ZEAL Network SE (TIMA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to ZEAL's conference call regarding the publication of the annual report 2019. [Operator Instructions] Let me now turn the floor over to your hosts, Dr. Helmut Becker and Mr. Jonas Mattsson.

Welcome.

Okay. Thank you very much, and welcome to this investor call. Thank you so much for the interest and for joining the call. I trust that all of you have access to the presentation, which should have been distributed to you this morning. But if you don't have it, it's also available on the ZEAL website in the Investor Relations section. This is an interesting time for all of us. And yet for full disclosure, we, the ZEAL team, are spread across different locations. So let's cross finger that the technology works well for us now. Moving on to Slide 2, you will find the agenda for today's presentation, highlighting the main areas Helmut and I will cover before giving you the opportunity to ask questions. We will start off by giving you a summary for 2019, followed by a business and a financial update. We will continue with an outlook and a cost comparison before we finish off with the recent developments and the key takeaways from this call. On Slide 3, we have included a quote from the annual accounts. And I have to say, I've never been so convinced that switching business model was the right decision for ZEAL and for our shareholders. By leaving the legal uncertainties behind us, we can now instead focusing on building, growing a sustainable business in Germany. This is something that I'm very much looking forward to. Allow me now to present the summary of the year, which you will find on Slide 4. 2019 was exciting and a successful year for the ZEAL Group. Not only did we reintegrate Lotto24 into company, we also changed the business model, and we relocated the corporate headquarter back to Hamburg from London. We saw an impressing rise in billings due to the inclusion of Lotto24 numbers. We further realized significant cost savings during the year. And the adjusted EBITDA came in, in line with the announced guidance. We also further expanded our market share. And we now have a proposal for the attractive dividend policy to present to you. Let me now hand over to Helmut, our CEO, that will take you through the business update section.

Thank you, Jonas. Welcome also from my side. Moving on to Page 6. What you can see on this slide is that the online lottery market in Germany has grown from EUR 250 million in 2013 to now more than EUR 1 billion in 2019. We have a strong position in this market with 35% market share in 2019, and that includes only 2.5 months of Tipp24 billings. Lotto24 has grown its market share over the last years. We plan to grow our market share going forward. Our long-term ambition is to have 50% online market share in the market in general. And if you look at the market on next page, we see there is an online penetration in the German lottery market that at this point in time is still very low. We're looking at 14% in 2019 compared to 26% in the U.K. or 41% in Sweden, and that's numbers from 2018. Other digital goods industries have typically online penetrations around 50%. So this is our #1 growth opportunity. We want to take advantage of the rising online penetration in the German lottery market. The total size of that market is EUR 7.3 billion for just the state lottery products or EUR 9 billion if we include other lottery products. Long term, that means we are looking at a EUR 9 billion market that's moving towards 50% online penetration, and we want to own 50% of that online market. We are going after this market opportunity with our brands, Lotto24 and Tipp24. The reunification of the 2 companies, ZEAL and Lotto24, is well underway. Everything we said we wanted to do has either been completed or is well on track. We have unified our organization and cut headcount to 190. We have set up the intercompany agreements and processes between ZEAL and Lotto24. For Tipp24, we have successfully conducted the business model change from lottery betting to lottery brokerage. We have restructured the company during the course of the deal implementation. We expect nonrecurring implementation costs to be between EUR 15 million and EUR 20 million as planned. And we are well on track to capture the announced synergies, that is the EUR 57 million synergies per year on top of the EUR 4 million cost savings program that we had started at the announcement of the deal. 2020, we will still see some transition impact. The reunification of our tech platform will be done throughout 2020 and eat up roughly 70% of our development capacity. This leads to transition costs, for example, for freelancers that will go away by the end of this year. On the next slide, we can see how the brokerage business model works. There are 16 state lotteries that operate lotteries in Germany, the biggest products being 6 out of 49 and EuroJackpot. Each of them sell only to the residents from their respective state. We broker these lottery products to our customers. We offer these products across Germany on our websites and apps under the brands Lotto24 and Tipp24. We earn a commission and a ticket fee on each transaction. Unlike the lottery betting model, we do not have a jackpot risk because the prices are paid by the state lotteries to us, and we just pass them on to our customers. This leads to much lower revenue and earnings volatility than in the lottery betting model. However, there is still a dependency on the size of the jackpot. In times of high jackpots, we see an acceleration in sales and customer acquisition. The opposite happens when the jackpots are low. This slide explains in many ways why we are excited about our business model. That's Page 10. It shows how the billings develop for each cohort of customers that we have acquired in past quarters. Once we have acquired a customer cohort, a significant share of them become very loyal and buy lottery products from us for many, many years. [Technical Difficulty] Okay. I think we are back now. Okay. So this slide explains why we changed business model and made the ZEAL-Lotto24 deal. In a business where you spend once for customer acquisition and then monetize those customer cohorts for many, many years, the sustainability of that business model is critically important. We concluded that the future of the lottery betting business and, therefore, the future growth and monetization opportunity was very much in doubt. Now we are in a stable environment and can safely harvest the value of the customers that we acquire. Our aim is to earn back the upfront customer acquisition costs within the first 2 years or less of the customer lifetime, thus creating a strong customer lifetime value. This slide also shows a strong customer acquisition track record, leading to strong billings growth over the last years. By the way, you can see the jackpot dependency on billings and on customer acquisition also on this slide. High jackpot situations have led to the peaks that you can see on this slide. Before we go into the financial update, let me quickly talk you through our business model. The biggest lever for growth that we have is efficient and effective customer acquisition. In addition, we can improve the customer lifetime value of our customers, for example, by driving the usage of apps or selling subscriptions. Billings growth drives revenue growth. In addition, we can drive revenue through margin improvements. We achieve this, for example, by optimizing our product mix, adding and selling high-margin products like clubs or Instant Win Games. Improving margin and, thus, customer lifetime value actually has a reinforcing effect on our customer acquisition because it improves the unit economics of our customer acquisition. We have strong economies of scale. Of an incremental euro in revenue, 80% to 85% dropped either to the bottom line or we decide to invest part of it into future growth, knowing that we can earn that growth investment back within 2 years. Finally, we managed EBITDA by executing tight cost control. With that, I'll hand you back to Jonas for the financial update.

