Aristocrat Leisure Limited

Good morning, and welcome to Aristocrat's financial results presentation for the half year to 31 March 2021. My name is Trevor Croker, Chief Executive Officer and Managing Director of Aristocrat.

It's a pleasure to present Aristocrat's half year results today along with Julie Cameron-Doe, our Chief Financial Officer, who is on the line; together with Mitchell Bowen, CEO of Aristocrat Gaming and Chief Transformation Officer, and Mike Lang, CEO of Aristocrat Digital. Thank you, everyone, for joining us.

Thank you, Trevor, and good morning, everyone. Slide 10 sets out the composition of Aristocrat's reported NPATA performance of $412 million, normalized for significant items and compared to the PCP.

As Trevor mentioned, the 12% higher NPATA, a 27% increase in constant currency was largely driven by an incremental $117 million profit in the Digital business, with modest growth across the Americas and ANZ Gaming businesses, partly offset by weakness in the International Gaming segment and $52 million in currency headwinds. Profit in the Americas Gaming segment increased $11 million compared to the PCP, an outstanding result that reflects the higher gaming operations contribution.

Growth was delivered across both premium Class III and Class II installed bases, along with a market-leading fee per day result. ANZ Gaming markets also benefited from improved consumer sentiment and strong portfolio performance, with profit in the segment of $6 million compared to the PCP.

Effective execution drove strong revenue performance across the period, with a notable acceleration through March and to a lesser extent, April. As Trevor referenced, D&D investment in talent and technology was maintained at strong levels, accelerating over the period as we gained more certainty around performance.

The increase in the group's effective tax rate from 24.2% to 24.7% is a function of the geographic profit mix during the half. Finally, results for the period were not impacted by any reductions to provision.

Turning now to Slide 11. The group's cash-generating fundamentals remain strong over the 6 months to 31 March 2021.

Normalized operating cash flow decreased 31% to $425 million compared to the prior corresponding period. The change in net working capital of $130 million reflects investments to support the recovery and growth of gaming customers and a decline in inventory levels due to the impact of COVID in the prior year.

The decrease in other cash and noncash inflows was driven by the appreciation of the Australian dollar in the reporting period. Capital expenditure was over $100 million in the half, primarily comprised of continued investment in hardware to support growth in the Americas Gaming operations installed base.

Thanks, Julie. Turning first to the global gaming business on Slide 14.

You'll notice we are presenting the 3 segments of Americas, ANZ and International on a combined basis, reflecting how these operations have been managed in our business for some time. Full segment performance details continue to be provided in the appendix.

Overall, Gaming segment revenue and profits fell around 14% and 13%, respectively, reflecting the impacts of COVID on key markets and segments, including the effective closure of many international Class III markets during the year. In local currency, Americas profit increased by 2% to $310 million driven by growth in the Class III premium and Class II gaming operations footprint.

The business grew share across key segments and expanded margins, reflecting growth in gaming operations' installed base to 50,554 units with approximately 87% operating. Operational momentum was supported by a stronger-than-expected economic recovery and strengthening consumer sentiment in the later part of the reporting periods.

Aristocrat's premium installed base grew 5% to 25,004 units with circa 80% of the installed base operational as at 31 March 2021. Over the same period, the Class II gaming operations installed base grew 2% to circa 93% of units operational at period end, reflecting customer decisions to switch on higher-performing products.

On a combined and adjusted basis, the average Class II and Class III fee per day increased 8.9% to almost USD 55 over the period or just over USD 47 on an adjusted basis. North America outright sales revenue decreased by 10% compared to the PCP, driven by the impact of COVID-related customer capital budget constraints.

However, ASP remained strong and share gains were achieved, as previously noted. Aristocrat averaged 17 of the top 25 games on the ILS premium title list in the 6 months to 31 March 2021, again demonstrating exceptional portfolio strength.

In ANZ, revenue increased by 2% to $210 million in constant currency compared to the PCP while profit increased 10% to $85 million. Margin expanded 310 basis points to 40.6%, reflective of the COVID impact in prior period, deferred investments and foreign exchange benefits.

Average cabinet selling price decreased slightly from the prior corresponding period driven by promotional activity to aid customer recovery and support long-term growth. The ANZ business extended its market-leading ship share performance over the 6 months to 31 March 2021, once again, highlighting the portfolio strength and the business's outstanding operational momentum.

