Evolution makes significant splash with its impressive Q2 2024 results

Lea Hogg July 22, 2024

Evolution’s Q2 2024 financial results paint a picture of a company that is not only surviving but thriving in the competitive iGaming industry. With strategic initiatives in place and a strong financial performance, Evolution is well-positioned to continue its growth trajectory in the coming quarters.

Evolution has reported an impressive operating revenue of €508.4, million marking a robust 15.3 percent increase year-over-year. This surge in revenue has propelled the supplier’s H1 revenue to the coveted €1 billion mark, a milestone that reflects the company’s strong financial performance that will pave the way for further growth and stability.

Evolution AB	H1 2024	H1 2023	Y-o-Y Change
✅Profit (EUR in millions)	538.3	515.2	+23.1
✅Earnings/Share (EPS, EUR)	2.53	2.36	+0.17
✅Operating Revenue (EUR in billions)	1.01	0.8706	+0.1394
✅Stock Price	$1162.50	–	–
✅Price Change	$-3.50	–	–
✅Percent Change	-0.30%	–	–

SOURCE: SiGMA

Acquisition of Galaxy Gaming

“With the acquisition, we accelerate and solidify our presence in the US market where Galaxy is licensed in 28 states. Through Galaxy we gain a relationship with regulators in states that are not yet open for online and fast-track all future licensing”
MARTIN CARLESUND

Evolution Malta Holding Limited, a subsidiary of Evolution AB, has entered into an agreement to acquire Galaxy Gaming, Inc. for approximately $85 million. This acquisition aligns with Evolution’s strategy to become the world’s top provider of casino games by enhancing its presence in the US market and strengthening its position as a leading licensor of proprietary table games to the online gaming industry.

Galaxy Gaming, known for its innovative casino table games and technology solutions, will continue to operate as a separate and independent business unit under Evolution. The transaction, which includes a premium of 124 percent to Galaxy Gaming’s closing share price, is expected to close in mid-2025, subject to customary closing conditions and regulatory approvals.

This strategic move is anticipated to benefit all stakeholders by combining Galaxy Gaming’s land-based business with Evolution’s global reach and online gaming leadership.

M&A consideration

Evolution AB has adopted a Capital Allocation Framework, a strategic tool to boost Mergers and Acquisitions (M&A) as its long-term vision. The company will consider acquiring companies, technologies, IP rights, or other assets, provided they enhance long-term shareholder value and operations.

There is no fixed annual allocation for M&A, and capital will only be allocated when strong projects are presented. Excess cash, after investments, dividends, and M&A, will be distributed through share repurchases, with the Board seeking annual authorization to ensure own shares do not exceed 10 percent of all shares. The Board said it is committed to maximizing returns for shareholders through these strategic moves.

Analysis of Q2 2024

Evolution’s Q2 EBITDA also experienced a positive trend, with a 10.9 percent increase year-over-year to €345.8 million. This upward trajectory continued into the first half of the year, with the EBITDA figure rising by 13 percent to €691.5 million. The EBITDA margin for the first half of 2024 settled at a healthy 70.3 percent, reflecting the company’s efficient operations and strong profitability.

However, it wasn’t all smooth sailing. The company’s profit margins dipped to 52.9 percent in Q2 2024, a decrease from the 59.9 percent figure reported in Q2 2023. Despite this, the company managed to generate a profit of €269.1 million for the period, a relative increase of 1.9 percent year-over-year. The profits for H1 2024 also saw a 4.5 percent increase year-over-year, amounting to €538.3 million.

The second quarter of 2024 was a period of strategic moves for Evolution. The company introduced a new capital allocation framework and launched a share repurchase programme. In a bid to expand its presence in the US market, the acquisition of Galaxy Gaming is expected to be finalised by mid-2025.

These developments are part of Evolution’s strategy to build on its positive Q1 results, which indicated growth across all geographical regions. CEO Carlesund expressed satisfaction with the progress made in Q2 2024. He highlighted the company’s revenue growth of 15 percent and an EBITDA margin of 68 percent. He also noted that the revenue growth at constant currency is estimated to be 19 percent for the quarter.

Today, Evolution Gaming Group AB (EVOG), based in Stockholm, is trading at 1,057.00 SEK, experiencing a decrease of 9.50 SEK, which represents a drop of 0.89 percent.