Original-Research: ZEAL Network SE - von NuWays AG

Einstufung von NuWays AG zu ZEAL Network SE

Unternehmen: ZEAL Network SE
ISIN: DE000ZEAL241

Anlass der Studie: Update
Empfehlung: BUY
seit: 22.11.2023
Kursziel: € 51,00
Kursziel auf Sicht von: 12 Monaten
Letzte Ratingänderung:
Analyst: Henry Wendisch

Lucrative “Games” business metrics

In Q3, ZEAL’s games business showed first meaningful impacts, but more importantly provided some tangible KPIs. Hence, we evaluate those metrics to compare Games with Lottery.

New KPI 'Pay-Ins': ZEAL introduced this new KPI to better compare Lottery and Games. Pay-in refers to the amount of cash customers deposit in their accounts at ZEAL to play Lottery or Games. One would assume that pay-ins are equal to billings, as players use that money to play. However, players win back a certain percentage of their stakes (Q3 average RTP: 50% at Lottery, 88% at Games), which can be used to play a second time and create more billings than pay-ins (see p. 2). This is the key differentiator of Games, as users play at a much higher frequency than Lottery players, leading to a strong pay-in to billings ratio of 4.9x (vs. only 1.3x at Lottery).

Higher pay-in margin: The pay-in margin (sales in % of pay-in) is 2x higher (35.3% in Q3 vs. 15.8% at Lottery), which shows the better monetization of Games users. The comparably lower gross margin of 7.1% (vs. 12.5% at Lottery) is overcomepansation by the strong billings to pay-in ratio, which in sum led to a strong effect in Q3: ARPU stood at € 22.02 for Games vs. € 7.67 for Lottery.

Improving profitability: Games should contribute with an incremental EBITDA margin of 85%, as one-off development costs are mostly incurred already, no substantial marketing expenses are planned (targeting of existing Lottery users) and only few additional OpEx should arise.

No cannibalization so far: Prior to launch of Games, the company expected some cannibalization of the Lottery business. However, the average spend on Lottery remained stable (-0.8% qoq), showing lower than expected cannibalization and that players tend to spend additional money on Games.

Lots of catch-up potential: Back in 2018, ZEAL accounted for 404k MAU in total with € 13.6m sales generated from Games (Q3'23: € 1.2m sales). Once monthly active users rise to more meaningful levels (only 18k in Q3), the positive impact on top-line and profitability should further increase (eNuW: 32k MAU, € 10m sales and € 8.5m EBITDA from Games in FY'24e).

In sum, there is a lot to like about ZEAL’s new EBITDA booster, that has just been turned on. Hence, we reiterate our BUY recommendation with unchanged PT of € 51.00, based on DCF.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/28367.pdf
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden www.nuways-ag.com/research.

Kontakt für Rückfragen
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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-------------------übermittelt durch die EQS Group AG.-------------------

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