Details of Evolution AB’s Q3 2023 Financial Results. Strong growth in operating revenues and EBITDA, but facing challenges in RNG business. (Images courtesy of evolution.com)
Evolution AB reported robust financial growth in the third quarter of 2023. Operating revenues increased by 19.6% to EUR 452.6 million, while EBITDA rose by 22.1% to EUR 318.6 million. This marks a profitable period for the company, with earnings per share (EPS) escalating to EUR 1.28. Despite the high demand for their Live Casino products and solid financial performance, there were some speed bumps in the expansion of studios and a slight decline in RNG revenues.
Positive Aspects
A 19.6% increase in operating revenues signals the company’s robust growth, while the strong EBITDA margin of 70.4% reflects highly effective cost management. In addition, earnings per share growth (EPS) increased from EUR 1.04 to EUR 1.28, providing higher shareholder returns.
Although recently, the company’s NASDAQ share price has dropped considerably from its yearly high of 1466.80 SEK to its current 991.91 when writing this review (16:16 GMT 26 October 2023). You can see the latest iGaming Stocks Update Issue 21 2023 report and track back through previous reports to get an idea of how EVO shares have performed throughout 2023.
Areas for Improvement
Despite high demand, the pace of Evolution’s new studio launches has been slow. Adding to this, there has been a decline in RNG revenue. This stems from First Person virtual table games to the online slot software providers owned by the company. NetEnt, NoLimit City, Red Tiger Gaming, and BTG, and . These RNG-based developers have contributed to a decline of 1.9% compared to the corresponding quarter last year. Adding to this pressure are currency headwinds, which have had a negative impact on top-line growth. The FX markets have been quite volatile as of late!
Evolution Brands, History, Awards, and more: For more information about the RNG brands under the Evolution, and the entire live casino games portfolio, the evo live casino page.
CEO’s Comments & Financial Table
The CEO of Evolution AB emphasized the significance of the third quarter’s almost 20% top-line growth and a remarkable 70.4% EBITDA margin. He attributed this performance to the company’s continuous efforts in releasing more games, which is a crucial factor for their long-term success. However, the CEO also highlighted the necessity of speeding up the recruitment process and the expansion of new studios to meet the high demand for their products.
| Metrics | Q3 2023 | Q3 2022 | % Change |
|---|---|---|---|
| Operating Revenues (EUR million) | 452.6 | 378.5 | 19.6% |
| EBITDA (EUR million) | 318.6 | 261.0 | 22.1% |
| Profit for the period (EUR million) | 272.8 | 221.3 | 23.3% |
| Earnings per Share (EUR) | 1.28 | 1.04 | 22.9% |
Evolution AB’s Q3 2023 Financial Results
Evolution continues to show considerable financial strength, even amidst challenges. The company’s ability to innovate and its geographic expansion strategies promise to keep it ahead in the race. Nonetheless, addressing bottlenecks in studio expansions and RNG revenue could be pivotal for long-term success.
- Financial Milestones: Evolution, a leading name in the online casino industry, has reported remarkable third-quarter figures. The company demonstrates significant economic prowess with a revenue of EUR 452.6 million and an EBITDA of EUR 318.6 million. The robust EBITDA margin of 70.4% adds an extra feather to Evolution’s cap.
- Live Casino: Though the revenues from the Live Casino division surged to EUR 385.8 million, Evolution finds itself in a curious quandary. The demand for its live casino product far exceeds its current supply capabilities. This discrepancy points to challenges in expanding studios at the needed pace. While a new studio in Colombia has opened, future projects in Europe, North America, and Latin America seem vital for accommodating rising demands.
- Sluggish RNG Revenues: On the other side of the coin, Random Number Generator (RNG) revenues experienced a slight slump. The division reported a decline of 1.9% compared to the corresponding quarter last year. Despite the dip, Evolution remains optimistic about improving its RNG operations methodically.
- Product Innovations and Geographical Expansions: Evolution is not merely riding on its laurels. During the third quarter, it released more games than any previous quarter, showcasing a solid commitment to innovation. Its growth in North America, Asia, and Latin America is particularly noteworthy, which reported increments of 9%, 35%, and 39%, respectively. Several new titles and game shows were launched, including the intriguing Red Door Roulette and Video Poker, which received warm receptions at the G2E show earlier in October.
- Currency Headwinds: While internal factors mainly explain the company’s financial performance, the external impact of currency variations cannot be overlooked. A strengthening Euro adversely affected the top-line growth, causing a 6-8 percentage point negative headwind on revenue growth.
Compare the latest results with Evolution AB’s 2023 Q2 results? Here are the full Live Casino Dominates Evolution Financials Report for Q2 2023 financial results published by my co-editor Jack Bannon on 27 July 2023.
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