ZEAL Network SE

I hope you all have access to the presentation. If not, it's also accessible on our homepage on the investor relations section. On this content slide, you'll find today's agenda. And we will start off with a summary of the first three months, followed by a financial update, our guidance, and the upcoming AGM before we're finishing off with the key takeaways. after this you will have the opportunity to ask questions let me start with a summary so let's move directly to slide four the world continues to suffer from corona even if there is hope in sight with the ongoing vaccination as discussed before being an e-commerce company we are set up to deal with the remote work when so much is moved to the cloud or at least accessible from wherever you are. Other external factors like the general economy has been strong, but this has limited or actually no effect on our business. Our business is very resilient to any changes up and down in the general economy. Of all external factors, the biggest driver is the overall jackpot situation, which has indeed been weak for both our main products throughout the first quarter and actually continued to be weak also in the month of April. But we have still been able to grow the business, which actually pleases me. Both billings, meaning the transaction volume and revenues are up 17 and 19% respectively. Gross margin increased and as a result, also the profitability of the company improved significantly. And we are now in the Google Play Store, which is something we and the entire industry have strived for since many years. This allows us to have our brand visible in the Google Play Store, and we can use this as a good acquisition tool. And we'll come back more to this at the end of the presentation. Speaking about financial updates, We can now for the first time compare like for like meaning a quarter in 2020 where we operated as a broker with a quarter in 2021 where we also of course operating as a broker. This is helping everyone now to analyze our business performance in a much simpler way. Let's now look at the financial and greater details which will be found on slide six. This is our income statement, a condensed version. This year has started off very nicely with revenue growth of 19% despite the low jackpot environment. This is slightly better than the billings growth, which is then supported by a more favorable product mix, meaning more premium products sold. Staff costs are mostly in line with last year since the majority of the people synergies were already included in last year numbers. We have continued investing in marketing even in this low jackpot environment. This has led to fewer but still with high customer lifetime values. Regarding direct operating expenses, this is mostly driven by the higher volume that is to be seen as a variable cost and then some one-offs related to a switch in payment service provider. The latter will allow us to have more efficient process, lower fraud and better charges going forward. All this has led to our main KPI adjusted EBITDA has risen 61% to 4.6 million and net profit after taxes are now at 2.5 billion. Let me now give you a bit more insight some of the KPIs that you will find on slide 7. As I said, our billings grow by 17% to 163 million, which is very satisfying considering, as I also said earlier, the jackpot situation we have experienced in the first quarter. Gross margin, which is telling us how much we keep, what turns into revenue, have improved the margin to 12.7%. which, as I said, is driven by the higher share of premium products. I do expect this to normalize on a slightly lower level, though, when the draw products, the normal lottery products, get a higher share of the total volume. On slide eight, we have highlighted net cash and new registered customers. Net cash is now at 68 million, up 4%, mostly thanks to the earnings we made in the quarter. We have a healthy net cash situation, which is why we afford to pay an attractive dividend to you, which I will come back to shortly. As I said before, even if we're confident to ultimately win the VAT case, we have indicated the remaining VAT cash exposure, which is approximately 22, 23 million. Let me now talk about acquisition of new customers. We continue to invest in marketing. and we have acquired close to 160,000 registered customers despite the jackpot situation. We clearly want this to be higher, especially when comparing to last year when we had record in new customer. But as we know, it's always easier in a more favorable environment. On slide nine, you will find further performance indicators. In this quarter, we have continued investing in marketing And this has led to lower efficiency and higher CPL, cost per lead. But the value these customer brings is typically higher since we acquire customer that really want to play the lottery and not only to jackpot hunters. If you then look at the return on investment of these customer, it's still very high number. So what I said last year that cost per lead is an indicator, but not the guiding metric holds true. Monthly active users increased to close to 970,000, and the 1 million mark is clearly what we want to have, which I expect will happen in a better environment. Average billing per user is very high at 56 euros, which indicates that the customers that do play spend a lot every month. Let's now move to the outlook and the guidance that you will find on slide 11. I can confirm that the guidance that we did announce end of March is still management's best estimate for the future. Let me reiterate the numbers. Billings of at least 700 million, revenues of at least 95 million, and an adjusted EBITDA of at least 20 million. As you may recall, we last year had a very favorable jackpot situation, which drove activity. But for this guidance, we of course can only assume statistical average outcome for the future months, plus the outcome that we have to date. And we also expect to continue investing in marketing, grow our market share. The planned marketing spend for the year is similar to last year of more than 30 million. On slide 12 we talk about the dividend policy and I'm just confirming what we have already told you about and what is actually going to the AGM for approval. We are proposing to pay out 20.2 million this year which is 12 percent more than last year and more than doubled what we paid out the year before that. This corresponds to 90 euro cent per share and our intention is to increase to one euro per share in 2002, leading then to payout of approximately 22 million. Let me now briefly talk about the upcoming AGM, Annual General Meeting. On June the 1st, we will hold our AGM virtually, also this year. The invitations with the registration documents were sent out at the beginning of this week to our shareholders. in addition to our usual items on the agenda of this AGM this also have a special item which you will see as number six with a small arrow to it and I would like to explain this in a little bit more detail according to our latest annual financial statement SEAL has a restricted capital reserve in the amount of 259 million We, the management board and the supervisory board, propose to convert the majority of this restricted capital into free capital reserve. With this technical step, and I underline this is a technical step, we want to enable an efficient equity management in line with capital market requirements, and in particular, create conditions for a much more flexible dividend policy going forward. We would therefore be pleased and encourage you to register and vote as a shareholder at our upcoming AGM. Now I will hand over to Helmut that will take you through the key takeaways.

Thank you, Jonas. So in Q1, we had a poor jackpot situation, and yet we drove good billings. and also we've seen a good revenue development. We've been able to increase our profitability. We have seen that, as expected, the new gambling treaty in Germany has now been ratified in all 16 German states, so that's going ahead as expected. And we now have the Lotto24 app in the Google Play Store, which gives us an opportunity to acquire more customers. So that's the summary of Q1. And with that, I think we should go straight into Q&A.

Thank you. If you would like to ask a question on today's call, please press star 1 on your telephone keypad. That's star 1 to ask a question. We will pause for one moment to allow everyone to signal. Again, that's star 1. We can now take our first question from Maris Furberg from Warburg Research.