Overall, we're proud of the performance and resilience of our global gaming business and the strength of our customer relationships. We look forward to continuing to benefit from our sustained investment in innovative product development over the half, including the most anticipated game in the industry, Buffalo Link from HRG Studios, which was launched in the U.S.

last fortnight. Moving now to the digital segment on Slide 15, and I note that the figures on this slide are in U.S.

dollars. The Digital business recorded above category bookings growth of 29% and a 52% lift in segment profits compared to the PCP to an exceptional $899 million and $301 million, respectively.

This was a result of effective investment in Live Ops features, new game content and UA over the period, combined with ongoing investment in growing and diversifying the digital portfolio. Consumer demand for digital games remained elevated compared to pre-COVID levels albeit somewhat moderated compared to the second half of fiscal 2020.

As previously referenced, the business invested an incremental $50 million in UA over the half compared to the PCP. This supported the profitable growth of RAID: Shadow Legends, strong performance in Social Casino games, especially Lightning Link and Cashman Casino and the scaling of EverMerge in the growing casual merge genre.

Our strategic rebasing of Big Fish business completed in the second half of fiscal year 2020 also contributed to revenue and profit gains in the reporting periods. This result highlights our progress in diversifying and broadening our portfolio of games across multiple genres, demographics and geographies.

RAID: Shadow Legends moved into profitability and EverMerge continued to scale strongly during the 6 months to 31 March 2021. When added to the successful launch of Lightning Link in 2018, Aristocrat has organically developed in 3 world-class titles across major genres over the past 3 years.

Margins expanded more than 500 basis points in the half. UA investment represented 28% of digital revenue, demonstrating highly efficient effective allocation during a period in which the business had no scheduled new games.

Our daily active users, DAU, reduced modestly to 6.7 million at period end, reflecting our ongoing focus on DAU quality. Along with DAU quality, a favorable genre mix, effective Live Ops, features and new games content combined to deliver an impressive lift in average bookings per daily active user or ABPDAU performance over the period.

ABPDAU grew 44% or $0.22 compared to the PCP to $0.72, a new record for our business. We are excited by the ongoing progress in our Digital business, particularly its momentum, scale, portfolio breadth and growing capabilities.

Looking ahead, we have a solid pipeline of new games. Whilst performance will dictate the timing of any worldwide launches, we plan to release at least 1 new title towards the end of this fiscal year.

We will continue to invest to grow our product pipeline and further build on our capabilities to fully capture our opportunities in Digital segment. Slide 17 provides a recap and a summary of our performance highlights in the 6 months to 31 March 2021.

A headline, double-digit increase in NPATA together with margin and share expansion across key gaming and digital segments, pointed to our increasingly competitive and high-performing product portfolios and customer engagement. The further diversification of the group's revenue profile also underlines our strengthening resilience.

As I said at the outset, the result demonstrates that we made the right decisions to sustain our differentiating investments in outstanding people and products, customer, talent and culture throughout the COVID-impacted period. Turning now to outlook for fiscal year 2021 on Slide 18.

Aristocrat plans for strong growth over the full year to September 30, 2021, assuming no material changes in economics and industry conditions, reflecting the following factors: enhanced market-leading positions in gaming operations, measured by the number of machines that are operating and game performance; sustainable growth in floor share across key gaming outright sales markets globally; further growth in digital bookings with UA spend expected to be modestly above the historical range of 25% to 28% of overall digital revenues, pending timing and success of new game launches in the second half of fiscal 2021; continued D&D investment to drive sustained long-term growth with investment likely be modestly above historic levels on a percentage of revenue basis; an increase in SG&A across the business, so we continue to scale and deliver our growth strategy. This includes continuing to identify adjacencies that expand our capabilities to create new business and grow through product, distribution and investment.

Nonoperating expense assumptions are also set out on the slide, specifically regarding interest expense, amortization of acquired intangibles and income tax expense. The group has entered the second half of the 2021 fiscal year with excellent momentum, flexibility and resilience and a balance sheet that continues to provide full strategic optionality.

We expect the business will continue to benefit from the decisions we have made to invest to extend our advantages. Aristocrat's global team is aligned behind a refreshed growth vision with established momentum and the confidence to continue to invest and accelerate execution in the period ahead.

With that, I'll conclude my formal presentation and hand it back to the moderator to open the line for questions.

