Jumbo Interactive (ASX:JIN) used its first-half FY26 earnings call to highlight a more diversified business profile following its recent acquisitions, alongside “solid” results delivered through what management described as one of the leanest jackpot periods in more than two decades for the Australian lottery market.
Managing Director and CEO Mike Veverka said the company has taken “significant steps” in its evolution toward becoming a global lottery and prize draw operator. He noted that eight years ago all profits came from Australia, while international operations now contribute around a third of profits. Veverka also emphasized Jumbo’s capital-light model and said the company is increasingly leveraging artificial intelligence to accelerate software development, improve productivity, and strengthen fraud detection and governance in a regulated environment.
1H FY26 performance and cash flow
Free cash flow increased 81% to just under AUD 20 million, with cash conversion of over 100%, which CFO Jatin Khosla cited as evidence of the company’s cash-generative model.
Khosla said underlying EBITDA excluding acquisitions increased 1.4% versus the prior corresponding period, reflecting a lower contribution from Australia due to the jackpot environment, offset by growth in managed services. Dream UK and Dream US contributed for roughly two-and-a-half months and two months, respectively, adding AUD 6.5 million and lifting group underlying EBITDA to AUD 37.5 million.
Australia: resilient result despite subdued jackpots
Veverka and Khosla both pointed to a weak jackpot backdrop in Australia. Management said the aggregate Division 1 prize pool declined 55%, the average jackpot fell to AUD 41 million from AUD 51 million, and there were no AUD 100 million jackpots—something the company said it has not seen since 2022. Even so, Jumbo reported a similar TTV outcome in lottery retailing and an increase in market share compared with the prior corresponding period, supported by a higher contribution from charity and proprietary products.
Digital penetration increased 80 basis points to 41.2%. Active players moderated, with management attributing the prior corresponding half’s higher activity to a record AUD 200 million Powerball draw. While new player volumes normalized, management said player quality improved, reflected in higher average spend and stronger value metrics.
In Australia, underlying EBITDA was AUD 27 million, with a margin of 47.2%, within the company’s 46%–50% guidance range. Khosla said this outcome came despite increased marketing investment, partially offset by improved product mix and momentum in charity and proprietary products. He also noted a 140 basis point increase in revenue margin to 24.8%, citing mix improvement and price changes for Saturday Lotto and Powerball.
During Q&A, Khosla said Powerball and Oz Lotto comprised about 68% of the first-half portfolio, which he described as the lowest seen in recent years compared with a typical level of around 75%. Veverka added that Jumbo has historically underperformed in low jackpot environments and overperformed when jackpots are high, pointing to an AUD 80 million Powerball draw two weeks prior as the company’s best result since 2021.
SaaS and managed services: new partners and expanding margins
In SaaS, the company highlighted a partnership with RSL Queensland, described as the largest prize home lottery in Australia. Veverka said the relationship has the potential to double SaaS TTV to over AUD 400 million in FY27. For the half, SaaS TTV increased 10% and external revenue rose 13%. Excluding Lotterywest (which was impacted by jackpots), TTV rose 12% and external revenue increased 23%.
Management also reiterated that Jumbo is working with Brightstar on a subcontractor basis related to technology and digital solutions for Lotterywest, with final terms subject to negotiation and board approval. During Q&A, the company said it remains involved in the overall solution, but it was too early to provide timing or quantums, and noted the existing Lotterywest contract continues until November 2027, with an option to renew.
In managed services, revenue increased 17% and underlying EBITDA grew 51%, with the EBITDA margin expanding to 28%. Khosla said the UK benefited from pricing initiatives and new business wins, alongside disciplined cost management and favorable foreign exchange translation. Canada outperformed due to new contract wins, product launches, and campaign timing that brought some revenue into the first half; he cautioned that the first-half growth rate should not be extrapolated, but said underlying momentum remains strong.
The company upgraded its FY26 Canada managed services (Stride) underlying EBITDA growth guidance to 20%–25%, from 5%–10% previously, while leaving UK managed services guidance unchanged at 10%–15% growth.
Dream UK and Dream US: integration ahead of schedule, guidance upgraded for UK
COO Brad Board said the first 90 days of integration for Dream UK and Dream US are complete and “ahead of schedule.” He described a phased program focused first on preserving momentum and integrating core functions, then platform implementation and value enablement, and later a shift toward growth execution and sustainable value creation. Board said Jumbo’s lottery platform is a “key strategic enabler” across the businesses, and that operating similar businesses globally is generating proprietary insights to optimize performance.
Khosla said Dream UK contributed $11.5 million in revenue and $5.2 million in EBITDA for the post-completion period in the half, performing ahead of expectations due to continued momentum and favorable prize mix. Jumbo upgraded expected FY26 underlying EBITDA contribution for Dream UK to GBP 8.0 million–GBP 8.3 million, from GBP 7.0 million–GBP 7.3 million previously.
For Dream US, Khosla explained the company adjusted reported revenue and EBITDA to remove a one-off, non-cash provisional fair value adjustment under AASB 3 related to deferred revenue for draws that commenced pre-acquisition but concluded post-acquisition. On an underlying basis, Dream US contributed $3.9 million in revenue and $1.2 million in EBITDA in the half. Full-year FY26 underlying EBITDA guidance for Dream US remained unchanged at $2.7 million–$3.0 million.
In Q&A, management also discussed seasonality, noting prize mix and the Christmas period typically benefit the first half, with the US business showing a stronger skew due to promotional timing around events such as Black Friday, Cyber Monday, and Giving Tuesday.
Capital management: dividend, debt reduction, and buyback
The board declared a fully franked interim dividend of AUD 0.12 per share, representing a 49% payout ratio of statutory NPAT at the top end of the company’s 30%–50% target range. Khosla said the balance sheet remains strong following the deployment of AUD 130 million of net cash for the acquisitions, with AUD 45 million in available funds and AUD 13 million of undrawn debt capacity. Net leverage was described as conservative at 0.8x EBITDA, and management said it has reduced debt by approximately AUD 10 million since completion and will continue to prioritize debt reduction.
Management said the on-market share buyback would continue to be executed in a “disciplined and opportunistic” manner. Responding to an investor question, Veverka said the buyback remains part of the company’s capital management mix, although the company is “unable to use it all the time” given other activity underway.
Looking ahead, Veverka said the company’s broader operating guidance was unchanged aside from the two upgrades (Stride in Canada and Dream UK), and pointed to the integration progress and the RSL Queensland onboarding as drivers heading into FY27.
About Jumbo Interactive (ASX:JIN)
Jumbo Interactive Limited engages in the retail of lottery tickets through internet and mobile devices in Australia, the United Kingdom, Canada, Fiji, and internationally. It operates through three segments: Lottery Retailing, Software-as-a-Service, and Managed Services. The company is involved in the retail of digital lottery tickets through Oz Lotteries; licenses Powered by Jumbo, a digital lottery platform solution to government and charity lottery operators; and lottery management services, including prize procurement, lottery game design, campaign marketing, and customer relationship and draw management services to charities.
