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Original-Research: ZEAL Network SE - from NuWays AG

08.05.2025 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
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Classification of NuWays AG to ZEAL Network SE

Company Name: ZEAL Network SE
ISIN: DE000ZEAL241

Reason for the research: Update
Recommendation: BUY
from: 08.05.2025
Target price: EUR 64.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Strong Q1; sales guidance too conservative, PT up

Sales grew by 42% yoy to EUR 51.1m (eNuW: EUR 50.5m) on the back of higher
prices (billings margin: 17.1%, up 4.1pp yoy) and a higher user base of
1.507m MAUs (+13% yoy). At user level, the monthly ARPU of Lottery increased
by 25% to EUR 10.01 (eNuW: EUR 9.95), mainly due to the price increase, whereas
ARPU of Games increased by 30% yoy to EUR 43.90 (eNuW: EUR 39.22) as user
spending increased thanks to a higher games offering on the platform.

EBITDA expanded sharply by 89% yoy to EUR 17.7m (eNuW: EUR 16.4m) due to
operating leverage and lower marketing expenses of EUR 15.5m (eNuW: EUR 14.5m)
compared to a high jackpot quarter. With 247k newly acquired users (eNuW:
125k), ZEAL nevertheless recorded the highest user intake in a quarter
without peak jackpots. This should be a direct effect of past and ongoing
brand awareness campaigns, but also due to recent tests of various new
marketing channels.

Dreamhouse Raffle is performing well. Compared to the first house raffle,
the second draw saw 11% sequentially higher billings thanks to 11%
sequentially higher MAUs and constant ABPU. For FY'25e, we expect at least
three more draws (1x in Q2, Q3 and Q4). In the mid-term, ZEAL intends to
increase the frequency up to 6x draws per year.

The negative CFO of EUR -0.4m is solely based on a EUR 18m negative WC swing.
This should be attributable to the discrepancy of customer pay-ins and
jackpot payout flows (from the lottery operator via ZEAL to the customer and
vice versa) through ZEAL's balance sheet before and after the reporting
date.

Based on the strong Q1 results, we regard the sales guidance as too
conservative now. Assuming a Q1 run rate, would yield EUR 206m FY'25 sales
(vs. guidance of EUR 195-205m). Mind you, the run rate does not include a
current strong jackpot environment in Q2 and also does not bake in further
customer growth assumed for the rest of the year. Therefore, a sales
guidance hike as early as Q2 results seems likely. On the other hand, higher
sales usually come in with higher investments in marketing, tech and people,
therefore an EBITDA guidance upgrade is less likely, but still in the cards.

In summary, ZEAL remains fully on track to deliver another record year.
Therefore, we reiterate our BUY recommendation and confirm ZEAL in our
NuWays Alpha List with a new PT of EUR 63.00 (old: EUR 62.00), based on DCF.

You can download the research here: http://www.more-ir.de/d/32506.pdf
For additional information visit our website:
https://www.nuways-ag.com/research-feed

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
++++++++++

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2132710 08.05.2025 CET/CEST

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