Interactive

Germany – Zeal Network sees six per cent increase in first half of 2021

The business of ZEAL Network, which includes lotto24.de and tipp24.de, Germany’s leading online provider of lottery products, achieved further growth in the first half of 2021 thanks to the stability of the business model, with a much weaker jackpot development than in the same period last year.

In the first half of 2021, billings of the ZEAL Group rose by six per cent to €332.91m (€314.4m in 2020), of which the Germany segment accounted for almost the entire amount at €332.8m. Revenue increased by two per cent to €44.5m of which €41.8m was attributable to the Germany segment. At 12.3 per cent, the gross margin in the Germany segment was thus stable compared to the prior-year figure.

The market environment for lotteries in Germany during the first six months of 2021 was comparatively weak: at just €9m, the average jackpot of the German lottery ‘LOTTO 6aus49’ was even lower than in the previous year and only exceeded the €20m mark once. At €38.3m, the average jackpot of the European lottery ‘Eurojackpot’ fell significantly short of the high prior-year figure and reached the €90m mark twice. Low jackpots have a negative effect on billings, gross margin and customer acquisition.

Despite this market environment, the company gained 291,000 new registered customers in the Germany segment. The increase in acquisition costs per new registered customer (cost per lead, CPL) of €32.85 was also a consequence of the enhanced marketing strategy, which takes the expected customer quality into account: higher CPLs in low jackpot phases are justified by the fact that it is precisely those lottery players won during these periods who generally exhibit higher long-term activity and thus a better customer lifetime value (CLV). As a result, the payback periods of new customers are only slightly longer. At EUR 13.8 million, marketing expenses in the first half of 2021 were below the prior-year level as a result of the significantly weaker jackpot development.

“The fact that we have managed to continue to grow with a significantly weaker jackpot development compared to the previous year makes us proud and shows us that we have taken the right measures to continuously improve both in terms of customers and results,” said Jonas Mattsson, CFO of ZEAL Network SE. “The scalability of our business model will also help us in the future to take advantage of market opportunities, adapt to the dynamic environment and continuously optimise.”