DGAP-News

ZEAL Network SE: ZEAL with good start to fiscal year 2021

DGAP-News: ZEAL Network SE / Key word(s): Quarterly / Interim Statement ZEAL Network SE: ZEAL with good start to fiscal year 2021 07.05.2021 / 07:30 The issuer is solely responsible for the content of this announcement. ZEAL with good start to fiscal year 2021

• Increased billings and revenue
• Strong gross margin achieved
• Profitability significantly improved

(Hamburg, 7 May 2021) Although the coronavirus continues to hold the world firmly in its grip, the ZEAL Group has made a good start to its fiscal year 2021 thanks to the stability of the business model - based on the loyalty of the customers and the unbroken popularity of online lotteries.

Increased billings and revenue, strong gross margin achieved

In the first quarter of 2021, billings rose by 17% to EUR 163.3¹ million (2020: EUR 140.0 million), of which the Germany segment accounted for almost the entire amount at EUR 163.3 million (2020: EUR 139.7 million). Revenue increased by as much as 19% to EUR 22.6 million (2020: EUR 19.0 million), of which EUR 21.1 million was attributable to the Germany segment (2020: EUR 17.0 million). At 12.7%, the gross margin in the Germany segment was above the prior-year level (2020: 12.1%).

The market environment for lotteries in Germany during the first quarter of 2021 was comparatively weak: at just EUR 5.7 million, the average jackpot of the German lottery 'LOTTO 6aus49' was even lower than in the previous year (2020: EUR 7.3 million) and failed to exceed the EUR 20 million mark even once (2020: once). At EUR 35.0 million, the average jackpot of the European lottery 'Eurojackpot' was also well below the prior-year figure (2020: EUR 54.2 million) and reached the EUR 90 million mark just once (2020: once).

Despite this market environment, the Company gained 156 thousand new registered customers in the Germany segment (2020: 206 thousand). The increase in acquisition costs per new registered customer (cost per lead, CPL) of EUR 33.48 (2020: EUR 26.00) was also a consequence of the enhanced marketing strategy: even though customer acquisition is naturally more difficult in low jackpot phases, such as the first quarter of 2021, correspondingly higher CPLs are justified by the fact that it is precisely those lottery players won during these periods who generally exhibit higher long-term activity and thus a better customer lifetime value (CLV). As a result, the payback periods of new customers are only slightly longer. At EUR 7.1 million, total marketing expenses in the first quarter of 2021 were above the prior-year level (2020: EUR 6.6 million).