Lotteries business sets its luck on hitting $1b jackpot
FAST-growing Brisbane lotteries business Jumbo Interactive has set itself the lofty goal of selling $1 billion worth of tickets by the middle of 2022.
That's about three times what the company generated in the last financial year, a period that founder Mike Veverka describes as a "breakout'' moment.
A new software program has turbocharged the outlook for Jumbo, which first started selling lottery tickets on the internet in 2000 and now operates ozlotteries.com under a deal with Tabcorp.
Veverka, a software engineer by trade, and a team of 80 colleagues spent four years rewriting the code and he says it has yielded immediate benefits since going live in April 2018.
"It gave us a lot more reliability, capacity and features. We can take more orders, sign up more customers and we're now able to sell to other operators,'' Veverka says.
Jumbo has already signed up the Mater and Endeavour Foundation lotteries as part of its new "software-as-a-service" business.
The company is also focused on growing that business overseas, launching a $9.1 million takeover of UK charity lottery business Gatherwell in November.
Veverka says he's on the hunt for further acquisitions in the UK, as well as Canada and possibly the US, in the year ahead.
With only about 7 per cent of all lottery tickets sold online globally, he believes this market is a "sleeping giant'' that provides Jumbo with immense opportunities.
About 25 per cent of lottery tickets in Australia are bought online, a number tipped to rise to around 35 per cent in the next five years.
The growth is already evident in the accounts for the company, which has seen its market capitalisation surge from about $50 million in 2012 to just shy of $1 billion today.
Jumbo delivered a 124 per cent jump in net profit to $26.4 million in the last financial year based on a 64 per cent surge in revenue to $65 million.
Since 2017, the number of active customers has more than doubled to 761,863, with new accounts almost tripling to 444,004.
Despite this, the company's share price peaked at nearly $28 in October but has since fallen back to about half that amount.
Veverka attributes the nosedive to "a bit of over excitement'' in the market despite the company's rosy prospects, including a forecast 13 per cent lift in net profit to $14.3 million in the December half.
Morgans analyst James Lawrence told clients in a briefing note after the release of annual results that Jumbo is "very well-placed heading into FY20'' and he still lists the stock as an "add''.