Original-Research: ZEAL Network SE (von NuWays AG): BUY

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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

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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 (% 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

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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

analysierten Unternehmen befinden sich in der vollständigen Analyse.

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