Thank you very much. And let me take you through the numbers in greater detail. So let's all move to Slide 12. Most of you have already heard about this number in our February call, but let me highlight a few numbers though. Billings of EUR 467 million is an increase of 58%, but that's mainly due to the inclusion of the Lotto24 customers. If we, for a moment, look at Lotto24 AG on a stand-alone basis, from the beginning of the year, they had EUR 366 million in billings of which EUR 37 million came from the Tipp brand. That means an organic growth of roughly 2.3% on a like-for-like basis for Lotto24. Revenues at EUR 113 million is, as explained earlier, lower due to the change in business model, but also the big winner we had in August in the old business model. Revenues for Lotto24 AG on a stand-alone basis in the beginning of the year is more difficult to separate due to intercompany agreements, but the underlying margin is 11.6%, so you can easily calculate that. Our cost base, this is quite interesting. So while we were adding EUR 22 million of cost coming from Lotto24, we were still able to reduce the overall cost by EUR 21 million. And finally, adjusted EBITDA at EUR 29.4 million, once again, within our guidance that we announced earlier. Let me now give you a bit more insights, which you will find on Slide 13. We were able to grow net cash to EUR 120 million, a 17% increase, showing the underlying strength of the business. We have set aside EUR 77 million for the VAT case, a case I'm sure that you all know we won in the first instant back in November last year. In January of this year, so obviously not reflected in these numbers, we paid EUR 54 million on this referred directly to the tax authorities in order to save or potentially also gain interest. New registered customers of 274,000 is the customer we acquired in the German brokerage segment. That means 7.5 months of Lotto24 and 2.5 months of Tipp24. If we do the same thing as for billings, if we're looking at Lotto24 AG on a stand-alone basis from the beginning of the year, they, Lotto24, acquired 397,000 customers, of which 24,000 was related to the Tipp brand. On Slide 14, you will find further performance indicators. CPL or cost per lead is reduced by 7%, thanks to more efficient marketing channels that we now have access to, especially social media and Google. Now our monthly active users is almost doubling. But if you look at the last quarter of this year, we're just shy of 1 million monthly active users. Average billing per user of EUR 53, a slight decrease from last year, is an effect that products like Instant Win Games are no longer part of the portfolio as we today are offering. And we have talked about that with you in the past. Let me now talk about the outlook for this financial year, which you will find on Slide 16. The 2020 numbers are more relevant when building your models than comparing with 2019 due to all special effect we had last year of Lotto24 inclusion of 7.5 months, the business model change, et cetera. So what are the numbers? Our 2020 guidance, we assume a billings of EUR 550 million to EUR 570 million, revenues of EUR 70 million to EUR 73 million, a gross margin approximately 12% and an adjusted EBITDA of EUR 5 million to EUR 8 million. The cost per lead for the German business will be lower than previous year. A new registered customer also for the German business will be nearly twice as many as we acquired in 2019. Finally, I can announce on Slide 17 that we are planning what we are planning to do in terms of dividends and always subject, of course, to approval of the AGM. But thanks to our sustainable business model and the expected increasing profitability and improved liquidity situation for the company, we are proposing to pay out almost EUR 18 million this year, which is more than double than we paid last time. This corresponds to EUR 0.80 per share. And our attention, though, is to increase this to EUR 1 per share in 2022. Let me now explain our cost base in the coming 2 slides. So please move to Slide 19. Taking Lotto24 stand-alone and just for inflation, we would have a starting position of EUR 22 million as a cost base. ZEAL Germany is now reporting a EUR 39 million cost base. And how is that explained? Firstly, we have to adjust for the volume effects when the billings are increasing to be able to compare a like-for-like, which is the first EUR 5 million in additional costs. Secondly, for good reasons, Lotto24 has deliberately underinvesting in the platform. We believe it's key to also have a state-of-the-art platform to be able to launch new products quickly to provide the best possible user experience. In fact, this is a competitive edge we have, and we need to stay top of the game. In addition, we're now building and adding new products like Instant Win Games and social lotteries which, in the medium term, will add growth and improve margins for our business. These initiatives have a business case supporting these investments. Lastly, we are still in a transition year in which we are assuming additional costs to further optimize the organization, reduce the complexity, and don't forget, we are still operating 2 listed company. All this leads to a German cost base of EUR 39 million, excluding the marketing costs. And don't forget, we also have a few millions in the cost for our international business initiatives, but those have no EBIT impact since they're also coming with positive revenue contribution. Moving to Slide 20. This explains the same information but per cost category. What I do want with this slide is to call out that we are planning to invest EUR 21 million in marketing, which is EUR 6 million more than the Lotto24 standalone. This is a signal of strength. The purpose is to grow the business, increase marketing share and take advantage of the off-line-to-online conversion that is certainly coming. With this, back to you, Helmut.

