placed to accelerate from here. In early January, we outlined that we expected Adjusted EBITDA for the year to be around GBP 340 million.
I am pleased to say that with what we have seen so far in Q1, I remain comfortable with that expectation. Turning to slide 13, and just before I hand back to Per to walk you through the details of the operational and strategic elements of the new plan, I'd like to outline my key focus areas for the finance function and how we are setting up for success. Firstly, we are driving and embedding a cultural shift in the business. This is all about a shift in mindset to deliver value creation. I have quickly restructured the finance team to set a structure that will support greater rigor of our plans and provide greater support to our decision-makers to drive high returns. Secondly, resource allocation is fundamental to creating value.
Our strategic review of B2C in the U.S. is a clear example of how we are improving our resource allocation and making quick decisions to drive superior returns. We will only spend money where we are seeing sustainable, profitable returns, and in line with our strategy, we will scale this quickly in an agile manner, protecting the downside with rapid actions to manage profitability, and where we see excess returns and performance, we will scale up to drive higher profitability. Thirdly, I am obsessed with operating leverage. This is a business that fundamentally has high operating leverage. We can service more customers and deliver more revenue from our scalable operations. But operating leverage doesn't just happen, and I see it as one of my fundamental roles to ensure that the finance team is driving this. This is about ensuring we deliver efficient growth.
I'll now hand back to Per to provide some more details on our exciting value creation plan.
Thank you so much, Sean. Let's go to slide 15. I'd like to outline our commitment to shareholders to create value. Firstly, we will drive profitable and sustainable revenue growth. I mean, we are not here to take market share for the sake of it. I mean, we are not here to build an empire. This is all about driving sustainable, high profits, but it's also a commitment to grow. We cannot and will not shrink our way to success. Secondly, we will drive improved profit margins. The plan I'm outlining today will deliver a bigger business but also a more profitable business. This is about expanding our capabilities, leading the industry in intelligent automation, and as Sean said, an obsessive focus on operating leverage. Thirdly, we will deleverage through highly disciplined capital allocation.
We will grow the business, generating materially improved cash generation and enabling rapid deleverage. Our capital structure with elevated leverage means deleveraging magnifies the return on equity. Turning to slide 16. This is our strategy on the page. This is our strategic framework and explains what success looks like and how to get there. This is our guiding light for what to do but also what not to do. Ultimately, we're the laser focus on value creation delivery. We have a clear vision and a mission with clearly set goals. This is what success looks like for Evoke, and we have a clear strategy translated into our value creation plan. I am, along with all the executive team members, absolutely committed to this plan, and we look forward to telling you about our progress against this plan. I joined this business because I love betting and gaming.
Betting for me adds further excitement to sports events. For others, it's about having fun, discovering a new slot machine, or playing poker against a friend. For others, it's about relaxation, some quiet me time to relax and enjoy. For all of us, this is about making life more interesting. This is what we will do as a business: make life more interesting for our customers. We will do this by delighting our players with world-class betting and gaming experiences. What do we mean by world-class betting and gaming experiences? I mean, this is delivering our customers valuable propositions. While we have a wide range of amazing brands, they will all deliver these key elements and raise the standards. We will be easier to use than the competition.
We will live our brand values across all interactions, whether it is our ads, our promotions, our customer service, or our products. We will offer personalized values using data insights to deliver the right products at the right time, at the right point of sale, and at the right price. We are moving towards a world of infinite personalization. We will be famous for doing the right thing for our customers: no misleading offers, no confusion, just clear, trustworthy interactions. To deliver this for our customers, we will invest to build three clear competitive advantages. These are the key enablers that will ensure we win in our markets. These are, firstly, operational excellence driven by data insights and intelligent automation. This allows us to build scalability to drive operating leverage, ensure consistent execution, deliver high-quality outcomes for our customers, and unlock new opportunities for efficiency.
Secondly, a winning culture. Our success is driven by our people, and we are committed to fostering a culture that empowers our colleagues to unleash their full potential and contribute to our collective success. And thirdly, ensure we have leading, distinct brands and products. I mean, we have an amazing start with three strong brands, but we will build on this by ensuring our distinct brands and products are tuned in to our customer needs, offering personalized value with sustainability embedded into every offering. In order to drive incremental value, we have initiated six strategic initiatives that will help instigate operational excellence into everything we do and build a foundation that is scalable and ready for step-change value creation. We are also crystal clear on where we are focused to deliver the best returns on our resources.
