ZEAL Network SE, the leading German online provider of lottery products, strongly increased its billings and revenues as well as the number of new customers in the first half of 2023.
In the process, ZEAL took advantage of the high jackpot phases for successful marketing campaigns, which significantly expanded the customer base for further business growth.
“The growth of our transaction volume in the second quarter of 2023 was near record-breaking and a whopping 18.8 percent higher than in the second quarter of 2022 – in this respect, we even recorded the second-best quarter in the company’s history,” said Jonas Mattsson, CFO of ZEAL. He also said that the continuous growth in new customers clearly shows that ZEAL has continued to make smart strategic investments in the first half of 2023 to further expand its market leadership. Mattsson continues, “Strategic growth in the e-commerce environment is becoming increasingly difficult, but with our attractive products and diverse marketing campaigns, we are confident that we will continue to impress in the market.”
The transaction volume of the ZEAL Group increased by 15 per cent to €411.7m in the first half of 2023. At the same time, sales revenue grew by eleven percent to €54.8m. At 12.5 per cent, the company’s gross margin was close to the previous year’s figure.
In the first six months of the year, ZEAL was able to take advantage of the attractive jackpot phases in January, March and June to acquire new customers and further expand its business volume. In June, for example, the popular Eurojackpot lottery hit the maximum jackpot of €120m in two consecutive draws. During this phase, ZEAL set a new record with a transaction volume of €30.6m in a single week. This development was supported by intensive marketing campaigns such as a cooperation with Kürsat Yildirim, known to the German public as a multiple lottery winner under the nickname “Chico”.
In the first half of 2023, ZEAL acquired 349,000 new customers, an increase of 20 per cent year-on-year. ZEAL experienced increased acquisition costs per registered new customer (cost per lead, CPL) of €45.09, reflecting higher media costs in intensified competition for new customers. As a result, marketing expenses were 44 per cent higher than in the previous year at €20m. Other operating expenses consequently increased to €31.6m. As a result of higher investments in new customer growth, EBITDA was down year-on-year at €13.8m.
“We pursue a focused marketing strategy and invest disproportionately in high-jackpot phases,” explains Jonas Mattsson. “The short-term decline in earnings at high jackpot phases is a perfectly normal development that will settle down again in the further course of the fiscal year.”
In April, ZEAL received permission from the Joint Gambling Authority of the Federal States (GGL) to offer virtual slot machine games, so-called online games, and started offering them in its own web stores in June. Since then, the company has been working on the continuous expansion of its games offering. At the beginning of August, ZEAL added further games to the portfolio of LOTTO24’s web stores and plans to expand the range to up to 200 titles within the first year.