Lottery (ASX:TLC) executives used the company’s latest earnings call to underline the resilience of its portfolio during what management described as the leanest jackpot environment since the group listed in 2022, while outlining a strategy centered on digital evolution, disciplined investment, and protecting its license position in highly regulated local markets.
New CEO highlights “position of strength” and digital focus
Chief executive Wayne Pickup, speaking on his first results call after joining the business and relocating from Chicago, said he had spent his first three months meeting teams across technology, commercial, and the contact center, as well as visiting lottery outlets along the eastern seaboard. Pickup said the company has “exceptional assets,” household brands, an “unmatched license portfolio,” a strong balance sheet, and what he described as a strong culture and retail network.
- Accelerating the company’s evolution as a digital entertainment business, which he emphasized would be an “evolution, not revolution,” and “not at the expense of retail.” He pointed to online store syndicates as an example of integration, noting about 80% of retailers sell shares in their store syndicates via the platform.
- Concentrating on local, highly regulated markets, with Pickup describing Australia’s market structure as attractive due to long-duration, staggered licenses and broad lottery participation. He noted that typically “one in two” Australian adults participate each year, but only half are registered customers, which he described as an upside opportunity.
- Focused execution, including continued game portfolio management and “disciplined capital and cost allocation.” Pickup said the company plans to provide more strategic detail at an investor day in the middle of the year.
Pickup also noted the rollout of a digital signage upgrade across 3,300 lottery outlets, which he said enables more dynamic in-store advertising and supports the next phase of delivering “data-driven, automated, and API-enabled content” to improve speed to market and promotional effectiveness.
Lean jackpots weigh on turnover, but financial results hold up
Chief financial officer Adam Newman said the first half of fiscal 2026 saw Division One offers for jackpot games fall 14% from the prior corresponding period, but the group delivered what he called a “resilient” performance supported by portfolio diversification.
Newman reported group revenue of AUD 1.8 billion and EBITDA of AUD 367 million, down 0.7%, with record Keno performance partly offsetting jackpot impacts. Operating expenses increased 2.9% to AUD 146 million, which Newman said reflected the timing of Powerball product changes and increased employee costs.
Net profit after tax declined 1.4%, but the board declared an AUD 0.08 per share fully franked interim dividend, in line with the first half of fiscal 2025. Newman said the dividend represented 103% of net profit for the half, supported by strong free cash flow.
Management quantified the earnings headwind from jackpot conditions, with Newman saying jackpot impacts adversely affected EBITDA by approximately AUD 26 million versus the prior period. Pickup added that the half represented the least favorable jackpot period since listing, with an estimated ~AUD 400 million unfavorable impact on turnover versus ~AUD 200 million in the first half of 2025.
Game portfolio: base games, instants, and Keno help offset jackpot softness
Executives repeatedly pointed to diversification across games and channels as a stabilizer. Newman said base games performed strongly, naming Saturday Lotto and Lucky Lotteries as standouts, while Instant Scratch-Its maintained momentum due to new products and pricing. Pickup said Keno continued to strengthen retail performance by capitalizing on pub and club foot traffic.
Pickup said changes to the company’s two largest games, Powerball and Saturday Lotto, are “resonating.” He said Saturday Lotto’s AUD 6 million core Division One offer is generating incremental revenue each draw, and early signs on Powerball pricing are positive, though the full effects are expected to emerge over time as jackpots normalize.
On Saturday Lotto, management highlighted strong retention following a price increase and new offer introduced in May. Pickup said early price retention is 103%, “well above expectations,” and above prior price increase retention, including during COVID when Division One moved to AUD 5 million. In Q&A, Chief Commercial Officer Callum Mulvihill said holding 103% after 29 weeks had “surprised on the upside,” and referenced a prior change that saw early retention around 80% but later settling around 50%.
Instant Scratch-Its were described as particularly successful in key gifting periods, with Pickup noting a refreshed range and higher price points such as AUD 30, and sales up 8.5% over the prior year during Christmas. He also said Lucky Lotteries was up “over 60%,” driven by a mega jackpot that reached AUD 21 million at period end and had risen to just over AUD 24 million at the time of the call.
Keno performance was another key theme. Pickup said Keno turnover rose 7%, growing above historical trend, supported by promotional initiatives, venue partner activity, and strong visitation in pubs and clubs. He added that the online Keno channel returned to growth after the introduction of spend limits in fiscal 2025, with turnover up 3.5% in the half.
Digital share, customer activity, and near-term initiatives
Pickup said digital share of lottery turnover grew to 41.2% for the half, while also noting that big jackpots drive participation and acquisition, and their absence impacted active customer numbers and digital share growth. In Q&A, management described recent digital softness as largely a derivative of the Powerball jackpot environment and said the long-term trend toward digital remains intact, with short-term fluctuations around jackpot conditions.
Pickup said the company wants to “capture growth faster” in digital, citing expectations of seamless experiences, instant gratification, and personalization. He highlighted opportunities to embed data and AI across the enterprise to better understand customer preferences.
Near-term initiatives discussed included:
- Check & Collect, enabling customers to scan tickets and claim prizes immediately via the app
- QR codes in retail outlets to simplify registration and support customer acquisition
Pickup also said the business is reviewing how it positions and markets products, arguing that customers “choose by game first” (e.g., Powerball or Saturday Lotto) rather than “lottery as a category,” and that the company can build stronger entertainment experiences around its “hero products.”
Capital discipline, investment plans, and license advocacy
On costs and investment, Newman reaffirmed fiscal 2026 OpEx guidance of AUD 310 million to AUD 320 million, with costs expected to skew to the second half due to advertising and promotion, technology, and project-related spend. He said the first half likely benefited by “low- to mid-single digits” in advertising and promotion spend due to the absence of revenue opportunities from large jackpots, with a step-up expected in the second half alongside initiatives such as an Oz Lotto brand refresh.
CapEx was AUD 34 million in the half, with full-year CapEx targeted at AUD 90 million to AUD 100 million, reflecting digital transformation, core platform work, and retail terminal upgrades.
Newman said net debt to EBITDA was at the bottom end of the company’s targeted leverage range at 3x, with AUD 560 million of available liquidity and a 4.5-year average debt tenor. He said the board remains committed to the 3–4x leverage target, will explore opportunities aligned with the strategy (including license enhancements), and will seek to return excess funds to shareholders in the most tax-efficient manner where appropriate.
Pickup also emphasized protecting and enhancing the license portfolio, warning that Northern Territory-licensed operators offering foreign-matched lottery products sit outside broader state-based frameworks and contribute no Lottery Duty to governments other than the NT. He said the federal government continues to review the products and that the issue “should be more fully addressed,” adding the company will advocate for consistent regulation.
Closing the call, Pickup said the first half demonstrated resilient fundamentals despite jackpot headwinds, and reiterated that the company intends to provide more detail on its plans at a mid-year investor day.
About Lottery (ASX:TLC)
The Lottery Corporation Limited engages in lottery and keno businesses in Australia. It operates under the The Lott and Keno brand names. The company was founded in 1881 and is based in Brisbane, Australia.