I will touch on our strategic initiatives and market focus in more detail shortly. Let's turn to slide 17. Our strategic framework provides the guiding rails for our value creation plan. Over the last few months, we have built a really powerful multi-year plan with clarity about what success looks like, where we will focus, how we will operate, and how each component will create value. This chart shows this concept in graphical form in terms of how we will drive success and the focus of driving incremental value on top of the business-as-usual run rates. I should point out that this is illustrative and conceptual, not the actual forecast. We know this is a highly competitive industry with significant pressures from regulatory changes, taxes, and cost inflation.
If we had done nothing and continued in the old BAU mode, business-as-usual mode, we believe that profits would have steadily declined over time. We have rapidly built a plan to address this and deliver robust growth. We have six strategic initiatives across the business, and these are global initiatives that drive improved operations through operational excellence and create a step-change in future profitability. These SIs, as we call them, are managed by the executive team and include the best people across the business. As we implement these, we will deliver significant improvements in our capabilities. Once fully effective, these SIs will be transferred to BAU. This will dramatically enhance our BAU capabilities and also free up capacity for future SIs and future step-changes in value creation.
This is a model and approach that I have employed multiple times in the past, both in executive roles and as a chair. It is a model that works and a model that drives value. It is a model that will deliver a step-change in our capabilities and our profitability. Turning to slide 18, I'd like to provide a few additional details about our four strategic initiatives that will instigate operational excellence. Customer Value Propositions. We have a portfolio of world-class brands, the envy of many in the industry. These are some of the strongest brands in any category in terms of brand awareness. But all of these brands have somewhat lost their way with inconsistent usage that undermines their power.
Our customer value propositions, or the CVPs, will provide complete clarity about our brands, who they are for, what good looks like for the customer, and how we will deliver these brands consistently across all touchpoints with our customers. It is our customer promise. So what? Yeah, I mean, improved brand clarity will deliver us improved cost per acquisition as we are able to focus on the right customers in the right markets and will provide improved lifetime value as we improve loyalty and share a wallet. Customer lifecycle management. I mean, we are mapping out every stage of the customer lifecycle from awareness through to becoming a loyal brand advocate. We want every customer to recommend our brands to their friends. And we will do this by using intelligent automation to provide a better experience to our customers.
We will provide the right offer with the right product at the right price at the right time. We are moving towards a world of infinite personalization. This will allow our customers to benefit from safe and personalized betting and gaming experiences. So what? Providing personalized, world-class betting and gaming experiences will reduce churn and grow share of wallet, growing our revenues and driving margin. Winning organization. Fundamental to our plan is the quality of our people. We have totally reset the operating model of the business, ensuring it is both fit for purpose and future-proof. We are building leading capabilities in cutting-edge areas like AI, automation, and customer lifecycle management. We will make Evoke the most exciting place in the industry for the best talent to grow their careers. So what? I mean, this SI is fundamental to delivering operating leverage.
We will have greater productivity and pace at lower cost, ensuring we are driving strong, profitable growth. ESG. So driving profits in itself is not enough. We must make this business future-proof. We must increase the sustainability of the business to ensure we maximize the value creation opportunity. Our ESG plans are being embedded across the business and are fundamental to the way we think about the future. So what? I mean, the business has suffered in the past from less sustainable earnings. We will continue to increase the quality and sustainability of our earnings by embedding ESG in everything we do. Turning to slide 19, I'd like to spend a couple of minutes on our step-change SIs. These are the strategic initiatives that provide a real step-change in our capabilities and future profitability. The first one is our product and tech foundations.
We have quickly determined our destination platform based upon the value creation opportunity using the best components from both 888 and William Hill. So what? I mean, this future platform will provide greater productivity, enhance our competitive capabilities, and ultimately drive significant cost savings. This SI will drive higher revenue at lower cost. The second one is our Operations 2.0 initiative. This is about building data, AI, and automation foundations that make the future-proof business. This will deliver a fundamentally different way of operating and support improved personalization for our customers and a step-change in our capabilities to deliver better experiences. So what? We aim to be the leading operator in the sector for AI and automation, which will drive a step-change in our efficiency and profit margins. Turning to slide 20, and this is about where we will focus our efforts.
