Zeal Networks has reported marginal revenue growth for the first half of 2019, with a positive contribution from the recently acquired Lotto24 business offsetting a decline caused by the closing of its Lotto Network and Venture24 brokerage businesses.
Billings – comprising all stakes from customers, including brokerage stakes and associated VAT, net of bets – amounted to €179.4m (£131.1m/$158.2m) in the six months to June 30, 2019, up from €141.9m last year. Total operating performance (TOP), or the sum of revenue and other operating income, was also up in the first half, rising from €74.9m to €79.3m.
Statutory revenue amounted to €77.5m, up from €77.3m in the first half of last year, although Zeal noted that the comparative period for all of these figures did not include results from Lotto24, with the acqusition only finalised in May of this year.
Lotto24 contributed €4.8m in revenue since it was added to the Zeal business in May, while Zeal also noted an increase in revenue from instant win games. This offset a €1.7m decline in revenue that resulted from the decision to shutter the Lotto Network and Venture24 consumer-facing brokerage businesses in November and December 2018 respectively.
Looking to expenses for the period, Zeal was able to make savings across the business, with both personnel expenses and other operating expenses significantly lower than in the previous year.
A planned reduction in the number of employees from the original 350 to 271 helped push personnel expenses down from €15.2m to €11.2m. Zeal is set to make further savings in this area, and has set a target of cutting its headcount to 200 employees by mid-2020.
Other operating expenses were cut from €43.3m to €36.8m, with direct costs of operations down from €22.3m to €17.7m and other costs of operations falling from €11.2m to €8.1m.
Zeal did spend more on marketing, with costs up from €9.8m to €11.0m, though this helped grow customer numbers to 377,000 during the first half, up from 293,000 last year.
These overall savings, coupled with the increase in revenue, meant that Zeal was able to post earnings before interest, tax, depreciation and amortisation of €31.2m, up from €17.0m last year.
Statutory earnings before interest and tax also climbed from €16.4m to €21.3m, while net profit increased form €11.1m to €14.3m.
“Even though we still have a lot of work to do, we are well on our way to achieving reunification with Lotto24 and the transformation of our German core business into online lottery brokerage as planned,” Zeal’s chief financial officer, Jonas Mattsson, said.
“We are convinced that the combination of the two companies will provide the best path to sustainable growth for the Zeal Group and will lead to tangible added value for our customers, employees and shareholders.”