In an economy marked by fluctuations and heightened operational costs, the lottery group Zeal has reported a notable 10.4% increase in revenue, amounting to €116.1m for the year ending 31 December 2023. This surge, denominated in various currencies—€99.2m and $126.2m—corresponds to a robust annual performance. Billings, which encompass stakes from players including brokerage stakes as well as the associated VAT and net bets, also witnessed an upward trend by 11.2%.
The year was punctuated by the ambitious launch of an online games offering by Zeal. Zeal, through its Lotto24 B2C subsidiary and companion brand Tipp24, made a strategic move to roll out games in Germany in June 2023. It kick-started this venture with a select assortment of games and proliferated its portfolio as the year progressed. This digital initiation is confirmed to have bolstered business by contributing an additional €3.0m to the year’s revenue.
Zeal’s foundational core, the lotteries business, also experienced a surge in revenue—up by 7.6% to €105.7m—showing buoyancy in this segment.
Against this background of revenue growth, it is notable that Zeal reported a decrease in net profit compared to the previous year. The dip was largely attributed to increased costs permeating the company’s operations, notably in marketing and personnel. Despite the lagging bottom-line figures, Zeal CEO Helmut Becker remarked on the potential for continued expansion, buoyed by the success of both the lotteries segment and the recent launch of online gaming.
Becker encapsulated the company’s achievements by stating, “In 2023, we further expanded our position as market leader. We’re benefiting from our strong brands. Lotto24, for example, has evolved into a winner’s factory, churning out more record winners last year than any other lottery provider in Germany. Our strong top and bottom-line results and our market share growth to 41.4%, underscore our strategic direction. Hence, we step into the future with resolve and optimism.”
To bolster its market position, Zeal heightened its investments throughout 2023, which correlated to an overall increase in costs. Staff related expenses saw a sharp rise of 19.6%, coming in at $22.6m, while other operating costs escalated by 8.8% to €62.0m. Marketing outlays were notably higher, up by 5.6% to €36.0m. Furthermore, both direct and indirect operating expenses increased by 12.2% to €12.0m and by 14.8% to €14.0m, respectively.
Additional financial burdens included €9.3m allocated for amortization and depreciation, compounded by $1.3m in financial costs. Consequently, the company’s pre-tax profit reduced by 2.2% to $23.3m from $22.8m in the preceding year.
After tax deductions amounting to €8.6m, Zeal’s net profit stood at €13.7m, which translates to a stark 17.5% decline from €16.6m in the prior year. However, the company had some positive financial indicators; EBITDA (earnings before interest, taxes, depreciation, and amortization) saw an uptick of 3.8%, concluding at €32.9m.
Looking ahead to the new year, Zeal has laid out vigorous growth plans, chiefly aimed at accelerating the burgeoning games segment and introducing novel products in the charity lottery niche. This ambition is projected to result in an uptick in revenue. For the year 2024, Zeal projects its revenue to land between €140.0m and €150.0m, which would mark approximately a 24.9% increase from the 2023 figures. EBITDA expectations are cast between €38.0m and €42.0m, situating the midpoint at €40.0m, a promising 21.6% above the total for 2023.
Summing up the financial progress, Zeal’s chief financial officer, Sebastian Bielski, expressed his optimism saying, “The strong growth in our billings and revenue signifies our success in captivating our customers with an attractive and innovative range of products. The expansion of our customer base is a testament to the targeted refinement of our marketing strategies. Moreover, our foray into the online games sector exemplifies our capability to cultivate new business verticals adeptly.”
Unfolding parallel to the financial report is the news of Zeal’s plan to acquire the residual shares in Lotto24. Already holding 94.86% of the subsidiary’s shares, Zeal is on the verge of purchasing an additional 0.59% stake, elevating its total to 95.45%. Post transactions, Zeal aims to secure approval to assimilate the shares of remaining minority shareholders into its fold by offering cash compensation for their stakes.
