Jumbo Interactive shares on watch after acquisition approval

Jumbo Interactive Ltd (ASX: JIN) shares have been rocketing higher in 2019, but could climb higher after its UK acquisition was approved.

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Jumbo Interactive Ltd (ASX: JIN) shares will be worth watching this morning after the company's recent UK acquisition gained regulatory approval.

What's the background to the acquisition?

Jumbo announced on 12 November that it would be acquiring lottery manager Gatherwell Limited for $9.1 million.

CEO Mike Veverka said the purchase would "accelerate Jumbo's expansion of the Software as a Service business in the UK."

The company is aiming for $1 billion of ticket sales through the Jumbo platform by 2022.

Jumbo had anticipated a response from the UK Gambling Commission by 31 January 2020, but today received the green light for the purchase.

The effective date of the acquisition will be 1 December 2019, with an expected 7-month contribution of $8.6 million in ticket sales to the Group's financial results.

The latest step is key to Jumbo reaching its $1 billion vision for the Jumbo platform by FY 2022.

How has Jumbo performed on the ASX this year?

Jumbo shares have climbed an astonishing 186.75% higher since the start of January. 

However, it's been a difficult November for shareholders as the company's shares have slumped 19.05% in the last 30 days.

The company's ambitious near-term goals have set the stage for a successful 2019, which has been full of aggressive customer acquisition and strong earnings.

Jumbo reported record financial results with a 74% year on year (YoY) increase in active customers to 761,863. Revenue rocketed 64% YoY, while net profit and earnings before interest, tax, depreciation and amortisation surged by 124% and 107%, respectively.

The group's SaaS vision has proven to be a hit, while the potential entry into the UK market also boosted investors' hopes higher.

Jumbo has a market cap of $1.3 billion and trades at a price-to-earnings ratio of 49.4x earnings. Jumbo shares are also netting a tidy 1.74% per annum dividend yield at the moment.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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