Our capabilities allow us to invest almost anywhere in the world, but we know that we must be selective with our time and our shareholders' money, deploying investments where we will generate a strong return and where we generate sustainable market-leading positions. Having reviewed our market-focused approach, we have redefined our market archetypes to fall under two key categories: core markets and optimized markets. This simplified approach enables increased focus and investment in our core markets while maximizing cash flow from all markets. We will remain laser-focused on our four core markets: the UK, Italy, Spain, and Denmark, which already generate about 85% of our total revenue and nearly 80% of our online revenue, and where we have established strong positions. These are all large, attractive markets with high and rising barriers to entry through regulation and established brands. This slide shows the online market size for these markets.
But it's also worth calling out there is a long runway of growth to come from online migration, particularly in Italy and Spain, where only about 20%-30% of gambling is currently online. In all other markets, our optimized category, we will prioritize cash flow generation and value maximization through leveraging our enhanced capabilities and scale. We expect to have more core markets in the future, but in order to become a core market, we need to see a route to sustainable, profitable, market-leading positions. We will add more markets through a combination of expansion of our capabilities as well as high-impact, capital-like partnerships, or M&A. In our other markets, these will generate high cash returns leveraging our scalable platform. Turning to slide 21 and a few notes on execution.
As I touched on earlier, you can have the best strategy in the world, but it's meaningless until you can execute effectively. Since joining, I have already instilled a step-change in focus and execution and value creation through our ongoing regular performance reviews as well as what I call a one-company program management office. This is a small group of experienced professionals headed up by Vaughan Lewis through his role as Chief Strategy Officer. They provide the governance of the strategic initiatives and support delivery and execution, ensuring everyone is aligned and we are making the most effective decisions. Outside of the strategic initiatives, I'm also obsessed with business-as-usual run rates and the underlying customer-centric key drivers, delivery against agreed plans, and ensuring accountability across my executive team for executing what we said we would. We are aiming for world-class, and that is a constantly moving target.
So our relentless focus on driving successful execution will not stop. I will now pass back to Sean to tell you what this all means for our financials. Thanks, Per. Turning to slide 23, I talked earlier about how we will drive growth while becoming more efficient. This slide provides an overview of how our strategic initiatives enable us to do that. On revenue, strong brands through our clear customer value propositions, enhanced personalization through customer lifecycle management, and improved products through products and technology will drive stronger revenue growth. We are building capabilities to drive profitable growth and win in our chosen markets. On direct costs, these are our costs that are driven by revenue, being costs like duties, payment processor fees, and content fees.
While most of this is outside of our control, being driven by regulation and tax rates, our disciplined approach to finance will ensure that we are driving cost efficiencies across our external costs, and some of our tech integrations will save money over time. Marketing. We are really clear about where we will compete and how we will compete. Our enhanced brands through our customer value proposition stream will support a significant improvement in our marketing efficiency, speaking to the right customers in the right market at the right time and delivering through our customer lifecycle management and product and tech initiatives. Overheads. Our product and tech, Operations 2.0, and winning organisation stream are fundamental to our plan to deliver improved operating leverage. Put simply, we will do more with less, a more efficient operating model, delivering greater output and supporting higher revenue at lower costs.
Turning to slide 24, what does this mean in terms of targets and value creation plan? We will deliver profitable and sustained revenue growth of 5%-9% per year. Improving our efficiency and driving operating leverage will add around 100 basis points to EBITDA margins each year. Finally, but importantly, this will deliver rapid deleveraging, with targets being below 3.5 times by the end of 2026. With that, I'd like to hand back to Per for his closing remarks. Thanks, Sean. Slide 26 summarises what we have talked you through. Today marks a new start for our new one-company Evoke. I'm really excited about the value creation plan that we are laying out, and I and the executive team are fully committed to this plan. We have a lot of work to do.
It is a reset of the business, but we know exactly what success looks like, and we have a clear strategy to get there. We have quickly built a high-quality team to deliver this plan with pace, urgency, and boldness. Firstly, we will drive profitable and sustainable revenue growth. Secondly, we will improve our profitability and efficiency through driving operating leverage. And thirdly, we will be highly disciplined with our capital, ensuring that this profitable growth drives deleveraging of the business, driving high return on equity. And this will be delivered with a laser focus on execution. With that, I'd like to hand over to the moderator for questions. We will begin with questions from the room, and we ask that you limit it to two questions each, please. For those online, you can submit your questions into the webcast, and we'll get to those after. Thank you so much.
