Good day and welcome to the ZEAL Network SE Quarter Two 2021 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jonas Mattsson, CFO. Please go ahead, sir.
Thank you very much, and good morning, everyone, and welcome to this call. I hope you have the access to the presentation, and if you don't, it's also accessible on our homepage under the investor relations section. If you go to the content slide, you will find today's agenda, and we will start off with a summary of the first six months, followed by financial update. We will then talk about our guidance for the year before we are finishing off with the key takeaways. After this, we will give you the opportunity to ask questions. Let me start by giving you a summary that you will find on slide four. The world is starting to recover from the pandemic, and vaccination rates are ticking up in most European countries. Last year, a big part of the economy got digitalized in just under a year.
We have probably never seen such a big change in user behavior with new IT solution that was quickly adopted. In our industry, and in Germany alone, the online penetration went from 14% in 2019 to around 20% in 2020. A remarkable uplift last year. As ZEAL is only operating online, this shift was welcome for our business. Being an e-commerce company, we are set up to deal with remote work when so much is moved to the cloud, or at least accessible from wherever you are and still being able to serve our customer. Other external factors like the general economy in the first half of 2021 has been strong, but this has limited or no effect of our business. In fact, our business is very resilient to any changes in the general economy, even in a very weak economy.
Of all external factors, the biggest driver is the overall jackpot situation, which has indeed been quite weak in most part of this year. Despite this, we have still been able to grow the business, which pleases me immensely. Both billings, meaning the transaction volumes, and revenues are up 6% and 2% respectively. Gross margin is line with last year, and the profitability of the company improved significantly. In the AGM, annual general meeting, all resolutions were adopted with stable majority as expected. As you probably have seen, ZEAL has also undertaken to make a delisting purchase offer to the remaining shareholders in Lotto24, and this process is ongoing with the aim of completing the delisting mid-September. Last but not least, we have strengthened the management board by two senior members. Helmut, perhaps you want to comment on this before I take you through the financials.
Thanks, Jonas, and good morning, everybody. We're very happy that Paul Dingwitz and Sönke Martens have joined our management board. Paul has been in charge of technology at ZEAL for the last five years. Sönke has been with ZEAL for seven years, leading our marketing and product management. Both of them have made major contributions to the success we've had, the business model change, the tech and marketing integration, and also capturing the merger synergies to call out a few. More importantly, as we focus on our future success and our growth ambition at ZEAL, technology excellence and product capabilities, as well as marketing and customer acquisition, will be key drivers of our success. With Sönke and Paul, we have the right talent on board to take ZEAL to the next level. Back to you, Jonas.
Thank you, Helmut. Let's now move to the financial update. As for the first quarter, we could compare like for likes, meaning quarters with the same business models. This is helping everyone to analyze the business performance in a much simpler way. Let's now look at the financial in greater detail, they will be found on slide six. Here you see a summary of our income statement. We had a solid start of the year with revenues growing by 2% despite this low jackpot environment. Please remember that the second quarter of last year had an extremely strong jackpot situation, especially for EuroJackpot. By the way, this product is up to EUR 90 million in tomorrow's draw. Going to be exciting for us.
Staff costs fell by more than 8% due to fewer people and revaluation of the employees' long incentive plan to match the current share price. We have continued to invest in marketing, but temporarily on a lower level to match this weak jackpot environment. This has led to fewer but still with high customer lifetime values. Our job is to managing this marketing spend to create the most value, which usually is to invest more and select the most efficient channels in favorable times, and invest less and potentially select other channels when the environment is poor. This is key to understand and also something we control and should and must be managed well.
Regarding direct expenses, this is mostly driven by the high volume, so this to be seen as our variable cost. Indirect operating cost has been reduced by more than EUR 2 million due to savings in service provider costs and external staff members. All this has led to one of our main KPIs, Adjusted EBITDA, has gone through the roof with a 228% increase, and now at EUR 10.7 million. Net profit after tax are at EUR 5.7 million. Also this, a huge increase from last year. Let me now give you a bit more insight on some of the KPIs that you will find on the next slide seven. Our billings grew by 6% to EUR 333 million, which is very satisfying considering the low or poor jackpot situation we have experienced during this year.
