ZEAL continued to grow in the first nine months despite a weaker jackpot situation

• Increased billings and revenue despite low jackpots
• Profitability significantly improved
• Successful delisting of LOTTO24 AG
• Guidance adjusted

(Hamburg, 11 November 2021) The business of ZEAL Network SE (lotto24.de, tipp24.de), Germany's leading online provider of lottery products, achieved further growth in the first nine months of 2021 thanks to the stability of the business model, with a much weaker jackpot development than in the same period last year.

Increased billings, stable gross margin at previous year's level

In the first nine month of 2021, billings of the ZEAL Group rose by 5% to EUR 493.2¹ million (2020: EUR 471.8 million), of which the Germany segment accounted for almost the entire amount (2020: EUR 470.9 million). Revenue increased by 1% to EUR 65.1 million (2020: EUR 64.5² million), of which EUR 61.5 million was attributable to the Germany segment (2020: EUR 58.4 million). At 12.2%³, the gross margin in the Germany segment was thus stable compared to the prior-year figure (2020: 12.3%).

The market environment for lotteries in Germany during the first nine months of 2021 was comparatively weak: the jackpot of the European lottery 'Eurojackpot' only reached the EUR 90 million mark three times (2020: six times), while the mandatory payout mark for the German lottery 'LOTTO 6aus49', set at EUR 45 million since 23 September 2020, was not reached at all (2020: three times). Low jackpots have a negative effect on Billings, gross margin and new customer acquisition.

Despite this market environment, the Company gained 446 thousand new registered customers in the Germany segment (2020: 787 thousand) and the acquisition costs per new registered customer (cost per lead, CPL) of EUR 27.57 (2020: EUR 27.58) were maintained at the previous year's level. At EUR 18.6 million, marketing expenses in the first nine month of 2021 were below the prior-year level (2020: EUR 25.3 million) as a result of the significantly weaker jackpot development.

Profitability significantly improved

Personnel expenses and other operating expenses of EUR 14.5 million and EUR 33.2 million, respectively, were also well below the corresponding prior-year figures (2020: EUR 16.6 million and EUR 43.0 million). As a result of adjusting marketing expenses to the jackpot environment, ZEAL significantly improved the profitability: for example, adjusted EBITDA for the first nine months of 2021 rose to EUR 17.6 million (2020: EUR 6.9 million) The Germany segment accounted for EUR 16.6 million of this amount (2020: EUR 5.2 million). EBIT and net profit of EUR 11.1 million and EUR 7.3 million, respectively, were also well above the prior-year figures (2020: EUR 2.9 million and EUR 6.6 million).

¹ For contractual reasons, the billings of our ONCE business in Spain are not included in this total.
² As of the fiscal year 2021, income from passing on costs in the course of the charity lottery 'freiheit+' is disclosed as revenue. Revenue in the first nine months of 2020 has been adjusted accordingly.
³ As the Spanish ONCE business is not included in billings but only in revenue, the margin trend is better reflected by the Germany segment than at Group level.

"The fact that we have managed to continue to grow with a significantly weaker jackpot development compared to the previous year at the same time significantly improve the profitability makes us proud. It furthermore demonstrates that we have taken the right measures by adjusting marketing investments and implementing strong cost discipline to match the market reality" says Jonas Mattsson, CFO of ZEAL Network SE. "The scalability of our business model will also help us in the future to take advantage of market opportunities, adapt to the dynamic environment and continuously optimise."

Delisting of LOTTO24 AG

On 21 July 2021, ZEAL decided to make an offer to the shareholders of its subsidiary LOTTO24 AG to buy all shares in LOTTO24 AG not directly held by ZEAL Network SE for a cash consideration of EUR 380.97 per LOTTO24 share. The reason for this purchase offer was to enable LOTTO24 AG to apply for a delisting of the LOTTO24 shares. The offer acceptance period ran from 16 August 2021 to 13 September 2021. The offer was accepted for a total of 22,834 LOTTO24 shares (corresponding to 1.42% of share capital). By the close of 13 September 2021, the stock exchange listing of the LOTTO24 shares was terminated. Following settlement of the offer on 23 September 2021, ZEAL holds now 1,527,520 LOTTO24 shares, corresponding to around 94.9% of LOTTO24 AG's share capital.

Guidance adjusted

Following a continued weak jackpot development in the third quarter, ZEAL reduces its 2021 guidance for billings and revenues but increases it's EBITDA guidance due to cost savings. Depending on the general conditions - in particular the further jackpot development - the company now expects for the financial year 2021 a transaction volume of around EUR 650 million (previously: at least EUR 700 million) in the Germany segment. In addition, the company now assumes that revenue will amount to around EUR 86 million (previously: at least EUR 95 million). ZEAL now expects an adjusted EBITDA of around EUR 25 million (previously: at least EUR 20 million).

Selected financial key figures as of 30 Septemeber 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.de, 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:
ZEAL Network SE
Sebastian Blohm
Public Relations
T: +49 (0)40 809036038
[email protected]