Thank you. Thank you. Good morning. Ivor Jones from Peel Hunt. You set deleveraging as a target. Does that primarily mean higher profit, or does it mean lower debt? And what I'm trying to get at is whether, as you deliver more revenue, whether you then need to constantly reinvest the upside in driving the benefits you've talked about in 2026 and 2027. And can I ask a second one now? Yeah, yeah. On slide 17, where you set out those components of the medium-term growth, operating excellence, and then the step-change, can you talk about the assumption that you've made about regulatory changes within that, whether you've assumed they're neutral from here or whether you've included some downside?
That upside that you're talking about in terms of operating excellence, you're talking about improving what Evoke does, but you haven't really talked about your gaps against the competitors because, to make progress, presumably, you need to take some share from somewhere. So if you could talk about the way you see gaps at the moment that need improving. Thank you.
Gavison. On deleveraging, so year 1, 2024, we expect it to be driven by higher profit. Cash is pretty neutral, pretty flat. I expect it to be over 2024. In the outer years, 2025 and 2026, we get the double effect of good growth in EBITDA but also a reduction in the net debt via cash generation. So it accelerates the deleveraging over the period. On regulatory changes, the assumption is that the changes that we've recently seen from the White Paper are fairly neutral for us.
We were pretty conservative about how we anticipated those changes coming into last year. So, as a result of that, it's fairly neutral going forward. You mentioned this with the gap versus competition. We have a tremendous opportunity to improve across the board when it comes to our strong brands. In particular, we see that we have a job to do, as I mentioned in the presentation, about how to be even more laser-focused and distinct, what our customer brand should stand for. That needs to follow through in everything we do across the customer interactions. There, we have one gap to address. We also know we have more to do in the UK when it comes to retail. We have tremendous opportunity when it comes to our retail channel.
It's a hugely important part of our go-to-market strategy as part of omnichannel, but also in terms of the brand awareness it creates in terms of the high street. We see that we have opportunity here when it comes to, for example, our retail gaming proposition. So it's absolutely clear that we do know what Evoke will have to do across the customer brands, but also, of course, that is also pegged towards what competition is doing because they will not, obviously, stand still. Thank you.
Hi. Matt Copeland from Jefferies. Thank you very much for the presentation and for taking my questions. I've got two, if I may, please. Firstly, on 2024, I think Sean, you mentioned that the first quarter was down about mid-single digits and then to expect growth to return from the second quarter onwards.
Can you possibly elaborate further at all on the phasing of that throughout the remainder of the year, particularly if we think of tailwinds, for example, the Euros coming later? And secondly, AI sounds like it's deeply embedded in the group's priorities moving forward. And you talked a lot this morning about the opportunities you see here on the back end to improve efficiency, but wondering if you also see similar opportunities at all on the front end, perhaps in the odds setting and trading platforms, particularly, Per, with regards to what you refer to as infinite personalization of betting types and preferences. Thank you.
Say the first one. You take the first one. Yeah. Well, so just to recap. Thanks, Matt. Just to recap, mid-single-digit negative for the first quarter. Flat quarter-over-quarter and gaming up, so some green shoots in there.
Just to review why that is, we're lapping regulatory and compliance up to the middle of February, the issues that we've been talking about and the issues that we talked about last year. That's the first thing. The second thing is we invested hard in Cheltenham. So we had a spectacular Cheltenham. We had 750,000 active customers, significant growth year-over-year. And then the third thing is that we had tough comps, so March last year had really excellent margin. Just looking forward, though, Cheltenham will clearly pay back in year. So the investment that we made in revenue in the first quarter will come back to us over quarters two, three, and four. We've previously discussed the fact that we're saving GBP 30 million in our overhead, and we're plowing that back into growth in the UK.
And then the third thing I'd say is, just generically, the VCP, the value creation plan, is a profitable growth plan. That is what it's designed to do. Every aspect of it is about driving profitable growth. And it's for those reasons that I'm confident that we will get back to positive growth in Q2, Q3, and Q4, and why I'm sticking to the guidance of 5%-9%.
