Just this week, a Lotto Powerball player won a whopping $10.5 million after buying his ticket online. That’s the kind of hope that drives thousands—if not millions—to buy lottery tickets even during tough times, like inflation or recession.
That also explains the 706k tickets sold by lottery retailer Jumbo Interactive (ASX: JIN) in H1 FY23. The Company sold over 1,200 tickets every minute and got 59k new signups.
Thanks to that, Jumbo’s revenue increased by 18.1% to $62.4 million, while total transaction value hit $417 million, a 27.2% increase. The Company’s earnings rose 7% to $30.4 million, with its underlying profit rising by 8.2% to $18.2 million.
Jumbo CEO and Founder, Mike Veverka, said, “We are pleased with the solid growth achieved in 1H23 which reflects a strong recovery in jackpots in the second quarter, including the $160 million Powerball, our best draw to date. Our platform continues to perform exceptionally well, with 100% uptime for the $160 million Powerball and a several records broken in terms of signups, checkouts and tickets sold per second.”
He added, “This performance is a testament to the work we’ve done in building a best-in-class lottery platform.”
In the first half of FY23, there were 23 Powerball/OzLotto jackpots, with the average value per jackpot up 10% to $41.7 million.
In Q1 FY23, people were still hesitant about buying lottery jackpots seeing how they had to manage their budgets due to rising prices. However, in the second quarter, they couldn’t help but give in to the chance to win big. There was a strong recovery in jackpots in Q2 FY23 which benefitted from three Powerball jackpots greater than or equal to $100 million.
Lottery retailing delivered value growth of 8% and revenue growth of 7%. The revenue margin declined 0.1% due to a shift in product mix with a relatively higher proportion of Powerball ticket sales. A step-up in the service fees paid to The Lottery Corporation Limited (TLC) did impact earnings.
That’s where Jumbo’s acquisitions came to the rescue. The H1 FY23 group revenue and earnings benefitted from, including Stride (six-month contribution) and StarVale (2-month contribution). Together, they contributed $55.7 million in total transaction value, $5.9 million in revenue and $2.3 million in EBITDA.
Veverka explained, “Stride has made a meaningful contribution to Group earnings, and we are pleased to have completed our acquisition of StarVale in November 2022. We continue to be impressed by the quality and growth potential of these businesses, and the integration process is now well underway.”
In FY23, the operating costs—excluding Lottery Retailing marketing costs—are expected to mellow as Jumbo targets an increase of 16% to 18%, compared to 33.2% in FY22. It expects its earnings to be at the upper end of the original range of 48% to 50%, but still less than its FY22 numbers.
To instill confidence in investors, the Company commenced an on-market share buy-back of up to $25 million in September 2022. By December 31, 2022, $1.9 million shares had been purchased.
To some, winning the lottery might seem like a far-fetched dream, a laughable thought. But high prices can make people believe that if you will it, you can win it.
Alinda is a Business Reporter for The Sentiment
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