Evolution reports strong Q3 2023 results with 19.6% revenue growth
Evolution has posted impressive financial figures in its latest interim report for Q3 2023. The company revealed that it generated €452.6 million in revenue during this quarter, marking a substantial 19.6% percent year-on-year increase, showcasing the remarkable demand for its offerings.
Q3 revenue Breakdown
The revenue breakdown for Q3 2023 showcased Evolution’s continued success. The live casino segment led the way, contributing the majority of revenue at €385.8 million, reflecting an impressive 24.3 percent increase. Evolution stated that they are currently experiencing a level of demand that exceeds their current capacity, prompting them to focus on expanding their footprint to meet this surging demand.
In contrast, the revenue from the RNG (Random Number Generator) segment experienced a slight decrease of 1.9 percent year-on-year, amounting to €66.8 million.
Despite this, Evolution clarified that Q3 was a quarter marked by progress in their RNG operations.
(Source: SiGMA) Evolution’s Q3 revenue breakdown recorded an increase of 24.3 % in the live casino segment to ￡385.8 million. Revenue decreased by 1.9% to ￡66.8 million year on year and Europe which is the company’s largest market increased by 10% year-on-year to ￡175.1 million. Asia experienced growth of 34.7% year-on-year to ￡172 million, North America increased by 9% year-on-year to ￡54.7 million and LatAm was up by 37.7% to ￡34.4 million
Regional performance
Breaking down revenue by region, Europe emerged as Evolution’s largest market, generating €175.1 million in revenue, a noteworthy 10 percent increase year-on-year. Meanwhile, Asia reported €172.1 million in revenue, demonstrating substantial growth at 34.7 percent.
North America’s growth was relatively modest at 9 percent, contributing €54.7 million to Evolution’s revenue. In Latam, revenue surged by an impressive 38.7 percent to €34.4 million. However, other markets collectively generated €16.3 million, experiencing a slight 1.2 percent reduction compared to the same period in 2022.
In summary, 40 percent of Evolution’s Q3 revenue originated from regulated markets, aligning with previous quarters but showing a one-percentage-point decrease compared to Q3 2022.
Foreign currency impact and profitability
Evolution acknowledged a more significant than usual impact from foreign currency fluctuations in Q3, mainly due to the relative strength of the euro, which reduced the value of international revenues. The company estimated a negative headwind of six to eight percentage points on revenue growth attributable to these currency fluctuations.
Despite these challenges, Evolution’s already impressive EBITDA margin improved in the latest quarter, climbing from 69 percent in Q3 2022 to 70.4 percent. This led to a remarkable EBITDA of €318.6 million, a significant 22.1 percent increase over Q2 2022.
The operating profit for Q3 reached €287.1 million, marking a substantial 21.5 percent increase, with an improved margin of 63.4 percent, up from 62.4 percent. Evolution declared an overall profit for the period amounting to €272.8 million, reflecting an impressive 23.3 percent increase compared to the previous year, resulting in a profit margin of 60.3 percent, up from 58.5 percent. Earnings per share for the quarter were €1.28, a notable increase from €1.04.
CEO comment
Martin Carlesund, CEO of Evolution said “Our Live Casino revenue grew to EUR 385.8 million for the quarter and we see a higher demand for our product than what we currently can deliver. That is a measure of the phenomenal traction our games have that also means we are not expanding our studios at the right pace. We have faced delays, and in some cases not executed fully, in several of our planned studio projects for this year but even more importantly we need to increase the pace of recruitment both in existing studios as well as to support new studios. We are working hard to get back on track in our existing locations and we will continue to invest in our network of studios and add new locations. We opened a smaller studio in Colombia just after the end of the third quarter”.
He explained that the underling growth drivers have remained unchanged.
Year-to-date results
For the first nine months of 2023, Evolution reported €1.32 billion in revenue, representing a substantial 26.1 percent year-on-year increase. EBITDA for this period reached €930.5 million, up by 27.6 percent, while operating profit stood at €840.1 million, marking a 27.7 percent increase. The company declared a profit for the period amounting to €788 million, a remarkable 27.1 percent increase from the first nine months of 2022, resulting in a profit margin of 60.3 percent, up from 58.5 percent.
Other recent developments
Evolution announced earlier this month that it expanded its partnership with the British Columbia Lottery Corporation (BCLC) by introducing two high-limit live casino tables, VIP Blackjack and VIP Baccarat, available for online players in British Columbia, Manitoba, and Saskatchewan. These tables are now live from Evolution’s Vancouver studio, enhancing the existing selection of live casino games on BCLC’s PlayNow.com platform. The VIP tables offer an opulent gaming experience with higher minimum bets
As of the latest data, Evolution AB (EVO.ST) is trading at SEK1003.40, with a decrease of -4.67%.