Thanks, Jonas. On Page 22, you can see the most recent developments. Two weeks ago, we've launched a charity lottery called freiheit+. The product is based on a proven product concept called cash for life or set for life. It is in addition to our product mix that customers can only buy from us. On the regulatory and legal side, the German state governments have agreed on a new gambling treaty. There are some risks and some opportunities in new law, but overall, it gives us a very stable environment to operate in, with no major changes to our business model or -- and market environment. We see some opportunities in improved marketing regulation and the potential to add other gambling products to our portfolio. However, likewise, other gambling companies could also add lottery to their business model. To do so, they would -- that would require a broker license, of course. As a result of the new regulation, our license has already been expanded to June 2022. We do not see a risk that our license could not be prolonged beyond 2022. And finally, the coronavirus crisis that we all live through right now. Fortunately, it has so far not had a measurable negative impact on us. As an online tech company, we are in a privileged situation. Our staff is mostly working from home. With the tools that we have in place, that is not a problem. We have not seen a major corona impact on our business yet. In Spain, ONCE and also the state lottery, sacli, have stopped their Spanish product costs. There, we are down to selling EuroJackpot and Instant Win Games. However, we consider the risk that the German state lotteries will stop their business and draws as very, very small. The same is true for EuroJackpot. What we see is that there is a decrease of around 10% to 20% in billings sold off-line in Germany and in other countries that have implemented similar anti-corona measures as Germany. We see a risk that the lottery product may be less top of mind for our customers than in usual times. On the other hand, the online channel is even more attractive these days. We try to take advantage of that with our advertising presence, for example, on online new sites. We currently see strong customer acquisition numbers, but it's difficult to separate the high EuroJackpot effect that we have right now from a potential corona crisis effect. It's too early to tell what effect the coronavirus crisis is going to have on our business. In any case, we have not seen a reason to adjust our plans for 2020 so far. So I want to conclude with the key takeaways from this presentation on Page 24. We do have an attractive and sustainable business model. We are very well positioned for growth. We have a clear focus on costs, and cost synergies are well on track. And we are proposing an attractive dividend policy. Thank you very much.

