ZEAL released solid Q2 results with sales and margin expansions despite a weaker jackpot environment. In detail:

Q2 sales grew by 24% yoy to € 50.4m in line with expectations (eNuW: € 50.6m), mainly driven by lottery sales (€ 45.7m, +27% yoy) which benefitted particularly from the price increase imposed in July ‘24 (ARPU: € 10.02, +15% yoy) and a higher lottery user base (MAUs: 1.52m, + 10% yoy). Mind you, these figures contain the positive effects from the new product “Traumhausverlosung” launched a year ago, which already contributed € 7-8m sales (eNuW) in H1 explaining 12pp of the H1 lottery sales growth of 34% yoy, whereas the remaining 22pp yoy sales growth stemmed from the classical lottery brokerage business.

“Traumhausverlosung” in high demand: ZEAL shared KPIs for all three draws since the launch, showing emerging trends. Monthly ABPU (average billings per user) ranges between € 20–22, reflecting solid spending. Although this figure is below that of classical lottery brokerage (€ 58-60), the strong 43% billings margin, should lead to monthly ARPU (average revenue per user) for Traumhausverlosung between € 8.60 - 9.50 (eNuW), in line with traditional lottery brokerage (~€10). Monthly active users (MAUs) ranged from 410–470k for the first two draws (Q4’24 and Q1’25) but fell to 350k in the third (Q2’25). This decline likely reflects weaker cross-selling, as Q4’24 and Q1’25 benefited from exceptional jackpot-driven spillover to “Traumhausverlosung”. As a result, D2C billings (directly via traumhausverlosung.de) rose to 49% of total Traumhausverlosung billings in the third draw, up from 40% at launch.

Games also developed nicely with 43% yoy higher sales of € 3.3m in Q2 (eNuW: € 3.7m) on the back of a higher user base (+42% yoy), following the rapid expansion of the Games portfolio. However, this also implies that the ARPU at Games has saturated at an extremely high level (ARPU: € 40.90, -1% yoy, i.e. 4x that of the lottery business).

EBITDA margin expanded by 8.8pp yoy to 35% translating into € 17.6m EBITDA (eNuW: € 17.6m), on the back of operating leverage with OPEX only expanding by 10%. Particularly noteworthy is, that despite a weaker yoy jackpot environment in Q2, ZEAL increased marketing by 12% yoy to € 13.6m. This is the result of a ongoing shift towards brand awareness campaigns (not jackpot dependent) and away from jackpot dependent performance marketing. This strategy seems to pay off, as ZEAL acquired 252k new users in Q2, which is relatively high for a low-jackpot environment.

ZEAL reaffirmed its FY’25 guidance, with CFO Behrendt indicating the upper end is now more likely. Strong user inflow and continued demand for “Traumhausverlosung” support ou expectations of sequential sales growth in H2, placing us above the € 195-205m sales guidance (eNuW: € 212m). Ongoing hiring and the remaining marketing budget (€ 29m spent in H1 vs. €60-70m FY’25 budget) should result in a figure only slightly above € 55-60m EBITDA guidance (eNuW: €60.5m).

Against this backdrop, we reiterate our BUY recommendation with unchanged PT of € 64.00, based on DCF.

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