ZEAL Network SE

Perfect. Good morning, everyone, and welcome to SEAL's earnings call for the first nine months of 2026. I'm Andrea, the CFO of SEAL, and I'm joined with our CEO, Stefan. This presentation is available for you also on our investor relation website, if you don't see it now live on the screen. So let's start with the agenda. The agenda for today's call is we will start with the highlights for the first nine months and then talk you through the financial and operational update. Afterwards, we will go into the strategic progress and our guidance for the full year 26. And at the end, we finish with key takeaways and then we open up for your questions. And with that, handing over to Stefan.

Thank you, Andrea, and also from my side, good morning, everyone. Thanks for joining the call. Let me start with the highlights of the first nine months of 2026. We delivered double-digit growth with 22%, including the first-time consolidation of Seven Canyon, our acquisition in the UK. Andrea will provide more detailed insights later. What's very important is that our lottery business kept growing even though the Eurojackpot situation was somewhat weaker than expected. But despite all of this, we added more than 1 million new customers in the first nine months of this year. That's the first time that we've passed this mark in that period. With the acquisition of Seven Canyon, we diversified our business into the highly attractive UK price draw market and that integration is progressing very nicely. We raised more than 300 million euros for public funding and charitable causes in all of our markets and following the consolidation of Seven Canyon, we have updated our revenue guidance by 20 million euros. now incorporating the newly consolidated UK businesses. To sum it up, the core business is growing, our customer base is growing and Seven Canyons opens new markets for us. Back to you, Andrea. Thanks, Stefan.

Now let's look at the financial and operational performance in more detail. So first of all, let's put everything into context. And here we look into our jackpot environment in Germany. The jackpot environment was mixed over the first nine months. Lotto 6049 reached its 50 million euro maximum for the first time ever and stayed there for 26 draws. This was quite outstanding. As a result, the average jackpot for Lotto 6 out of 49 rose from 9 to 32 million year over year. But as you might remember from our last earnings call presentation, the key driver for our customer growth is actually Eurojackpot. And Eurojackpot was weaker. Eurojackpot reached 120 million, the maximum only in May, and remained there for two drills. compared to four times in the previous year. In average, it fell from 50 million to 41 million. This is why we are particularly proud of our record new customer growth in the first nine months of 2026. And now let's see how this translates into financial results. Here you see our group P&L with the main revenue and cost items. But let me explain a bit the items and especially the one-off effects that we have inside with Seven Canyon. Revenue increased strongly by 22%, up to 199 million, with 10.5 million coming from Seven Canyon. which we consolidated from the 9th of July onwards. But even excluding Seven Canyon, revenue grew by 16% year over year, driven by the strong performance in our core business in Germany. On the operating expenses, the increase reflects our continuous investment in growth and diversification of our strategy. Really important for us. Personal expenses increased by 11% as average FTEs rose by 30%. This of course includes also our UK businesses and their teams. Marketing expenses rose by 35% up to 67 million. And this also includes Seven Canyon with 4.8 million euros. And we are very proud of these investments because this is actually considering our very strong boundary conditions that we set up for our teams. On the indirect expenses, they were up 61%, mainly driven due to one-off effects in the consultancy cost and advisory area of 4.9 million that are related to the Seven Canyon transaction. And this is, of course, a non-recurring item. Additionally, 1.8 million of this increase is linked to the Seven Canyon Group. As a result, EBDR increased by 9%. and our EBITDA margin mounts to 30%, reflecting the M&A-related one-off expenses as well as higher marketing investments within our guardrails. Net profit shows 32 million euros. He has to remember that the year 2025 had a one-off effect, a positive tax attribution based on the re-evaluation of deferred tax liabilities that was in place in Q3 2025 with 4.1 million. In 2026, we are just posting the normal tax rate of around 32%. Therefore, if you want to compare like for like without the special tax effect from 2025, basis of our net profit grew actually by 8%. Let's have a brief look on the effects that Seven Canyon had in our EBTR and we are providing here an EBTR-adjusted bridge where you can see how the effects from Seven Canyon impacted our SEAL P&L. If you start with the reported EBTA of 58.7 million, and take the contribution from Seven Canyon out from the revenue side but also from the cost side as well as the 1F expenses that we already communicated to you of 4.9 million and the FX effect of the transaction you are actually ending up with an underlying poor business deal EBITDA before the transaction of 62.7 million what is really a strong result for the first nine months of 2026. And now let's look into our businesses. We start with the core lottery business. The lottery billings increased by 10%. And the main driver, like in the last quarters, were of course the more active customer base and the higher spend. The higher spend was mainly supported by the Lotto 649 jackpot that we had in Q2 and Q3. Average monthly active users increased by 7% and our monthly FD billings increased by 3%. Even more important, the lottery revenue increased by 16% year over year, a really strong growth ahead of the billings growth that we just communicated to you. The gross margin improved by 0.8 percentage points from 17.5 to 18.3%, a really strong number. This margin improvement was again driven by Fable product mix and also highlighting our diversification strategy that we put into the products in Germany. Overall, we achieved a strong top-line growth with further improving the margin profile of our lottery business, what will benefit us for the future. The second growth driver is, of course, our customer acquisition, as you know. And here we reached, Stefan said it already, the new nine months record with one million new customers we acquired. 15% more than last year, despite a weaker Euro jackpot environment. And that with keeping still track on our boundary conditions on CPLs and payback periods for any kind of investment that we are doing in marketing. Cost per lead increased by 11%, reflecting this higher acquisition volume, raising media costs and also the marketing investment into the launch of Autoverlosung.