The British betting and gaming firm Evoke, known for its brands such as William Hill, 888, and Mr Green, has recently faced a mixed bag of financial results. While the company managed to exceed profit expectations for the previous year, its shares took a hit due to slower-than-expected revenue growth forecasts for the first quarter. This downturn reflects broader challenges in the industry, particularly regulatory pressures aimed at curbing problem gambling.
Navigating the regulatory maze
Evoke’s shares plummeted by as much as 18.8% following the announcement that its first-quarter revenue growth would be in the low single-digit percentage range. This contrasts with its annual revenue growth forecast of 5%-9% for the year. The company attributes these short-term hurdles to regulatory curbs on problem gambling and some anticipated revenues not materialising as expected. Analysts at JPMorgan noted, “We would expect some concerns on Evoke’s ability to fulfil its guidance, particularly given a rather soft Q1”.
In the UK, regulatory measures have been tightening, with the government capping stakes on online slot games in November to combat binge play. According to Reuters, this move is part of a broader effort by the UK to rein in harmful gambling habits, which has impacted several betting companies. Despite these challenges, Evoke remains optimistic about its core profit for the first quarter, expecting an increase of £18-28 million from the previous year. This is supported by cost-cutting measures that have identified additional savings of £15-25 million for 2025.
Evoke’s strategic pivot
Under the leadership of CEO Per Widerstrom, Evoke has been implementing a turnaround strategy which includes a rebranding from 888 Holdings and a renewed focus on core markets such as the UK, Italy, Spain, Denmark, and Romania. Widerstrom expressed confidence in the company’s full-year expectations, stating, “We remain highly confident in our full-year expectations … in addition to driving further margin expansion as a result of our more efficient operating model”.
Evoke’s adjusted core profit for 2024 was £312.5 million, surpassing analysts’ estimates of £294 million. The company’s ability to navigate regulatory challenges will be crucial, especially as the UK continues to scrutinise the betting industry. The sector will also be watching developments from the British finance minister’s Spring budget, following a relief in October when taxes were left unchanged.
Evoke views its path to profits as being supported by strategic changes made in 2024, which aimed to enhance profitability and improve its product offerings. The company is focusing on a more sustainable customer base and high-value clients, which, while beneficial in the long term, may impact short-term revenue growth.
Weathering the storm
As Evoke continues to adapt to changing regulatory landscapes, it will be necessary for the company to maintain its strategic focus. The company’s shares fell sharply after the announcement, highlighting investor concerns about the slow start to 2025. However, Evoke’s strong earnings for 2024, driven by online performance and strategic changes, provide a potentially solid foundation for future growth.
