Zeal Network Reports Surge in Earnings, but Expenses Rise

The German internet lottery intermediary, Zeal Network, observed a surge in its earnings to €22.6 million in the initial three months of the year. However, expenditures also saw a slight uptick.

Zeal adjusted its business strategy, resulting in a rise in revenue during the first quarter. Income reached €22.6 million, marking an 18.9% increase compared to the same period in the previous year, expanding from €19 million in 2020 to €22.6 million. Zeal reported that €21.1 million of this total originated from its German operations, representing a 23.5% year-over-year increase, growing from €17 million in the first quarter of 2020 to €21.1 million.

However, Zeal’s revenue growth also led to higher expenses. Zeal added 156,000 new customers in its German operations during the first quarter, a decrease of 24.2% year-over-year. The company attributed the increase in customer acquisition costs, from €26.0 in the first quarter of 2020 to €33.48 this year, to heightened efforts to attract customers. Overall, marketing costs totaled €7.1 million, up 7.5% year-over-year this quarter, expanding from €6.6 million in 2020 to €7.1 million.

Zeal attributes the 64.2% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) this quarter, growing from €2.8 million to €4.6 million, to the revenue growth, coupled with the absence of any non-recurring expenses or income. German operations contributed €4.1 million to this total, more than double the amount in the first quarter of 2020.

Zeals performance has been adjusted after they ceased offering lottery wagering services. This marks the initial occasion they’ve contrasted their outcomes annually since they commenced operating a lottery brokerage.

This alteration in their business strategy transpired subsequent to their acquisition of the lottery brokerage firm Lotto24 in May 2019. Zeal initially endeavored to acquire Lotto24 in January 2019, following the declaration of their intentions in November 2018.

Zeal’s Chief Financial Officer, Jonas Mattson, stated they are still acclimating to the novel approach to conducting business.

“We’ve demonstrated over the preceding year that we can seize opportunities, accommodate change, and persist in modifying our operational methods,” remarked Mattsson.

“We’re persevering on this trajectory.”

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