ZEAL Network : Quarterly Statement Q1-3 2022

QUARTERLY STATEMENT

1 JANUARY - 30 SEPTEMBER 2022

we define the future of lottery

ZEAL Network SE is the leading German online broker for state lottery and other permitted lottery products. Our aim is to innovate and drive change in the lottery sector while further expanding our online market leadership.

Our mission

To define the future of lottery! As a technology company, we constantly strive to enrich our offerings with new inno­ vations. To achieve this, we leverage our many years of ex­ perience in the e-commerce sector, our lottery expertise and our knowledge of our customers' wishes, aims and gaming behaviour.

Our goal

We let people dream. We make a contribution to society. Our work enables people to dream big. And with every lottery ticket sold, we are helping society by supporting good causes via our charity lotteries or via our customers playing the state lotteries.

CONTENTS Q 1-3 2022 at a Glance	3
Business Review	4
Results of Operations and Financial Position	6
Selected Financial Information	10

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Q 1-3 2022

At a Glance

+25%

€22.0m

EBITDA

(Q 1-3 2021: €17.6m)

€36.42

CPL (COST PER LEAD), GERMANY SEGMENT (Q 1-3 2021: €27.57) +32%

501k

NEW REGISTERED CUSTOMERS,

GERMANY SEGMENT (Q 1-3 2021: 446k) +12%

€544.4m

BILLINGS

(Q 1-3 2021: 493.2m) +10%

€74.5m		12.8%		159
REVENUE		GROSS MARGIN,		EMPLOYEES²
	GERMANY SEGMENT		(Q 1-3 2021: 158) +1%
(Q 1-3 2021: €65.1m¹) +14%
	(Q 1-3 2021: 12.2%) +0.6 pp

Continued growth with targeted acquisition measures

• New customer growth accelerated
• Biggest jackpot in German history in July
• VAT proceedings concluded in ZEAL's favour
• LOTTO24 product portfolio now also accessible via n-tv website

Definitions of the measurements disclosed above can be found in the 'Management System' section of the Group Management Report 2021.

• Revenue plus income from insurance to compensate for jackpot winnings from the 'freiheit+' charity lottery. This income is disclosed as other operating income, while jackpot winnings reduce revenue. Further details are provided in notes 4 and 5 to the Consolidated Financial Statements 2021.

• Average number of employees (FTEs, excluding students and temporary staff)

At a GlanceZEAL Network SE Q 1-3 2022

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Business Review

We continued to increase our business volume in the third quarter of 2022. One significant growth driver was the record 'Eurojackpot' in July, which prompted a record number of customers to buy lottery tickets from us and generated significant growth in new registrations.

Over the course of the first nine months of 2022, the jackpot environment for our two main products was mixed. Since the maximum jackpot was raised from €90 million to €120 million with a rule change for the 'Eurojackpot' in March 2022, two new records have been set: €106 million in May and €120 million in July. Moreover, the former limit was almost reached once (€89 million) prior to the rule change in the first quarter of 2022. However, the 'Eurojackpot' reached its maximum level less frequently than in the previous year (2021: three times €90 million). The jackpot environment for the 'LOTTO 6aus49' lottery was generally more positive, compared to the extremely weak situation of the previous year, even though the jackpot level in the third quarter of 2022 failed to exceed €25 million. Since the beginning of the year, the mandatory payout mark of €45 million has been reached twice (in January and April)

- in each case for two consecutive draws (2021: not once).

Developments in the geopolitical and economic environment (including the war in Ukraine, rising inflation, the expected further increase in interest rates and fears of an impending economic recession) have had only a limited impact on the spending behaviour of our customers so far.

In the first nine months of 2022, we raised our billings by 10% year on year to €544.4 million¹ (2021: €493.2 million¹).

Our customers become increasingly active during high jackpot phases: in July, billings and the number of our active customers reached record levels of €83 million and 1,307 thousand, respectively. There was even stronger growth in revenue (plus reimbursements from insurance to compensate for jackpot winnings from the 'freiheit+' charity lottery disclosed in other operating income), which increased in total by 14% to €74.5 million (2021: €65.1 million). This was due to a higher-margin product mix compared to the previous year. At 12.8%², gross margin was up 0.6 percentage points on the previous year (2021: 12.2%).

