Evolution Publish 2024 Year-End Results

Evolution: Year-end report 2024

• The Board proposes a dividend of EUR 2.80 per share (2.65)
• The Board intends to repurchase shares up to EUR 500 million
• Over 1,700 Live tables at the end of the period (1,600)

Fourth quarter of 2024 (Q4 2023)

• Total operating revenues increased 31.5% to EUR 625.3 million (475.3) whereof;
  • Net revenues increased 12.3% to EUR 533.8 million (475.3)
  • Other operating revenues of EUR 91.4 million (-), other operating revenues are related to reduced earn-out liability.
• EBITDA increased 35.0% to EUR 455.0 million (337.0), corresponding to a margin of 72.8% (70.9)
• Adjusted EBITDA (excluding other operating revenues) increased 7.9% to EUR 363.6 million (337.0), corresponding to a margin of 68.1% (70.9)
• Profit for the period amounted to EUR 377.1 million (282.9)
• Earnings per share amounted to EUR 1.83 (1.32)

January-December 2024 (2023)

• Total operating revenues increased 23.1% to EUR 2,214.1 million (1,798.6) whereof;
  • Net revenues increased 14.7% to EUR 2,063.1 million (1,798.6)
  • Other operating revenues of EUR 151.1 million (-), other operating revenues are related to reduced earn-out liability.
• EBITDA increased 23.2% to EUR 1,561.8 million (1,267.4), corresponding to a margin of 70.5% (70.5)
• Adjusted EBITDA (excluding other operating revenues) increased 11.3% to EUR 1,410.7 million (1,267.4), corresponding to a margin of 68.4% (70.5)
• Profit for the period amounted to EUR 1,244.0 million (1,070.9)
• Earnings per share amounted to EUR 5.94 (5.01)

Comments from CEO Martin Carlesund:

For the fourth quarter 2024, Evolution reports net revenue of EUR 533.8 million and adjusted EBITDA of EUR 363.6 million, corresponding to year-on-year revenue growth of 12.3 percent and an adjusted EBITDA margin of 68.1 percent. Net revenue growth at constant currency is estimated to be 16 percent in the fourth quarter. In addition to net revenues the quarter also includes non-recurring other operating revenues of EUR 91.4 million related to a reduced earn-out liability. For the full year 2024 net revenue growth is 14.7 percent and the adjusted EBITDA margin is 68.4 percent.

During the past year Evolution has strengthened its position as the world’s leading provider and innovator of online casino games.

However, it has also been a year in which we have handled several challenges such as the sabotage activities towards our Georgian studio, cyber-attacks in the Asia region and also an increased tax-rate.

For 2025 our first priority continues to be growth and to increase market share in the expanding online casino market. Expansion will continue in 2025 – with a slightly more expensive resource mix, taking into account the situation in Asia and a strengthened focus on regulated markets we expect to see an effect on margin.

We estimate the EBITDA margin for full-year 2025 to be in the range of 66-68 percent. We have scalability in our business model and in the longer term there is good opportunity for higher margins.

We continue to innovate and develop our world-leading product portfolio. The key to our future success is to continue to give players an exciting, entertaining and flawless playing experience.

During the past year we have invested in our patent-protected portfolio and we are now increasing our efforts against infringements and counterfeit versions of our games.

Our 2024 game releases have performed very well and have met my high expectations from the beginning of the year.

Our “Product Leap” years will continue into 2025. I am happy to state that our roadmap for the coming year is the strongest and most solid ever.

It includes games with brand new mechanics, many games that have a truly global audience, as well as incremental improvements to our classics.

Announced titles include the much-anticipated Marble Race, a new amazing Fishing game, a spectacular Crash-game as well as the instant classic Fireball Roulette and extensions of our unique Blackjack portfolio among many other releases.

We saw strong momentum in the final quarter of the year in North America, Latin America and Europe.

Development in Asia is flat versus the previous quarter as we continue to face challenges from cyber-attacks towards our video distribution in the region.

Our Live Casino offering continues to perform well in the fourth quarter with 13.3 percent growth year-on-year. We end the year with over 1,700 tables, a net increase of about 100 tables during 2024.

During the year we added over 300 tables across our network, which I am happy with, but with significantly reduced capacity in our Georgia studio, this added capacity is still not enough.

We are currently operating without any disruptions in Georgia and expect to remain at the current reduced capacity as we ramp up expansion in other studios.

To respond to the continued strong demand for Live Casino we will continue to invest for growth during 2025.

We have ongoing projects for new studios in Brazil and the Philippines and I expect in total to open 3-4 new studios during the year. For 2025 we estimate capex of about 140 MEUR in line with 2024.

We maintain the positive trend of incremental improvements for our RNG offering and I am pleased with the releases in the fourth quarter, resulting in a year-on-year growth of 6.7 percent. The improvements made to our platform during the year are clearly starting to show effect. We will maintain a high pace of new RNG game releases for 2025.

The regulatory landscape in our industry is constantly evolving. An increasing number of countries introduce a national regulation for online casino.

We view this development positively and consider it a long-term driver of growth for the industry as it over time attracts new end-users and clarifies how B2C operators can address the market.

As a B2B provider of games we hold licenses in several markets and need to adapt as regulation evolves.

We have implemented further technical measures to ring-fence the regulated markets and to ensure that our games are available only through the locally licensed B2C operators in markets where local licenses are available. This change is reflected in our lowered margin guidance for the year.

As mentioned, three of our four regions showed strong development in the quarter.

North America continued its strong performance from the previous quarter. Expanded table capacity and new game releases support Live Casino and improvement in RNG indicates that the region has turned a corner.

In Europe we experienced steady development during the year at around 10 percent growth.

We have a very exciting year ahead in Latin America, where the Brazil market introduced local regulation starting in January 2025, our upcoming local studio will be important to supply the demand in the country.

We are also expanding table capacity in Colombia for the Spanish speaking regions in Latin America market as well as for markets outside the region.

2024 has been a difficult year in Asia and the region remains affected by cyber-attacks in the fourth quarter. Revenue in the quarter is flat in comparison to the previous quarter. We continue our work to resolve the situation with full force but as stated in Q3 we expect this to take some time. The development in Asia is also reflected in our lowered margin guidance for 2025.

The Board of directors proposes a dividend of EUR 2.80 (2.65) per share for 2024, in line with our dividend policy.

In addition, the Board intends to repurchase shares for up to EUR 500 million during 2025, in line with our capital allocation framework.

Evolution is highly profitable, debt-free with strong cash flow delivering capital returns to shareholders. We are very well positioned for 2025, and I look forward to what we will do during the year to continue to maximize after-tax earnings for our shareholders.

I am also grateful for the hard work and the ways in which our Evolution-team has taken on and resolved the many challenges during the past year.

With great determination, hard work and professionalism, our employees have brought Evolution to an excellent position for future growth. We will relentlessly continue to strive to make Evolution a bit better every day also during 2025.

Live Casino Comparer Comment

A few key takeaways:

• Dealing with the Cyber Attack in Asia has impacted growth, which remained flat during the previous quarter.
• 1,700 tables across the network.
• Due to the strikes, there was a period of reduced table capacity since the downsizing at the Georgia Studio.
• New Studios are being built in the Philippines and Brazil to support those markets.
• The regulatory landscape is challenging. The UKGC is investigating Evolution’s UK License for allowing UK players to access Evolution games on non-UK-licensed casinos.
• Headcount is 21,252, year-on-year growth of 10.6%.
• Asia is the biggest market, with Europe second.