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Jumbo (ASX:JIN) reports HY21 result, should you bet on its shares?

Jumbo Interactive Ltd (ASX: JIN) has reported its FY21 half-year result. Is it time to bet on shares?

Jumbo is a digital lottery business with a software as a service (SaaS) platform for operators in Australia and globally. It also offers lottery management services to charities and community groups in the UK and Australia. It also sells lottery tickets in Australia and the South Pacific.

Jumbo’s HY21 result

Total transaction value (TTV) increased by 26% to $233 million, which helped revenue rise by 9% to $41 million.

In the retailing lotteries division, Jumbo said that the random jackpot cycle was not kind to the Australian lottery market with only 15 large jackpots compared with 23 in the prior corresponding period, which represents a decline of 35%.

Jumbo attributed the growth of revenue to its evolving SaaS and managed services businesses.

The company pointed out that in its SaaS business, a new partnership was entered into its first government customer, LotteryWest, while in managed services, Gatherwell made a material contribution to the result. It also said it has now leveraged the superior Gatherwell model in Australia, announcing this week two new domestic charity partners for its managed services segment.

Underlying EBITDA (EBITDA explained) grew by 3.7% to $24.1 million and underlying net profit declined 5.8% to $14 million. The EBITDA margin declined by 300 basis points (3.00%) to 59%.

Jumbo dividend

The Jumbo board decided to slightly decrease the dividend per share to 18 cents, down from 18.5 cents.

Management comments

Jumbo Executive Director and CEO said: “We are delighted with the group results which show our new business segments helping to lift results in periods when the jackpot cycles are low.

For the first time we are reporting our results in three segments, reflecting the evolving strength and diversity of Jumbo, as we continue to leverage our superior lottery management capabilities and technology to reshape our business, making lotteries easier for our partners and customers, and underpinning our continued growth, both domestically and offshore.”

Summary thoughts

Jumbo seems like a business that has multiple growth levers that it can pull. The Jumbo share price has come off a lot since late 2019. I think Jumbo could actually be one to watch if it can keep adding clients to its SaaS business.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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