The moderator, please.

[Operator Instructions] The first question is from Patrick Schmidt of Warburg Research.

I would have 3, if I may. So the first question, it's very simple to get on your cash position again. So you reported about EUR 156 million in your balance sheet. And I guess this is netted against the EUR 30 million other liabilities to get to the -- about EUR 120 million net cash. And just to be sure when you deduct the 40 -- the EUR 54 million, that you get to about EUR 66 million. And the potential of the VAT case of another EUR 23 million to get to the EUR 77 million. But earlier, when I remember correctly, you stated that the contingent liability could amount to EUR 85 million. Is that revised? Or was that a different figure, just to be sure? And then secondly, when you talked about the online penetration rates, obviously, these are clear -- let's say, clear figures from the state lottery and does not include any gray market participants like one of your main competitors, Lottoland. So how would you see the chances of getting market shares from them? And how do regulators, at the moment, basically, let's say, fight against the sacli lottery providers in terms of potential payment bookings or IP booking, et cetera? And then one more question. I was slightly confused by your definition of Instant Win Games because you said they're excluded now but then you're saying there's potential of innovation for new Instant Win Games. Maybe you can clarify that. And one last question, just on your potential Q2 -- Q1 performance. You said favorable jackpot situation. I think the [ added ] jackpot in EuroJackpot is 18% higher than last quarter. So I guess, you should be off to a good start. And I was wondering about your cautious from the coronavirus. As in France, for example, we saw the state lotteries, online ticket sales surge basically. And they also observed a sharp decline in brick-and-mortar retail sales.

Thank you, Patrick. Maybe I can start answering your question. So you are basically right in what you're saying, but let me just try to clarify this one. Yes, when you look at cash and short-term financial assets, we have more than EUR 150 million in that one. But you also then have to deduct all the working capital and short-term liability. If you do that, you come to EUR 120 million. As I presented in net cash, that's available -- availability net cash that we have. From this one, you have in figure to then deduct a EUR 76 million in VAT liability. And let me clarify, when we talk about EUR 85 million, that was including interest and penalty that we assumed before. But as we give this payment to the tax authorities in January of EUR 54 million, that remove all the interest and the penalty on this part. So should we, in a worst case, lose the situation, we only have a further EUR 22 million, which is then the delta, as you rightly pointed out, as a potential liability to tax authorities. We have -- although pretty certain that we have a very, very strong case, and we ultimately predict that we're going to win the case. And then we will obviously earn interest to the 6% that the German state have as an internal interest of this EUR 54 million that we have already paid. In terms of the online penetration, they exclude the former secondary lotteries or the secondary lottery business, and basically, we only have 1 major play, which is Lottoland, as you know. So they exclude it from this 14%. And speaking about the regulation...

Yes, let me comment a little bit on Lottoland and secondary lottery and what's happening there. So yes, Lottoland is under a lot of pressure right now. I don't think their billings would change the online penetration numbers in a very significant way. The key issues that they have is that Lottoland and secondary lotteries have lost most of their marketing channels, almost all of their marketing channels. And that enforcement is even increasing and has increased over the last months and years. And that's enforcement on the secondary lottery providers, but also on the marketing channels, the marketing companies themselves. Lottoland is also in a difficult situation in terms of legal court cases, so losing key court cases, basically, which is adding more and more doubt about the sustainability of that business model. And then quickly on the Instant Win Game question. So what Jonas meant when he managed -- when he mentioned Instant Win Games were the portfolio of Instant Win Games that we offered on Tipp24. What we have as an opportunity right now is Instant Win Games and the first type of Instant Win Games that comes to mind are scratch cards that we can offer now in more and more states in Germany and that have a higher margin. I believe that we can go beyond scratch cards in certain states going forward, but that's something that we are working on right now.

