Shares in lottery operator Jumbo Interactive Ltd (ASX: JIN) are surging in today's session after the release of its FY25 results.
The market responded positively to the update, with the company posting its second-highest profit on record.
At the time of writing, shares in the ASX All Ords stock are changing hands at $11.50 per share, up by 12% from yesterday's close.
In comparison, the All Ordinaries Index (ASX: XAO) is 0.3% lower at the same time.
Let's take a closer look at how the year unfolded for this ASX All Ords stock.
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Specialist lottery business
Jumbo is an Australian digital lottery business.
It sells lottery tickets, licenses lottery software, and offers comprehensive management services for clients around the world.
Today, more than 14,000 organisations implement the company's solutions.
Jumbo divides its operations into three business segments.
In its lottery retailing division, the group is responsible for online reselling of state and charitable lottery tickets in Australia.
In its Software-as-a-Service (SaaS) unit, Jumbo licenses its digital lottery platform to governments and charity lottery operators.
And through its managed services division, the company provides lottery management services with a focus on the UK and Canada.
FY25 performance snapshot
Firstly, it warrants mentioning that Jumbo's FY25 numbers don't seem spectacular when compared to FY24.
However, management noted that FY24 was an "exceptional" year boosted by record jackpots.
So, the company's performance in FY25 appears solid considering FY24 was unusually strong.
Total transaction value (TTV) of $996.1 million declined by 5.5% from the previous year.
Revenue also dipped by 8.8% to $145.3 million, with underlying operating earnings (EBITDA) of $68.3 million falling by 10.8%.
Jumbo's underlying EBITDA margin of 47% came in slightly lower but within management's guidance range.
Notably, the underlying EBITDA margin for the managed services division clocked in at 27%, comfortably surpassing guidance of between 21% and 23%.
Meanwhile, underlying net profit after tax (NPATA) declined by 8.8% to $42.3 million.
Underlying earnings per share (EPSA) also slipped by 8.3% to 67.6 cents per share.
And free cash flow of $41.6 million fell by 23% on last year's numbers.
The company declared a fully franked dividend of 54.5 cents per share for FY25 – unchanged from FY24.
What next for this ASX All Ords stock?
In FY26, Jumbo expects its Australian operations to deliver an underlying EBITDA margin of between 46% and 50%.
Here, the revenue margin for the lottery retailing unit is forecast to rise slightly. The SaaS revenue margin is projected to remain stable.
In the managed services division, Jumbo anticipates underlying EBITDA to grow between 10% and 15% in the UK, and up to 10% in Canada.
The company also plans to continue its share buyback program which saw $7.8 million worth of shares bought in FY25.
However, management noted that the timing and number of shares purchased will depend on the company's share price, as well as alternative capital deployment opportunities.
Notably, the ASX All Ords stock has identified potential acquisitions as a pillar for accelerating growth.
