ZEAL Network SE: ZEAL with promising start 2020
May 14, 2020 7:30 AM
ZEAL Network SE
/ Key word(s): Quarterly / Interim Statement
ZEAL with promising start 2020
(Hamburg,14 May 2020) ZEAL Network SE (Lotto24.de, Tipp24.com), Germany's leading online provider of state-licensed lottery products, has made a promising start into the fiscal year 2020: The ZEAL Group has grown billings, achieved a strong gross margin, further reduced costs and successfully acquired new customers. In order to improve transparency, the Company reorganised its reporting segments: From now on ZEAL will report on the segments "Germany", which mainly comprises the online lottery brokerage business of the Lotto24 and Tipp24 brands, and "Other", which mainly comprises the business of ONCE and ZEAL Ventures.
Positive financial development
Revenue of the ZEAL Group decreased by 48% to EUR 19.0 million in the first quarter of 2020 (2019: EUR 36.5 million), mainly due to the expected revenue dis-synergies in connection with the business model change. Similar to billings, revenue in the first quarter of 2019 still included the secondary lottery business but not Lotto24's online lottery brokerage business from the first quarter of 2019. Revenue in the Germany segment amounted to EUR 17.0 million in the first quarter of 2020.
Supported by a positive development of lottery clubs the gross margin in the Germany segment was 12.1% in the first quarter of 2020 (2019: no Germany segment). Since, among other things, the Spanish ONCE business is not included in billings but only in revenue, the Company's margin development is better reflected in the Germany segment rather than on Group level.
Further cost savings realised
ZEAL therefore confirms the planned annual cost synergies of at least EUR 57.0 million, of which 80% is to be achieved after the first year and 100% after the second year of completing the Lotto24 takeover. Overall, the Company continues to expect total expenses for achieving the planned cost synergies within the targeted range of EUR 15.0 million to EUR 20.0 million. Up to the end of the first quarter 2020, expenses of EUR 15.0 million incurred for this. For the rest of the 2020 fiscal year, ZEAL expects further expenses of up to EUR 2.0 million.
As a result of the revenue dis-synergies in the course of the business model change, adjusted EBITDA in the ZEAL Group of EUR 2.8 million was, as expected, down on the previous year (2019: EUR 12.2 million). The Germany segment contributed EUR 1.9 million to this. After deducting increased depreciation and amortization mainly resulting from the takeover of EUR 2.7 million (2019: EUR 0.6 million) and non-recurring expenses of EUR 0.1 million (2019: EUR 1.8 million), EBIT fell to EUR 0.0 million (2019: EUR 9.8 million).
At acquisition costs per new registered customer (cost per lead, CPL) in the Germany segment of EUR 26.00, the Company acquired 206 thousand new registered customers in the first quarter of 2020 (2019: no Germany segment).
Impact of the corona crisis
Guidance 2020 reiterated
"We are on a good way to reach our goals, even if some steps of the transition, such as the complete technical integration of Lotto24 AG, are still pending," says Jonas Mattsson, CFO of ZEAL Network SE. "The fact that every Friday in April EUR 90 million were in the EuroJackpot and that we were able to turn two customers into multiple millionaires during this time once again, makes our customers and us of course very happy."
Selected financial key figures as of 31 March 2020:
*In the three months ended 31 March 2019, the Group did not operate a Germany segment. As such prior year comparatives are not available.
About ZEAL Network SE: ZEAL Network SE, Germany's leading online provider of state-licensed lottery products, is a Hamburg based Group which mainly brokers customers' tickets to the state lottery companies through the brands Lotto24.de and Tipp24.com, for which it receives a commission. The offerings include among others »Lotto 6aus49«, »Spiel 77«, »Super 6«, »EuroJackpot«, »GlücksSpirale«, lotto clubs, »Keno« and the »Deutsche Fernsehlotterie«. Founded in Germany in 1999, it was initially set up as a lottery broker. In 2005, it was floated on the Frankfurt Stock Exchange (Prime Standard) and became one of the most successful initial public offerings (IPOs) in Germany at the time. In 2009, the Group changed its focus from lottery brokerage to the secondary lottery business. It moved its registered office to London and was renamed as ZEAL Network SE in November 2014. In May 2019, ZEAL completed the takeover of Lotto24 AG, returned its Tipp24 secondary lottery to the German brokerage business in October 2019 and relocated its registered office back to Germany in the same month.
14.05.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||ZEAL Network SE|
|Phone:||+49 (0)40 808141-123|
|Fax:||+49 (0)40 808 141-199|
|Listed:||Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange|
|EQS News ID:||1044309|
|End of News||DGAP News Service|