Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Significant growth across all key metrics, with Group TTV and revenue up 24% and 34%, respectively.
- Increased dividend by 27%, reflecting strong financial performance.
- Successful digital transformation in Australia, with digital penetration increasing to 40.9%.
- Strong performance in lottery retailing, with a record number of large jackpots and increased active players.
- Positive momentum in SaaS and managed services segments, with TTV and active players up 19% and 27%, respectively.
Negative Points
- Higher operating expenses, including a 76% increase in marketing costs and a 12% increase in employee costs.
- Disappointment in a UK-based acquisition that fell through due to renegotiation of terms.
- Challenges in the Canadian market, with some lottery programs needing reevaluation and a shortfall in Stride's EBITDA.
- Increased technology costs, reflecting higher software license fees and continued investment in data management.
- Potential impact of fewer jackpots in FY25, which could affect revenue growth.
Q & A Highlights
Q: Can you provide details on the acquisition you walked away from in May?
A: It was a UK-based acquisition that we were quite far along with, but the vendor wanted to renegotiate terms at the last minute. We decided to stay disciplined and walked away. We are now focusing on other opportunities. (Mike Veverka, CEO)
Q: What are you seeing in terms of average spend per customer in the first six weeks of FY25 compared to the second half of FY24?
A: The average spend is very healthy. July was slow, but August has seen a strong comeback, especially with the recent $100 million jackpot. (Mike Veverka, CEO; Jatin Khosla, CFO)
Q: Can you discuss the reevaluation of customer contracts for Stride in Canada and its impact?
A: We are focusing on modernizing lottery programs in Canada. Some smaller programs are being reevaluated, but our main partners remain strong. We expect to get Stride back on track, similar to our success with Gatherwell. (Mike Veverka, CEO)
Q: What was StarVale's TTV and EBITDA growth in constant currency for FY24?
A: StarVale saw mid- to high-single-digit revenue growth, around 5%, with a slightly softer margin due to investments in the business. (Jatin Khosla, CFO)
Q: How did the recent $100 million jackpot perform, and what was its impact on active players?
A: The performance was strong, better than the last $100 million jackpot. It also helped launch our Daily Winners premium tier and saw good uptake. (Mike Veverka, CEO)
Q: What changed in Canada to cause a significant revenue and margin decline in managed services?
A: Two lotteries discontinued, impacting revenue by about CAD800,000. We are focusing on lottery strategy rather than just fulfillment to drive better margins. (Mike Veverka, CEO; Jatin Khosla, CFO)
Q: How do you plan to avoid similar issues in future M&A activities?
A: We are learning from each acquisition and aim to streamline the process. We need a few more acquisitions to complete our strategy, especially in Canada. (Mike Veverka, CEO)
Q: What is the expected contribution to SaaS revenue growth from new customers versus existing ones?
A: The majority of growth will come from existing customers. New additions like RSPCA and MS Queensland will also contribute. (Jatin Khosla, CFO)
Q: Will Jumbo be making a submission to the federal government's review into offshore lottery providers?
A: We are not surprised by the review and have been working behind the scenes. We support the industry and TLC to ensure the right business models and tax contributions. (Mike Veverka, CEO)
Q: Can you quantify the TTV revenue impact of the strong jackpot season in FY24?
A: Based on public data, the TTV benefit is around $30 million. We have experience managing growth after strong years, which gives us confidence. (Jatin Khosla, CFO; Mike Veverka, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