So about AI. I'm a huge fan of AI used in the right way. And yes, as outlined today, Operations 2.0 is all about, in the right way, to monetize and build the capability when it comes to data and talent automation and AI. And I truly believe, and we truly believe, that this is a very important enabler for the business, for the future, any business in the society, and to be a key enabler for value creation.
We are investing in building core capability in terms of AI and intelligent automation, both in terms of bringing in world-class people from other sectors who actually know what world-class looks like. We have no time whatsoever to learn from scratch. We are bringing on board people that know what world-class looks like and building that foundation with AI and automation. When it comes to how we drive value, I mean, actually, today, we are using AI already today when it comes to the recommendation engines when it comes to casino content. But what we want to do is that, in a strategic way, to institutionalize AI and intelligent automation in the way we operate, and it's going to fundamentally change the operation and also how we're going to operate. When it comes to revenue generation perspective, I mean, you were spot on.
It is about how we can use AI in a responsible way. It actually will be absolutely infinite in terms of personalization in the offering to the customer across any channel, any moment. And with AI, and on top of that, you have the layer of intelligent automation, we believe that is something that we will focus on, and that is a massive opportunity for revenue generation. But also, when it comes to cost efficiency, we see the opportunity, and you see other sectors, and also in this sector, utilizing AI and intelligent automation when it comes to customer service, absolutely when it comes to trading and odds management. And looking throughout the whole value creation, there are tremendous opportunities to use AI and intelligent automation to move from manual operations to intelligent automation.
So this is a step change in the way we see AI and operational excellence, and we are already having people in the know what world-class looks like in other sectors.
Hi. Morning. Richard Stuber from Deutsche Numis. Say a couple for me, please. First of all, the 5%-9% revenue growth, could you explain sort of how you see it developing on a UK versus international over that period? And presumably, you expect UK to sort of have a smaller share by the. That. And secondly, one for you, Per. When you were working at Fortuna, was there anything obvious that Triple Eight should have been doing, in your view, which you see as an easy win opportunity, so things which you implemented sort of immediately? And just really any general thoughts in terms of what you were doing at Fortuna which you could apply here?
I'd like to start. First one. Yeah. So we're not announcing at this stage and disaggregating the 5%-9% growth, Richard, into UK and international. It is worth saying, though, this is not 0% in the UK and all of the growth seen through international. It is reasonably evenly balanced. And in the answer to the last question I set out, the reasons that I'm expecting to see growth for the remainder of this year, and clearly, most of that was focused in on the most of the answer focused in on the UK, right? So the UK is an absolutely key focus to us. I mean, it's a significant chunk, well over 50% of our revenue. So we have to go and make that work
So second question on Fortuna. I was there for seven years.
Fortuna is the leading regulated operator in Central and Eastern Europe when it comes to betting and gaming. As I mentioned in the presentation, that I've had the opportunity over the years - that's why I have a few gray hairs - over the years to adopt and to work with this model that you have seen today. It is a very clear view on the strategic framework and how that translates into a value creation plan. No rocket science, really, but that is a good, solid model that I have used for many years, also at Fortuna Entertainment Group.
So what you have seen today, in terms of concept, in terms of approach, is what we did at Fortuna Entertainment Group, being very clear about what our success looked like, being very clear about how to win customers, being very clear about how to win in the marketplace, and how that then translates into laser focus on the strategic initiatives to drive incremental value on top of the run rates. I had the privilege to work with fantastic people at Fortuna that, over five years, we grow the underlying profitability five times over five years. If you look at now what we do here—and I'm very humble because the challenge is different—but the sector and the business is very much the same.
If you look at the underlying strategic initiatives that we have now in terms of winning organization, operating model, the focus on insights and automation-driven customer lifecycle management, the focus on being absolutely clear about what our brand should stand for, we did that at Fortuna. Yes. It is a new company, new, great people, but I have no doubt whatsoever, with my new team and the great support we have from the board and the great people we have in organization, that we will deliver this plan.
Thank you for taking my question and just shouting from a corner. My first one will be I'm seeing that you've simplified your market segmentation. Previously, you have three segments, and now you only have core and optimized. Can you explain more clearly what you are doing different, what you will be doing different with regard to these different segments?