Gross margin, which is telling how much we keep or what turns into revenue, is in line with last year. Just to remind you that in Q1 we had a higher margin, I told you that I expect it to normalize around this happier number. If we move to the next slide eight, with highlighted net cash and new registered customers. Net cash is now at EUR 58 million, up 90%, mostly thanks to the earnings made in the years. This is down for the first quarter since we have made a EUR 20 million dividend payment just a month ago or two months ago. As I said, even if we're confident to ultimately win the VAT case, we've indicated to you the remaining VAT cash exposure, which is around EUR 23 million. Let's now talk about acquisition on new customers.
We continue to invest in marketing, but temporarily at a lower level to match the current jackpot situation. This has led to fewer but still close to 300,000 new registered customers. This is not the level we want it to be, and we are always exploring new channels, but the main driver is the jackpot situation, especially if you compare with last year. That was pretty extreme. As I have said, it's a key activity management to scale up and down marketing and use different channel mix for every unique situation to create the maximum value of every marketing investment. On the next slide nine, you will find further performance indicators. We have seen an increase in Google and Facebook-related acquisition costs, and as a consequence, driving up the CPL, cost per lead.
This has led to slightly lower efficiency, but the value this customer brings is typically higher since we acquire a customer that really want to play the lottery and not only jackpot hunters. If you then look at the return of investment of these customers, still very high numbers. What I said last year, that CPL is an indicator but not the guiding metric, still holds true. Monthly active users just shy of one million, and I expect this to be ticking up in line with more favorable jackpot situation. Average billing per user is very high at EUR 57, which indicates that customers that do play, they spend a lot every month. Let's now talk about the outlook for the financial year, and you will find that on slide 11. I can confirm that the guidance that we announced end of March is still our best estimate for the future.
Allow me to reiterate the numbers. Billings of at least EUR 700 million, revenues of at least EUR 95 million, and Adjusted EBITDA of at least EUR 20 million. As you may recall, last year, we had a very favorable jackpot situation with draw activity. For this guidance, we of course can only assume statistical average outcome for the future months, but of course, the outcome to date added to that. On slide, we talk about the dividend policy, and we have just paid out EUR 20 million in June, and we are aiming for an 11% increase to EUR 1 per share already next year. This means that we will return EUR 22 million to shareholders in 2022. With this, over to you, Dr. Helmut Becker.
Thanks, Jonas. Let me summarize the key takeaways. We have good billings and revenue development despite a poor jackpot situation. We significantly increased our profitability. We have the new German State Treaty, the new regulation, gambling regulation that came into force on the July 1st. That was a lot of work for us to get prepared for it. We've done this. We can focus on other things. We have strengthened our management board. Thank you very much. Let's now open up the floor for questions.
If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is disabled to allow your signal to reach our equipment. Once again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We can now take the first question from Marius Fuhrberg from Warburg Research.
Hi, thanks for taking my questions. Actually, I have two currently. The first one would be in connection with the delisting of Lotto24 and the offer you made. Do you expect any further extraordinary costs of that, or is this rather insignificant? The second one would be on the [Glücksspielstaatsvertrag] and also the instant win games. How's the progress going for applying for this license? Do you already have any feedback from the state department, or is this still ongoing and you're still waiting for any feedback there?
Maybe I can start with the first question, and then Helmut will take the second on the games question. The delisting offer, I'm not sure I heard the entire question, but it was about our offer. Our offer to the lotto, the official offer that we go out will go out to the shareholders very shortly. You have seen on the July 21st the intention to issue this offering. We will, of course, carry on with this one.
The uptake rate is quite difficult to assess. We think it's a very fair offer from ZEAL. It's based on the law, the six months volume-weighted average price. Like I said, the uptake and how many will tender the shares is for us very difficult to assess. We hope as many as possible accept this one because it's a good offer, and I think they will benefit from it, but it's in the end up to them.
