Zeal revenue drops 48% amid business restructure

Online lottery brokerage business Zeal Network has reported a revenue fall of 48% to €19m year-on-year for Q1 2020, down from €36.5m in Q1 2019.

The German firm highlighted the “expected revenue dis-synergies in connection with the business model change” as the reason for the mass decrease.

This change relates to Zeal’s decision to discontinue its secondary lottery betting business, which included the EuroMillions and US Powerball lotteries, in October 2019.

Breaking down the €19m total revenue for Q1 2020, €17m was derived from Germany alone, which is composed of the Lotto24 and Tipp24 brands.

Looking ahead, Zeal noted that it expected total annual revenue to reach between €70m and €73m for 2020.

Elsewhere, adjusted EBITDA was down 77% from Q1 2019 (€12.2m) to Q1 2020 (€2.8m), while billings increased some 108% to €140m in Q1 2020 thanks to the inclusion of Lotto24 sales.

Lotto24 has been part of Zeal since May 2019 and therefore its billings were not included in Q1 2019.

Zeal highlighted that it had also made €8.3m in cost savings via cutting personnel and operating expenses from Q1 2019 (€25m) to Q1 2020 (€16.7m).

Jonas Mattsson, Zeal CFO, said: “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.

“The fact that every Friday in April, €90m 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,” he added.