I see that you've moved them up to core. What's changed there now and your plan going forward with this market? For all other markets, are you planning more exits on top of the US, which is under strategic review? Have you baked more market exits into your revenue forecast going forward? That's my first question. My second question will be your free cash flow, I think. Sean just mentioned that 2024 will be of neutral cash flow. Then, using your guidance on revenue growth and margin improvement in the medium term, is that reasonable based on free cash flow estimation on those guidance? Because the incremental free cash flow will be driving the leveraging, but quite slowly, in my opinion, towards 2026. You are facing a significant maturity wall in 2027. What's your plan exactly going into the refinancing window?
Are you comfortable with your current debt burdens, or are you planning other measures? My final question will be a small one. Can you give an update on the legal settlements, the provisions for you in Austria and in Germany? What's the expected cash outflow from there? Thank you. In terms of the first question on the market segmentation, I think that you will be absolutely perfect to address that. Sure. Thank you.
So yeah, look, the core markets are really all about driving sustainable, profitable market-leading positions. We're targeting podium positions with really strong brands that cut through and generate that flow of customers and sustainable revenues at really profitable levels. That in-market scale really gives us those outsized returns. You'll remember Denmark was a growth market. It's done extremely well as a market. We're about 10% market share there, number three in that market.
It's a really strong, self-sustaining, and powerful market. So that's been promoted to a core market. Those core markets are really the heart of the business. Those will be where we really drive success. They're around 85% of revenues. And like Per said earlier, we're on the lookout for more markets and more opportunities to bring countries into that core segment. Those optimised markets, though, will generate a lot of cash. They'll benefit from all of the increased capabilities that we're building. So much better foundations, clearer customer value propositions, better product and technology, the automated customer lifecycle management model. So we certainly wouldn't be standing still in those optimised markets. But what we're looking for is the right set of market conditions and the right set of capabilities for us to create the way to create more core markets.
So if you think about the kind of the key requirements for success in any market, you've got a license. You've got products and technology. You've got brands. You've got operations and the skills of how you actually operate the business. And then you've got capital. Now, we don't have to deploy all five of those in every market. We can be quite selective. We can use our brands in some market. We can use our technology on a B2B basis in some markets. We can use our licensing and operational skills. So we've got a lot of different ways of working. And we've shown already the ability to create value with alternative models, with the Africa business, for example. So we're really excited about the potential to create future core markets. But for now, like Per said earlier, it's as much what we don't do as what we do.
Having that real focus on those four core markets and really winning in those markets is critical for the next few years. On delivery, just to sort of remind ourselves of the forecast, we expect to see significant delivering in 2024, 2025, and 2026. We expect to be under 3.5 times levered into at the end of 2026. You mentioned a liquidity wall, a maturity wall in 2027. Actually, the majority of our debt is 2028. We've still got a couple of years beyond the end of the value creation plan before we get to that maturity wall. I've got no doubt that when we deliver this plan, that the access to the market will be absolutely there. It's not something that concerns me, but it is something that we plan for.
In terms of the Austria provision, so the provision remains basically flat year-over-year. We are absolutely convinced and have had legal advice that we are operating legally there. We also don't expect any short-term cash impact from that. We think that'll be in the courts for some time. As I say, crucially, we are convinced that we're operating in a legal manner.
Thank you. Sean Kealy from Panmure Gordon. If I look at the slides, I think it's slide 19. You point to actives, CPA and LTV as possible areas for improvement. I was just wondering, firstly, what does the LTV to CPA ratio look at the moment? How much do you think you can improve that, sort of looking at new customer acquisition?
Is that mostly a combination of reducing the cost per acquisition, or is that being able to get more out of every new customer that you onboard? And sort of what really is driving that? Is it marketing efficiency and so on? That's sort of number one. And then if I can ask just very quickly, you've talked a lot about data and AI and so on. Obviously, investing in those is typically quite expensive. I'm wondering what sort of quantum of investment you're making and what we should expect to see that look like. Thank you. So if we start first with the strategic initiatives that we do have to drive value, if we look at those, there are many areas in almost all areas focused on the customer. It is about the customer value proposition that needs to be much more to the point.
