Jumbo Faces Jackpot Headwinds: What’s Next for Its Lottery Retailing Business?

FY25 Performance Amid Jackpot Variability

Jumbo Interactive Limited (ASX – JIN) has released its full-year results for FY25, revealing a company that weathered a challenging jackpot environment with resilience. Total transaction value (TTV) fell 5.5% to $996.1 million, while revenue dropped 8.8% to $145.3 million. This decline was largely attributed to a softer run of large jackpots, including the absence of any jackpots exceeding $100 million, a stark contrast to the previous year’s record $200 million Powerball draw.

Despite these headwinds, Jumbo’s Lottery Retailing division demonstrated strong player engagement, supported by a revamped marketing playbook targeting new and dormant players. This strategic focus helped mitigate the impact of a 15.9% decrease in Lottery Retailing TTV to $457.2 million, with revenue down 12.4% but margins improving slightly due to portfolio mix adjustments.

SaaS and Managed Services Drive Diversification

Jumbo’s Software-as-a-Service (SaaS) segment marked a milestone by surpassing $250 million in TTV and generating $10 million in external revenue for the first time. The segment’s 17.1% TTV growth and 21.2% revenue increase (excluding transitional impacts) underscore the company’s successful expansion into the B2B lottery market. However, EBITDA declined 8% to $30.2 million, reflecting a lower intersegment fee from Lottery Retailing, though the segment maintained a robust 68.2% EBITDA margin.

Meanwhile, the Managed Services division, encompassing operations in the UK and Canada, posted modest growth with TTV rising to $288 million and EBITDA improving to $7 million. The UK business benefited from new contracts and pricing initiatives, while Canada stabilized following contract re-evaluations. Both regions are focused on profitable growth and operational efficiency under refreshed leadership.

Capital Management and Dividend Stability

Jumbo declared a fully franked full-year dividend of 54.5 cents per share, consistent with FY24, reflecting a payout ratio near the upper end of its 65% to 85% target range. The company also continued its on-market share buy-back program, purchasing $7.8 million worth of shares in FY25, bringing the total to $11 million since inception. Management emphasized a disciplined approach to capital deployment, balancing share repurchases with growth investments.

Looking Ahead to FY26

Looking forward, Jumbo anticipates Lottery Retailing TTV will be influenced by jackpot frequency and size, with a focus on growing charity and proprietary products supported by promotions. SaaS momentum is expected to continue, driven by organic growth and enhanced service offerings. Managed Services in the UK and Canada are projected to deliver underlying EBITDA growth of 10-15% and 5-10% respectively, supported by new business wins and operational improvements.

The company also signaled intentions to accelerate growth through targeted acquisitions, maintaining a strategic balance between capital returns and investment in its diversified business lines.