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

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 € 45m. This implies a lower momentum than in the previous quarters affected by the same price increase effect (Q3’24: +49% 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: € 259m, -0.7% yoy), on the back of a higher expected user base (MAUs: +10% yoy) but also the decreasing ABPU of € 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 € 3.7m (+62% yoy and +10% 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 € 50.6m in Q2. With subdued marketing expenses (Q2 was rather uneventful in terms of jackpot environment) expected at € 13.5m, group EBITDA should arrive with strong margins at € 17.6m (+66% yoy; 35% EBITDA margin).

Our estimates imply H1 sales of € 102m and an EBITDA of € 35.4m. By simply assuming this run-rate for FY’25e (sales: € 204m, EBITDA € 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 € 214m and an EBITDA of € 67m in FY’25e.

Therefore, we reiterate our BUY recommendation with an unchanged PT of € 64.00, based on DCF.

You can download the research here: zeal-network-se-2025-08-04-update-en-c08b2
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.
++++++++++