I agree @SudMav -- feels like the market is being overly harsh here.

Some expectation for further (albeit modest) contraction in the underlying EBITDA margin, sluggish expected growth in managed services for FY25, outlook for lower large jackpots (40-45 compared to 55 last year), higher marketing costs.

None of which seem to justify a 10% fall, imo, but just suggesting some possible explanations.

they are on 19x EPS (excluding amortisation of acquired intangibles -- which is a non-cash cost) which isnt terrible for a business that has a super strong balance sheet, a history of growth and which throws off a lot of cash.

@SudMav I am not an expert on JIN, but was on the call out of interest. the main issues appear to be, 1. cycling a huge year on jackpots, 2. the Canadian acquisition has had to be re-engineered, and there was a comment you get what you pay for, ie they bought a cheap company with issues that need to be sorted, also they indicated more M&A coming. 3. there were some issues in the guidance that looked a bit light, eg third party saas growth. so a mixed bag.

i have no view on the valuation

@Solvetheriddle "2. the Canadian acquisition has had to be re-engineered, and there was a comment you get what you pay for, ie they bought a cheap company with issues that need to be sorted, also they indicated more M&A coming."

Great point. I wonder whether MIke's walking away from the latest UK acquisition when the price went up demonstrates some learning that you don't always know what you're getting, and therefore making some allowance for "remediation" in valuing the deals?

All acquisitions carry this risk (unless you have deep inside knowledge, e.g., through a pre-existing strategic relationship), so I tend to mark management up when they say they walked away from a deal because they couldn't agee on the price. This is where it helps to have highly aligned management, as opposed to "professional managers" with the wrong incentives like revenue, EBITDA or earnings growth.

Also only about 9% of revenue so if that’s what caused the sell off - haven’t had time to listen to the call - then very much overkill to be down this much.

My valuation range is $14.50 - $18.50, and I told myself I'd have a hard look at it if it fell below $14.00,

So I'm adding 25% to my RL position with a limit order at $13.70.... which I think will clear.

I suspect it's because they basically guided for a flat year in FY25, based on a forecast for fewer Jackpots in Australia and some resetting in Canada. They should be expecting that given the big jackpot year in FY24. This cyclicality of jackpots is completely normal over the longer term for Jumbo who more importantly keep growing market share. The savage sell off today seems like a good example of how Mr Market seems to only have a 6 to 12 month view most of the time!

Happy to take advantage of that and add more of this high quality compounder to my portfolio.

I just had a listen to the presentation where the CFO suggested that TTV could be lessened by approx. 30m by the normalisation back to the regular jackpot levels.

Some in-house development work is being done for Canadian to improve the business (which was expected) as they wanted to get into the market. In the call they talked about some pain now for some benefits in the future, so hopefully this means there will be some margin improvement in the future from this activity.

Still some potential M&A opportunities in the UK over the horizon as well, so still some potential upside if they can bring improved technology offerings and some ongoing revenue.

Taking a long term approach, I am still bullish on this opportunity and think they still have a great platform to grow the business going forward by growth and mergers. Took the opportunity today to up my stake IRL to take advantage of the price and nearly 2% dividend payout.