Lottery growth drives Zeal in Q1 despite weaker jackpots

Zeal Network Achieves Robust Growth: Lottery Revenue Surges 41.3% in Q1

In the first quarter of the fiscal year, Zeal Network reported an impressive 42% year-on-year growth in revenue, totaling €51.1 million ($58.1 million). This remarkable increase can be primarily attributed to enhanced lottery performance, alongside significant gains in the company’s gaming division.

This figure surpasses the previous year’s €36.1 million, as detailed in Zeal’s latest Q1 financial announcement.

Chief Financial Officer Andrea Behrendt, who assumed her role in April, highlighted the strong lottery performance as a key driver of success, even amidst the absence of any major jackpot events during the quarter.

The average jackpot for prominent draws such as LOTTO 6aus49 and Eurojackpot did rise compared to Q1 of the previous year, although neither reached maximum jackpot thresholds. Despite this, both revenue and billings showed robust growth, with active customer numbers increasing by 13%.

“Our journey into the new year began with significant momentum, reflected in our strong performance,” stated Behrendt. “We take pride in the substantial increase in revenue and customer engagement, particularly with the absence of high-stakes jackpots.

“These results demonstrate the effectiveness of our strategic marketing investments and our initiatives to grow our customer base over the long run. We are confident in the growth potential of our core business within this currently underpenetrated market.”

Lottery Billings Soar to €264.7 Million

Diving deeper into the lottery segment, Zeal achieved a remarkable 41.3% boost in lottery revenue, amounting to €45.2 million.

Billings, which encompass all stakes—factoring in brokerage stakes and associated VAT—rose by 7.5%. Meanwhile, customer payments escalated by 9.5% to €215.4 million. However, the average monthly billings per user (ABPU) experienced a slight decline of 5%.

Notably, Zeal reported a staggering 133.1% increase in the average number of active monthly users (MAU), reaching 1.5 million. This surge is primarily attributed to customer base growth throughout 2024, reflecting positively in overall billings.

Significant Growth in Online Gaming

In parallel to the lottery sector’s rise, Zeal also experienced a substantial upswing in its gaming division. Quarterly revenue for games soared by 54.6% year-on-year, totaling €3.4 million.

Billings from gaming activities increased by 45.4% to €45.5 million, with customer payments surging 62% to €10.2 million and ABPU increasing by 22%. Additionally, the average MAU for the gaming segment was 19% higher than the previous year.

“We have seen promising developments in our B2B sector as well,” Zeal noted. “Strategic partnerships with esteemed providers such as Tipico and Gamomat are set to enhance our portfolio and expand our target demographics more swiftly moving forward.”

The company also recorded an additional €1.5 million in revenue from diversified operations, including its ONCE brand in Spain, marking a 5.4% year-on-year increase.

Profit Analysis Amid Increased Costs

Operational expenditures rose across several areas in Q1; however, revenue growth facilitated an impressive 88.3% increase in EBITDA, bringing this to €17.7 million.

Higher amortization and depreciation costs directly impacted financial results, yielding a pre-tax profit of €14 million—a remarkable surge of 102.9% year-on-year.

It’s essential to note that tax comparisons for the year reflect unique circumstances. Zeal faced an income tax obligation of €4.2 million this year, in contrast to a €14.2 million benefit in 2024, stemming from the Lotto24 squeeze-out. The previous year’s tax advantages arose from the recognition of deferred tax assets on losses carried forward after the squeeze-out request.

Consequently, the bottom line net profit for this year stood at €9.8 million, illustrating a 53.6% decline from €21.1 million reported in Q1 2024.

This detailed financial performance underscores Zeal’s dynamic position within the gaming industry, propelled by strategic initiatives and a commitment to expanding its customer base—setting the stage for continued growth in an evolving market.