Let me take the second question on the games. We've done our homework. Our application has been submitted. I think we are one of the first batch, part of the first batch that submitted the applications. The authorities are working or started to work on the applications, but we have not received any feedback yet. We are hoping to receive feedback during the second half of this year, and then hopefully we can start the business. Technically, we are ready to start the business.
Okay. Follow-up on this one. Actually, you would probably like to start still in H2 already, right?
We would like to. We are ready to do that. Unfortunately, this is not in our hands, right. It's the authority taking the decision.
Sure
We don't have a timeline. They don't publish a timeline. We are in their hands, so to say.
Sure. Okay, thanks.
As a reminder, please press star one to ask a question. We can now take the next question from Marie-Thérèse Grübner from H&A Investment Banking.
Yes. Good morning, gentlemen. Thank you for taking my question. First of all, I would like to know if it is at all possible to give us a range of the cash outlay we can expect for the Lotto24 minorities take out. Secondly, in terms of the licenses, I was curious to know if any of the instant win games or any other products that you will be able to offer once your license has been approved. If any of that is in your current 2021 guidance at all. Thirdly, if you could give us a bit of a trading update regarding Q3. Of course, the EUR 90 million jackpot is certainly very helpful to activity. I was wondering if we could get at least first assessment of how Q3 is looking like. Thank you very much.
Okay. Let me start. The cash outlay is really depending on the uptake rate, as you know. We have a price of approximately EUR 3.18 per share. Assuming that all shareholders of Lotto24 would tender their shares, it will be somewhere between EUR 40 million-EUR 45 million. For that, we have secured financing, as I'm sure you have seen from our half-year report. The financing is fully secured, and that is a question, and I can't really speculate how many of the shareholders that will tender. We have obviously secured financing for the full amount. Whether that will come up to that amount or a lower amount, I can't estimate. Trading update for the Q3 is also something that I would like to avoid, and the reason being it's very volatile with the jackpot.
Now on Friday, I'm super happy that we have a EUR 90 million jackpot. Whether that will be won or not, nobody knows. It's very difficult. What I can say is that for the full year, our guidance is still our best estimate. No quarterly breakdown on this one, but like I said, I'm happy that we have a good jackpot situation, at least this coming week.
I think you said something about the license and the games. Clearly in all our forecasts, we are assuming a very conservative approach on this. We don't know when the license, like Helmut said, will be granted. Of course we take a very conservative approach how much we can actually achieve this year. Clearly our aim is to fully scale up during the next year and be fully up to speed. This year, it's really out of our hands when the regulator will provide the license so we can start offering these products to our customers.
All right. Thank you very much.
Thank you.
Once again, if you would like to ask a question, please press star one now. We can now take the next question from Marius Fuhrberg from Warburg Research.
Hi, one follow-up from me on the question regarding the guidance and the instant win games. You said that you took a very conservative approach there. Does it mean that you included a very low million digit amount in EBITDA revenues or billings from instant win games, or does it mean that you did not reflect instant win games for the current year at all?
We have a very small part of the revenue and EBITDA impact of this year included in our guidance. Just a small one, but we still have something.
Okay. That's clear. Thanks.
Once again, that is star one to ask a question. It appears there are no further questions at this time. I'd like to now turn the call back over to today's host for any additional or closing remarks.
Maybe I can summarize. Thank you very much for taking the time. This has been, like we said, a solid first six months. Despite the checked environment, we are still growing the business, so we are fairly positive and satisfied with the performance of the company for this first six months. Obviously we're looking forward for the coming six months and report back to you the numbers both for Q3 and Q4. Hope you stay interested and feel free to reach out to any one of us or our investor relation department. We're happy to serve you with the kind of information you may need. Thanks for taking the time, and have a great day. Thank you. Bye-bye.
This concludes today's call. Thank you for your participation. You may now disconnect.