ZEAL Network SE Management Presentation - March 2021 - QUARTERLY STATEMENT 1 January - 31 March 2020
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March 2021
ZEAL Network SE
Management Presentation
QUARTERLY STATEMENT
1 January – 31 March 2020
September 2016, Management Presentation
Content 1. Why invest in ZEAL 2. Company structure 3. Business model 4. Market potential 5. Regulation 6. Current development 7. Guidance 2020 + dividend policy 8. Appendix
Five reasons to invest in ZEAL
• No. 1 in online lotteries in Germany
• Unique, cash generating business model
• Outstanding customer loyalty
• High growth opportunities in an underpenetrated market
• Attractive dividend policy
3
Company structure
ZEAL Group with strong Germany segment
Lottery broker
ONCE
Lottery partnerships/ventures
State lotteries/charities
External investments/
German Lottery broker Internal incubation
Leading German online provider of
state licensed lottery products
5
Business model
Unique lottery brokerage business model
Customers Lottery operators 1)
Billings Remitted Stakes
Commissions
Prize money Prize money
✓Established products
✓No jackpot risk
1) 16 state lottery operators from German Association of State Lottery Companies (»Deutscher Lotto- und Totoblock, DLTB«)
7
Strong customer value proposition
• Superior user experience
– Available anywhere anytime (24/7)
– Secure - no risk of losing the ticket
– Automatic price notification and price collections
– Strong web, mobile and apps experiences
– Data driven recommendations and CRM
• Best product portfolio
• Trusted brands
• Servicing all of Germany
8
Customers are very loyal and generate high long-term value
Billings per customer cohort in € (Lotto24 + Tipp24, quarterly) Billings in €
The peaks representing high jackpots and corresponding
higher active user engagements.
2013 2014 2015 2016 2017 2018 2019 2020 2021
9Market potential
Promising long-term potential
Medium to long-term: Target: ZEAL’s
50% Online penetration Market share ~50% Long-term potential
Billings Billings Billings
~€9bn* >€4bn >€2bn
* Source: Total German lottery market volume of €9.0bn in 2020A as per Goldmedia, including other lotteries such as Class Lotteries, Aktion Mensch and Deutsche Fernsehlotterie
11Online market shares show strong growth momentum
Online penetration by industries Online lottery penetration by countries (2019)
Online Music (2020) 74% 63%
Online Banking (2019) 61% 46%
Additional growth potential
Online Holiday (2019) 58% 30%
Ø 64% Ø 46%
Online Lotto (2019) 14% 14%
Source: statista, VIR Daten und Fakten 2020, press release BVMI, German Association of State Lottery Source: La Fleur´s 2020 European Lottery Abstract (based on 2019 numbers)
Companies (»Deutscher Lotto- und Totoblock, DLTB«), German Lottery Association (»Deutscher Lottoverband,
DLV«)
12Great market opportunity
Customers Billings
51% 3) 51% 3)
can imagine to can imagine to
play online play online
70.2m €4.4bn
29.7m 15.1m €9.0bn2)
adults1)
potential online
lottery €1.0 bn2)
customers billings
players1)
Adults (>18 years) in Germany Total lottery market in Germany 2018
Adults that play lotto occasionally or regularly 14% online penetration 2019
Potential customers in Germany Online market potential in Germany
1) According to IfD Allensbach © Statista 2019, »Anzahl der Personen in Deutschland, die Lotto oder Toto spielen, nach Häufigkeit von 2015 bis 2019 (in Millionen)«
2) According to According to Goldmedia Glücksspielmarkt Deutschland 2020
3) According to own Brand Tracking November/December 2019
13Favourable competitive landscape
High 16 federal states
DLTB
Financial Power/
Access to Capital
Lottoland
Secondary lottery
Other private online brokers
Low
Low Product/Online High
Expertise
14Regulation
New German state treaty on games of chance (GlüStV) to come
• Valid until 30 June 2021
Current • No online casino and poker games
GlüStV
2012
• No expiry date (can be terminated no sooner than 2028)
• Includes a permit model for online games, sports betting,
online poker and a license model for online casino
New
GlüStV
• Requirement to strictly separate gaming formats on different
2021 websites will be abolished
• Lotto24 broker license valid until June 2022
Broker • Limitation of new permit still open (5 or 7 years?)
License ➢ No significant impact on our business model
16Price increase of Lotto 6aus49 from 23 September 2020
• No payout after the 13th draw anymore but on reaching the
€45 million mark
• Price per field increases from €1.00 to €1.20
• Additional increase of €0.10 at Tipp24.com combined with an
own prize draw one time a month
➢ More attractive product due to rising stakes and faster growing
jackpots that should also trigger a long-term positive revenue effect
17Guidance 2020 + dividend policy
Guidance 2020 raised again
Comparative figures for 2019 are difficult to compare with those forecast for 2020 due to the Lotto24 takeover in May
2019 and the business model change from a secondary lottery to an online lottery broker in Germany in October 2019.
