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Original-Research: ZEAL Network SE - from NuWays AG

07.05.2026 / 09:00 CET/CEST
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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 80
Target price on sight of: 12 months
Last rating change:
Analyst: Simon Keller

Q1 review: Growth despite weak jackpots

Q1 results were largely in line with expectations (see p.2) and show that
ZEAL continues to grow structurally even in an unfavourable jackpot
environment. Importantly, the quarter underlines management's willingness to
step up marketing and diversification spend against a soft jackpot backdrop
to build a materially larger earnings base over the coming years.

Q1 sales rose 6% yoy to EUR 54.3m (eNuW: EUR 55m), supported by a 5% increase in
monthly active lottery users and a 0.7pp yoy improvement in the gross margin
to 17.8%, partly driven by the higher-margin proprietary raffles. Lottery
trading was held back by zero peak jackpots in both Lotto 6/49 and
Eurojackpot and a weaker EJ jackpot environment (avg. EUR 34m vs. EUR 49m in
Q1'25). Games revenue grew 14% yoy to EUR 3.9m, with MAU up 34% yoy to 35k as
the portfolio expanded to >740 titles (c.+80% yoy). ARPU of EUR 37.41 (-15%
yoy) reflects a tough Q1'25 comp that benefited from an unusually high share
of large-ticket customers, and sits in line with the longer-term average.

EBITDA came in at EUR 15.5m (eNuW: EUR 15m), down 13% yoy, with the margin 1.2pp
ahead of our estimate. The yoy decline reflects three drivers: (i) a tough
comparable base, as Q1'25 benefited from strong new customer cohorts won
during the exceptional Q4'24 jackpot run; (ii) deliberately stepped-up
marketing spend (+13% yoy to EUR 17.6m) despite the weak jackpot backdrop,
which still delivered 274k new registered customers (+11% yoy); and (iii) a
27% rise in headcount (240 to 305 FTE), mainly to build out
Traumhausverlosung and the newly launched Traumautoverlosung. CPL rose 11%
to EUR 53.80, reflecting elevated D2C marketing activity for the charity
lotteries; the underlying CPL for the core brokerage business stood at EUR 46,
broadly in line with FY25 levels.

In sum, ZEAL is still adding lottery users without jackpot support and
diversification is becoming more visible. The Mallorca house (house 6)
generated EUR 10.5m billings at an ABPU of EUR 27.48, up 16% from house 5,
showing the format continues to improve on key engagement metrics. The 8th
Traumhaus raffle is already running, and Traumautoverlosung's Season Zero
marks the entry into premium-vehicle prizes, broadening the proprietary
product suite (see our last update).

Looking ahead, the current Eurojackpot sits at EUR 76m and could approach peak
levels within 2-3 weeks, which would mark the first peak of FY26.
Importantly, Q1 marketing of EUR 17.6m sits below the FY26 run-rate implied by
the EUR 85-95m guidance, leaving c. EUR 22-26m of quarterly marketing firepower
to deploy into more favourable jackpot environments.

Cash of EUR 115m and a 53.8% equity ratio leave ample room for further capital
returns, with buybacks being a potential catalyst beyond the proposed
dividend. At c. 22x PPA-adjusted 2026e earnings and 34% below the 5-year
EV/EBITDA median, valuation looks undemanding for a largely macro
uncorrelated business with mid-teens growth and 30%+ EBITDA margins
near-term.

BUY, PT EUR 80, based on DCF.

You can download the research here:
https://eqs-cockpit.com/c/fncls.ssp?u=f79fb72e305f1c490e99754af4a7308c
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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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2322898 07.05.2026 CET/CEST

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