ZEAL Network has reported continued growth in the first quarter of 2026, demonstrating resilience despite what it described as a “weak jackpot environment.”
Revenue increased by 6% year-on-year to €54.3m (£46.9m) at the Germany-headquartered business, supported by steady expansion in its core lottery business and a growing customer base.
Monthly active users rose 5% to 1.575 million, while new registrations climbed 11% to 274,000, but EBITDA declined by around 13% to €15.5m, reflecting ongoing investments in marketing, personnel and product development.
Net profit also took a hefty 15.5% hit, dropping from €9.8m to €8.3m YoY.
The company emphasised that costs which have impacted its financials are part of a broader strategy to diversify revenue streams and reduce reliance on jackpot cycles.
A key part of that strategy is the continued expansion of ZEAL’s charity lottery portfolio.
During the period, the company prepared and subsequently launched its latest offering, the Traumautoverlosung (Dream Car Raffle), which went live in April.
This marks ZEAL’s third in-house charity lottery product in Germany, following earlier launches such as the Dream House Raffle, and reinforces its push to build a second growth pillar alongside traditional lottery brokerage.
Gross margin in the lottery segment also improved to 17.8%, up from 17.1% a year earlier.
At the same time, ZEAL’s Games segment continued to gain traction. Revenue from the division rose 14% to €3.9m, supported by an expanded portfolio of more than 740 titles and increasing user engagement.
The company sees this segment as an increasingly important contributor to its long-term, diversified business model.
But even though the active user base is growing, individual users are spending less on average.
The Average Billings Per User for lotteries declined by 3%, while the Average Revenue Per User for the ZEAL Games segment dropped by 15%, which management attributed to a lower share of high-roller players.
“The first quarter of 2026 shows that we are consistently executing our strategy even in a weak jackpot environment: our core business is growing, and we have continued to invest in diversifying our business model,” said Andrea Behrendt, Chief Financial Officer of ZEAL.
“Through targeted investments in new charity lotteries such as the Dream Car Raffle, we are laying the foundation for sustainable growth that is less dependent on jackpot cycles.
“The slightly lower EBITDA compared to the previous year is primarily a reflection of these measures.”
The cost of ZEAL Network’s improvements
Despite these improvements, diversifying the business portfolio has come at a price – total costs of operations increased by 15.8%.
This was heavily driven by a 21.4% jump in personnel expenses as the company expanded its headcount from 240 to 305 full-time employees to support new product diversification.
Marketing expenses also increased by 13.3%, and direct operating expenses rose 19% due to higher payment processing and customer verification costs.
ZEAL has confirmed its 2026 revenue and EBITDA guidance, coming in at €250-€260m and €70-€75m respectively. This would represent an increase on 2025’s figures of €218.5m and €68.8m, though numbers in later quarters this year will have to begin to jump to reach those expected figures.
The company proposed a dividend of €1.40 per share, representing a total payout of approximately €29.5m.
While this aligns with its policy of a steadily increasing base dividend, the overall total is significantly lower than the €50.6m total payout distributed to shareholders in 2025.
There are certainly positives to be taken from ZEAL’s start to FY2026, but a challenging jackpot environment combined with growing overheads could throw some unwanted headwinds into the picture if they are to sustain.
Investors have not taken much confidence from the results, with ZEAL’s share price on the Frankfurt Stock Exchange slightly dropping by 2% to €48.50 at 3:45pm GMT yesterday, though a dip this small suggests that there are no huge concerns regarding the firm’s Q1s.
Stefan Tweraser, Chief Executive Officer at ZEAL, commented: “New year, same successful strategy – in the first quarter of 2026, we continued to deliver revenue growth while further advancing the diversification of our business model. I’m very proud of our achievements.
“A big thank you to our dedicated Team ZEAL. I’m excited to continue this successful journey together with you.”