Evolution reports the highest EBITDA margin at nearly 71 percent

Lea Hogg 2 months ago
Evolution reports the highest EBITDA margin at nearly 71 percent

Online casino solutions producer Evolution presented strong financial performance during the second quarter of 2023, with impressive top-line growth of 28.2 percent, amounting to EUR 441.1 million compared to EUR 344.0 million in the same period last year. This resulted in the company achieving its highest ever EBITDA-margin in a quarter, reaching an outstanding 70.7 percent.  The company’s unwavering focus on quality, constant improvement and innovation enables it to outperform competitors even during challenging times. Evolution AB’s growth-oriented mindset, along with its team of nearly 18,000 dedicated professionals, sets the stage for an exciting second half of 2023.

Martin Carlesund, Evolution Group’s CEO, (pictured above), said of the results “Although a strong financial result, operationally I feel that we can do more to leverage our execution power to the fullest.”

Highlights of second quarter

Operating revenues soaring by 28.2 percent to EUR 441.1 million compared to the previous year. The EBITDA also saw substantial growth, increasing by 30.8% to EUR 311.7 million, representing a record-high margin of 70.7%. The profit for the period amounted to EUR 264.1 million, and earnings per share stood at EUR 1.24. For the first half of 2023, the company reported operating revenues of EUR 870.6 million, up by 29.8 percent, with EBITDA reaching EUR 611.9 million, a 30.8 percent increase. During this period, the profit for the period totaled EUR 515.2 million, and earnings per share amounted to EUR 2.41. Noteworthy events in Q2 2023 included the successful launch of “Funky Time” and the expansion of new live casino studios in Latin America.

Evolution Q2 2023 results: Comparison of revenue QoQ. (Source: SiGMA) 

Live casino business contributed signficantly

The live casino business contributed significantly to the revenue, representing 84 percent of the total and recording a remarkable 33.5 percent increase to EUR 371.8 million. While the financial results are robust, the company acknowledges the need to leverage its execution capabilities further to maximize potential.

Evolution AB made significant strides in its RNG (Random Number Generator) operations during the period, successfully catching up with its game release plan by the end of the quarter. Despite experiencing a 4.0 percent decline in revenue (EUR 69.3 million) compared to pro-forma figures from the second quarter of the previous year, the business remained stable compared to the first quarter and demonstrated a 5.8 percent increase from reported figures. Although it did not align with the double-digit growth targets for RNG, the segment remains highly profitable and positively contributes to group margins.

Strong EBITDA margin

Cost management continues to be a priority for Evolution AB, achieving a strong EBITDA margin of 70.7 percent in the second quarter, well within the communicated range of 68-71 percent for the full year 2023. The company navigated external challenges to maintain a favorable cost level, although price increases have impacted operations. To sustain growth, Evolution AB emphasizes increasing efficiency while supporting growth.

Evolution Q2 2023: Comparison of Q2 results YoY. (Source: SiGMA)

Funky Time attracted new players

The launch of “Funky Time” in Q2, a unique game show combining RNG and Live game elements with animated characters and live video, proved to be successful, attracting numerous new players. The company’s roadmap for both Live and RNG games is brimming with exciting releases scheduled for the second half of 2023, setting the stage for a promising roadmap in 2024.

With a focus on long-term growth opportunities across regions, Evolution AB continues to expand its Live game portfolio in North America, recently launching Live Craps in Michigan and strategically increasing its presence in the region. Latin America has also seen a rise in player numbers, leading to studio expansions in Argentina and Colombia. Europe and Asia, being the largest regions for the company, present significant potential for growth, with Europe experiencing high demand for new tables.

Supported by a robust financial position and strong cash flow generation, Evolution AB remains committed to its dividend policy and investments in innovation and talent. As an all-equity financed and profitable company, the firm is dedicated to growth despite current macro-economic challenges. Investments in existing studios and planning for new locations continue to enhance the playing experience and drive growth.

Evolution (STO:EVO) trades on Stockholm Stock Exchange at 1282.40SEK −1.20 

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