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

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Original-Research: ZEAL Network SE - from NuWays AG

04.08.2025 / 09:00 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: 04.08.2025

Target price: EUR 64.00

Target price on sight of: 12 months

Last rating change:

Analyst: Henry Wendisch

Q2 Preview: Solid growth amid normalizing user metrics

Topic: Following our Q2 jackpot environment analysis, we fine-tuned our Q2

estimates. Here's what we expect for ZEAL's Q2 results due on Wednesday,

August 6th 2025:

Lottery business to be driven by price increases. For the last time, ZEAL's

lottery sales should benefit from the base-effect following the price

increases of last year, which was imposed in July 2024. Therefore, we see

lottery sales to grow by 25% yoy to EUR 45m. This implies a lower momentum

than in the previous quarters affected by the same price increase effect

(Q3'24: % yoy; Q4'24: 131% yoy; Q1'25: 41% yoy), however, this should

be the natural cause of a normalized spending behavior. Mind you, Q1'25

benefitted from strong spill-over effects of the enormous lottery

environment of Q4 (as players continued to play into Q1 with elevated

spending per user), whereas Q2 should show a normalized user spending again,

in line with historical user habits. Consequently, lottery billings are seen

to come in mostly flat yoy in Q2 (eNuW: EUR 259m, -0.7% yoy), on the back of a

higher expected user base (MAUs: % yoy) but also the decreasing ABPU of EUR

57 (-10% yoy; eNuW) due to the effect described above. Also, the rising

billings share of the highly successful product "Dream House Raffle" (part

of the lottery business) comes with lower ABPUs (but higher billings

margins) than the classical lottery brokers business, thus explaining the

weaker ABPU further.

Games business to gain more traction. ZEAL should have made further progress

on the games portfolio roll-out in Q2, with notably more games offered to

players. Not only does a broad offering attract additional players, it also

maintains and foster playing habits of existing players. Therefore, we

expect the Games business to show sales of EUR 3.7m (% yoy and % qoq) on

the back of 48% yoy higher MAUs and 8% higher ARPUs (eNuW).

In sum, group sales are seen to grow by 24% yoy to EUR 50.6m in Q2. With

subdued marketing expenses (Q2 was rather uneventful in terms of jackpot

environment) expected at EUR 13.5m, group EBITDA should arrive with strong

margins at EUR 17.6m (% yoy; 35% EBITDA margin).

Our estimates imply H1 sales of EUR 102m and an EBITDA of EUR 35.4m. By simply

assuming this run-rate for FY'25e (sales: EUR 204m, EBITDA EUR 71m), the top-end

of the guidance (see bottom-right of this page) looks in reach or even

beatable. However, we expect significantly more marketing spending

throughout H2, especially on the "Dream House Raffle". Moreover, we expect a

sequential improvement in lottery sales on the back of further user intake

and stable ARPUs. Consequently, we are positioned above the guidance with

sales reaching EUR 214m and an EBITDA of EUR 67m in FY'25e.

Therefore, we reiterate our BUY recommendation with an unchanged PT of EUR

64.00, based on DCF.

You can download the research here:

https://eqs-cockpit.com/c/fncls.ssp?u=674d428e802be1e01881968420217be9

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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

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2178680 04.08.2025 CET/CEST

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