2020 2020 2019 1)
NEW OLD Actual
Billings (in €m) 610-630 590-610 466.7
Revenue (in €m) 80-83 76-79 113.5
Adjusted EBITDA (in €m) 8-10 7-10 29.4
Slightly above Slightly above
Gross margin (Germany segment, in %) 24.3
12 12
Lower than Lower than
CPL (Germany segment, in €) 32.50
previous year previous year
New registered customers
Around 900 Around 800 274
(Germany segment, in thousand) 2)
1) Including Lotto24 since 14 May 2019, secondary lottery business up to 15 October 2019 and Tipp24 brokerage business beginning with 15 October 2019.
2) Related to the Germany business of the ZEAL Group. 2019: incl. Lotto24 since 14 May 2019 and Tipp24 only since the business model change on 15 October 2019.
19
September 2016, Management PresentationDividend policy reiterated
• Based on the continuing positive liquidity situation of the ZEAL Group in 2019
and the expected increasing profitability
• €17.6 million paid out in dividends to shareholders in 2020 (2018: €8.4 million)
• Corresponds to a dividend of €0.80 per share for 2019 (2018: €1.00)
• Intention to increase the dividend annually – with the aim of reaching €1.00 per
share in 2022 (depending on the economic development)
20
September 2016, Management PresentationFive reasons to invest in ZEAL
• No. 1 in online lotteries in Germany
• Unique, cash generating business model
• Outstanding customer loyalty
• High growth opportunities in an underpenetrated market
• Attractive dividend policy
21Questions
AnswersAppendix
Disclaimer
The information contained herein must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other
person or used in whole or in part for any other purpose.
This document contains certain forward-looking statements relating to the businesses, financial performance and results of the Companies and/or the
industry in which the Companies operate. Such forward-looking statements, including assumptions, opinions and views of the Companies and statements
from third parties, are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated development.
The Companies do not guarantee that the assumptions underlying such forward-looking statements are free from errors, nor do they accept any
responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments.
No representation or warranty (express or implied) is made as to, and no reliance should be placed upon, any information, including projections, estimates,
targets and opinions contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and,
accordingly, none of the Companies or any of their subsidiary undertakings or any of such person's officers, employees or advisors accepts any liability
whatsoever arising directly or indirectly from the use of this document.
By accepting this presentation, you acknowledge that you will be solely responsible for your own assessment of the market and the market position of each
of the Companies and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of
each of the Companies' businesses.
This presentation is for information only and shall not constitute investment advice. It is not intended for solicitation purposes but only for use as general
information..
This presentation is dated 02 March 2021. Neither the delivery of this presentation nor any further discussions of any of the Companies with any of the
recipients, shall, under any circumstances, create any implication that there has been no change in the affairs of any of the Companies since such date.
24
September 2016, Management PresentationManagement Board
Dr. Helmut Becker Jonas Mattsson
CEO since Sep 2015 CFO since Feb 2015
Before: Before:
• CMO of ZEAL • CFO of O3b Networks
• Member of the Supervisory • CFO of various entities of
Board of ZEAL SES
• CCO at XING AG
25
September 2016, Management PresentationHistorical development of ZEAL
1999 19-Nov-2018 8-May-2020
Founded Announcement of Remitted to the
takeover offer for SDAX
2009 Lotto24 by ZEAL 14-May-2019
2005 Settlement of the
IPO Change to secondary
lottery business Lotto24 acquisition
2014 31-Jan-2019
2002
Renamed to Publication of October 2019
Open Madrid
2012 ZEAL & move of the offer to Change of business
office
2008 Spin-off HQ to London Lotto24 model and
Regulatory Lotto24 shareholders relocation
change in DE
GlüStV(1)
(1) Glücksspielstaatsvertrag = State Treaty
26Shareholder structure
Private
investors No. of shares: 22,396,070
11,57
Market cap: ~ € 891m
Year-opening price: € 20.75
33,89
Günther Group Nov 12, 2020: € 39.80
Other
institutional 26,32 November 2020
investors
3,58
4,46 20,18
Jens Schumann
Marc Peters Working Capital Group
Source: Information from notification of voting rights and company information
27Summary
➢ Strong nine months 2020
9M ➢ Billings up 42%
➢ Solid gross margin achieved
➢ Further investment in marketing
2020 ➢ Full-year guidance for new registered customers
already exceeded - again
➢ Guidance 2020 raised - again
September 2016, Management Presentation 28ZEAL Group figures 9M 2020
Billings € 472m Germany Other
