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ZEAL Network SE is the leading German online lottery provider. In the first half 2023, ZEAL Network SE increased its revenues and billings as well as adding new customers. ZEAL used the high jackpot phases to launch successful marketing campaigns that significantly increased the customer base.
Jonas Mattsson said that the growth in our transaction volume was nearly record-breaking in 2023 and 18.8 percent greater than the second quarter 2022. In this regard, we recorded the second best quarter in ZEAL’s history. The CFO of ZEAL, Jonas Mattsson, said that the growth in new clients clearly shows ZEAL’s strategic investments made in the first half 2023 in order to expand the company’s market leadership. Mattsson continued, “Strategic expansion in the ecommerce environment has become increasingly difficult. But with our diverse marketing campaigns and attractive products, we are confident we will continue impressing in the market .”
Transaction volumes and growth records
In the first half 2023, the ZEAL Group’s transaction volume increased by 15 per cent to 411.7 millions euros (2022: 358,3 million euros). Sales revenue increased by 11 percent to reach 54.8 million euro (2022: 49.4 millions euros). The company’s gross profit margin, at 12.5%, was almost the same as the previous year (2022.2: 12.8% ).).
ZEAL has been able to use the lucrative jackpot phases of January, March, and June in the first half of the year to gain new customers and expand its business. In June, Eurojackpot, a popular lottery, won the 120 million euro jackpot in two consecutive draws. ZEAL achieved a record of 30,6 million euros worth of transactions in a week during this phase. The marketing campaign was intensive, and included a collaboration with Kursat Yildirim (known to Germans as “Chico”, a multi-lottery winner).
Strong new customer growth strengthens earnings base
In 2023’s first half, ZEAL added 349 000 new customers, a 20 percent increase on the previous year (292 thousand). ZEAL saw an increase in acquisition costs for each new registered customer (cost per led, CPL), which was 45.09 Euros (2022: 37.61 Euros). This is due to higher media costs as a result of increased competition. Marketing expenses increased by 44 percent to 20.0 million euro (2022: 13.9 million euros). The other operating expenses increased by 31.6 million euro (2022: 24.5″ million euros). EBITDA decreased year-over-year to 13.8 million euro (2022: 164 million euros) due to higher investments made in the growth of new customers. EBIT was 9.3 million euro (2022: 12.1 million euro) and the net profit for this period was 5.6 million euro (2022: 9.4million euros). Jonas Mattsson explains that the company has a targeted marketing strategy, and makes a disproportionate investment in high jackpot phases. The short-term drop in earnings during high jackpot phases is perfectly normal and will be settled down in the course of the financial year.
Expanding the game portfolio
ZEAL was granted permission by the Joint Gambling Authority of the Federal States to offer online slot machine games in April. In June, ZEAL began offering these games in its web store. The company has worked to expand its game offering ever since. ZEAL has added more games to LOTTO24 webstores at the beginning of August. The company plans to increase the number of titles to 200 within the first 12 months.
Forecast confirmed
ZEAL intends to increase its market share as an online lottery provider in fiscal year 2023. The company continues to anticipate a billings amount between 800 million and 830 million euro for the Germany segment – assuming a jackpot average development. ZEAL also continues to forecast revenues between 110 and 120 millions euros for fiscal year 2023. ZEAL anticipates an EBITDA range between 30 and 35 million euros. The company plans to spend significantly more on new customer acquisition this year than the previous one. Marketing expenses are expected to be between 34 and 39 millions euros.
