Jumbo Interactive Ltd (ASX: JIN) shares have jumped 10% today following a big half-year update and increase in full-year profit guidance.
Jumbo Interactive is an Australian lottery business with its history going back to 2000. The company operates the Ozlotteries website.
Jumbo is different to conventional lotteries businesses because tickets are sold online or via a smartphone app. More than three-quarters of customer interactions are completed via mobile devices.
Today, the digital gaming business released a half-year trading update to investors showing a 64% increase in transactions on its platforms and revenue at $29.9 million, up 55%. Jumbo’s net profit is expected about $11.8 million, up 123%.
“The strong performance in the first half is driven by continual improvements in our software platform and online marketing that have engaged existing customers as well as acquired new customers, taking full advantage of the favourable jackpot activity,” Mike Veverka, Jumbo’s CEO and founder said.
For the full 2019 financial year Jumbo expects to report revenue of $54.9 million (up 38% and a profit which will be about 75% higher at $20.5 million.
The one blemish from today’s round of updates was news that founder Veverka might sell some of his shares. However, for investors like me who focus heavily on incentives and alignment, he’ll still be a significant investor with around 16% ownership of all shares in the company.
Is Jumbo a bargain?
I wouldn’t call Jumbo shares a bargain at today’s prices given that its shares trade at about 10 times yearly sales. However, Jumbo appears to be one of the ASX’s finest growth companies with wide profit margins and potential for further expansion. Therefore, I’d at least have it on my watchlist in 2019.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
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