And then to your last question, Patrick, about the Q1 performance, clearly, this will be announced to the market in mid-May when we announce the first quarter earnings. But what I do can say is that EuroJackpot now has a very, very strong or high jackpot, it's close to EUR 90 million, and we will see if it rolls over further on Friday when the draw takes place. That is obviously a very good news for the industry or for the lottery industry. On the other side, 6 out of 49, which is the main product in Germany, hasn't had any impressing development in this first quarter. It started off really well on first or second of January when we had this 13 months ago. But after that, we haven't had any remarkable jackpot in 6 out of 49. So there is pros and cons for the different 2 products, which are the main 2 products for us.

Okay, perfect. And then just one more comment on the corona as I was wondering that you are so cautious about the development. Have you looked at the France figures that were published? Or I mean, you already said that it's probably difficult to distinguish between the jackpots effect and the corona crisis effect. But could you be a bit more optimistic going forward? People are at home. So they are believing in the -- maybe in the big sort of luck.

Yes. So what's definitely happening is that the off-line billings are going down. We see that in the primary market in Germany and also, like you called out, in other markets. We don't see a strong signal right now that we could attribute to the corona crisis yet. In terms of billings uplift and in terms of customer acquisition, we do see strong customer acquisition, as I said. I think that's probably where we will have long term -- maybe even the stronger opportunity to benefit potentially. But it's hard for us to tell what of that strong performance in customer acquisition is EuroJackpot -- the EuroJackpot situation that we have right now with a very high EuroJackpot and what is the corona crisis. So we will provide an update on that situation in our Q1 call.

The next question is from James Letten of Berenberg.

Just a couple, if I may. Firstly, on the licensing system. Can you just talk in a bit more detail about how you see the regulation working specifically? How many licenses do you think the government will provide for primary lottery operators? And second, any comment on potential M&A, I guess, particularly regarding Lottoland. And lastly, just regarding the dividend policy going forward. You said you intend to increase it to 1 year by 2022, but you intend to increase it annually, and that depends on the economic development. Could you just define a bit more in detail about what you mean, what would determine how much you increase it by?

Okay. Thank you for that question. I actually missed the second question. Maybe, Jonas, you didn't miss it, and it's in your court anyway. To the first question, so in terms of primary lottery licensees, the state lotteries have the -- have primary lottery licensees. The only other primary lottery licensees available in Germany are charity lottery licensees. And that's what we've basically just done with a partner, together with a partner with freiheit+ that is a charity lottery. I think what you were probably thinking about is lottery brokerage licensees. And they are, in principle, unlimited. If you remember, when lottery brokerage was -- we introduced into the German market many years ago, there were more than 20 companies successfully applying for lottery brokerage licensees. And many of them are still around. Some have gone out of business. Many have gone in hibernation mode. And as you -- as we discussed when we discussed the business model, it's a strong economies of scale business model. So fortunately, we have that scale. And now with Lotto24 and Tipp24, we have even more scale, which puts us into a great position. But in principle, anyone can apply for a brokerage license or there's also still companies around who have a brokerage license.

And then I can comment on your other questions. The first one was M&A. Clearly, the company is always monitoring the potential [ or big stories ] out in the market, you throughout Lottoland. We are always open to both inorganically and, of course, organically grow the business. We don't see any immediate opportunities. We think that what we can do is to instead of acquiring smaller brokers, it is probably cheaper and quicker and more cost efficient to acquire these customers in the market than buying the company. Whether Lottoland is for sale or not, I'd leave it up to them. Your last question was about the dividend policy. And you stated depending on our economic development. And of course, that is clearly the underlying case that we believe very strongly, and I'm very confident in our business model now that is so much more sustainable than the old secondary business model. All our growth projections looks very favorable for us. We're making good tailwind in the integration. And the growth is -- seems to be coming. And if everything goes as we expect, then we will incremental increase the euro per share or the EUR 0.80 per share up to the EUR 1 per share, as I announced.