I think you made mention that your installed base for Class II and III active machines were at 93% and 80%, respectively. Just can you dig a bit deeper into these trends and as well as your record fee per day numbers, just to understand the underlying momentum.

If you could just make comments perhaps around just how these transferred through the half. How it looked as you exited March and what the current sort of run rate looks like?

Yes. Thanks, Desmond.

I appreciate the question. I'll step into a couple of ways.

So first of all, I think we look at the macro picture, the world has been changing a lot through COVID. And if you look back at the early part of the half, there was very limited machines switched on and as casinos started to open more machines decided to switch on.

There's obviously some ups and downs from installed base during the first quarter. If you think about what happened in North America towards Christmas time and over Thanksgiving where there were further shutdowns from that point of view.

But what it did do is it kept building through the period towards the second half. We were able, as you can see from the results, to increase our installed base in both Class II and Class III machines.

And also to get to a percentage switched on, which was, as you reflected, 80% and 93% which was above competitor rates and industry average for those. I think if you then look at it, we continue to place, as I said, product.

And if you look at what's been driving that product placement, been new games like Cash Express Luxury Line, Crazy Rich Asians, these games have been able to drive installed base. And what we've seen towards that higher fee per day is that high performing games are being switched on operators, high-performing games are therefore performing for operators and for Aristocrat.

We've also got a strong pipeline of games coming through. As I referenced, the last 2 weeks, we've launched Buffalo Link in North America.

Very, very strong pipeline and game content coming through for that. And early results for that is very solid as well.

No, that's great. I appreciate that.

Second question, just around digital. I think you guys are now expecting UA to be modestly above the 25% to 28% historical range.

I think this compares to your prior guidance of between 25% to 28%. So perhaps if you could just flesh that range out a bit more?

And to what extent is opportunities to invest in some of these existing games? Or it's more sort of weighted towards new games that's coming for soft launch on Slide 28?

Yes, sure. So guiding to 25% to 28%, it's a pretty dynamic investment thesis, if you think from those games points of view.

We didn't have any new games in the first half, but we're able to be very efficient in our investment behind scaling Lighting Link by -- and also scaling EverMerge as a new game and then continue to support rate through other forms of marketing. That's 3 games in 3 years that our organic games that have been successfully developed and released by Aristocrat into the marketplace.

If you talk about our guidance for the second half, modestly above, we have got a pipeline of games coming through, as you can see, we have a couple of games in the pipeline now. We've got 2 that are close to soft launch.

We expect one in the second half to go to launch. And that will adjust what happens from a UA point of view.

And we think that happening will put us towards the top end or modestly over the top end of UA should those games come to launch.

So first quick one for me. As we think about some of the industry tailwinds and your performance in digital, how should we think about the second half?

Maybe talk to us about what's one-off and maybe what's a permanent step change?

Yes. I think -- Don, how are you.

I think the way to think about it is that through the COVID period, it has accelerated the adoption of affordable entertainment. And I think that's what you can call mobile games.

That has happened in the first part. And I think when we were talking to you this time last year, we were signaling to already a big step-up from the first part of -- the second half of -- in the early part of the second half of 2020.

I think what you've seen now is we're seeing some growth rates moderating. We're cycling over some very strong comps for the same period last year.

The things that have driven good performance for us have really been Live Ops, the efficient use of UA, new features, new game content. So in the half, we did 75,000 live operations -- 7,500, sorry.

And then we also roughly produce about 125 new games in the full year into our slot content as well. So we continue to bring in new features, new game content and also scale existing platforms like RAID.

So you'll notice that we've got tower defense and other activities now bringing in extra activity to support the features in RAID.

And then how should we think about D&D spend going forward? Can you talk a little bit about maybe what eventuated from the last result, where I think it was guided to increase relative to where it came in and how we should think about the future, maybe the second half of next year?

Yes. So we've been taking a cautious approach in the way we've been investing, but we've been accelerating through the second half of this period of time.

So since the start of the calendar year, we've been investing behind higher end activity. And you can see that we continue to keep a flow of games coming through in the land-based business.

We also see adjacencies, which we're adjusting into our adjacencies, but we do expect it to be higher in the second half as a percentage of revenue, and that's because of the flow-through to more adjacencies and also to get us back into a cadence of new games coming through a regular basis. So we've had new mass cabinets in released.

We've got the next-gen cabinet release. We had new game content coming through, increased cadence of games into the digital business as well.

