ZEAL with good start to fiscal year 2021

• Increased billings and revenue
• Strong gross margin achieved
• Profitability significantly improved

(Hamburg, 7 May 2021) Although the coronavirus continues to hold the world firmly in its grip, the ZEAL Group has made a good start to its fiscal year 2021 thanks to the stability of the business model - based on the loyalty of the customers and the unbroken popularity of online lotteries.

Increased billings and revenue, strong gross margin achieved

In the first quarter of 2021, billings rose by 17% to EUR 163.3¹ million (2020: EUR 140.0 million), of which the Germany segment accounted for almost the entire amount at EUR 163.3 million (2020: EUR 139.7 million). Revenue increased by as much as 19% to EUR 22.6 million (2020: EUR 19.0 million), of which EUR 21.1 million was attributable to the Germany segment (2020: EUR 17.0 million). At 12.7%, the gross margin in the Germany segment was above the prior-year level (2020: 12.1%).

The market environment for lotteries in Germany during the first quarter of 2021 was comparatively weak: at just EUR 5.7 million, the average jackpot of the German lottery 'LOTTO 6aus49' was even lower than in the previous year (2020: EUR 7.3 million) and failed to exceed the EUR 20 million mark even once (2020: once). At EUR 35.0 million, the average jackpot of the European lottery 'Eurojackpot' was also well below the prior-year figure (2020: EUR 54.2 million) and reached the EUR 90 million mark just once (2020: once).

Despite this market environment, the Company gained 156 thousand new registered customers in the Germany segment (2020: 206 thousand). The increase in acquisition costs per new registered customer (cost per lead, CPL) of EUR 33.48 (2020: EUR 26.00) was also a consequence of the enhanced marketing strategy: even though customer acquisition is naturally more difficult in low jackpot phases, such as the first quarter of 2021, correspondingly higher CPLs are justified by the fact that it is precisely those lottery players won during these periods who generally exhibit higher long-term activity and thus a better customer lifetime value (CLV). As a result, the payback periods of new customers are only slightly longer. At EUR 7.1 million, total marketing expenses in the first quarter of 2021 were above the prior-year level (2020: EUR 6.6 million).

Profitability significantly improved

Due to the positive development of revenue, adjusted EBITDA rose to EUR 4.6 million (2020: EUR 2.8 million) - there were no non-recurring expenses or income. The Germany segment accounted for EUR 4.1 million of this amount (2020: EUR 1.9 million). EBIT and net profit of EUR 2.4 million and EUR 2.5 million, respectively, were also well above the prior-year figures (2020: EUR 0.0 million and EUR 0.1 million, respectively).

¹ For contractual reasons, the billings of the ONCE business in Spain are not included in this total.

"We are pleased that, following the LOTTO24 takeover, the business model change and the organisational adjustments, we will again be able to publish truly comparable figures in the current and previous reporting periods with the first quarter of 2021", says Jonas Mattsson, CFO of ZEAL Network SE. "In addition, 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. We are consistently continuing along this path."

Guidance confirmed

For the fiscal year 2021, ZEAL therefore continues to plan the expansion of its market leadership as an online provider of state lottery and other permitted lottery products. Depending on the general conditions, in particular the jackpot development, the Company still expects billings of at least EUR 700 million for the Germany segment. Following exceptionally strong jackpots in the previous year, ZEAL has assumed an average jackpot development, resulting in a lower growth rate than in the previous year. Moreover, the Company continues to expect revenue of at least EUR 95 million in fiscal year 2021. With similarly high marketing investments as in the previous year of around EUR 32 million, adjusted EBITDA is still expected to reach at least EUR 20 million.

Selected financial key figures as of 31 March 2021:

About ZEAL Network SE: ZEAL Network SE, Germany's leading online provider of lottery products, is a Hamburg based e-commerce Group which mainly brokers customers' tickets to the state lottery companies through the brands lotto24.de and tipp24.com, for which it receives a commission. The offerings include among others 'LOTTO 6aus49', 'Spiel 77', 'Super 6', 'EuroJackpot', 'GlücksSpirale', lotto clubs, 'Keno', the 'Deutsche Fernsehlotterie' and 'freiheit+'. Founded in Germany in 1999, it was initially set up as a lottery broker. In 2005, it was floated on the Frankfurt Stock Exchange (Prime Standard) and became one of the most successful initial public offerings (IPOs) in Germany at the time. In 2009, the Group changed its focus from lottery brokerage to the secondary lottery business. It moved its registered office to London and was renamed as ZEAL Network SE in November 2014. In May 2019, ZEAL completed the takeover of LOTTO24 AG, returned its Tipp24 secondary lottery to the German brokerage business in October 2019 and relocated its registered office back to Germany in the same month.

Contact:
Frank Hoffmann
Investor Relations
T: +49 (0)40 809036042
frank.hoffmann@zealnetwork.de