ZEAL Network's 2024 Earnings: A Bullish Surprise

In the world of online lottery brokerage, ZEAL Network has emerged as a standout performer, and its 2024 earnings report is a testament to its meteoric rise. The company's financial results for the fiscal year 2024 have not only exceeded expectations but have also set new benchmarks for the industry. Let's dive into the details and understand what makes ZEAL Network's performance so impressive.



A Record-Breaking Year

ZEAL Network reported a staggering 62% increase in revenue, reaching €188.2 million for the fiscal year 2024. This growth is a significant leap from the previous year's €116.1 million, and it surpasses consensus expectations by 4%. The company's EBITDA also saw an 88% increase, reaching €61.9 million, which is an 8% beat over consensus estimates. These figures are not just impressive; they are indicative of a company that is not only growing but also becoming more profitable.

The Drivers of Growth

So, what's behind this remarkable performance? Several factors have contributed to ZEAL Network's success:

1. Customer Acquisition: The company reported a 28% increase in customer acquisition, reaching a milestone of one million new customers per year for the first time. This growth was supported by enhanced customer activity and intensified marketing efforts.

2. Lottery Billings: Lottery billings rose by 28% to €1.1 billion, driven by a favorable jackpot year and successful marketing measures. The average number of active customers increased by 25%, reaching 1,436 thousand.

3. Market Share Expansion: ZEAL Network's market share in the online lottery sector increased from 41.4% to 43.8%, indicating that the company is not only growing but also capturing a larger share of the market.

4. Strategic Changes: The company's strategic changes in ticket pricing and product mix have also contributed to its growth. The gross margin rose by 3.1 percentage points to 15.6%, thanks to a price increase in ticket fees in June 2024 and a change in the product mix.

Sustainability of Growth

While ZEAL Network's performance is impressive, the question remains: can this growth be sustained? Several factors suggest that it can:

1. Market Potential: The online lottery market in Germany is still underpenetrated, with only 23% market share. This leaves room for further growth.

2. Innovation: ZEAL Network's commitment to innovation, as seen in the launch of the Traumhausverlosung (Dream House Raffle), suggests that the company is proactive in exploring new revenue streams.

3. Efficiency: The company's efficient marketing measures have led to a 23% decrease in the cost per lead (CPL) to €35.16, making customer acquisition more efficient.

The Road Ahead

ZEAL Network's guidance for 2025 suggests continued revenue growth and a strong EBITDA outlook. The company's dividend for the 2024 financial year is set at €2.40 per share, consisting of an ordinary dividend of €1.30 and a special dividend of €1.10. This means a total distribution to shareholders of around €50.6 million, a significant increase from the previous year's €23.8 million.

Conclusion

ZEAL Network's 2024 earnings report is a bullish surprise that underscores the company's strong financial performance and growth potential. With a combination of customer acquisition, market share expansion, and strategic changes, ZEAL Network is well-positioned to continue its growth trajectory. Investors should take note of this impressive performance and consider the potential of this company in the online lottery brokerage sector.