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Original-Research: ZEAL Network SE - from NuWays AG

01.07.2025 / 09:00 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
invitation to conclude certain stock exchange transactions.

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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
Target price: EUR 64.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Q2 lottery spending remains at high levels

Yesterday, we analyzed the Q2 lottery data published by the DLTB (German
state lottery) for the two most popular lottery products "Eurojackpot" and
"Lotto 6aus49". Here's our takeaway:

Eurojackpot spending at high levels. With 2x peak jackpots, EUR 1.17bn were
spent on Eurojackpot tickets in Q2. This corresponds to a 8% yoy a decline
(Q2'24: 2x peak jackpots, but with two separate run-ups instead of two peaks
successively like in Q2'25) but a 3% qoq increase against Q1'25 (0x peak
jackpots, but strong spill-overs from the exceptional Q4'24). All in all,
the spending remains high, as in Q2'25 spending was only 4% below the high
LTM average. Also, this indicates a shifting demand towards the Eurojackpot
and away from Lotto 6aus49.

Lotto 6aus49 continues its weakness. The jackpot situation remained
unexciting, continuing its streak of no peak jackpots for almost two years
(7 quarters). However, Q2'25 pushed the bar even lower with an average
jackpot size of only EUR 4.6m (vs. EUR 15m in 2023 or EUR 10m in 2024). However,
the fact that the average spending per draw of EUR 31.2m remained relatively
constant (only -4% yoy and -7% qoq), shows the relatively stable and
recurring demand for this lottery product. Nevertheless, the demand in
general for Lotto 6aus49 has declined continuously, with Q2'25 showing the
lowest spending on this product since 2018.

The shift in demand away from Lotto 6aus49 towards Eurojackpot should have
no notable effect at ZEAL, as customers simply substitute one lottery ticket
for another, which ZEAL brokers to the state lottery. Nevertheless, the Q2
lottery data serve as a helpful indicator for ZEAL's Q2 performance, given
that ZEAL accounts for a 44% market share of the online market (29% online
penetration).

Q2 to show disproportionate sales growth. Given the fact, that overall
lottery spending remained relatively stable qoq, but also that ZEAL acquired
247k new users in Q1 (of which 25% on average become active users), we
expect 1.55m MAUs coupled with an ABPU of EUR 60 (+2,4% qoq due to 2x peak
jackpots) for Q2. This should translate into lottery billings of EUR 280m (+7%
yoy, +6% qoq) and a disproportionate rise in lottery sales by 34% yoy (+7%
qoq) to EUR 48m (eNuW), due to price increases introduced in Q3'24. Adding the
also rising sales from Games (eNuW: EUR 3.7m up 62% yoy), ZEAL should report
total Q2 sales of EUR 54m sales (+33% yoy, +6% qoq), according to our
estimates. On the back of higher expected marketing expenses (eNuW: EUR 18.5m,
up 19% qoq) during the peaking jackpot phase, Q2 EBITDA is seen at EUR 17m
(31% margin, up 5pp yoy and down 3.6pp qoq).

Against this backdrop, we are positioned 6% above the sales guidance and 16%
above the EBITDA guidance. Consequently, a guidance upgrade should be in the
cards, especially in the event of strong jackpots in H2. Therefore, we
reiterate our BUY recommendation with unchanged PT of EUR 64.00, based on DCF

You can download the research here: http://www.more-ir.de/d/32936.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
++++++++++
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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