Updating my pricing on this one following the recent FY update.

Key updates from the slide deck and investor call.

• TTV $453.4m down 6.4% YOY which is mainly from a 15% reduction in lottery retailing.
• NPAT of $19.1m down 9.3%
• Slight decrease in active players to 1036 (down 5% on H2) but still 100 more than 2024.
• SAAS TTV up but revenue down 5.3% to 13.3m, however the newer agreements signed are starting to show an upwards trend in the % rate applied.
• Free cash flow down 63.6% to 11.6m due to subdued lottery and trade payable timings.
• Managed services TTV down 3.8% with EBITDA down 16% (in line with expectations)
• Canadian business revenue down 19% following contract losses and updates from the previous quarter.
• Dividend of 24c announced (high end of their distribution range).
• H2 numbers looking much higher with the high volume of jackpots this year.
• Diluted EPS of 28.35c (down from 31.88 last FY) based on 340k less shares than the previous year.

The call on this one was quite informative as Jumbo have provided some good information. Learning from their recent acquisitions and market growth, they are looking to focus more on B2Customer space as this allows them to better scale with the solutions they have.

Saturday lotto price increases will be coming in May 2025, and JIN are looking to increase their price over and above by 5c, which is expected to deliver contribute an additional revenue of $300k per annum. This is likely to be the same when Powerball changes in 2026.

Once the pricing is updated, the premium above the regular TLC page is now moving to approximately 20%, which is partially offset by the daily winners giveaways. Will be monitoring the active user count, especially with the current cost of living crunch.

Marketing is being targeted to bigger jackpots, and focussed the new cost per lead of 29.49 also incorporates the cost of returning customers coming back to buy tickets which aren't classified as a new lead, and the significant reduction in new players (down to 81,200)

Overall

The sell down of this one hurts but I'm confident with the mean reversion nature of lottery retailing + price increases will get the NPAT fairly close to where things were last year.

Hoping that they can find some good acquisition opportunities in the B2C space, which will help them to increase geographical reach.

They are continuing to stand up new customers in the SAAS space, and with the renewals of Endeavour and Deaf lottery my thesis of growth opportunities in this space has not yet been busted.

Will continue to monitor the free cash flow situation as the continued trend could ultimately lead to more dilution/debt for any future acquisitions.

If the continued jackpots continue, I think this one sits somewhere between the $12 and $13.5 range. The expected PE is between 17- 19 for now which is well below the historic average of mid-high 20s and reflects the current growth opportunities.

Disc: Held IRL and SM

Slides