Evolution to concentrate efforts on increasing network of studios to support growth

Evolution will concentrate efforts on investing in its network of studios together with adding new locations in a bid to support its ongoing growth, as CEO Martin Carlesund expressed concerns that the company is seeing higher demand than it can currently deliver.

In the third quarter of 2023, Evolution reported record group operating revenue of €452.6 million, an increase of 19.6 per cent, and EBITDA amounting to €318.6 million, corresponding to almost 20 percent top-line growth and a 70.4 percent EBITDA margin.

The surge was underpinned by a 24.36 per cent increase in live casino revenue in the three months up to 30th September, amounting to €358.8m.

Commenting on the company’s performance, the CEO asserted that Evolution is seeing “a higher demand for [its] product than what we can currently deliver”.

“That is a measure of the phenomenal traction our games have. However, it also means we are not expanding our studios at the right pace.”

Mr Carlesund remarked that the company has experienced several setbacks in a number of its planned studio projects, and identified recruitment as a key area which needs to be ramped up:

“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.”

He also confirmed that Evolution opened a smaller studio in Colombia “just after the third quarter” and affirmed the company’s plans to open one new studio in Europe later this year, and “3-4 next year in Europe, North America and LatAm.”

Random Number Games (RNG) revenues amounted to €66.8 million and declined 1.9 percent compared to the corresponding quarter last year. Despite the step back in year-on-year growth “it was a quarter when [Evolution] made progress in [its] RNG operations,” the CEO remarked.

“Our release pace is now where we want it to be, and all new games are from the third quarter on OSS (One Stop Shop). We are methodically and systematically moving our RNG business forward. Our earlier communicated goal for RNG growth remains but at the moment we focus on showing step-by-step improvements.”

Mr Carlesund said the company is focused on factors within its control when explaining its financial results, “however, this quarter the impact from external factors such as currency effects are more significant than ever”.

The strengthening of the euro against most currencies has affected its top line growth negatively during this year. Players deposit and play in many different currencies with Evolution’s operators, while the resulting Gross Gaming Revenue is converted to euro which is the base for its invoicing. In the third quarter Evolution estimates negative headwind on revenue growth from currency effects to the tune of six to eight percentage points when comparing revenues to the same quarter last year.

The CEO singled out North America as a region the firm expects to develop over the years as more US states regulate, while the online casino market in the region si still in an early stage of development.

Mr Carlesund revealed that North America registered nine per cent growth in North America compared to the same period last year, but slightly lower revenue in Q3 when compared to the second quarter. Asia and Latin America registered growth at 35 and 39 per cent respectively from last year, while Europe showed a steady 10 per cent increase. The growth compared to third quarter of last year is organic in all regions, the CEO noted, as the latest acquisitions were then included in the group.

Summarising his comments, Mr Carlesund said “the underlying growth drivers remain unchanged. We face a tougher macro climate today than one year ago and we are underserving the market at the moment, but we will continue to invest, optimize recruitment and, as always, push for growth through focus on product innovation.

“Our financial strength will continue to serve us well as we can continue to invest without interruption and grow. We remain committed to delivering new thrilling experiences to new and existing players and continue to strive to be just a little better every day. I look forward to the final months of the year and onwards into 2024.”