Jumbo Interactive Ltd (ASX: JIN) shares are trending lower despite the company advising it has launched a managed services business segment in Australia. During afternoon trade, the Jumbo share price has edged 0.69% lower to $14.49. However, it’s worth noting that at one point during intraday trading, Jumbo shares reached a high of $14.73 after the news broke.
Let’s take a look at what the online lottery ticket seller announced?
What did Jumbo announce?
The Jumbo share price is failing to stay afloat today after the company advised it has launched a managed services business catering to the Australian market. To complement the launch, Jumbo revealed that its foundation partners, Paralympics Australia and St John Ambulance Australia (VIC) Inc. have both signed on.
The newly launched segment will provide a complete lottery management service to not-for-profit organisations. This will include prize procurement, game design, campaign marketing, customer relationship management, and draw management.
Paralympics Australia and St John Ambulance will each have their own lottery games, and Jumbo will earn a fee as a percentage calculated from the total transaction value (TTV). This will be in addition to a share of the profits which Jumbo will also receive.
It’s estimated that these two clients will achieve an annual TTV of around $6.5 million once fully operationally. Furthermore, in the Paralympics Australia agreement, Jumbo will become an official partner of the Paralympics Australia Team.
Both clients will commit to their agreements for a period of up to 4 years. This will consist of a 2-year initial term followed by an option to extend for another 2 years.
According to an Australian Charities Report released in 2018, the total addressable market in Australia for Jumbo’s managed services business is roughly $10.5 billion comprising donations and bequests.
Words from the CEO
Jumbo CEO Mike Veverka touched on the newly launched segment, saying:
We are excited to launch the Managed Services business in Australia with our foundation partners Paralympics Australia and St John Ambulance Australia (VIC).
The addition of managed services in Australia is aligned with our vision of “making lotteries easier” and will assist many not-for-profits meet the challenges of COVID-19 and continue their fundraising efforts via a digital lottery program.
How has the Jumbo share price performed?
Over the last 12 months, the Jumbo share price is up more than 24%, reflecting a recovery in the sector.
Jumbo shares dipped to a low of $6.99 on 16 March, before surging around 85% over the course of the following month
Based on the current Jumbo share price, the company commands a market capitalisation of around $911 million.
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Aaron Teboneras owns shares of Jumbo Interactive Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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