Trevor, look, forgive me for bringing in -- mentioning one of your competitors here, but one of your competitors in digital are reporting a very similar company to Aristocrat's Digital business, reporting 34% all-in operating margins. And Aristocrat is now 34%.

But of course, the D&D is being moved off into a central reporting area. I'm just wondering with this result, given that UA was still quite high at 28%, are these higher margins sustainable?

And really, should we be thinking about further upward trajectory in margins given where some of your competitors are reporting digital margins?

Yes. Thanks, Larry.

I appreciate the question. First of all, I think we've been focusing on digital from day 1 as profitable growth, and we continue to focus on making sure profitable growth.

And I referenced earlier about the roughly 125-odd games annually that we use in Social Casino that moved through into the digital business. The thing that changes the profit mix is really the genre mix, and different genres have different margins.

Obviously, Social Casino is different for casual games, and that's where we get a lot of the difference differentiation. Is it sustainable?

I think as we continue to build out our portfolio, we're going to be building out into strategy. We're going to be building out into more casual genres, then that's going to have some impact on margins.

But I think what you can see from what Mike has done and his team has done is they've actually put together a very strong business with 52% increase in margins, 520 basis points increase in margin as a percentage and they're actually growing their business responsibly by using UA and other ways to drive it. So I don't think you can keep modeling it forward, to be honest with you, because our expansion is going to cause some downward pressure on margin, but I would put us at the top end of margin from a performance point of view and also our strong focus on profitability for growth.

Okay. And in terms of the land-based business, I understand you guys are working with your customers to extend the duration on some of your gaming operations arrangements, revenue share arrangements.

I'm just wondering if you can give us some color about how we should think about yield expansion? I know you're perhaps taking price increases on new contracts as well.

How we should think about yield expansion in probably more Class III than Class II and the duration of those arrangements? If you can give us some color there.

Yes. Look, it's a customer-by-customer scenario, Larry, so I won't get into each one of those.

But what we are is we're signing longer and bigger arrangements with our customers now. We're focused on making sure that there's long-term profitability for our customers.

And we said right at the start of this pandemic that we were going to help lead the industry out of the period of time and support our customers, and that remains our focus as well. They are important to us, obviously, because they're the grassroots of what we do.

But they've also been good partners through us -- to us through this period of time as well. Really, it's about building into a partnership relationship by removing this transaction piece.

So we continue to see good installed base growth. When you talk about yield, I think yield is a factor, to be frank with you, of consumers.

As more consumers come to the properties as more machines are switched on, then yields will change appropriately. But you can still see on a yield basis, we still hold a healthy gap to our competitors and the average for -- whether it's adjusted or unadjusted point of view.

So we have been using activities like Aristocrat Assist, et cetera, to help our customers through this period of time, and we'll continue to partner with them with a longer term view of sustainable growth.

Just one question for me. How would you describe your visibility in land-based at the moment?

And what's the feedback you're getting from casino customers in North America at present?

Yes. Thanks, Rohan.

I appreciate the question. The sales group under Mitchell Bowen have done a really good job over the last couple of years of implementing processes and systems, so things like Salesforce, et cetera.

Our visibility of our funnel is the best that we've had, and we continue to see -- be able to see well through that funnel, whether it's in gaming of for sale product. If you think about what we're seeing, we're still seeing good opportunity in gaming ops, off the back of great games like Crazy Rich Asians, Cash Express Luxury Line and the recently released Buffalo Link, and we've seen strong momentum for each of those, not just performance, but also pipeline to come through.

When it comes to for sale, it's a little bit harder because our customers aren't necessarily into that capital -- releasing capital for games at the moment. So we are seeing some visibility there, and we do have good visibility as far new openings and expansion goes.

But as far as a change in for sale market and capital allocation for customer, it's still a bit cautious from this point of view. And similarly with the Class II business, we've had good performance there from Hunt for Neptune's Gold, strong fleet performance.

So we are still placing games. As you saw, we did increase our installed base in Class II and Class III during the period.

We feel confident that going forward for the balance of this year that we'll continue to see installed base increases. And also fee per day is a little bit harder because it's a consumer sentiment, but good quality games will drive foot traffic, and we believe we'll benefit from that.

Maybe a couple of questions for Julie. Just wondering, first of all, what the increase in receivables is attributable to?

