Zeal enjoys rise in Q1 revenue as it adjusts to business model change

Revenue came to €22.6m, an 18.9% increase from €19.0m year on year. Zeal reported that €21.1m of this total was generated by operations in Germany, a rise of 23.5% from €17.0m in the first quarter of 2020.

However, Zeal’s revenue growth also led to an increase in expenses. Zeal gained 156,000 new customers in its German operations in Q1, a decrease of 24.2% year on year. The business said that the increase in acquisition costs per customer, from €26.0 in the first quarter of 2020 to €33.48 year on year, came as a result of an increased effort to attract customers. In total, marketing expenses, at €7.1m, rose 7.5% this quarter compared to €6.6m year on year.

Zeal considered the rise in revenue and the lack of non-recurring expenses or income as the reasons for the rise in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter of 64.2%, from €2.8m to €4.6m year on year. Operations in Germany amounted to €4.1m of the total amount, more than double compared to the first quarter of 2020.

Zeal saw adjustments in its results following its discontinuation of lottery betting services, though these results marked the first time that year-on-year comparisons were to the lottery brokerage business.

The business model change came after its merger with lottery broker company Lotto24, which it acquired in May 2019. Zeal first bid to acquire Lotto24 in January 2019, having announced its intention to do so in November 2018.

Zeal chief financial officer Jonas Mattson said the business was still adapting to the new business model.

“We already demonstrated in the past year that we are capable of exploiting market opportunities, adapting to dynamic environments and continuously fine-tuning our business model,” Mattsson said.

“We are consistently continuing along this path.”