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
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, € 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 € 4.6m (vs. € 15m in 2023 or € 10m in 2024). However, the fact that the average spending per draw of € 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 € 60 (+2,4% qoq due to 2x peak jackpots) for Q2. This should translate into lottery billings of € 280m (+7% yoy, +6% qoq) and a disproportionate rise in lottery sales by 34% yoy (+7% qoq) to € 48m (eNuW), due to price increases introduced in Q3’24. Adding the also rising sales from Games (eNuW: € 3.7m up 62% yoy), ZEAL should report total Q2 sales of € 54m sales (+33% yoy, +6% qoq), according to our estimates. On the back of higher expected marketing expenses (eNuW: € 18.5m, up 19% qoq) during the peaking jackpot phase, Q2 EBITDA is seen at € 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 € 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
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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