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Jumbo Interactive Delivers Strong FY22 Results and Announces On-Market Share Buy-Back of Up to $25 Million

August 29, 2022 | Lottery News

TOOWONG, Qld. (August 26, 2022) — Jumbo Interactive Limited (ASX:JIN) (Jumbo) today announced its results for the full year ended 30 June 2022 and an on-market share buy-back of up to $25 million.

Jumbo CEO and Founder Mike Veverka said “We are pleased with the strong growth achieved in FY22 off the back of an improved jackpot cycle. FY22 was a pivotal year for Jumbo as we build the foundations to successfully execute our global growth strategy. Lottery Retailing is exceptionally well positioned to benefit from the ongoing shift to digital and the new OzLotto game launched in May 2022, while the integration of Stride and StarVale will build scale in our Managed Services and SaaS segments globally.”

FY22 performance highlights

Strong double-digit growth reported across key performance metrics:

  • TTV up 36% to $659.9 million
  • Revenue up 25% to $104.3 million
  • Underlying EBITDA1 up 13% to $55.1 million
  • Underlying NPAT1 up 14% to $32.2 million
  • Underlying EPS1 up 13% to 5 cents per share.

The Board has declared a fully franked final dividend of 20.5 cents per share, taking the total FY22 dividend to 42.5 cents per share, up 16% on FY21. In addition, the Board has approved an on-market share buy-back of up to $25 million.

Lottery Retailing

 The domestic jackpot environment improved with 43 Powerball/OzLotto jackpots greater than or equal to $15 million in FY22, compared to 38 in FY21, with the average value of these jackpots up 28%. 2H22 benefitted from a $120 million Powerball jackpot in February 2022, the first jackpot greater than $100 million since September 2019. This however was followed by significantly lower jackpot activity in March and April 2022, with peak monthly Jackpots of $20 million, before increasing to $80 million and $60 million in May and June respectively.

Lottery Retailing delivered headline TTV growth of 26% and revenue growth of 21%. On an underlying basis, adjusting for the transfer of our Western Australia customers from Lottery Retailing to Software-as-a-Service (SaaS) in December 20202, underlying TTV and revenue growth were 32% and 27% respectively. The underlying revenue margin declined 0.8% mainly due to the product mix with a relatively higher proportion of Powerball ticket sales. Underlying EBITDA increased 5% to $30.1 million, reflecting an EBTIDA/revenue margin of 33.1% (FY21: 40.0%).

SaaS

 Jumbo licenses its Powered by Jumbo (PBJ) digital lottery platform to government and charity lottery operators in Australia and globally. Jumbo has an advantage through its dual role as a developer and client of our proprietary lottery software. Our experience using PBJ in our Lottery Retailing segment enables us to optimise the platform for both our clients and us.

On a reported basis, SaaS TTV increased by 60%. On an underlying basis, adjusting for the transfer of our Western Australia customers from Lottery Retailing to SaaS in December 20201, TTV growth was 39%. External revenue (excluding the revenue received from Lottery Retailing) was up 29% reflecting the growth in TTV and a softer revenue margin due to product mix. Underlying EBITDA increased 31% to $28.9 million, reflecting an EBTIDA/revenue margin of 67.8% (FY21: 68.3%).

Managed Services

Jumbo provides its digital lottery platform as well as effective lottery management services to charities and worthwhile causes looking to establish a lottery program or enhance an existing one. This segment predominantly reflects UK-based Gatherwell which was acquired in November 2019. On a constant currency basis, Gatherwell delivered a 31% and 24% increase in TTV and revenue respectively. EBITDA increased 3% to $0.7m, reflecting an EBITDA/revenue margin of 29.8% (FY21: 36.0%). The lower margin reflects the impact of increased investment in marketing and employees to underpin future growth.

On 1 June 2022, Jumbo completed the acquisition of Stride Management Corp. (Stride) in Canada, with a one-month performance contribution recorded in FY22. The acquisition of StarVale Group (StarVale) announced to the market on 27 January 2022, remains subject to UK Gambling Commission approval, which is anticipated by the end of Q1FY23.