We used the record €120 million 'Eurojackpot' prize in July to step up the expansion of our customer base: in the third quarter of 2022 alone, we achieved 208 thousand new registered customers. In total, we have acquired 501 thousand new customers since the beginning of the year (2021: 446 thousand new registered customers). The cost per lead (CPL) of €36.42 was higher than in the previous year (2021: €27.57). However, the prior-year figure was particularly low due to registrations in the third quarter of 2021 during our '#geimpftgewinnt' ('vaccinated wins') cam- paign. In addition, our acquisition measures in July led to a rise in CPL. Registrations from a special offer for the charity lottery 'freiheit+' in January 2022 also resulted in an increase in CPL. Without this effect, CPL would

have risen less strongly to €34.58.

Personnel expenses fell slightly to €13.9 million (2021: €14.5 million). Due to the above-mentioned intensive marketing activities in July 2022, marketing expenses rose by €5.5 million and were thus largely responsible for the increase in other operating expenses to €40.6 million (2021: €33.2 million). Thanks to the growth of our business volume, we continued to achieve economies of scale and improved EBITDA to €22.0 million (2021: €17.6 million). At €15.5 million and €12.1 million respectively, both EBIT and net profit were also well up on the corresponding prior-year figures (2021: €11.1 million and €7.3 million).

• For contractual reasons, the billings of our ONCE business in Spain are not included in this total.

• As the Spanish ONCE business is not included in billings but only in revenue, our margin trend is better reflected by the Germany segment than at Group level.

Business ReviewZEAL Network SE Q 1-3 2022

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In its ruling on 12 August 2022, the German Federal Fiscal Court dismissed the appeal of the Hannover-Nord tax authority against the decision of the Hanover Fiscal Court of November 2019 with final effect in favour of myLotto24 Ltd.. Delivery of the judgement as a formal precondition for the tax authority to reimburse the advance payment of around €54 million plus interest of around €1.8 million made by myLotto24 Limited is still pending. The payment will have no impact on ZEAL's income statement, as the corresponding receivable was already recognised in other assets.

In August, ZEAL strategically expanded its B2B partner portfolio by entering into a cooperation with the high-reach German news portal n-tv. Players thus have the opportunity to participate in state lotteries via LOTTO24 products offered by n-tv's own webshop. As a result, our strategic partner portfolio not only comprises the 1&1 portals WEB.DE and GMX, but also n-tv.de. As well as extending our reach, this partnership gives us an opportunity to directly address a target group with a strong online and news affinity.

ZEAL's nomination for the Global Regulatory Awards 2022 as 'Compliance Team of the Year' demonstrates that its compliance efforts are playing a key role in establishing it as a trustworthy, reliable and, above all, compliant market player. The award is presented by VIXIO GamblingCompliance, the leading provider of regulatory information for the gaming and payments sector.

A further strategic milestone for the ZEAL Group is to offer premium instant lottery, scratch card and instant games to customer groups with an affinity for lotteries. We want to offer the premium titles of ZEAL Instant Games which are already in our portfolio, as well as new games, on an international basis - also in cooperation with local partners. In October, ZEAL therefore entered into a partnership with the American full-service lottery provider Park Avenue Gaming. Within this framework, Park Avenue Gaming will integrate the successful online games of ZEAL Instant Games into its online platforms in Peru and its video lottery terminal business Argentina starting in the first quarter of 2023.

On 2 November 2022 we announced a public share repurchase offer for up to 714,285 shares of ZEAL Network SE, corresponding to up to approximately 3.2% of the current share capital. The offer price per share of €28.00 is approximately 9.9% above the relevant stock market price of the ZEAL shares. The acceptance period started on 9 Novem- ber 2022 and will end on 29 November 2022, subject to extension. The shares acquired under the repurchase offer may be used for any purpose permitted under the authorization granted by the Annual General Meeting on

30 June 2022.

Our guidance for billings, revenue and EBITDA remains unchanged. For the fiscal year 2022, we still plan to maintain our position as the leading online provider of lottery products and to launch new products. Depending on the general conditions - in particular the jackpot development - we continue to anticipate billings of at least €750 million. More- over, we still expect revenue to be at least €105 million in fiscal year 2022. EBITDA is expected to reach at least €30 million. Compared to the previous year, we plan to invest significantly more in the acquisition of new customers and expect marketing expenses of around €30 million.

Business ReviewZEAL Network SE Q 1-3 2022

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