Zeal Network Reports €11.4 Million Net Profit in 2021

For the 2021 financial period, Zeal Network, a German lottery provider, realized a net profit of €11.4 million (£9.5 million/$12.5 million). This gain was primarily driven by substantial reductions in operational expenditures throughout the year.

The company’s income, including lottery insurance earnings, reached €86.8 million in the twelve months concluding December 31, 2021. This figure represents a slight decrease from €87 million in the preceding fiscal period.

Zeal indicated that its core German operations contributed the majority of revenue, accounting for €78.5 million of the total. The remaining €4.9 million originated from other operations.

The company also disclosed that the total group stake volume (encompassing wagers from all patrons) increased by 0.6% year-over-year to €656.5 million. However, Zeal noted that lottery payouts were “less robust” compared to the prior year.

Zeal emphasized several key accomplishments in 2021, including extending an offer to acquire the remaining shares of Lotto24. This move would result in Zeal fully owning the online lottery brokerage firm that it spun off in 2012.

Zeal currently holds 93% ownership of Lotto24. The agreement necessitates Lotto24 to delist its remaining shares from the Frankfurt Stock Exchange to facilitate Zeal’s acquisition.

Following the agreement on September 23, 2021, Zeal held 1,527,520 shares of Lotto24, which represented roughly 94.9% of Lotto24’s total shares.

Zeal also made changes to its leadership team, appointing Paul Dingwitz as the Chief Technology Officer and Sönke Martens as the Chief Operating Officer.

In addition, Zeal reduced costs in various areas, such as decreased marketing spending for specific lottery games due to lower lottery payouts. Zeal explained that this limited market opportunities, leading to the reduction in spending.

As a result, total operating expenses declined by 23.0%, with personnel costs down by 12.9%, marketing costs down by 27.0%, direct operating costs down by 11.6%, and indirect operating costs down by 30.8%.

This resulted in an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increase of 117.6% compared to the previous year, reaching €27.7 million. After including €8.7 million in depreciation and amortization expenses, EBIT (earnings before interest and taxes) reached €19 million, representing a 254.3% increase compared to €5.4 million in 2020.

Zeal also reported €2.1 million in financial expenses and €0.3 million in equity losses from associates, resulting in a pre-tax profit of €16.7 million.

The company paid €5.3 million in income taxes, meaning it achieved a net profit of €11.4 million at the end of the fiscal year, a 44.5% increase compared to 2020.

“In 2021, we showed that we can succeed even in a difficult market environment,” said Jonas Mattsson, CFO of Zeal.

Enthusiasm is anticipating a robust 2022, forecasting revenue of at least €105 million, a 21% upswing from 2021. They also anticipate adjusted EBITDA to expand by at least 6% to €30 million.

“We are assured in our capacity to sustain Zeal’s prosperous growth in the future,” remarked Helmut Becker, Chief Executive Officer of Zeal.

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