• Group TTV: Down 6%.
• Revenue: Decreased by 11%.
• Underlying EBITDA: Down 12.9%.
• NPATA: Decreased by 11%.
• Free Cash Flow: Down 64%, impacted by trade payable timing differences.
• Dividend: Interim fully franked $0.24 per share, slightly lower than the previous corresponding period (pcp).
• Digital Penetration: Increased to 40.4%.
• Active Players: Up 15%.
• Lottery Retailing TTV: Down 15.3%.
• Lottery Retailing Revenue Margin: Increased to 23.4%.
• SaaS TTV: Up 15%.
• SaaS External Revenue: Grew 5.8%.
• Managed Services UK Revenue: Broadly flat.
• Managed Services Canadian Revenue: Declined 19%.
• Available Funds: $52.7 million.
• Share Buyback: $4.6 million spent in 1H '25.

• Warning! GuruFocus has detected 4 Warning Signs with ASX:JIN.

Release Date: February 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Jumbo Interactive Ltd (ASX:JIN) successfully launched the Daily Winners Premium tier loyalty program, enhancing player engagement during a subdued jackpot period.
• The SaaS segment showed positive momentum with strong charity TTV growth and new partnerships, indicating robust customer advocacy.
• The balance sheet remains strong, providing flexibility for future growth, and the company declared an interim fully franked $0.24 per share dividend.
• Digital penetration increased to 40.4%, showing potential for further growth in the online lottery market.
• The company has a strategic focus on B2C opportunities, which are expected to deliver higher growth compared to traditional B2B targets.

Negative Points

• Group TTV and revenue were down 6% and 11%, respectively, due to a subdued jackpot environment.
• Underlying EBITDA and NPATA decreased by 13% and 11%, respectively, reflecting the impact of lower revenue in Lottery Retailing.
• Free cash flow was down 64%, impacted by trade payable timing differences, although cash conversion would have been around 100% after adjustments.
• The cost per lead increased significantly, reflecting increased maturity in the online lottery market and heightened competition.
• Canadian revenue declined 19% due to the transition or discontinuation of several lottery contracts, impacting the Managed Services segment.

Q & A Highlights

Q: Can you explain the market share recovery strategy and its effectiveness? A: Mike Veverka, CEO, explained that the focus shifted from cost per acquisition to reactivating existing players through paid advertisements. This strategy, tested since December, has shown promising results, particularly in January and February, and will continue to be refined for better market share recovery.

Q: What are the expectations for the Daily Winners loyalty program in terms of membership and EBITDA impact? A: Mike Veverka, CEO, noted that the program reached breakeven within six months, faster than expected. The focus is on maintaining low churn rates and expanding margins over time. The program's success in a low jackpot period suggests potential for accelerated growth with normal jackpots.

Q: How does the recent marketing strategy affect cost per lead and overall marketing efficiency? A: Mike Veverka, CEO, stated that the cost per lead has increased due to existing players being reactivated by ads, which skews the metric. The company is shifting to a percentage of TTV model for a more accurate representation of marketing efficiency.

Q: What is the impact of the Saturday Lotto price increase on revenue margins? A: Jatin Khosla, CFO, mentioned that the price increase is expected to uplift revenue by $300,000 to $400,000, assuming similar jackpot sequences and cycles as previous years.

Q: How does the shift to B2C acquisitions align with growth objectives? A: Mike Veverka, CEO, explained that B2C opportunities offer higher growth potential compared to B2B. The company is focusing on acquiring B2C businesses that align with their growth targets, particularly in the UK and North America.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.