Total revenue for the six months to 30 June amounted to €44.5m (£37.7m/$52.3m), up from €43.6m in the first half of last year.
Zeal said that the vast majority of revenue in H1 – €41.8m – was generated by its German business, with the remaining €2.7m coming from its operations in other markets.
Billings – comprising all stakes from customers, including brokerage stakes and associated VAT, net of bets – were also up by 5.9% year-on-year to €332.9m, of which Germany accounted for almost the entire account at €332.8m.
This increase came despite Zeal saying the market environment for lotteries in Germany was comparatively weak at €9.0m for the half, while the average jackpot for the German lottery ‘LOTTO 6aus49’ was lower than the previous year and only exceeded the €20m mark once.
The average jackpot for the ‘Eurojackpot’ European lottery was also down from €51.2m last year to €38.3m, with Zeal saying lower jackpots had a negative effect on its billings, gross margin and customer acquisition.
However, despite this market environment, the provider gained 291,000 new registered customers in Germany during the six-month period.
“The fact that we have managed to continue to grow with a significantly weaker jackpot development compared to the previous year makes us proud and shows us that we have taken the right measures to continuously improve both in terms of customers and results,” Zeal’s chief financial officer Jonas Mattsson said.
“The scalability of our business model will also help us in the future to take advantage of market opportunities, adapt to the dynamic environment and continuously optimise.”
Turning to costs, Zeal was able to reduce its operating expenses by 16.7% to €34.2m. Savings were made in all areas, but the biggest decline came in marketing costs, which fell 24.9% to €13.8m.
Higher revenue and lower operating spending meant that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 228.2% year-on-year to €10.7m.
After taking into account €4.4m in depreciation and amortisation costs, earnings before interest and tax amounted to €6.3m, compared to a €2.0m loss last year.
Profit before tax also improved from a €215,000 loss to a positive of €7.4m, while net profit for the half rocketed 1,405.6% to €5.7m.
Looking ahead to the remainder of 2021, Zeal said that revenue is forecast to climb to at least €95.0m, which would be 9.2% higher than last year. Billings for the German segment are set to increase 7.4% to €700.0m, and overall adjusted EBITDA 57.5% to €20.0m.
Confirmation of the H1 results comes after Zeal last month made an offer to purchase the remaining shares in Lotto24 and take full ownership of the online lottery broker it spun off in 2012.
Zeal already owns 93% of the total shares in Lotto24 and the agreement would see Lotto24 delist its remaining shares from the Frankfurt Stock Exchange in order to allow Zeal to acquire them.
Should the purchase go ahead as expected, Zeal plans to pay €381.79 (£327.30/$450.29) per Lotto24 share to current shareholders, though the final price will be determined by the German Federal Financial Supervisory Authority.
Original article: https://igamingbusiness.com/zeal-sees-net-profit-rocket-in-h1-after-cutting-costs/