The next question is from Berenice Lacroix of Kepler Cheuvreux.

You mentioned that you reported a rising number of new customers in 2019. I wondered which part of the new customers relate to Lotto24 brand.

Thank you, Berenice, and maybe I can take that question. So on Slide 13, we talked about 274,000 new registered customers. They were in the brokerage segment. So what they include in for the ZEAL group, 7.5 months of Lotto24 and 2.5 months of Tipp24 since we changed the business model of Tipp24. I fully appreciate that, that number doesn't tell you that much. So what we are also providing is that if you look at Lotto24 AG on a stand-alone and for the beginning of the year, and just to be clear, ZEAL was not responsible for the first 5 months, but if you do on a Lotto24 stand-alone, Lotto24 acquired 397,000 for the full year of 2019, of which 24,000 were related to the Tipp brand for the last 2.5 months.

There are currently no further questions in the queue. [Operator Instructions] The next question is from Jean-Marc Muller of JMS Invest.

Just one question from my side. And I -- for technical reason, I missed a couple of minutes of the call, so I hope my question wasn't already asked before. I mean if I look at your international business in 2019, it had -- I mean, Lottovate had sales of around EUR 5 million and had an EBITDA loss or an EBIT loss of EUR 6 million. So that would imply a total cost base of around EUR 11 million in 2019 for just this business. And if I look at your guidance, if I understand correctly, you're guiding for a flat EBIT with around EUR 3 million of costs, accordingly, roughly EUR 3 million of sales. Is this the right way to look at it, I mean, that you basically arguing that you can bring the cost down from EUR 11 million to EUR 3 million on declining sales?

Jean-Marc, I'm happy to take your question there. Yes, actually, what we did, if you remember from the fall of 2019, when we moved our secondary business model into a brokerage business, we also decided to shut down all secondary or lottery betting products, I say, worldwide, but in the U.K., which was the biggest market for us. So we decided to stop that. That obviously reduced marketing and people cost. So yes, when it comes to our international business, which is predominantly Norway and Spain and a few other small markets, we assume that in our guidance, that they have a -- they are breakeven. So we will have billings from the ONCE business or revenue from the ONCE business. We have cost for marketing and people. And then we also have costs for our -- for all our other initiatives. But if you take all of this into account, they will be breakeven. So the profit that I announced or the EBITDA of EUR 5 million to EUR 8 million is coming from the German business.

The next question is from Andrew Carver of Comeragh Capital.

Just a couple of questions from my side, please. Firstly, I think you mentioned earlier in the call that you've seen some shutdowns of the lottery draws in other countries. I think you mentioned Spain. Can you maybe elaborate as to what gives you confidence that this won't happen in Germany? I think you described it as very low risk. And then second question is on the longer-term market share of 50% and your marketing budget. Do you see any possibility? Or are there any discussions going on internally or maybe even increasing your marketing spend by more than the EUR 6 million given the current corona situation and maybe taking advantage of people who would be wanting to shift to online at a faster rate than before? And then secondly, on the 50%. I think if we look at both Lotto and Tipp in 2020 kind of on a pro forma basis, you would already be, would [ be ] not comfortably above the 35% and maybe even into the 40s. So can you maybe talk about how long do you think it will take to get to the 50%?

