Evolution has reported year-over-year revenue and adjusted EBITDA growth for the fourth quarter and across 2024, concluding what has been an eventful year for the iGaming provider.
However, the company enters 2025 with several ongoing situations, including a review of its UK licence by the UK Gambling Commission (UKGC).
Evolution working with UKGC to resolve review
In December last year, the UKGC launched a review of Evolution’s licence in the UK market. The review was initiated under Section 116 of the Gambling Act 2005, as the Commission identified Evolution games as “being accessible from the UK through operators not holding a Commission licence”.
When asked about the investigation by the Commission during Evolution’s investors call, CEO Martin Carlesund said: “We are working with the UK Gambling Commission to resolve this review and we’re following through with them and doing whatever they request and from my point of view, humbly so, I think it’s going well.”
Carlesund noted that Evolution is “working with all regulators in Europe constantly”, adding: “I want to emphasise that we have the same goal as the regulator, we want 100% channelisation.
“The UK, we all know it is not the biggest of our markets, it’s relatively small, but we don’t want it to be unchannelised, we want it to be channelised, so we have the same goal.”
Q4 and 2024 growth
During Q4, total operating revenues increased by 31.5% YoY to €625.3m (Q4 2023: €475.3m), EBITDA rose by 35% YoY to €455m (Q4 2023: €337m), with a margin of 72.8% (Q4 2023: 70.9%). Profit for the period was €377.1m (Q4 2023: €282.9m), while earnings per share amounted to €1.83 (Q4 2023: €1.32).
Net revenues for the quarter increased by 12.3% YoY to €533.8m (Q4 2023: €475.3m), while adjusted EBITDA (excluding other operating revenues) grew by 7.9% to €363.6m (Q4 2023: €337m) with a margin of 68.1% (Q4 2023: 70.9%).
Live games generated €459.4m in net revenue (Q4 2023: €405.6m), while RNG games produced €74.4m (Q4 2023: €69.8m). Evolution attributed the live casino revenue growth to “increased commission income” from existing and new customers.
Geographically, Asia led the way in net revenue for the iGaming provider during Q4 with €202.2m, but Europe wasn’t too far behind with €201.8m. North America was next with €70.6m, followed by LatAm with €38.5m and Other with €20.7m. Net revenue from regulated markets was €220.4m.
Carlesund noted that “strong momentum” was achieved in most regions during Q4, except for Asia which remained flat, as it continued to face challenges following cyber attacks on its video distribution in the region.
Evolution also still has an ongoing labour dispute with workers in Georgia, but Carlesund stated that the company is “currently operating without any disruptions” and it expects to remain at its current reduced capacity as it ramps up expansion in other studios.
As for 2024 overall, total operating revenues rose by 23.1% YoY to €2.2bn (2023: €1.8bn), EBITDA increased by 23.2% to €1.6bn (2023: €1.3bn), with a margin of 70.5% (2023: 70.5%). Profit for the period amounted to €1.2bn (2023: €1.1bn) while earnings per share were €5.94 (2023: €5.01).
Net revenues for the year increased by 14.7% YoY to €2.1bn (2023: €1.8bn), while adjusted EBITDA (excluding other operating revenues) rose by 11.3% to €1.4bn (2023: €1.3bn) with a margin of 68.4% (2023: 70.5%).
Live games net revenue came in at €1.8bn (2023: €1.5bn) while RNG games stood at €287.4m (2023: €275.3m). The live casino revenue growth across the year was attributed to “increased commission income” from existing and new customers.
At the end of the quarter, cash and cash equivalents amounted to €801.5m (2023: €985.8m).
‘Well positioned for 2025’
Looking to the year ahead, Carlesund stated that the company is in an investment phase as it focuses on growth and increasing market share, with a strong product roadmap and continued expansion as more studios are opened, including in Brazil and the Philippines. EBITDA margin for the full year is estimated to be in the range of 66% to 68%.
The CEO said: “For 2025 our first priority continues to be growth and to increase market share in the expanding online casino market. Expansion will continue in 2025 – with a slightly more expensive resource mix, taking into account the situation in Asia and a strengthened focus on regulated markets we expect to see an effect on margin.”
Carlesund added that Evolution has its strongest roadmap of game releases ever set for the year ahead, as it believes this is a “key cornerstone” to the provider’s success. Up to four studios are expected to be launched during 2025, while the company will also execute on its capital returns.
The CEO continued: “The Board of Directors proposes a dividend of €2.80 (2023: €2.65) per share for 2024, in line with our dividend policy. In addition, the Board intends to repurchase shares for up to €500m during 2025, in line with our capital allocation framework.
“Evolution is highly profitable, debt-free with strong cash flow delivering capital returns to shareholders. We are very well positioned for 2025, and I look forward to what we will do during the year to continue to maximise after-tax earnings for our shareholders.”
