A record payout on its Crazy Time game may have slowed growth at Evolution, but CEO Martin Carlesund reassured investors that the company’s Q2 2024 performance was “solid”.
The gaming giant reported operating revenues of €508.4m, representing a 15.3 percent increase on the corresponding period in 2023, while EBITDA climbed by 10.9 percent to €345.8 million.
EBITDA margin was 68 per cent, down from 70.7 percent in Q2 2023. However, it maintained full-year guidance at 69 – 71 percent margin.
Carlesund insisted the results would have been better if it had not been for the record-breaking success enjoyed by one player, but admitted that the win would be good for the business in the long term.
“I see the financial result in the quarter as solid although not fully reflecting our operational performance,” he explained.
“There are some clear reasons-, one reason being that we had the largest payout ever in an online casino during the quarter of our Crazy Time game. Large player wins are part of the game and positive for our games’ attractiveness to players, but it does affect us through lower revenue share in the period.”
The win was not the only drag on performance though. CarIesund identified that Evolution had seen “slower development” in most regions during Q2, a trend he attributed to the “natural variations in our industry”.
Despite this, he remained positive about the prospects for the rest of the year, and added: “The underlying market drivers and demand for our market-leading products remains very strong.”
Appetite for new markets
Part of the reason for CarIesund’s optimism is the investment the company has made in developing new markets, a strategy that he expects to pay off in the long term.
“It has been a very active second quarter at Evolution and I am happy with the progress we have made on several of our initiatives,” he said. “We are intensively working on introducing our offering to new markets that have recently regulated or are in the process of regulating such as the Philippines, Brazil, and the Czech Republic.”
CarIesund added that he can also see “vast potential” for expansion in some of Evolution’s more established markets.
“Europe continues to show a steady pace of growth, and Asia continues to be the fastest growing region,” he enthused.
“Our presence in North America expands, offering more successful game types in each state. In the second quarter we also introduced our Live games in Delaware for the first time. LatAm is performing well, even though the Brazilian market is still waiting for the transition to regulation.”
New titles for new revenue streams
Moving into new markets is not the only strategy Evolution has for growth. It has been busy behind the scenes developing new products and has a heavy release schedule planned for the rest of the year.
Revenue from live casino increased by 18 per cent year-on-year in Q2 2024, while the RNG segment saw just 2 per cent growth. However, Carlesund expressed confidence that “incremental improvements” to the RNG business, largely in the form of games launches, would support improved growth.
“We have a high pace of fantastic game-delivery in 2024, even better than in 2023, and we are planning for over 100 new releases,” he explained.
“Although one of our bigger launches – Lightning Storm – has been pushed into Q3, we are overall on track with our release plan for the full year. The release of Lightning Storm will be one of the biggest releases ever in the industry. We have taken some extra time to make sure we release something spectacular that the market has never seen before.
“In Q2 we saw the very successful release of Balloon Race, a latest-generation online live slot game combining game-show features with a simple and easy-to-play slot game, a game that was very well received by end users. Also, Lightning-versions of our popular SicBo and Dragon Tiger games came to market.
“On the RNG side, we have released 26 titles in the quarter – all fabulous games with the distinct trademark of quality and innovation of our four individual RNG-brands: Red Tiger, Nolimit City, NetEnt and Big Time Gaming.”
Adding to the brand portfolio
A third strand of the growth plan is M&A, as reflected by the planned acquisition of Galaxy Gaming in a deal that valued the US business at $85m.
“We are constantly looking for new ways to strengthen our position as the leading supplier of online casino games and have announced an offer for Galaxy Gaming. With the acquisition, we accelerate and solidify our presence in the US market where Galaxy is licensed in 28 states,” Carlesund said.
“Through Galaxy we gain a relationship with regulators in states that are not yet open for online and fast-track all future licensing. Galaxy holds over 130 licences in total world-wide. Galaxy has a diverse portfolio of great games that further will strengthen Evolution’s games-portfolio and secure access to the fantastic titles that our future players are accustomed to already today.”
Delivering value
The CEO concluded his update to investors by expressing satisfaction that the Board had provided clarity on Evolution’s future plans by clearly communicating the company’s capital allocation framework.
That framework includes the initiation of a share buy-back programme of up to €400m, which the CEO suggested would be “highly value enhancing to shareholders”.
He added: “As a highly-profitable company with a market leading position in a globally growing industry we are focused on providing best-in-class products to our customers, a great place for our team members to work and grow, coupled with superior returns to shareholders.
“Even though regulation is increasing the workload in many markets right now, it paves the way for a very strong future.”
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