So to your first question, I mentioned that in Spain, both the ONCE lottery and sacli, the other big lottery in Spain, the state lottery have shut down their draws. One thing that is already different in Spain is not only that the corona situation there is already a bit more advanced, but also that the online penetration in the lottery market in Spain is still very, very low. We are talking about 2%. So for them, it wasn't a big pain to basically close any business that they are doing, whether it's off-line or online. What gives us confidence is that we are in touch with the operators of these lotteries, and we know that they are determined to keep operating these lotteries. They are setting up the draws with multiple redundancies. So that's redundant locations, redundant teams, redundant machines. That's true for the German state lotteries. It's also true for EuroJackpot. And the online penetration in Germany is already a lot higher. We're talking about 14%. So that can sustain the lotteries, and it would also be a lot more painful to close that down. So -- but the key point is that we are in direct conversations with the people who are operating those lotteries, and we know what they are doing and how they are handling the situation. So to your second point, yes, we are obviously looking at opportunities to, long term, continuously grow our marketing budget within the unit economics boundaries that I mentioned. So we want to earn our money back within 2 years. We're testing new channels. We think there are some opportunities there. And that's what's going to happen throughout this year and then continue into the next years. We're also, short term, optimizing our marketing spend, and we are and have always taken advantage of situations. So normally, that's high jackpot situations like we have with EuroJackpot right now. And on top of that, we have the corona crisis situation right now. And I did mention, I think, already that we also take advantage in the sense that we are present in the relevant channels. For example, in the new channels, in the new sites where people inform themselves about the corona crisis. And so we are visible there. Basically, they can see that they can play the lottery -- continue to play the lottery from the comfort of home by using our brands. So we've always been flexible in terms of ramping up our marketing spend, taking advantage of these kinds of situations, and that's already what we are doing. And then on the 50% market share, it's hard to predict. It's a long-term trend. The online penetration in Germany has been growing over the last years. It's still very much an underpenetrated market. It will certainly take many years to get to 50% online share in the overall market, so that the lottery market itself is 50% online. Lottery is also a habitual product, and the average age of the customers is actually relatively old. It's above 40. So it will take some time to drive up this penetration, but it's a continuous trend. We can see it from other markets, we can see it in Germany. And yes, you're right. If we included a full year of Tipp24, we would actually be already at a market share which is north of 40%.

If I could just ask one more follow-up on the second point about the marketing. Are you seeing, at least short term, anyway, a benefit in cost per customer acquisition from perhaps cheaper marketing slots as other industries are perhaps pulling back on advertising?

So I don't know how the -- I mean, if that would have happened, it would have happened in the very last days or a couple of weeks. So we are seeing good unit economics right now. That's what I can tell you. Whether that has come down significantly from what it was, let's say, 3 or 4 weeks ago, I would have to check.

The next question is from Carsten Kinder of Hauck & Aufhäuser.

I also have technical issues. So I hope the questions haven't been asked. First question would be, how much cash do you need to run your business? And would you be prepared to return the rest to your shareholders? Then secondly, billing statistics of your major product, 6 out of 49, suggest their billings have only gone down by 1.5%, 2%. You mentioned there is a drop of 20% of the off-line channel. Would you agree that the online penetration and the conversion to online could gain speed by the coronavirus just comparing the drop of online channel and the overall drop of billings? And that's it.

Thank you, Carsten. So I think with the new dividend policy, I think this is exactly what we're doing. We are very confident in our business model. We know that we don't need that much cash. Let me just explain this a little bit further. Obviously, we are in a business model. We don't do large investments. The investments we do is of minor servers. The rest is engineering time and marketing spend that is obviously fully included in the profit and loss and in the guidance. So our capital need is very limited in the coming years. So that's why we are proposing a pretty attractive dividend policy on the amount of EUR 18 million that is paid back to the shareholders as of today. What do we need going forward? I would say it's quite low, thinking about the amount of roughly EUR 10 million, EUR 50 million as a working capital buffer, just being sure that we always can scale up marketing should the opportunity arise. So it's in that ballpark number. The rest would then come that we continue generating profit and can return even more back to our shareholders in the future. In terms of the coronavirus effect, as you discussed and as Helmut already explained, there have been a drop for the off-line world, not only in Germany, but in France. And we saw the same thing in the U.S. actually just recently. I think there is opportunity that people will shift a part of their spendings into the online world. Obviously, very early to say. And since we have this EuroJackpot, high EuroJackpot situation, we need to analyze that better when we have the numbers. But clearly, there is an opportunity for us here.

One follow-up question on the license. Helmut mentioned it has been prolonged to now June 2022. When has that happened, the prolongation?

That's happened as part of the state treaty that is now being implemented. It's basically a transition period that was put in place to -- and -- to June 2022.

[Operator Instructions] There are currently no further questions in the queue.

If you have no further question, then we would like to thank you for participation and your interest. Our next regular call will be on 14th of May, concerning our Q1 report. And we wish you all the best and healthy for the future. And thank you, and goodbye.