Is that a sort of a combination of the longer terms you're talking about for customers? Or is it perhaps an indication of some better shipments towards the end of the period?

Julie, over to you. Julie can you hear us?

Yes. I can hear you.

Sorry, having trouble with that mute button. Sacha, thanks for the question.

Yes. Look, the -- I think your question is a good one about the growth in receivables.

Clearly, we did see sales accelerate through the period, and we finished the period stronger. And that has had an impact on the level of receivables at the period end.

Okay. And just a couple of questions on the outlook commentary in the SG&A guidance.

Can you maybe clarify that a little bit in terms of -- first of all, are you talking constant currency costs? Or is that an AUD expectation for growth?

Sure. I mean SG&A guidance, it's really around the fact that we are we've said before, for a couple of years now that we need to invest to grow this business in a sustainable way, and we've identified the areas that we need to invest in.

Now clearly, as we went through the period last year, when we went into cash preservation mode, we had to pause a number of those projects. And so as we kicked off the year this year, we would still -- we remain cautious, as Trevor referenced.

But as we saw the momentum pick up, and as we saw the execution going well, we pushed through and sort of flicked the switch back on in terms of some of those investments. So we do see -- we very much see the need for more investment in those areas.

And as we say in our outlook statement, it is about identifying adjacencies and investing behind them and really building out those capabilities we need to grow this business. So an example would be in the customer experience area, where we're investing in that area.

We've talked, and you'll see that we have a page in our Investor Presentation for the first time this time on ESG. So there's investment in that area as well.

Data is a key investment area for us as well. And we've talked many times before about the need for investment in cyber and privacy and all of those kind of basic housekeeping things that organizations of our size and scale need.

So absolutely, it it's constant currency with what is currency Aussie dollar, U.S. dollar.

It is growth in investment, really aligned to building out the continued growth of the business.

Okay. I might step through with that you a bit later off-line because I do have trouble getting to growth in that number, given some of the sort of the bad debt provisions and inventory write-downs that you had last year.

But I just had one final question. In terms of your liquidity position and the debt that you currently have fully drawn.

Is there a call option on that sort of second tranche of the U.S. Term Loan B, which I think is at a much higher-margin than the rest of the Term Loan B debt?

So the nature of the Term Loan B is it's fully drawn down. And as you know, this time last year, that's when we took it on, when we were -- everybody was in a position of great uncertainty and not really knowing what was going to happen to liquidity in the markets across the world.

That's why we did it. It is at a higher-margin than our existing Term Loan B.

The way it operator is, it's covenant light. It is tightly priced compared to what was in the market at the time.

It only requires minimal amortization, covenant-light and so on. So the -- we're now in a position having got through the first year, if it where opportunistically, we'll be able to go out and potentially reprice when the time is right in the market.

And we will look to do that in any case because I'm sure you can see with the cash that we're sitting on, which is we've chosen to be in this position for the time being. That's not a position we'd expect to be in over the long term, and it's really as a result of taking on the additional debt and that form of debt being TLB, which is fully drawn down.

So we will -- when -- at the appropriate time, we'll be looking to refinance and rebalance the balance sheet, pending the market conditions, as I said, and the opportunities for us to utilize the cash on organic and inorganic opportunities.

Look, I had a question on digital and I'll follow up with another question as well. I think you mentioned there's one new gain possible for the end of the fiscal year.

What about into FY '22? And when we're thinking about digital, you've got those charts on Page 30.

Can you sort of talk us through which segments are the most attractive and where you think you could win share or scale quickly?

Yes. Thanks, David.

I'll make a couple of comments and hand over to Mike Lang, who's on the call as well. So we continue to keep a pipeline going of about 10 to 15 games at any one point in time, and we continue to drive towards having that shift to that genre diversity.

And as I said earlier, Lightning Link, RAID and EverMerge are 3 new genre games have come exclusively from Aristocrat, and we've been able to build those from the ground up. So I'll get Mike just to talk you to about where he is on pipeline and also '22.

We continue to focus on how do we build that pipeline and also the talent to support it. So I'll hand over to Mike now if you can just unmute yourself, Mike, can you ?

Thanks, Trevor. I appreciate the question.

Yes, we're very encouraged about our pipeline as we look out into the future, all driven organically as we've developed that across our various businesses. In particular, we continue to want to invest in our core segments that we're in today.

