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    TIMA   GB00BHD66J44

ZEAL NETWORK SE

(TIMA)
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ZEAL Network : Quarterly Statement Q1 2021

05/07/2021 | 07:06am EDT

GAME CHANGER

WE DRIVE CHANGE IN THE LOTTERY INDUSTRY.

QUARTERLY STATEMENT

1 JANUARY - 31 MARCH 2021

NEW

NORMAL

ZEAL Network SE is the parent of an e-commerce group of companies that create online lottery experiences for their customers. Founded in Germany in 1999, it was initially set up as a lottery broker and floated in 2005 - in one of Germany's most successful IPOs on the Frankfurt stock exchange at that time.

In 2009, the Group changed its focus from lottery brokerage to lottery betting and later moved its registered office to London.

In May 2019, ZEAL completed the takeover of LOTTO24 AG, transitioned its former Tipp24 secondary lottery business to a German online lottery brokerage business in October 2019, re­ located its registered office back to Germany and successfully finalised the integration in 2020.

Today, we are the leading German online provider of lottery products. Our aim is to innovate and drive change in the lottery sector while further expanding our market leadership!

CONTENTS

Q 1 2021 at a Glance

3

Business Review

4

Results of Operations and Financial Position

6

Selected Financial Information

9

. 2

Q 1 2021

AT A GLANCE

156k

12.7%

NEW REGISTERED CUSTOMERS,

GERMANY SEGMENT

GROSS MARGIN,

(Q 1 2020: 206k)

GERMANY SEGMENT

(Q 1 2020: 12.1%)

€22.6m

REVENUE

€163.3m

(Q 1 2020: €19.0m)

€33.48

BILLINGS

(Q 1 2020: €140.0m)

COST PER LEAD, CPL GERMANY SEGMENT (Q 1 2020: €26.00)

€4.6m

ADJUSTED EBITDA

(Q 1 2020: €2.8m)

GOOD START

TO FISCAL YEAR 2021

  • Increased billings and revenue
  • Strong gross margin achieved
  • Profitability significantly improved
  • LOTTO24 now also in Google Play Store

Definitions of the measurements disclosed above can be found in the 'Management System' section of the Group Management Report 2020.

At a GlanceZEAL Network SE Q 1 2021

. 3

BUSINESS REVIEW

DEAR SHAREHOLDERS,

Although the coronavirus continues to hold the world firmly in its grip, the ZEAL Group¹ has made a good start to its fiscal year 2021 thanks to the stability of our business model - based on the loyalty of our customers and the unbroken popularity of online lotteries.

In the first quarter of 2021, our billings rose by 17% to €163.3² million (2020: €140.0 million), of which the Germany seg-

ment accounted for almost the entire amount at €163.3 million (2020: €139.7 million). Revenue increased by as much as

19% to €22.6 million (2020: €19.0 million), of which €21.1 million was attributable to the Germany segment (2020: €17.0

million). At 12.7%, our gross margin in the Germany segment was above the prior-year level (2020: 12.1%). As the Spanish ONCE business is not included in billings but only in revenue, our margin trend is better reflected by the Germany segment than at Group level.

The market environment for lotteries in Germany during the first quarter of 2021 was comparatively weak: at just

€5.7 million, the average jackpot of the German lottery 'LOTTO 6aus49' was even lower than in the previous year (2020: €7.3 million) and failed to exceed the €20 million mark even once (2020: once). At €35.0 million, the average jackpot of the European lottery 'Eurojackpot' was also well below the prior-year figure (2020: €54.2 million) and reached the €90 million mark once (2020: once).

Despite this market environment, however, we gained 156 thousand new registered customers in the Germany segment (2020: 206 thousand). The increase in acquisition costs per new registered customer (cost per lead, CPL) of €33.48

(2020: €26.00) was also a consequence of our enhanced marketing strategy: even though customer acquisition is naturally more difficult in low jackpot phases, such as the first quarter of 2021, correspondingly higher CPLs are justified by the fact that it is precisely those lottery players won during these periods who generally exhibit higher long-term activity and thus a better customer lifetime value (CLV). As a result, the payback periods of new customers are only slightly longer. At €7.1 million, total marketing expenses in the first quarter of 2021 were above the prior-year level (2020: €6.6 million).

Due to the positive development of revenue, adjusted EBITDA rose to €4.6 million (2020: €2.8 million) - there were no

non-recurring expenses or income. The Germany segment accounted for €4.1 million of this amount (2020: €1.9 million).

EBIT and net profit of €2.4 million and €2.5 million, respectively, were also well above the prior-year figures (2020: €0.0 million and €0.1 million, respectively).

There was more encouraging news with regard to our products: as of 29 March 2021, the LOTTO24 app is now also available in the Google Play Store for Android. After previously having banned gambling apps from the Google Play Store in Germany, Google has now made a significant U-turn: with effect from 1 March 2021, the company has adjusted its policy and now allows certain gambling products - in particular apps for participating in permitted lotteries. We hope that this approval by the Google Play Store will support the growing share of mobile usage and further accelerate our growth.

  • The ZEAL Group is comprised of ZEAL Network SE and its subsidiaries.
  • For contractual reasons, the billings of our ONCE business in Spain are not included in this total.

Business ReviewZEAL Network SE Q 1 2021

. 4

For the fiscal year 2021, we therefore continue to plan the expansion of our market leadership as an online provider

of lottery products. Depending on the general conditions, in particular the jackpot development, we continue to expect billings of at least €700 million for the Germany segment. Following exceptionally strong jackpots in the previous year, we have assumed an average jackpot development, resulting in a lower growth rate than in the previous year. Moreover, we continue to expect revenue of at least €95 million in the fiscal year 2021. With similarly high marketing investments as in the previous year of around €32 million, adjusted EBITDA is still expected to reach at least €20 million.

One last thing: we are pleased that in the first quarter of 2021 we can once again publish truly comparable figures for the current and previous reporting periods. Due to the LOTTO24 takeover, the business model change and numerous organisational adjustments, our performance was not always easy to recognise from the comparative figures over the past few quarters. Nevertheless, we already demonstrated in the past year that we are capable of exploiting market opportunities, adapting to dynamic environments and continuously fine-tuning our business model. With your support, we are consistently pursuing this path.

Hamburg, 6 May 2021

The Management Board

Dr Helmut Becker

Jonas Mattsson

Chief Executive Officer

Chief Financial Officer

Business ReviewZEAL Network SE Q 1 2021

. 5

Disclaimer

ZEAL Network SE published this content on 07 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2021 11:05:02 UTC.


© Publicnow 2021
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Financials
Sales 2021 101 M 120 M 120 M
Net income 2021 9,83 M 11,7 M 11,7 M
Net cash 2021 67,4 M 80,0 M 80,0 M
P/E ratio 2021 95,0x
Yield 2021 2,25%
Capitalization 928 M 1 101 M 1 101 M
EV / Sales 2021 8,54x
EV / Sales 2022 7,10x
Nbr of Employees 164
Free-Float 57,9%
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Average target price 56,33 €
Spread / Average Target 35,7%
EPS Revisions
Managers and Directors
Helmut Becker Chief Executive Officer
Jonas Mattsson Chief Financial Officer
Peter Steiner Chairman-Supervisory Board
Oliver Jaster Deputy Chairman-Supervisory Board
Thorsten H. Hehl Member-Supervisory Board
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