Zeal Group Release Annual Report Maintaining 2020 Outlook

Zeal Group has retained its outlook for the current year after an annual report was released by the online distributor of state-licensed lottery products looking at its results during 2019.

Following the successful acquisition of Lotto24, acquired nearly 12 months ago amid Lottoland’s strong opposition, Zeal raised billings by 58 percent to € 466.7 million (2018: € 296.3 million).

Given the significant organisational changes, and the much weaker EuroJackpot growth than in the previous year, the company aligns this with the aforementioned acquisition.

Sales during the period fell 36.3 percent to € 113.5 million (2018: € 154.8 million), mainly due to a bonus payment from its former secondary lottery company and the reported sales dis-synergies induced by the shift in business model.

In addition, Zeal has celebrated a further reduction in its cost base with overall costs falling from € 20.6 million to € 91.9 million, despite additional costs in € 22 million incurred in connexion with the acquisition.

The adjusted EBITDA of € 29.4 m was, as anticipated, down 38.3 percent from the previous year’s € 47.7 m due to sales dis-synergies and the last large prize payout, yet in line with the recently increased guidance.

In a media release, Zeal affirmed its expectations for the time ahead, adding that it aims to further extend its “market leadership as an online provider of state lottery products.”

Zeal explained, elaborating: “Aware that the comparative figures for the previous year are difficult to compare with those forecast for 2020 due to the Lotto24 takeover in May 2019 and the business model change from a secondary lottery to an online lottery broker in Germany in October 2019, ZEAL Group expects billings of between €550m and €570m.

“This includes for the first time the full year billings of Lotto24 and the discontinuation of the international products as part of the termination of the secondary lottery business. Based on the expected dis-synergies as a result of the business model change, ZEAL anticipates revenue of between €70m and €73m in the fiscal year 2020.

“As the gross margin in the online lottery brokerage business is naturally lower than in the riskier secondary lottery business, the company expects a gross margin of approximately 12 per cent – a comparable level to Lotto24 in recent years.

“Depending on the general conditions, in particular the jackpot development, the timing of the implementation of the planned synergy effects and the marketing investments for the acquisition of new customers, EBITDA is expected to be between €5m and €8m.

“Due to the access to proven, more cost-effective marketing channels, the company expects the German business of ZEAL Group to nearly double the number of new customers in 2020 with a lower CPL compared to the previous year.”

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About Joe Kizlauskas

Joe is a seasoned iGaming copywriter and speaker who has been in the business since 2015. He's written more words on all elements of iGaming than he likes to remember, and he's contributed material to a number of well-known brands. Joe may be seen playing 5 a side, at the gym or playing games on his Playstation when he is not writing.