Zeal hails “sustainable” investment with revenue expected to rise in 2022
In a preliminary results announcement, Zeal said it experienced “strong” development despite ongoing global uncertainty that has impacted the wider gambling industry.
Chief financial officer Jonas Mattsson said ongoing investment in all areas of the business not only helped in 2022 but will allow it to grow further in 2023 and beyond.
“We are proud of our strong development despite the ongoing global uncertainty and the resilience in the lottery products in these times,” Mattsson said. “The positive development of our business figures in almost all areas proves that we have sustainably invested in our own growth with our measures in 2022.
“In 2023, we will not only focus on further expanding our base business, but also drive innovation to further extend our market leadership.”
Preliminary results
For its 2022 financial year, Zeal said revenue is expected to hit €105.2m (£92.7m/$111.5m), which would be a 21% increase from €86.8m in the previous year.
Total group billings, which comprise all stakes from customers through Zeal’s offering, are forecast to increase 16% to €758.4m, while the group was able to acquire 29% more new customers than in the previous year.
This rise in customers came as a result of increased marketing activities during high jackpot phases, which in turn is expected to lead to a 52% rise in marketing costs to €34.1m, with operating expenses also set to rise 39% to €57.0m.
However, due to higher business volume, Zeal said earnings before interest, tax, depreciation and amortisation (EBITDA) will reach €3.9m, while market share is likely to increase to 41%, compared to 39% in the previous year.
Key events noted by Zeal in the preliminary result announcement included Lotto24 securing a follow-up licence for lottery brokerage in Germany, with this to run for seven years until June 2029.
Zeal also highlighted the decision by the German Federal Fiscal Court in August to reject an appeal of the Hanover North Tax Office against the decision of the Hanover Fiscal Court of November 2019 in favour of MyLotto23 Ltd. This led to the tax office refunding a down payment of around €54.0m made by MyLotto24 at the start of 2023, with an additional repayment of €2.0m in associated interest still expected.
Looking ahead to 2023, Zeal said it expects to further expand its market leadership with the introduction of new products including online games under the licence for virtual slot machine games that the group company applied for.
Depending on general conditions – and an average jackpot development – Zeal anticipates billings to be between €800.0m and €830.0m for the Germany segment, with revenue to be in a range of €110.0m and €120.0m.
EBITDA for the full year is expected to be in a range of €30.0m and €35.0m, while with plans in place to invest significantly more in the acquisition of new customers, this will likely lead to marketing expenses reaching between €34.0m and €39.0m.