Jumbo share price sinks 10% on FY22 earnings miss

Man open mouthed looking shocked while holding betting slip

Man open mouthed looking shocked while holding betting slip

The Jumbo Interactive Ltd (ASX: JIN) share price is sinking on Friday morning following the release of the company’s preliminary full-year results.

At the time of writing, the lottery ticket seller’s shares are down 10% to $12.97.

Jumbo share price tumbles after results miss expectations

Here’s a summary of how it performed during FY 2022 (unaudited):

  • Total Transaction Value up 36% to $660.1 million
  • Revenue up 27% to $103.8 million
  • Underlying EBITDA up 14% to $54.0 million
  • Underlying NPAT up 16% to $31.6 million

How does this compare to expectations?

While this looks pretty good on paper, as you might have guessed from the Jumbo share price performance, this was short of expectations.

For example, consensus estimates reveal that the market was expecting revenue of $107.01 million, EBITDA of $56.41 million, and net profit of $33.29 million.

Management commentary

Jumbo’s CEO and founder, Mike Veverka, was pleased with the company’s performance in FY 2022. He said:

We are very pleased with the strong growth that we have achieved in FY22 off the back of an improved jackpot cycle. FY22 has been a pivotal year for Jumbo as we build the foundations to successfully execute on our global growth strategy. Lottery Retailing is exceptionally well positioned to benefit from the ongoing shift to digital and the new OzLotto game launched in May 2022 while the integration of Stride and StarVale will help us build scale in our Managed Services and SaaS segments globally.

The domestic jackpot environment remains supportive with 43 Powerball/OzLotto jackpots greater than or equal to $15 million in FY22, compared to 38 in FY21, with the average value of these jackpots up 28%. 2H22 benefitted from a $120 million Powerball jackpot in February 2022, the first jackpot greater than $100 million since September 2019. This however was followed by significantly lower jackpot activity in March and April 2022, with peak monthly Jackpots of $20 million, before increasing to $80 million and $60 million in May and June respectively.

FY 2023 outlook

While no guidance has been provided for FY 2023, management has given the market an idea of what lies ahead.

This includes an increase in its cost of goods sold due to its Lottery Corporation Ltd (ASX: TLC) service fee rising from 2.5% to 3.5%.

Excluding this, underlying operating cost growth is anticipated to moderate, with Jumbo targeting an increase of 20% to 22%. This compares to 32% growth in FY 2022. This is expected to lead to its underlying EBITDA margin falling slightly to 48% to 50% from 52% in FY 2022.

In respect to sales, as always, jackpots remain a significant driver of Lottery Retailing ticket sales. As a result, there is uncertainty as to the exact number and aggregate value of large jackpots and thus its sales.

The post Jumbo share price sinks 10% on FY22 earnings miss appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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