It's also now how effective we are in terms of holding the hand of the customer throughout the customer journey. Conversions, and how, in a responsible way, we are actually being very precise which offer at the right time, at the right place. You can imagine now when we have more data, greater level of sophistication, we will be able, in a responsible way, to drive a better RPU. Also, when we are more distinct in terms of our brand proposition, even more focused when it comes to driving return on our marketing investments, it will help us, through improved conversion as well, to improve the CPA. Now, I haven't even talked about the product proposition. But if you overlay that as well, there is no doubt that both in terms of the cost efficiency as well as the value per customer, in a responsible way, we will do better.
When it comes to data, AI, and automation, we are absolutely obsessed about driving value creation. And when we are investing into AI and automation, it will be to start with all focus on the use cases that lay at our hand. So the reason for being for the new division we set up now is to set up the foundation for AI and talent automation. But the investments that we do all tie towards use cases to drive, in most cases, in-year payback. Anything you would like to add?
Yeah, yeah. So I wouldn't think of these SIs as big J-curve investments that have got a dividend in terms of cash flow, right? But the point is that across our P&L, across bonusing, marketing overhead, we have got significant pools of cost.
And this plan is all about using those significant pools of cost in a much more efficient and effective way. So we're taking what we currently spend, and we're just spending it a lot, lot better. On your first question, we're not talking about the details of the customer lifecycle model, so.
Hi. Good morning. It's Roberta Ciocia from Investec. I have two questions. The first one for Vaughan. You did mention before the market share in Denmark. Could you remind us also the market shares in the other core regions, please? And the second question, more for Per. What do you think are the key risks to achieving your medium-term targets? That's all. Thanks. Yes?
Sure. Thanks, Roberta. So fairly straightforward one, yes. So in the UK and Spain, we're also around 10% share, either side just fractionally. And in Italy, we're approximately 5%.
As you know, we're online only in Italy and focused on the casino market primarily. There, we have higher share. I think, still current, we're the only online-only brand that's been growing market share in Italy. So a strong market for us, significant in-country scale. Yeah, we're positive about the future prospects there. I think just to add on the UK and all the questions on that and the growth profile, I think it's important to note we have been growing share of active players. What we've seen is a kind of huge remixing of the business in terms of the RPU level. So we've gone from pretty much the top of the market for monthly RPU to pretty much the bottom of the market.
That reflects all of that shift in the business and the shift in the policies and processes and player protections and the implementation of a lot of the elements of the white paper and the stakes reduction that we've put through already. As we look forward, the confidence we have from that growth in active players and in the UK, we're talking about kind of 1.2 million players a month. Using the plans that we've got in terms of building much clearer brand propositions, the pluses that go with that, the offers that are increasingly personalized and increasingly relevant for players, that's why we're so confident about growth in the UK as well.
Yes. You asked about the key risks of the plan. I mean, let's start with the plan. We are absolutely committed and confident in the delivery of the plan to start with.
As always, as a leader, there are plenty of opportunities and risks that you need to deal with. And we will. The way we are, in a very proactive and agile way, dealing with the execution dimension of our plan is, as I mentioned, that we have put in place already back in November a one-program management office that will be absolutely obsessed about the delivery of the plan and the value. And of course, that in order to deliver the plan, we need leadership. We need the people. And of course, upfront, we have ensured now we have a world-class team as my executive team. But also, as I mentioned, we have brought onboard some fantastic people also in the wider leadership team. There will always be risks and opportunities there. There are, of course, external factors like tax, regulation.
I think when it comes to the UK and the white paper, I think we are very well positioned when it comes to our current position now and the competitive landscape. When it comes to the white paper, as you know, we already have the GBP 5 stake limit on slots. We know very well how the customer behavior will evolve when we put those limits in place. We have taken very clear, prudent measures since before when it comes now to player safety measures. So we are very well positioned. So yes, there are risks and opportunities. But the starting point is that we have done this before. We are humble in terms of the work we have to do. But there's no doubt that. In the plan, and we will, in an agile way, work on addressing both upsides and downsides.
Thank you. Ivor Jones, Peel Hunt.
Are you planning to report performance against plan to investors, or will you just report financial performance? And I guess tying up all these questions about costs and balance sheet, could you go faster if you had more cash available to you? Are you constrained by the state of the balance sheet? Okay. Thank you.
