Finance

Jumbo Interactive sees H1 profit fall despite revenue and sales growth

| By Robert Fletcher
Australian lottery retailer Jumbo Interactive has reported a year-on-year decline in comprehensive profit for the first half of its financial year, despite an increase in sales helping drive revenue up in the period.

Revenue for the six months through to 31 December 2020 totalled AUS$40.9m (£22.9m/€26.6m/US$32.4m), up 8.8% from $37.6m in the same period in 2019.

Breaking down its revenue performance, lottery retailing was by fair Jumbo’s main source of income, with revenue in this business segment amounting to $37.8m, up 2.7% on the previous year.

Revenue from the software-as-a-service (SaaS) segment also rocketed 200.4% to $1.6m, due to the scaling up of some customers that became fully operational in the period.

Managed services revenue was also up by 655.1% to $1.5m, helped by a full six months of contributions from the Gatherwell UK lottery business, compared to just one month in the comparable period in 2019.

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 25.6% to $47.5m as a result of growth within the SaaS and managed services segments.

“For the first time, we are reporting our results in three segments, reflecting the evolving strength and diversity of Jumbo, as we continue to leverage our superior lottery management capabilities and technology to reshape our business, making lotteries easier for our partners and customers, and underpinning our continued growth, both domestically and offshore,” Jumbo’s chief executive and executive director Mike Veverka said.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the half was up by 0.9% year-on-year to $23.1m. Lottery retailing EBITDA reached $15.4m, SaaS $10.4m, managed services $464,000 and other revenue $187,000, but Jumbo also reported a corporate loss of $3.4m.

Cost of sales in H1 was up by 45.2% to $4.1m, mainly due to the new service fee under the reseller deal agreed with Tabcorp in August 2020. Jumbo also noted a 15.5% increase in operating costs to $18.1m, primarily as a result of higher administrative costs, which climbed 36.6% to $15.3m.

This left a profit before tax of $19.1m, down 7.8% from $20.7m at the same point in 2019. Jumbo paid $5.9m in tax, resulting in a profit of $13.2m, down 8.3% year-on-year.

Jumbo also accounted for a negative impact of $109,000 as a result of foreign currency translations, meaning it ended the half with a profit of $13.1m, a drop of 9.0% on the corresponding period in 2019.

“We’re delighted with the group results which show our new business segments helping to lift results in periods when the Jackpot cycles are low,” Veverka said.

In terms of other key highlights for Jumbo during the first half, the retailer in November agreed a deal to supply the Western Australia’s Lotterywest with its online software platform and related services – its first agreement with a government-owned lottery.

Also in November, Jumbo secured a remote gambling software operating licence from the British Gambling Commission, while the retailer in September named veteran Australian executive Susan Forrester as chair of its board of directors.

Other business activity saw Tabcorp in September agree to sell its 11.6% stake in Jumbo Interactive for $97.8m.

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