The German lottery firm, Zeal Network, experienced a significant surge in earnings during the initial three months of 2022. Their profits soared by a remarkable 101.6% compared to the same period in the previous year. This impressive growth was attributed to a combination of increased revenue and reduced expenditures.
Zeal generated €25.1 million in the first quarter, representing an 11% increase from the prior year. The majority of this revenue originated from Germany, although the company also secured earnings from other nations. The rise in revenue was primarily driven by a surge in lottery ticket sales.
Zeal witnessed a substantial increase in lottery ticket sales, registering a 10.9% growth compared to the previous year. This upswing was fueled by larger jackpots and an expanded player base.
Zeal attracted 154,000 new customers, a slight decrease from the previous year. The cost of acquiring each new customer was higher, primarily due to a special promotional campaign for their “Freiheit+” charitable lottery. Excluding this promotion, the acquisition cost would have remained comparable to the previous year.
Zeal’s operational expenses were lower than the preceding year.
During the initial three months of 2022, Zeal’s income reached 16.5 million euros, a decrease of 8% compared to the same period last year. This decline was primarily driven by a 20.2% reduction in personnel expenditures, with the total workforce shrinking from 164 to 156 individuals. Marketing expenses rose by 3.3% to 7.3 million euros, but direct operational costs decreased by 10.6% to 2.5 million euros, and indirect operational costs also experienced a decline of 15.2% to 2.6 million euros.
The combined effect of increased revenue and decreased expenses resulted in a substantial 95.6% year-over-year surge in earnings before interest, taxes, depreciation, and amortization (EBITDA), reaching 8.9 million euros in the quarter, a significant jump from 4.6 million euros in the previous year.
Zeal also recorded 2.1 million euros in depreciation and amortization expenses, a slight decrease of 2.9% from the first quarter of 2021, leading to a remarkable 187.6% increase in earnings before interest and taxes (EBIT) to 6.8 million euros.
After accounting for 0.158 million euros in financial costs and a 0.043 million euro loss from affiliated companies, pre-tax profit amounted to 6.7 million euros. Zeal paid 1.6 million euros in income tax, resulting in a net profit for the quarter of 5 million euros, more than double the 2.48 million euros recorded in the same period last year.
“We are pleased with the start of 2022 and have once again achieved growth in revenue and profitability; this will encourage us to continue investing this year to achieve further growth,” stated Jonas Mattsson, the Chief Financial Officer of Zeal.
Zeal further indicated that its projections for full-year transaction volume, revenue, and EBITDA remain unchanged. Based on the current overall situation, revenue could reach at least 105 million euros, representing a 21.0% increase from the previous year.
Bills are anticipated to reach at least 750 million euros, a 14.2% increase, while EBITDA is expected to reach at least 30 million euros.
No minutes, displaying an 8.3% rise compared to the previous year.
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