ZEAL continues to grow faster than expected in the third quarter of 2020 and raises its full-year guidance again

(Hamburg, 15 October 2020) According to preliminary calculations, ZEAL Network SE (Lotto24.de, Tipp24.com), Germany's leading online provider of state-licensed lotteries, has reached the full-year guidance for new registered customers, already raised in July 2020, after the first nine months of 2020 and is again raising its guidance for the fiscal year 2020. Supported, among other things, by the good jackpot development of the German lottery Lotto 6aus49 in the third quarter of 2020, the continued high marketing investments led to a growth in billings, revenue and new registered customers that exceeded expectations.

Due to the increased marketing investments of EUR 25.3 million (2019: EUR 17.9 million) to acquire new customers, ZEAL was able to gain 787 thousand new registered customers in the German segment in the first nine months of 2020 alone, with a preliminary CPL of EUR 27.58 (2019: no German segment).

According to preliminary calculations, billings increased by around 42% to EUR 471.8 million in the first nine months of 2020 (2019: EUR 332.6 million). The Germany segment contributed a preliminary EUR 470.9 million to this. In a year-on-year comparison, it should be noted that ZEAL 2019 offered additional products in the secondary lottery business which were discontinued in October 2019 due to the business model change. Moreover, Lotto24's online lottery brokerage business has only been part of ZEAL Group since 14 May 2019. The Lotto24 billings up to 14 May 2019 were therefore not included in the previous year's figures.

Due to the expected revenue dis-synergies in connection with the business model change revenue decreased by a preliminary 31% to EUR 63.9 million (2019: EUR 93.2 million). Similar to billings, revenue in the first nine months of 2019 still included the secondary lottery business, but not Lotto24's online lottery brokerage business up to 14 May 2019. Revenue in the Germany segment amounted to preliminary EUR 57.8 million in the first nine months of 2020.

Supported by the market launch of the social lottery freiheit+ in March 2020 and the positive development of lottery clubs, the gross margin in the Germany segment was a provisional 12.3% in the first nine months of 2020 (2019: no Germany segment).

With preliminary EUR 6.9 million the adjusted EBITDA in the ZEAL Group was also below the previous year's level (2019: EUR 28.3 million) due to the revenue dis-synergies associated with the business model change.

In fiscal year 2020, ZEAL continues to plan to expand its market leadership as an online provider of state lottery products with the Lotto24 and Tipp24 brands. Based on the strong nine-month figures and access to proven, more cost-effective marketing channels, the Company now expects the number of new registered customers in the Germany segment to be around 900 thousand in 2020 (previously: around 800 thousand) with a lower CPL than in the previous year. In addition, ZEAL now anticipates billings of between EUR 610 million and EUR 630 million (previously: between EUR 590 million and EUR 610 million), revenue of between EUR 80 million and EUR 83 million (previously: between EUR 76 million and EUR 79 million) and an unchanged gross margin in the Germany segment of slightly above 12% in fiscal year 2020. Depending on the general conditions - in particular the continuation of the high marketing investments to acquire new customers within the attractive market environment, the jackpot development and the implementation of the synergy effects - the Company now forecasts the adjusted EBITDA to be between EUR 8 million and EUR 10 million (previously: between EUR 7 million and EUR 10 million).

The quarterly statement as of 30 September 2020 will be published on 12 November 2020.

Explanations of the key financial figures used can be found in the Annual Report 2019 on the Company's website (available at https://www.zealnetwork.de/en/investors/publications/ ).

Contact:

Frank Hoffmann, CEFA
Investor Relations

ZEAL
Straßenbahnring 11
20251 Hamburg
T +49 (0) 40 8090360-42
[email protected]