Full Year 2026 Lottery Corporation Ltd Earnings Call Transcript
Key Points
- The Lottery Corp Ltd (ASX:TLC) delivered a resilient FY26 result despite a 21% decline in jackpot offers, with group revenue reaching $3.6 billion and EBITDA down only 1.8% to $736 million.
- The company held its full-year dividend at $0.165 per share, reflecting confidence in the business's health and long-term growth outlook.
- The Victorian license extension to 2068 significantly reduces the company's risk profile, with the next major renewal not until 2050 in New South Wales.
- Base games showed strong momentum, with Saturday Lotto and Instant Scratch-its growing 5.6% and nearly 8% respectively, demonstrating resilience in the core franchise.
- The company is executing a clear strategy to modernize and grow, including digital initiatives like the new app features (PlayPick and Draw Reveal) and a planned Oz Lotto price and matrix change for 2027.
- OpEx decreased to $296 million, reflecting disciplined cost management and structural cost reductions, with FY27 guidance of $305-315 million.
- Digital share grew 90 basis points despite lower jackpot turnover, indicating continued customer preference shift to online channels.
- Keno delivered another record year, with retail visitation and in-venue improvements sustaining growth.
- The company has a strong balance sheet with a BBB+ credit rating reaffirmed by S&P, and leverage is expected to delever over time.
- Management is focused on execution and has a clear roadmap for growth, including extending draw times for major games to improve customer convenience.
- FY26 was a soft year for big jackpots, a one in 45-year outcome, with Powerball not reaching $100 million and Oz Lotto not reaching $50 million, impacting turnover and EBITDA by $80 million.
- Net profit after tax pre-significant items declined 6% due to lower jackpot activity and higher interest costs.
- Interest expense rose 4% and is expected to increase materially in FY27 due to debt funding for the Victorian license extension, with new debt at higher rates.
- Adjusted leverage increased to 4.2 times, above the long-term target range of 3-4 times, though expected to decrease over time.
- The potential ban on online Keno products could result in a $25 million EBITDA impact, and the company is still assessing the full implications.
- Retained customers decreased by 4%, though management attributes this to jackpot variability rather than macro factors.
- The company faces regulatory and legacy technology constraints that limit the frequency of product refreshes, with Oz Lotto changes not expected until late 2027.
- FY27 has started with slow jackpot activity, and the company has not seen any improvement in the first seven weeks.
- Significant items of $58 million after tax were recorded, including an ACT license impairment and reorganization costs.
- The company is not providing specific guidance on the cost of new debt, creating uncertainty for investors.
Good morning and thank you for joining today's call on the Lottery Corporation's 2026 financial results. I'm Wayne Pickup, the company's MD and CEO; and I'm joined by our CFO, Adam Newman. We'll walk through the investor presentation lodged with the ASX this morning, then open the line for questions.
Since I joined the Lottery Corporation nine months ago now, you may have heard me say that it operates from a position of strength with a privileged market position and strong fundamentals. But while that's true, we need to position the business for the next chapter of growth to evolve from being a lottery operator to a digitally led entertainment platform.
To achieve that, we've refreshed the strategy and implemented a new operating model. New teams are in place and we're moving at pace to execute. We're preserving what's been successful over many years, but modernizing it for how Australians want to play and engage today as customers move online and demand more. That creates a clear opportunity
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