That's Plarium, the mid-core segments that have done very successful. That's both strategy, role-playing games, but we are also looking now at the action segment with a new game Mech Arena that's launching this year, which we're encouraged about the potential broad center in that segment.

Within our Social Casino segment, we continue to, as Trevor mentioned, do very well within our core games, and we will continue to look at new games as we look forward in that segment and our market-leading position, in particular on the slots area that we're very strong at and continue to want to invest in. And then finally, on the casual segment, with the success we've had with EverMerge, which is now trending at the $150 million plus gain a year we're very, very bullish on the merge segment.

We think that's an area that we want to continue to invest in and come in very strong this year in that area, and we continue to want to invest in that. So broadly, we'd like to continue to be diversified across various genres and organically drive our business as we've done over the last year.

a little bit David to it's -- sorry, it's very similar to the way we think about our land base business with adjacencies, where is there an adjacency that's on a size market that we like, has got capability that we believe we can either buy or build. And then we start to attack it.

And I think Mike and the team have identified a couple in there, like he said, around Mech Arena and other alternatives that we can build out from our core competencies.

Great. And just my final question, just thinking about long run segment margins.

I know you've covered off on digital, and that was a question on SG&A. But if you look at that Americas business, do you think you can eclipse the FY '19 peak margins in that business as outright volumes normalize?

Or do you think we still sort of sit between that 50% to 55% level?

Now I'll make a couple of comments and then hand it over to Julie for the detail, David. I think we're seeing strong margins coming back as the business has rebounded, but I also believe where we exited pre-COVID with our margins, we're at a very high level.

I think that we are getting operating leverage back, but I'll let Julie just talk you through about where we're going on the future of it.

Thanks, Trevor. David, yes, look, I think when you look at the Americas business in this period, clearly, you can see the strength of recurring revenue in the numbers.

And as you know, the gaming operations across Class II and Class III really just throw up the highest margin in our overall business. So when you have a strong relative share of that, the margin is really going to be strong.

We are expecting to expand into adjacencies for outright sales to come back, and therefore, we would expect that to be a bit of a drag on the margin. And as I mentioned earlier, we were very conservative in terms of the investment in SG&A and the -- in terms of the projects we need to take on to build out those adjacencies.

So we did pause some stuff and we paused some discretionary spend, and we've been switching that back on, and it's been ramping through the year. And so as that comes through as well, that will also impact on the margins.

And I mean, segment margins for the Americas are like in that 50% to 55% range. It's -- they're pretty nice margins, right?

So I wouldn't be pushing and guiding to take them higher.

Trevor and Julie. Just on back on digital.

Thinking about rate profitability, you called out that you've reach profitability in the first half. In the past, you've given us some comments around sort of the UA in rate itself.

Can you just maybe help us understand how that's evolved over the half, given you continue to grow bookings so the run rate is continuing to step up? I'd assume that's not full too quickly, but I'd just be interested in that.

And then also just Plarium Play given most of the users on that I understand are also the big RAID players. How that's factoring into that comment around profitability?

Yes. Thanks, Bryan.

I appreciate the question. I'll make a couple of comments and hand over to Mike again.

Look, at the end of the day, RAID did move to profitability and is now into cumulative profit as well. So it's a well scaled game and it's got good metrics behind it.

It's also still an investable game from a UA perspective, and we continue to invest based on, as I said earlier, the features that we're putting out there, the UA investment of the game is stacking up from that perspective. I think the other part here is that, Mike might just want to give you some context around the Plarium Play, but also some of the other alternative ways that they have been marketing RAID in other channels and other influences to drive players.

Mike?

Thanks, Trevor. Generally, one of the things that's really been very successful for RAID this year is the significant investment we've made in content, new content, that has not only driven additional ARPDAU but has really engaged customers significantly beyond our expectations.

It's really been one of the big success stories. So not only has that allowed us to continue to invest in UA, but in a very profitable way, manage that appropriately as we continue to drive more profit in that game.

Long term, in regards to Plarium Play, we're very encouraged by the results. It represents close to 30% of the total revenue within RAID today.

And we want to look at other games within our portfolio that -- to use within that new platform as a way to not only create greater experiences for our customers, but more profitable experiences for us in regards to reducing the platform fees that we otherwise would pay. In regards to marketing, I think the team of Plarium has done a really good job of exploring not only new platforms like YouTube and TikTok and other platforms like that, but have had very good success in actually TV advertising, more traditional advertising mechanisms that allows us to diversify our overall marketing mix.