So let me first start on the strategy limitation. I look forward to coming back each time to give you all an update on how we are progressing on the plan. Hugely important. Hugely important for us as a team to show how we are delivering and building credibility and trust. Hugely important. And just on the capital constraints, we very much believe that we have the capital needed to drive this value creation plan. We have also been very clear about that where we do see inefficiencies, we will act on those.
That's also why we upfront addressed and acted on the cost optimization of GBP 30 million in year and how we are then reinvesting that into future growth, in particular in the UK. Sean, would you like to add something to that?
Just to say, we won't give you a detailed P&L versus a planned P&L. But we absolutely will come back to these and tell you how we're progressing in terms of our plans. And in the short term, the answer is no. We're reinvesting. We're saving, and we're reinvesting. It's all about efficiency of the P&L, right? Using the buckets of costs that are in there currently and just using them much better. Thank you.
We have a few questions from the webcast. So our first question comes from David Brohan. He says, "Are there any KPIs you can share on 888 Africa?
And how does that fit into your medium-term view?"
So let me start, and then we can chip in. We are very satisfied when it comes to 888 Africa's performance and the way we are partnering with that team. Only looking at Q1 2024, we see year-on-year growth 4 times. We see that 888 Africa, over the time period, or the value creation plan, is a substantial material value creation enabler. Also, what I think is important is that, because we alluded to that in the presentation, that we do see opportunities in our focus to drive value to see how we can monetize our assets even more and even better. And that is what we are doing when it comes to 888 Africa, when it comes to brand partnerships. And we learn every day working in Africa with this great team how we can leverage our assets.
That is a great learning that we will, of course, leverage and capitalize on in our value creation plan. Vaughan, would you like to add something?
I'll be careful not to say too much, but. So I think at the interim results, we told you about the 1 millionth player celebration with the 1-millionth FTD. We're expecting the 2 millionth next week. So the business continues to go from strength to strength in terms of volumes. We see a really good growth profile going forward, both within the markets that we're in already and continuing to grow share. We're number 3 in one market already, probably number 2, actually, now, and targeting podium positions in the markets that we're in and also expanding into new markets across the course of this year and into next year.
So yeah, like Per said, very strong revenue growth profile but really strong underlying dynamics driven by penetration of those markets, really what we call hyper-localisation in those markets, on the ground really understanding the customers, really understanding the products that work, and fitting the products and offers to those specific markets. So yeah, lots more to come. I think we look forward to telling you more about that in the future at the right time.
Thank you. The next question from David is, "What is your updated view on brand strategy? Is there any difference to consider here between core and optimized markets? And are there any particular products that you would call out that you are either better than peers or where there are opportunities to improve?" So let me start on the brand strategy. As I mentioned in the presentation that.
We have some absolutely world-class customer brands in our portfolio. But it's also clear that we have an opportunity to be much more distinct and clear about what each brand should stand for, not least in terms of the position versus competition, but also in terms of each of our own brands versus each other. So here, obviously, we have the 888 and William Hill and Mr Green brands. We are not talking about the massive, radical rebranding and repositioning, but I'm talking about being more distinct and clear, targeted towards the audience and the target customer group that we're aiming to have.
When it comes to the product proposition, I think I mentioned that before, that we see opportunities in terms of the customer journey being even more frictionless across all the markets, in particular in the UK, in light of the compliance measures and safer gambling measures that we have taken. So that is one opportunity we have to improve. Clearly also, as I mentioned, when it comes to retail gaming proposition, there we have a tremendous opportunity to have further value being generated. Anything to add? No. Great. Thank you.
Any other questions? The team will answer afterwards. As we are coming up to the end of time, I will hand back over to management for closing remarks.
So I just would like to thank everyone for today. It is today a very important day for Evoke, our new one company.
I am delighted to have an exceptionally strong team to work with. I am delighted to have the strong support from the board and even more so a great set of people across the whole company. We have outlined today a value creation plan that is based upon our new strategy. It's based upon a model, an approach to value creation that I had the opportunity to have adopted over many, many years. So we are very clear about what success looks like, how to get there, and how that translates into value creation. And myself and the executive team are hugely committed to this plan and to delivery. And I can't wait to have an opportunity with my team to share how we are progressing on that plan. So with that, I would just like to thank you so much. Thank you.