Zeal’s revenues slump 26% YoY after eight-figure jackpot pay-out
Lottery operator’s EBITDA down almost 40% in 2019 as business achieves significant costs savings
Zeal Network has reported a 26% year-on-year fall in revenue to €113.5m for 2019 due in part to paying out a bet-on-lottery jackpot of €26.3m.
The Hamburg-based digital lottery operator posted EBITDA of €28.8m last year, a near-40% drop over the €47.7m recorded in 2018, according to Zeal’s preliminary estimates.
Last May, Zeal completed the takeover of Lotto24, which resulted in a 58% increase in billings to €466.7m compared with €296.3m in 2018. Meanwhile, its Tipp24 brand switched its business model from a bet-on-lottery operation to a brokerage business in October.
Zeal said that as a result of the business model change, such “strong fluctuations brought about by jackpot-related prize pay-outs will no longer occur in the future”.
While the takeover of Lotto24 resulted in additional costs of €22m, Zeal reported that total costs for the group fell by €20m from €112.5m in 2018 to €92.5m in 2019.
The cost reduction was partly attributed to a fall in staff numbers to 190 from 228 the previous year. Operating expenses were slashed by €14.2m to €69.5m despite a €2.4m increase in marketing costs for both brands, Lotto24 and Tipp24.
In its German business, Zeal acquired around 274,000 new registered customers in 2019, although this figure only includes new Lotto24 customers since last May’s takeover and new Tipp24 customers since the business model altered.
Zeal CFO Jonas Mattsson said: “After leaving behind a long period of legal uncertainties and significantly improving our risk profile with the end of the secondary lottery business as the leading online provider of state lottery products, we can now fully focus on the continuously growing and socially valuable German online lottery business with two strong brands.”
For 2020, Zeal anticipates billings of between €550m and €570m and revenues of €70m to €73m.