And again, as you can see by the numbers, prove that, that game can continue to drive profitability even with the UA investment that we're spending.

Great. I appreciate that color.

Just my second question then is continuing on this theme with EverMerge. It's likely to become your second biggest game or close to it over the next 12 months at the rate it's going.

I'm just interested in how you compare the bookings and earnings opportunity for EverMerge compared to RAID. I understand very different genres, very different games, different in-app purchase profile, et cetera.

But I'd just be interested to see how big this game could be from a financial perspective for you guys? And given what you're seeing with your internal data?

Yes. Thanks, Brian.

I'll hand it over to Mike again. I think the key point here is these are genre-by-genre metrics, which you identified as well is that different target audience sizes, different types of lifetime value.

But I'll hand over to Mike and talk about where we merged kind of views and his vision is around EverMerge.

Thanks, Trevor. Yes.

Listen, we're very happy with the success of EverMerge, especially in the context of it's, by far, the most successful new game launch we've had with the Big Fish organization since acquiring the company. It's clearly not at the scale of RAID, and we should set expectations in regards to that.

But in regards to the success it's had, it's significantly higher than our original expectations. I think we're at the point in the life cycle that over the next few months, we're going to be making more decisions about where is that game, how big could it become versus not only the choices we have within our own existing portfolio but new games that are coming through.

And I think that's one of the strategic benefits of our company right now is that we have the flexibility to make decisions about where we want to invest across our entire portfolio. And we'll make that decision again based on how we look at the overall situation on a game-by-game basis.

But looking at this game today from a year ago, we're very, very pleased with the results we've seen in EverMerge from where we are today.

Okay. So just the comparisons there, Bryan, to help you out.

RAID's sitting sort of like $230 million for the half, EverMerge sitting about $130 million, $135 million for the half.

Sorry, I was more talking about that since in terms of the run rate -- the ramp-up has been pretty quick, maybe not quite as quick as RAID, but after 12 months sort of EverMerge is running at a pretty healthy run rate versus how RAID was. Obviously, RAID continued on with it for another couple of years.

So just interested in sort of that longer-term picture. But I think I've got a pretty good idea of that now.

It seemed like it was a pretty strong result on cost control, particularly on the land base side of the business. Could you just talk to maybe how much of that cost control is temporary versus permanent?

Yes. Thanks, Suthesh.

I'll make a comment and hand it over to Julie. But as we said earlier on, coming into this period of time, it was uncertain volatile.

We took an approach where we contained spending, which was some of the cost-cutting that we did in the second half of last year, we contained spending until we start to see the confidence coming through from the top line and the business point of view. Since then, we've continued to increase our spending with the confidence, not just in the core business, but also expanding into the adjacencies.

And Julie is far more articulate in these things than I am, I'll hand over to her.

Hi, Suthesh. Thanks, Trevor.

Yes, look, I think we need to sort of put this back into context of where we were last year and the actions that we took. And clearly, we went into a cash preservation mode and we cut discretionary spend.

We had people furloughed while our customers were closed, and our employees took pay cuts, our Board of Directors took reductions in fees as well. So we have this whole raft of measures in place.

But as we saw our customers coming back and needing our help, we unfurloughed people, and we returned to full pay effective at the beginning of the fiscal year. And then as we -- as Trevor said, as we started to see the recovery, and we saw the momentum, and we grew confident in our execution, we unpaused a number of the roles that we've been pausing on to come back.

So when you talk about how much of this result is due to cost control, we're always prudent with our cost, and we always invest prudently and on an informed basis. I think you probably need to look at some of the one-offs that we had in the prior year that I think Sacha called out.

We had some larger provisions that didn't repeat in the period that would have impacted the prior year, for example. And so I think when you think about -- throughout the period, we've actually been in the position of starting to reinvest and taking the business that was rebased at the end of last year.

Because if you think about across the whole business, we did have the actions we took at Big Fish to rightsize the Big Fish business. We've done some necessary pruning across corporate and land-based as well as the gaming business.

And then really, as we got into this year, we have been starting to reinvest behind the areas that we need to really grow the business. And Trevor, and as I said before, we're looking really -- and as we say in our guidance, we're looking at how we can grow into adjacencies and build out the capabilities we need to be effective in those adjacencies.

