Interactive
ZEAL starts 2024 with 35 per cent revenue growth
By Phil - 8 May 2024
ZEAL Network, the leading German online provider of lottery products, has started the new financial year with a strong growth spurt. In the first quarter of 2024, billings from lotteries climbed by 22 per cent to €246.3m.
Group revenue increased by 35 per cent to €36.1m (2023: €26.7m). EBITDA at Group level increased slightly by one per cent to €9.4m due to one-off effects and the almost doubling of marketing expenses compared to the previous year.
“We made a very strong start to 2024 and were able to significantly accelerate our revenue growth, particularly in our core business of lottery brokerage. We are also particularly proud of the fact that we were able to achieve EBITDA slightly above the previous year’s level in the past quarter despite almost doubling our marketing expenses and a negative one-off effect from a major win in our charity lottery Deutsche Traumhauslotterie amounting to €0.8m. This shows that our measures to acquire new customers are paying off very quickly and that we are generating income across the entire breadth of our customer base,” said Sebastian Bielski, CFO of ZEAL. “With the announced squeeze-out at LOTTO24, we are also putting ZEAL in the best possible position for the future and are leveraging further efficiency potential.”
ZEAL’s significant revenue growth in the first quarter is primarily due to the strong performance of the lottery business. Billings increased by 22 per cent to €246.3m, while revenue from lotteries rose by as much as 28 per cent to €32m (2023: €24.9m). The growth in billings is primarily due to the 21 per cent increase in the average number of active customers per month (MAU). ZEAL was also able to improve the gross margin in the lottery business to 13 per cent (2023: 12.4 per cent) thanks to a change in the product mix and further margin optimizations. Excluding the one-off effect from the distribution of a major prize in the company’s charity lottery Deutsche Traumhauslotterie, the gross margin would have been as high as 13.3 per cent.
The games business, which was launched last year, also developed very positively in the first three months of the year. Compared to the fourth quarter of last year, ZEAL was able to increase revenue from games by around 20 per cent from €1.8m to €2.2m. At seven per cent, the gross margin was stable compared to the previous quarters.
ZEAL was also able to further expand its games portfolio at the end of the quarter. The subsidiary LOTTO24 AG received permission to offer a further 64 games.
ZEAL invested heavily in future growth in the past quarter, acquiring more than twice as many new customers (320 thousand) as in the same period of the previous year (2023: 143 thousand). The company achieved this customer growth much more efficiently than in the same period of the previous year. At € 33.04, the acquisition costs per registered new customer (cost per lead, CPL) were noticeably lower than in the previous year (2023: € 36.77). Due to the company’s strategic decision to use the exceptionally good jackpot situation in January 2024 for efficient new customer growth, marketing expenses of € 13.4 million were 91 per cent higher than in the same period of the previous year (2023: €7m). As a result, other operating expenses rose to €21m (2023: €12.5m). As a result of the increased number of new customers and the growth of the games business, the direct costs of business operations also rose to €4m (2023: €2.7m).
At €9.4m, EBITDA was slightly higher than in the first quarter of the previous year (2023: €9.3m). At €7.5m, EBIT was six per cent higher than in the same period of the previous year (2023: €7.1m) due to lower depreciation and amortization recognized in profit or loss. Net income for the period rose to €21.1m (2023: €4.7m) due to the first-time recognition of expected tax benefits from the utilization of existing tax loss carryforwards in connection with the LOTTO24 squeeze-out.