FY22 Group financials

Group metrics

$m

Reported

FY21

Lottery- west adj.1 Underlying

FY21

Reported

FY22

Reported Variance

Underlying Variance

TTV

487.0

487.0 659.9 35.5%

35.5%

Revenue

83.3

(1.6) 81.7 104.3 25.1%

27.6%

Revenue margin

17.1%

(0.3%) 16.8% 15.8% (1.3ppt)

(1.0ppt)

Underlying operating costs2

(26.4)

(26.4) (35.2) 32.9%

33.2%

Underlying EBITDA2

48.9

(1.4) 47.5 55.1 12.6%

16.0%

Underlying EBITDA margin2

58.7%

(0.6%) 58.1% 52.9% (5.9ppts)

(5.3ppt)

Underlying NPAT2

28.3

(1.0)3 27.3 32.2 13.6%

17.8%

Underlying EPS2

45.4

(1.6) 43.8 51.5 13.4%

17.6%

 Group revenue increased 28% on an underlying basis, underpinned by strong double-digit growth across all operating segments. Underlying EBITDA increased 16%, however, the underlying margin was impacted by the step up in the service fee paid to The Lottery Corporation and previously flagged increased investment in the business to support strategic growth.

Dividend and Capital management

 The ongoing positive cash generation of the business and strength of our balance sheet enabled the Board to declare a final, fully franked dividend of 20.5 cents per share, taking the total dividend for the year to 42.5 cents per share. This translates to a dividend payout ratio of 85.6% of statutory NPAT. The record and payment date for the dividend is 2 September 2022 and 23 September 2022 respectively.

The Board continuously reviews and assesses Jumbo’s capital management framework. As announced on 27 January 2022, Jumbo successfully secured a new $50 million senior debt facility for up to five years with an initial tranche of $30 million to be used for the acquisition of StarVale and a further $20 million available for future strategic growth.

The Board resolved to adjust its targeted dividend payout ratio to a range of 65% to 85% of statutory NPAT following the completion of the StarVale acquisition. The revised dividend policy, effective from FY23, will enhance Jumbo’s flexibility to repay debt while maintaining a satisfactory dividend yield for shareholders.

In addition, and as part of Jumbo’s proactive approach to capital management, the Board approved an on-market share buy-back of up to $25 million. The on-market share buy-back will be conducted on an opportunistic basis from September 2022. The timing and number of shares to be purchased will depend on the prevailing share price and alternative capital deployment opportunities. Please refer to the accompanying Appendix 3C for further information relating to the on-market share buy-back. Jumbo reserves the right to vary, suspend or terminate the share buy-back program at any time.

Jumbo CEO and Founder Mike Veverka said “The strength of our balance sheet, strong cash generation profile of our business, debt headroom and flexibility from our revised dividend policy enables us to continue to invest in the business, provides capacity for further M&A and organic growth, and delivers shareholder returns through dividends and a share buy-back.”

FY23 Outlook

 Jumbo has recently completed its annual planning process and expects the FY23 results will contain the following features:

Lottery Retailing:

  • Cost of sales to be impacted by the increase in The Lottery Corporation service fee1 to 5% of the subscription price of tickets purchased (2.5% in FY22)
  • Marketing costs are expected to be in the range of 5% to 2.0% of Lottery Retailing TTV (FY22: 1.7%)

Group (excluding the impact of the Stride and StarVale2 acquisitions):

  • Underlying operating cost growth excluding Lottery Retailing marketing costs (see above) is anticipated to moderate with Jumbo targeting an increase of 20%-22% (FY22: 33%)
  • The underlying EBITDA margin is anticipated to be within a range of 48%-50% (FY22: 53%)

Jackpots remain a significant driver of Lottery Retailing ticket sales (and revenue) and in any given year there is uncertainty as to the exact number and aggregate value of large jackpots.

Annual General Meeting

 For the purposes of ASX Listing Rule 3.13.1, Jumbo advises that:

  • The Annual General Meeting will be held on Thursday 10 November 2022 at 00 am (AEST) from its Brisbane Office and as a hybrid meeting; and
  • In accordance with Rule 40.13(a) of the constitution of Jumbo Interactive Limited, the closing date for the receipt of director nominations is Thursday 29 September 2022, being at least 30 business days before the Annual General Meeting.

Authorised for release by the Board of Directors. For further information contact:

Investor Relations – Jatin Khosla

+61 428 346 792

jatink@jumbointeractive.com

Media – Mike Veverka (CEO & Founder)

+61 7 3831 3705

media@jumbointeractive.com

About Jumbo Interactive

Jumbo is Australia’s leading dedicated digital lottery company, making lotteries easier by offering its proprietary lottery software platform and lottery management expertise to the government and charity lottery sectors in Australia and globally, and by retailing lottery tickets in Australia and the South Pacific via ozlotteries.com.

Jumbo was founded in Brisbane in 1995, listed on the ASX in 1999, and has ~190 employees creating engaging and entertaining lottery experiences for its global player base.

SOURCE: Jumbo Interactive.

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