And those are things like customer experience, data, we talk about cyber and privacy, just a few of the key areas where we need to reinvest. And another area we've talked about has been last year, we obviously paused, and we didn't have a lot of variable compensation going through because of the financial performance, whereas that's coming back this year as well.

And we have been -- we've increased the amount of equity we've been rewarding our people to make sure that we can retain and attract really strong talent.

But it seems surprisingly, we haven't had anything on iGaming acquisitions yet on the call. So I thought you'll be releasing this not for this half.

Given your $0.15 dividend and strong cash flow, should we interpret that as preserving capital for any potential future acquisitions you might see? Or is that a reset payout ratio?

Can you just help us understand sort of how you're thinking about that part of your business in terms of your organic growth?

Yes. Thanks, Bryan.

Our priority still remains around liquidity, and Julie sort of walked through where we sat with our capital priorities, capital management. We have a very strong balance sheet.

The discretion -- it's a discretionary allocation from the Board point of view from a dividend, we did do $0.10 fully franked for the full year. We have done $0.15 fully franked for the half.

It's a progressive in nature. Dividend from our perspective, as I said to you at the start, we're really focused on liquidity here.

We want to have -- continue to have the ability to self-fund our future growth across the digital and gaming business and other adjacencies. We see ourselves as an asset-light free cash flow generating technology company.

And really, where we see ourselves as well positioned to take advantage of opportunity should they come up, but more importantly, to continue to invest behind the content, the talent and the distribution, which drives our continuous growth as an organization. If you go back to that fundamental of what we do is by driving profitable growth, we drive sustainable return to shareholders, and be able -- to have the ability to reinvest for the next wave of profitable growth.

Okay. And have you thoughts evolved on your gaming space at all since you last addressed the market a couple of months ago?

So I couldn't quite hear you, Bryan, on that one. Sorry.

Just confirming if your thoughts have evolved much on the iGaming space in the U.S. and whether that opportunity is still there for you?

Or if it's pretty much a status quo? So the way you saw it a couple of months ago when you last spoke to the market?

Yes. No, we can see -- thank you, I've got that.

We continue to monitor the market as we do all adjacencies. We've got a number of adjacencies we continue monitor.

There's only 6 states which we've really moved forward with online gaming at the moment, so it's just one of the options that we continue to look at for our business. The growth in digital, you can see the results of our diversified business model.

Now the growth in digital is phenomenal, and we believe that there's a lot of growth there and continue to invest for both talent and content to go into that business. And the gaming business as well.

We've got strong growth as the gaming businesses rebound. We continue to listen to our customers about what they're looking for and work with them on solutions that we can continue to build on.

So we are well positioned. I think from my perspective, the key here is to continue to grow our core businesses and then be ready for those opportunities when they come through as far as our gaming goes, it's just one of those adjacencies that we continue to monitor.

And I'd say it's still very early in its life span in North American market.

Just a clarification on digital. I think Mike mentioned something about a portion of Plarium and RAID revenues going through the internal proprietary platform.

Could you guys just perhaps repeat that and maybe expand on it?

Yes, sure, Larry. So that's Plarium Play, which is -- we've been talking to the market now for about 12, 18 months and has continued to scale, I'll get Mike just to walk you through Plarium Play and how that -- how we think about that.

And also what it does from Plarium's point of view with no platform fees, obviously. Mike?

Thanks, Trevor. Yes, Plarium Play is an internal platform that we have that allows PC customers to be able to access the game.

It's a much even robust game experience for them and allows them then not only to have that stronger customer experience but allows us then to not pay platform fees as a result of that. So the economics of those customers are better as a result of that.

And so we believe that both are very complementary, and we'll continue to expand Plarium Play for our own titles as well as over time, explore the possibility for others to join and to be part of that platform as well.

And Mike, did you mention what portion of RAID's revenues are going through Plarium Play?

Approximately close to 30%.

Great. Thank you.

And I'll now close the formal proceedings. I'll just make a couple of quick comments before doing so.

I just want to reiterate how proud we are of our team and the efforts that they've put in through this period of time and the success that they've been able to generate, also the appreciation and support of our customers who have been great partners through this period of time. As we continue to drive towards being a trusted and leading gaming and entertainment and technology company.

We came into the second half with excellent momentum and we're very confident about the outlook statements we've given you here today. So with that, I thank you on behalf of the broad Aristocrat team, of your ongoing interest in the company, and wish you all a good day.

Thank you.