German online lottery products provider ZEAL Network SE has published its first financial report of the fiscal year, noting a good start to 2021 with increased billings and revenue, a strong gross margin, and significantly improved profitability.
In the first quarter of 2021, ZEAL reported that its billings increased by 17% to €163.31m (2020: €140.0m), with its Germany segment accounting for almost all of that at €163.3m (2020: €139.7m).
The company’s revenue saw an improvement of almost 19% to €22.6m (2020: €19.0m), of which €21.1m was attributable to the Germany segment (2020: €17.0m). The segment’s gross margin was above the prior-year level at 12.7% (2020: 12.1%).
The positive development of revenue helped its adjusted EBITDA to rise to €4.6m (2020: €2.8m) with no non-recurring expenses or income, with the German segment accounting for €4.1m (2020: €1.9m). EBIT and net profit came in at €2.4m and €2.5m respectively and were also above the prior-year figures (2020: €0.0m and €0.1m respectively).
Due to contractual reasons, the billings of the ONCE business in Spain are not included in this total.
While ZEAL described the lottery market in Germany during Q1 as ‘comparatively weak at just €5.7m’, it managed to gain 156,000 new registered customers during the period (2020: 206,000).
The company noted that the increase in acquisition costs per newly registered customer of €33.48 (2020: €26.00) was a consequence of the enhanced marketing strategy.
CFO Jonas Mattsson noted: “We are pleased that, following the LOTTO24 takeover, the business model change and the organisational adjustments, we will again be able to publish truly comparable figures in the current and previous reporting periods with the first quarter of 2021.
“In addition, we already demonstrated in the past year that we are capable of exploiting market opportunities, adapting to dynamic environments and continuously fine-tuning our business model. We are consistently continuing along this path.”
Looking ahead, ZEAL stated it plans to continue expanding as an online provider of state lottery and other permitted lottery products. The company still expects billings of at least €700m for the Germany segment, depending on general conditions, in particular developments around the jackpot.
The firm added that it continues to anticipate revenue of at least €95m in the fiscal year. With similarly high marketing investments as in the previous year of around €32m, it still foresees adjusted EBITDA to reach at least €20m.