ZEAL Has Undergone Strong Development Despite Global Uncertainties

• ZEAL publishes preliminary figures for the fiscal year 2022
• Ambitious growth objectives achieved in a challenging environment​
• Online market share expanded to ​around 41%​
• VAT case won, resulting in a high special dividend
• Outlook 2023: Continued business growth expected​

Hamburg, Germany (February 28, 2023) – ZEAL Network SE, the leading German online provider of lottery products, today published its preliminary figures for the fiscal year 2022. Despite ongoing global uncertainties, ZEAL has undergone strong development.

Improved jackpot situation influences transaction volume and revenue
In 2022, ZEAL took advantage of the improved jackpot situation for targeted new customer acquisition and, with 703 thousand registered new customers, acquired 29 per cent more new customers than in the previous year (2021: 544 thousand). Billings increased by 16 per cent to € 758.4 million (2021: € 656.5 million). Due to a higher-margin product mix, ZEAL’s revenues grew by 21 per cent to € 105.2 million (2021: € 86.8 million) and the company’s gross margin exceeded its prior-year level of 12.9 per cent by 0.7 percentage points (2021: 12.2 per cent). All of the above figures are based on preliminary calculations.

Profitability increased further
In order to expand its customer base in an efficient and targeted manner, ZEAL greatly expanded its own marketing activities in high jackpot phases. As a result, marketing expenses increased by € 11.8 million to € 34.1 million (2021: € 22.4 million) and were thus responsible for most of the increase in other operating expenses to € 57 million (2021: € 41.1 million). Thanks to the expansion of the business volume, ZEAL was nevertheless able to increase EBITDA by € 3.9 million. The company’s market share also increased to 41 per cent compared to 2021 (39 per cent).

License to broker lotteries in Germany renewed until 2029
In 2022, ZEAL reached an important milestone for LOTTO24 AG by obtaining the follow-up license for lottery brokerage in Germany. This is the first license for LOTTO24 AG under the new State Treaty on Gaming, which has been in force since July 1, 2021. The license is valid for seven years, until June 30, 2029.

VAT proceedings concluded in favour of ZEAL
In its decision of August 12, 2022, the German Federal Fiscal Court (Bundesfinanzhof) rejected the appeal of the Hanover North Tax Office against the decision of the Hanover Fiscal Court of November 2019 in favour of myLotto24 Ltd. in a legally binding decision. At the beginning of 2023, the tax office refunded the down payment of around € 54 million made by myLotto24 Limited. An additional repayment of the associated interest amount of € two million is still expected. The refund had no impact on ZEAL’s income statement as the corresponding receivable was already recognized in other assets.

Special dividend payment planned
At the Annual General Meeting on May 9, 2023, ZEAL will propose the payment of a dividend of € 3.60 per share (2021: € 2.10 per share), corresponding to distribution to shareholders of approximately € 78.0 million (2021: € 47.0 million). The dividend consists of a basic dividend of € 1.00 as well as a special dividend of € 2.60. The payment of the special dividend is a further step towards optimizing the Company’s capital structure.

Outlook 2023
In the financial year 2023, ZEAL plans to further expand its market leadership as an online provider of lottery products and to introduce new products, including online games under the license for virtual slot machine games the company applied for. Depending on the general conditions – and an average jackpot development – ZEAL anticipates billings in the range of € 800 million to € 830 million for the Germany segment. Moreover, ZEAL expects revenues in a range of € 110 million to € 120 million in the fiscal year 2023. EBITDA is expected to reach a range of € 30 million to € 35 million. Compared to the previous year, ZEAL plans to invest significantly more in the acquisition of new customers and expects marketing expenses of € 34 million to € 39 million.

“We are proud of our strong development despite the ongoing global uncertainty and the resilience in the lottery products these times,” says Jonas Mattsson, Chief Financial Officer of ZEAL Network SE. “The positive development of our business figures in almost all areas proves that we have sustainably invested in our own growth with our measures in 2022. In 2023, we will not only focus on further expanding our base business but also drive innovation to further extend our market leadership.”

SOURCE: ZEAL Network SE.