ZEAL Network SE

Good day and welcome to the ZEAL Network SE Q3 2021 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Johannes Mattsson, CFO. Please go ahead, sir.

Thank you very much. I hope you all can hear me loud and clear. And good morning and welcome to ZEAL's earnings call. I hope you also have access to the presentation. If you don't, it's accessible on our homepage under the investor relations section. If you go to slide two, you will see the content slide where you'll find today's agenda. And we will start off with a summary or highlights of the first nine months, followed by a financial update. We'll then talk about the updated guidance for the year before we're finishing off with the key takeaways. After this, we will give you the opportunity, as always, to ask questions. I will now hand over to our CEO, Helmut Becker, to take you through the summary and regulatory situation.

Thank you, Jonas, and good morning, everybody. So, let me start by giving you a little bit of context first. Our environment has changed. The corona pandemic has become less of a factor, as most countries, including Germany, have lifted their lockdowns on the back of the vaccination campaigns. Instead, a weak jackpot environment has characterized the last quarter and this year to date. This has a direct effect on our billings that we make with our existing customers. High jackpots drive billings, low jackpots suppress billings. But a weak jackpot situation also impacts our customer acquisition. We manage the efficiency of our customer acquisition very carefully. Therefore, we dial up marketing spend in good jackpot environments and dial it down in low jackpot environments. Longer term, as jackpots are simply a function of statistics, this does not really make a difference. Short term, it does. So, despite the jackpot environment, billings and revenue have increased in the first three quarters of this year. We have significantly improved our profitability. That's the result of our efficiency-optimized marketing approach, our cost control, and the synergies between Lotto24 and TIP24MZO. Other highlights include a successful delisting of Lotto24 to reduce complexity and associated costs, We've run a vaccination lottery based on 3S Plus to support the vaccination campaign of the government. We made one person very happy, a record winner we had. A Ziel customer won almost 50 million euros. That was a Eurojackpot win. And, that's my last point, based on the trends I've just explained, we adjusted our guidance. And Jonas will go into more details later in the presentation. So before we go into the numbers, let me quickly talk about regulation. The new gambling state treaty took effect on the 1st of July this year. It will run at least until 2028. We have so far seen no adverse effects of this new state treaty on our business. We do see new business opportunities for us in games and potentially sports settings. The opportunity we are focused on right now is to launch games. The technical term in Germany is virtual slot machines. We will offer games to our customers that are tailored to our lottery player target group. We know from past experience, as well as from international lottery markets, that this is a good opportunity. Technically, we are ready to launch. We're only waiting for our license, or it's a permit to be precise, to be issued. The authorities issuing that permit have recently come out with a statement in a media publication. They said that they may issue the first permit in Q4, but will certainly issue the first ones in Q1 2022. And finally, we will apply for an extension of our broker permit, brokerage permit. This will be a very straightforward exercise. So, with that, over to you, Jonas, to take us through the financial update.