Zeal Network profits up 85% despite revenue slump
Operator posts EBIT of 20.7m but revenues are hit by "exceptionally high" prize pay-outs
Zeal Network this morning reported an 85% rise in profits for the nine-months ended 30 September despite revenues halving due to “exceptionally high” prize pay-outs.
The lottery operator, which is based in London but predominantly sells into mainland Europe, saw revenues tumble from 105.4m in 2014 to 51.9m this year.
But despite the dip in revenues, the firm was able to deliver an 85% increase in EBIT to 20.7m via reduced operating expenses and larger jackpots driving increased player engagement.
The firm said it had also been able to mitigate the high jackpot pay-outs through a hedging structure, which returned 38.3m during the nine-month period ended 30 September.
Zeal recently switched its measure for top line guidance from revenues to ‘total operating performance’ – which incorporates other income such as hedging payments – as a result of these types of jackpot wins.
Total operating performance dipped slightly (down 15%) to 91.9m however net profit rose a massive 645% to 8.2m.
“Zeal has achieved a robust profit increase in the first nine months of 2015, despite exceptionally high prize pay-outs,” Zeal Network CEO Dr. Helmut Becker, said.
“We are also gaining traction with new gaming product initiatives, launched earlier this year that are driving an increased revenue per customer,” he added.
The firm said its full-year guidance for operating performance was 130m with EBIT expected to come in at around 30m.