Jumbo (ASX:JIN) Shares Jump on Signing Deal with Lotterywest

  • November 13, 2020 02:10 PM AEDT
  • Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

Jumbo (ASX:JIN) Shares Jump on Signing Deal with Lotterywest

Summary

  • Jumbo's wholly owned subsidiary TMS Global Services Pty Ltd has signed a 10-year agreement with Lotterywest to provide online software platform and services.
  • Lotterywest is owned and operated by the Western Australian State Government.
  • Mr Mike Veverka, CEO of Jumbo, considers the deal as a significant achievement, with the first government client onboard.
  • Initially, the term is for a three-year period with the option of extension for a further three years followed by four years. 
  • Lotterywest will supervise the marketing strategy for players whereas Jumbo will provide customer support on the white-label platform on behalf of Lotterywest.
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Stock of Jumbo Interactive Limited (ASX: JIN) traded higher by 7.181 per cent to AUD 13.730 on 13 November 2020 (AEDT 12:55 PM), post a significant market update. TMS Global Services Pty Ltd, a wholly owned subsidiary of Jumbo Interactive, has signed an accord with Lotterywest.

Lotterywest is owned and administered by the Western Australian State Government, whereas TMS Global Services is a leading internet online lottery business provider.

Under the agreement, TMS Global Services will provide its online software platform and services for up to the next 10 years to Lotterywest. The agreement follows on the binding term sheet signed and unveiled in late-September 2020.

The agreement includes customary termination rights for service arrangements, giving Lotterywest the authority to terminate the deal at any time if Jumbo materially breaches its obligations, amongst other things.

Key Terms of the Agreement

  • Through a white-label platform for the provision of technical and customer support, software platform and associated operation, and development services, Jumbo Interactive will receive a 9.5 per cent service fee for every customer transaction.
  • It is a 3+3+4-year plan. Initially, the term is for a three-year period with the option of extension for a further three years followed by four years. Lotterywest holds the full authority to exercise the extension's options as per its choice.
  • As soon as a client opts into the new white-label platform, customer ownership will get transferred to Lotterywest.
  • As per the agreement, Lotterywest will supervise the marketing strategy for players and Jumbo will provide customer support on the white-label platform on behalf of Lotterywest. As agreed with Lotterywest, JIN will market to new or existing customer base. 
  • Lotterywest holds the option to transition white-label players to the Lotterywest website and app 12-months from the date of go-live. It is currently scheduled for late-December 2020.

Financial Performance: In Q1 FY21 ended 30 September 2020, Jumbo reported a significant improvement in its underlying performance. In the key lotteries business, like-for-like sales increased by between 26 per cent and 64 per cent. It contributed to group revenue, which was down by only 2 per cent on PCP. The group margins of revenue to TTV was in the range of 19.8 per cent to 20.6 per cent.

About Jumbo Interactive

Jumbo Interactive is one of Australia's largest digital lottery retailers using the latest technology to create an entertaining and engaging customer experience across various digital platforms. It offers flagship service Oz Lotteries and is powered by dual revenue streams of both national and charity lotteries.

 

 


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