Revenue € 64m
Adjusted EBITDA € 7m 91% 9%
of of
Employees
EBIT 165
€ 38m Revenue Revenue
Market Cap. September 2020
Listed since 2005, € 891m
Part of German SDAX
Online lottery Primary lotteries with national
brokerage business permits, international services
for lottery operators,
investments in start-ups
29ZEAL: Consolidated Income Statement
and Balance Sheet in €k
30/09/20 30/09/19 Change in %
Income Statement
Revenue 87,023 93,178 (31.5)
Total costs of operations (59,569) (73,139) (18.6)
Adjusted EBITDA1) 6,903 28,253 (75.6)
EBIT 2,864 12,854 (77.7)
Profit before taxes 5,595 12,815 (56.3)
Net Profit 6,537 10,816 (39.6)
30/09/20 31/12/19 Change in %
Current assets 96,138 173,998 (44.7)
Balance Sheet
Non-current assets 395,898 347,135 +14.0
ASSETS 492,036 521,133 (5.6)
Current liabilities 34,617 49,909 (30.6)
Non-current liabilities 62,997 65,499 (3.8)
Equity 394,422 405,725 (2.8)
EQUITY & LIABILITIES 492,036 521,133 (5.6)
1) Result from operating activities before amortisation, depreciation and non-recurring income/expenses
30ZEAL: Business Unit Segment Reporting
as of 30/09/20 in €k
Germany Other Total
Revenue 57,846 6,019 63,865
Other operating income 2,339 (10) 2,329
Adjusted EBITDA1) 5,235 1,668 6,903
Depreciation/amortisation – – (7,695)
EBIT – – 2,864
Financial result – – 2,873
Share of loss from associates (142)
EBT – – 5,595
Income tax – – 942
Net Profit/loss – – 6,537
1) Result from operating activities before amortisation, depreciation and non-recurring income/expenses
31ZEAL: KPIs
Secondary lottery business Broker Business
Billings Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(in €m) 2018 2018 2019 2019 2019 2019 2020 2020 2020
67.8 77.7 67.4 112.0 153.3 134.0 140.0 174.4 157.3
ABPU Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(in €) 2018 2018 2019 2019 2019 2019 2020 2020 2020
58.0 60.4 57.5 60.5 57.3 48.4 49.5 54.5 54.9
MAU Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
(in k) 2018 2018 2019 2019 2019 2019 2020 2020 2020
384 427 375* 365 917 925 942 1,065 954
*Restated based on prior quarter correction
3291% of at least €57m planned cost synergies already achieved
May-2020
Target of 80% of planned cost synergies
after the first year of completing the
Lotto24 takeover – 91% already achieved.
• €33m related to the BMC
19-Nov-2018
• €20m related to additional cost savings
Announcement of
the takeover offer of 2020
Lotto24
2021
2018
May-2021
2019 Target of 100% of planned cost
synergies after the second year of
completing the Lotto24 takeover –
expected to be achieved by May 2021
14-May-2019
Completion of the takeover of
Lotto24. Starting point for the
realisation of cost synergies
33Reconciliation of Lotto24 cost base to ZEAL target cost structure 1) 1)
1)
€ million
1)
Cost base Volume Platform New products / Transitional Cost base Cost base Cost base
Lotto24 effects investments functionality costs Germany International ZEAL Group
- Based on full year - Increase of billings - Stable, versatile and - Improved product - Reflecting transition, - Also revenue
2018 numbers 2) (depending on state of the art offering like IWG´s e.g. technology cost contribution
jackpots) leads to platform that can and social lotteries, until platform
- Adjusted for - Expected to be
higher direct costs quickly add new leading to increase unification & org
inflation & cost profit neutral in
products and in billings & margin restructuring
increases - Additional 2020
functionalities completed
marketing staff to - Reflected in
- Including
manage higher - Reflected in personnel costs & - Higher costs due to
reclassification of
acquisition/ increased number of other operating 2 stock-listed
marketing cost into
marketing IT staff & other expenses companies &
direct costs
investment operating expenses complexity
1) Operational costs excluding marketing expenses, amortisation, depreciation and non-recurring expenses
2) Annualized Q4 2018 cost run rate would suggest a Lotto24 cost base of €24 million as starting point for comparison
34Lotto24 cost base vs. ZEAL target cost structure related to the P&L 1) (incl. Marketing)
€ million
60
+6
21
39
37 +6 14
15
2)
+4 8
22 8
+7
4
17
10
Cost base Lotto24 Cost base Germany
Personnel expenses Direct costs Other costs Marketing expenses
1) Operational costs excluding amortisation, depreciation and non-recurring expenses
2) Including costs of approx. €3 million, that were reflected in Lotto24 in other cost positions and therefor lead to an increase of % of billings (now approx. 1.4%)
35Financial calendar 2021
Publication of Annual Report 2020 25 March 2021
Publication of Q1 Report 7 May 2021
Annual General Meeting 4 June 2021
Publication of Half-Year Report 12 August 2021
Publication of Q3 Report 11 November 2021
36Frank Hoffmann, CEFA Senior Investor Relations Manager ZEAL Straßenbahnring 11 20251 Hamburg T +49 (0)40 809 036 - 042 M +49 (0)175 267 3420 frank.hoffmann@zealnetwork.de www.zealnetwork.de
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