ZEAL Network SE

Good morning, everyone, and welcome to this call. I hope you have the access to the presentation, and if you don't, it's also accessible on our homepage under the investor relations section. If you go to the content slide, you will find today's agenda, and we will start off with a summary of the first six months, followed by a financial update. We will then talk about our guidance for the year before we are finishing off with the key takeaways. After this, we will give you the opportunity to ask questions. So let me start by giving you a summary that you will find on slide four. The world is starting to recover from the pandemic and vaccination rates are ticking out in most European countries. Last year, a big part of the economy got digitalized in just under a year. We have probably never seen such a big change in user behavior the new IT solution that was quickly adopted. In our industry and in Germany alone, the online penetration went from 14% in 2019 to around 20% in 2020, a remarkable uplift last year. As Seale is only operating online, this shift was welcome for our business. Being an e-commerce company, we are set up to deal with remote work when so much work, so much is moved to the cloud, or at least accessible from wherever you are and still being able to serve a customer. Other external factors like the general economy in the first half of 2021 has been strong, but this has limited or no effect of our business. In fact, our business is very resilient to any change in the general economy, even in a very weak economy. Of all external factors, the biggest driver is the overall jackpot situation, which has indeed been quite weak in most part of this year. Despite this, we have still been able to grow the business, which pleases me immensely. Both billings, meaning the transaction volumes and revenues are up 6% and 2% respectively. Gross margin is lined with last year and the profitability of the company improved significantly. In the AGM, Annual General Meeting, all resolutions were adopted with a stable majority as expected. As you probably have seen, SEAL has also undertaken to make a delisting purchase offer to the remaining shareholders in Lot 24, and this process is ongoing with the aim of completing the delisting in mid-September. And last but not least, we have strengthened the management board by two senior members, Helmut, perhaps you want to comment on this before I take you through the financials.

Thanks, Jonas, and good morning, everybody. We're very happy that Paul Dingwitz and Sönke Martens have joined our management board. Paul has been in charge of technology at ZEAL for the last five years. Sönke has been with ZEAL for seven years, leading our marketing and product management. Both of them have made major contributions to the success we've had, the business model change, the tech and marketing integration, and also capturing the merger synergies to call out a few. But more importantly, as we focus on our future success and our growth ambition at Zeal, technology excellence and product capabilities, as well as marketing and customer acquisition, will be key drivers of our success. With Sönke and Paul, we have the right talent on board to take Zeal to the next level. So back to you, Jonas.

Thank you, Helmut. Let's now move to the financial update. As for the first quarter, we could compare like for likes, meaning quarters with the same business models. This is helping everyone to analyze the business performance in a much simpler way. Let's now look at the financial in greater detail, and they will be found on slide six. And here you see a summary of our income statement. We had a solid start of the year with revenues growing by 2% despite this low jackpot environment. And please remember that the second quarter of last year had an extremely strong jackpot situation, especially for Jira jackpot. And by the way, this product is up to 90 million in tomorrow's draw. which are going to be exciting for us. Staff costs fell by more than 8% due to fewer people and revaluation of the employee's long incentive plan to match the current share price. We have continued to invest in marketing, but temporary on a lower level to match this week's jackpot environment. This has led to fewer, but still with high customer lifetime values. Our job is to managing this marketing spend to create the most value, which usually is to invest more and select the most efficient channels in several times and invest less and potentially select other channels when the environment is poor. This is key to understand and also something we control and should and must be managed well. Regarding direct expenses, this is mostly driven by the high volume, so this should be seen as our variable cost. Indirect operating cost has been reduced by more than 2 million due to savings in service provider costs and external staff members. All this has led to one of our main KPIs, adjusted EBITDA, has gone through the roof with a 228% increase and now at 10.7 million euros. Net profit after tax are at 5.7 million, also this huge increase from last year. Let me now give you a bit more insight on some of the KPIs that you will find on the next slide, slide seven. Our billings grew by 6% to 333 million, which is very satisfying considering the low or poor jackpot situation we have experienced during this year. Gross margin, which is telling how much we keep or what turns into revenue, is in line with last year. But just to remind you that in QET we had a higher margin But then I told you that I expected to normalize around this happier number. If we move to the next slide, slide eight, we've highlighted net cash and new registered customers. Net cash is now at 58 million euros, up 90%, mostly thanks to the earnings made in the years. However, this is down for the first quarter since we have made a 20 million dividend payment just a month ago or two months ago. As I said, even if we're confident to ultimately win the VAT case, we've indicated to you the remaining VAT cash exposure, which is around 23 million. Let's now talk about acquisition on new customers. We continue to invest in marketing, but temporary at the lower level to match the current jacket situation. This has led to fewer, but still close to 300,000 new registered customers. This is not the level we want it to be, and we are always exploring new channels, but the main driver is the jackpot situation, especially if you compare with last year. That was pretty extreme. As I have said, it's a key activity management to scale up and down marketing and use different channel makes for every unique situation to create the maximum value of every marketing investment. On the next slide, slide nine, you will find further performance indicators. We have seen an increase in Google and Facebook-related acquisition costs, and as a consequence, driving up the CPL cost per lead. This has led to slightly lower efficiency, but the value this customer brings is typically higher since we acquire a customer that really wants to play the lottery and not only jackpot hunters. If you then look at the return of investment of this customer, still very high numbers what i said last year that tpl is an indicator indicator but not the guiding metric still holds true monthly active users just shy of 1 million and i expect this to be ticking up in line with more favorable jackpot situation average billing per user is very high at 57 euros which indicates that customers that do play they spend a lot every month Let's now talk about the outlook for the financial year, and you'll find that on slide 11. I can confirm that the guidance that we announced end of March is still our best estimate for the future. So allow me to reiterate the numbers. Billings of at least 700 million, revenues of at least 95 million, and adjusted EBITDA of at least 20 million. As you may recall, last year, we had a very favorable jacket situation, which drove activity. But for this guidance, we of course can only assume statistical average outcome for the future months. But of course, the outcome to date added to that. On slide, we talk about the dividend policy. And we have just paid out 20 million in June. And we are aiming for an 11% increase to one euro per share already next year. This means that we will return 22 million to shareholder in 2022. With this, over to you, Helmut.