Topic: The state lottery (DLTB) released its 2024 lottery data with details about the on- and offline distribution channels, which implies a strong market share gain for ZEAL. In detail:
More lottery spending: lottery spending increased by 4.4% yoy to € 8.56bn in 2024. As there were no price increases throughout the year, the increase should strem from a higher user activity. The main products remained Lotto 6aus49 (€ 3.5bn, -8% yoy) and a strong Eurojackpot (€ 2.6bn, +30% yoy).
Online growth and offline decline: in 2024, lottery players spent € 2.59bn (+28% yoy) via the online channel on lottery products (eNuW, based on DLTB data). On the other hand, this implies a 4% yoy decline to € 5.97bn in the offline channel. Consequently, the online penetration increased by 5.5pp yoy to 30.3% (eNuW)
Large jump in market share: Based on our estimate of ZEAL's FY'24 bilings incl. own products of € 1.19bn (+ 34% yoy) and the published € 1.4bn (+ 17% yoy) in online billings from the state lottery, ZEAL should show a market share jump by +4.6pp yoy to46% in 2024 (eNuW). This clearly shows thatZEAL is able to outperform the state lottery's online offering as a result of its highly specialized and efficient online marketing operations.
Outlook for 2025: following a superb 2024, ZEAL should have an easy to reach comparable base in H1'25e, thanks to the strong user intake of the past and the price increase as of H2'24. Going into H2'25e, the positive base effect of the price increase will be gone and a similarly strong H2'25 lottery environment like in H2'24 is not predicatble. Therefore, we expect a tough comparable base for H2'25e. Nevertheless, the company will remain on a growth path in FY'25e (eNuW: +7% yoy sales growth). Moreover, the increasing fix cost coverage allows for a better cost mix towards the high-return marketing spendings, further sustaining growth.
All in all, ZEAL remains in the driver seat of the German online transformation of lottery by outperforming the state and also by creating a market outside the state lottery with its own and well received products such as games, freiheit+ and the dream house raffle "Traumhausverlosung", that all come in at higher margins and show large growth potentials. Therefore, we recommend to BUY with unchanged PT of € 60.00, based on DCF.
ISIN: DE000ZEAL241
