Mr Veverka: Thank You, Thank You for Your Time This Morning. Jumbo
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Mr Veverka: Thank you, thank you for your time this morning. Jumbo Interactive is the company behind ozlotteries.com, which is a app and a website that has been around since 2005 selling lottery tickets in Australia, same lottery tickets you buy on the street, Oz Lotto, Powerball, but a whole lot more. We're completely 100% digital. All our tickets are sold via our various devices which include your computer, your phone, even your Apple watch and we've really undergone a lot of growth over the last 15 years. We started this in 2005 and we really represent what lotteries is going to look like in the future. One of our big strengths is that we've really done a good job in appealing to the younger demographic. The little graph you see there on the left, the light blue is the demographic of your typical lottery player, on the right-hand side you've got the 65-plus and on the left-hand side, you've got your 18 to 25s. While the dark blue is our demographic and as you can see, it's very heavily skewed towards the 25 to 35 and 35 to 45 on the left hand side, so being purely digital, people in that age group are more likely to go and buy a lottery ticket online than walk into a store. A lot of benefits with buying tickets online, we have features like auto play, the convenience that it's there 24 hours a day. One of our customers - one of the perks of my job is I get to ring up winners and we had a winner who, on the Central Coast, won about $25 million. I called him up to tell him that he'd won $25 million and he thought it was a joke. I explained to him that no, it was all official, he still didn't believe me and I explained that five years earlier he had signed up on our auto play and every week we were faithfully buying his tickets for him and this particular week when his numbers came up and that's when the penny dropped, literally, that he really did win. So it was a great story that we really put out there to the market and it encourage a lot of our other of our players to join up onto our auto play. We also have a thing called the lotto party. I'm sure you've all been part of a lotto syndicate at work where somebody has to get together and organise a group of people to play the lottery; a lot of problems doing it that way. We've gone completely digital, we're responsible for chasing people up for the money, we're responsible for divvying up the prize winnings at the end of the day, so as we say, we keep friends as friends. We also do special combos and also a new thing for the last few years, we do charity games. So we have people like the RSPCA, the Mater Hospital, the Endeavour Foundation and others on our website, so people can come to the website, buy Oz Lotto, buy Powerball, buy Set For Life as well as support these charity games. So that's a quick introduction as to who we are. How did we go in the last six months? On the left-hand side, well let me start with the right-hand side, the financial results were great, they were record numbers. TTV, which is our ticket sales, up 25% and revenue up 23%, profits up, everything that you would expect to see of a good result. But the real question is why are the numbers so good and the reason for that is that our customers clearly love playing on Jumbo. We track our number of active customers, they're customers that actually play in the last 12 months and over the last 12 months we had 848,000 active customers, which grew over 100% over a two-year period, so that’s some pretty staggering growth on not just customers that sign up to the system, but actually play. For us it's all about engaging with our customers and using technology to make that happen. Now lotteries is a fun game when the jackpots are big, but it can get boring when the jackpots aren't there. So typically or historically, lottery sales tend to go up and down with the jackpots, you get a large jackpot, sure, everybody will buy a ticket when it's $100 million, but what if it's only $10 million, doesn't seem like a lot of money anymore, so the sales go down. But when they're on our software platform, when they're on our app, we've got a lot more technical methods to keep engaged with our customers and keep them playing. Our customer dormancy rate, which is our measure of when people just stop playing for one reason or another, has plummeted from about 30% down to 16.9%. That's a good thing, because our customers are less dormant, they're more active on our system. Again, our proprietary software platform is the main reason for that. We're employing artificial intelligence and machine learning, so it really personalises each one of our customers. They're not treated as a number, but they're treated as an individual. We know what they like, what they don't like and we give them the content that suits that. That's important because from a financial point of view, as I said before, sales tend to go up and down with jackpots, makes us a lot more resilient with the jackpots do go down. Because we've got all this technology at our disposal, that keeps people engaged and playing. This is an interesting graph. This shows you the percentage of tickets that get sold online as opposed to the overall market and as you can see from the last seven or eight years, it's steadily grown up and up and up. So right now 26.7% of all the lottery tickets sold in Australia happen online. There are countries like in the UK, they're about 30%, Finland and Austria are about 40% and 50%, so this whole migration of customers from offline to online and the emergence of younger players into lotteries is really pushing along the growth of the online lottery industry. It's one of those industries that's just resilient to so many things. It's there because it raises money for schools and hospitals, the state governments are major beneficiaries from lottery ticket sales, Tabcorp, our partner, is a major beneficiary. We are of course and the people that play the lotteries, obviously the winners, are major beneficiaries, but it's really all about raising money for schools and hospitals and even during the GFC, our lottery sales just kept going up and up and up, it's impervious to many of the things that happen around the world. That's just a little graph of the number of jackpots. As you can see, it does go up and down over the years, but the internet penetration continues to go up and our sales continue to go up regardless. That's the ticket-selling business, that's been around for 15 years, but last year we started a new part of our business, software as a service, which we call Powered by Jumbo. Now we're quite a success in the world lottery stage and a lot of people come up to us and say how can their lottery around the world benefit from some of the technology that we've developed here in Australia for the last 15 years. So we've addressed that by releasing a software as a service business that basically sells our software platform to other lottery providers around the world. That represents a lot of growth for Jumbo over the next decade or two, because let's face it, a lot of tickets get sold around the world, about US$300 billion, that's billion with the B, around the world and only about 7% of that is online. So a lot of work to be done over the next couple of decades for companies that can help lotteries go online. But our initial target are charity lotteries, simply because they're the lotteries most eager to sign up on our system. We've had three clients to date and just this morning we've announced our fourth client, the multiple sclerosis lottery in Queensland. They've joined the Endeavour Foundation, the Mater and The Deaf Society as clients of ours using our software. We've just, in the last six months, developed a point of sale solution, because they're not just - these customers don't want to just sell their tickets over the app that we give them or the website that we give them, but they have houses, they have over- the-phone sales and everything, so we've just released a point of sale device that works seamlessly with our website and our app so that people can buy their tickets from inside the prize home, wherever that may be. Some of the long term growth, as you can see there, despite the jackpot fluctuations, yes there are some short term ups and downs there, but over the long period, that's over about six or seven years, you can see it's quite a strong uptick, in fact our compound annual growth rate over five years is about 24.6%, which is not too bad.