Retail lottery and SaaS drive growth at Jumbo Interactive in H1

Total revenue for the six months through to 31 December 2021 amounted to AU$52.8m (£28.0m/€33.6m/US$38.0m), up 29.1% from $40.9m in the corresponding period in the previous year.

Retail lottery remained Jumbo’s primary source of revenue, with this segment generating $46.7m during the half, up 23.6% year-on-year. This, Jumbo said, was due to higher player activity on the back of increased large jackpot activity.

SaaS revenue climbed by 69.1% to $2.4m as a result of scaling up current customers within the Australian market, as well as having six full months of Western Australia’s Lotterywest, having signed a long-term agreement with the lottery at the end of 2020.

Remaining revenue came from managed services, with revenue rising 40.8% year-on-year to $2.1m. The main contribution here came from the Gatherwell UK lottery business.

Jumbo also noted that total transaction value for the business, comprising the gross amount received from the sale of goods and services rendered in the half, increased by 4.1% from $232.8m to $327.9m.

Key events during the period included the delay of Jumbo’s planned acquisition of Canadian lottery management provider Stride Management, with this now not take place until mid-2022 due to an “extensive” regulatory approval process. Jumbo initially hoped the deal would go through before the end of 2021.

Also in H1, Jumbo appointed Nigel Atkinson as UK general manager as part of its strategy to expand its presence in the UK charity lotteries market.

After the end of the period, Jumbo agreed a deal to acquire UK external lottery manager and digital payments business StarVale Group, via newly incorporated, wholly owned entity Jumbo Interactive UK.

Jumbo will pay an initial $32.1m take ownership of 100% of the business, while the deal also includes up to $8.5m in deferred payments, which will be payable subject to StarVale achieving certain earnings targets. Jumbo hopes to complete the deal before the end of its 2021-22 financial year.

“We are very pleased with the growth that we have achieved this half, across all our operating segments, and the positive momentum across the business,” Jumbo founder and chief executive Mike Veverka said. 

“Lottery retailing continues to perform exceptionally well, underpinned by the improved jackpot cycle and our focus on player engagement and retention. Our SaaS and managed services segments continue to demonstrate good organic growth with all our Australian SaaS clients contributing on a full run-rate basis.”

Looking at costs for the six months and spending was higher across a number of areas, with administration expenses climbing 11.8% to $17.1m and marketing spent 80.8% to $4.7m.

However, revenue growth meant pre-tax profit was 25.1% higher at $23.9m, while earnings before interest, tax, depreciation and amortisation (EBITDA) also increased 22.3% to $28.2m.

Jumbo paid $7.5m in income tax, leaving a net profit of $16.4m, an increase of 24.7% from $13.2m in the previous year.

After also including a negative effect of $295,000 in foreign currency translation differences, this meant net profit attributable to the owners of Jumbo reached $16.1m, up 22.9% year-on-year.

“We are successfully executing on our strategy and planning is underway to ensure we efficiently and effectively integrate the Stride and StarVale acquisitions post completion,” Veverka said. “The global lottery industry is in the midst of a digital change and our Powered By Jumbo software platform will be key to supporting lotteries through this change. 

“Our balance sheet remains strong and when combined with our new debt facility, provides additional headroom for further strategic growth.”