Zeal Network raises EBITDA guidance for 2019

Online lottery brokerage Zeal Network has announced that its earnings before depreciation, amortisation, and exceptional items (EBITDA) for the fiscal year 2019 are expected to surpass its initial forecasts.

For the 12 months through to December 31, 2019, Zeal said EBITDA is likely to come in at between €27m (£22.9m/$30.0m) and €30m, up from the forecast of €18m to €21m published in August with its half-year results.

However, despite the increased forecast, Zeal’s EBITDA would still be down significantly on €48m in the previous 12-month period.

Zeal said the primary the reason for this increased guidance comes as a result of a business model change, which saw the company pivot away from lottery betting to focus on brokerage, from 15 October. Zeal said that it was able to generate additional earnings from its secondary lottery business during this period.

In addition, Zeal said marketing investments – depending on respective jackpot development – were less than originally expected. This was due to due to lower jackpots and the fact that marketing spend has not yet been fully ramped up in the Tipp24.com segment after the business model change.

The increase in guidance comes despite Zeal last month warning that full-year revenue and earnings were likely to fall significantly from the prior year, following its acquisition of Lotto24 and the pivot of its Tipp24 business from lottery betting to brokerage.

At the time, Zeal said the change of Tipp24’s business model was likely to have an impact on its customer base, and coupled with a €26.3m jackpot win in August, revenue was set to be “significantly lower” than 2018’s €160m total.

Zeal also said at the time that EBITDA was expected to fall to between €18m and €21m, although this is now not expected to be the case.