(MENAFN- EQS Group) Original-Research: ZEAL Network SE - from NuWays AGClassification of NuWays AG to ZEAL Network SECompany Name: ZEAL Network SEISIN: DE000ZEAL241Reason for the research: Recommendation: Kaufenfrom: 10.05.2024Target price: EUR 53.00Target price on sight of: 12 MonatenLast rating change: Analyst: Henry WendischStaggering Q1 kicks off new growth phase; chg est. & PT On Wednesday, ZEAL released staggering Q1 results above expectations withstrong sales growth and better than expected profitability. Moreover, ZEALsubstantially improved marketing efficiency which drove customer growth torecord levels. In detail: Strong Lottery business: Lottery billings came in better than expected at €246m, +22% yoy (eNuW: €234m) and were driven by 4x peak jackpots. Lottery sales grew by 28% yoy to€ 32m (eNuW: € 31m) thanks to the strong billings coupled with a solidbillings margin of 13.0%, up 0.9pp yoy (eNuW: 13.2%). Upbeat Games adoption: Games contributed better than expected with billingsof € 31m (eNuW: €25m) and sales of € 2.2m (eNuW: € 1.9m) driven by further additions to theGames portfolio as well as user adoption with MAUs growing by 22% qoq to22k (eNuW: 20k). Consequently, the ARPU stood at € 33.6 (vs. € 8.0 atLottery) highlighting the attractive user economics at Games. Dynamic top-line: Q1 sales rose by 35% yoy to € 36.1m (eNuW: € 34.8m).Based on an average jackpot development, we expect a slight qoq salesdecline in Q2e (eNuW: € 34m; due to less user activity) before the plannedexpansion in the billings margin to above 15% (currently: 13%) shouldunfold its posititve effect on sales from Q3e onwards (eNuW: € 38m in Q3e /€ 42m in Q4e). EBITDA much better than expected: Q1 EBITDA came in at € 9.4m, +1% yoy(eNuW: € 5.1m) despite heavy marketing expenses of € 13.4m (eNuW: € 14m),but driven by higher than expected sales and lower than expected indirectcosts of € 3.6m (-20% qoq; eNuW: € 5.8m), as the majority of ramp-up costsof the new social lottery will likely be incurred towards the end of theyear and not in Q1 and Q2. Improved marketing efficiency: Costs per Lead decreased by 10% yoy to € 33(eNuW: € 40), showing that customer acquisiton has become more efficient sum, ZEAL accounted for 320k new registrations (+124% yoy; eNuW: 350k)and grew their MAU in Lottery by 21% to 1.33m (eNuW: 1.26m). Guidance well in reach: Management confirmed the guidance (see bottomright), but based on our revised estimates, we expect a reach at theupper-end of the guidance, due to the improved user base. Therefore, we reiterate our BUY recommendation as well as ZEAL's positionin the NuWays' AlphaListwith an increased PT of € 53.00 (old: € 51.00), based on DCF can download the research here:For additional information visit our websiteContact for questionsNuWays AG - Equity ResearchWeb: Email: ...LinkedIn: Adresse: Mittelweg 16-17, 20148 Hamburg, Germany++++++++++Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.++++++++++-------------------transmitted by EQS Group AG.-------------------The issuer is solely responsible for the content of this research result of this research does not constitute investment adviceor an invitation to conclude certain stock exchange transactions.
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