Evolution Gaming ((EVVTY)) has held its Q1 earnings call. Read on for the main highlights of the call.
During the latest earnings call, Evolution Gaming conveyed a mixed sentiment. While the company is optimistic about its expansion plans and product roadmap, the quarter was marred by slower revenue growth, challenges with ringfencing and cyber issues, and increased expenses. Positive developments in North America and recruitment growth were somewhat overshadowed by these challenges.
Expansion Plans
Evolution Gaming is aggressively pursuing its expansion strategy, having recently opened a new studio in Romania. The company plans to further extend its footprint by establishing studios in Brazil, the Philippines, Michigan, and expanding in Malta, Colombia, Argentina, New Jersey, and Philadelphia.
Strong Product Roadmap
The company has a robust product roadmap, with plans to release more than 110 games in 2025. Several new games were launched in Q1, including War, Race Track, and Marble Race, with upcoming releases like Super Color game and Ice Fishing.
Recruitment Growth
Evolution Gaming’s workforce has surpassed 22,000 employees, marking an 8.4% year-on-year growth. This increase is primarily driven by recruitment efforts in Brazil and the Philippines.
Positive Reception at ICE Exhibition
The company showcased its headline games at the ICE Exhibition in Barcelona, receiving a great response from operators, which bodes well for its future product launches.
North America Growth
North America continues to be a strong market for Evolution Gaming, with a 15% year-on-year growth. The company is expanding its presence in New Jersey through a partnership with bet365.
Revenue Growth Slowdown
Despite the expansion efforts, net revenue grew by only 3.9% year-on-year to EUR 520.9 million, with a constant currency growth of 6.1%, indicating a slowdown in revenue growth.
EBITDA Margin Decline
The EBITDA margin declined to 65.6%, falling short of the full-year guidance of 66% to 68%, reflecting the financial pressures the company is facing.
Impact of Ringfencing
Ringfencing measures in Europe have led to flat revenue development and a 6% decline from Q4 in the region, posing a significant challenge to the company’s growth.
Cyber Challenges in Asia
The company continues to face cyber challenges in Asia, resulting in flat revenue growth in the region for three consecutive quarters.
RNG Revenue Growth Decline
RNG revenues grew by only 3.1% year-on-year, marking a decline from previous quarters, which is a concern for the company’s revenue streams.
Increased Operating Expenses
Operating expenses increased by 15% year-on-year due to investments in new products and capacity, highlighting the company’s commitment to growth despite financial challenges.
Forward-Looking Guidance
Looking ahead, Evolution Gaming remains optimistic about the second half of the year. The company is banking on strong product launches and expansion plans, including new studios in Brazil and the Philippines, to drive growth. Despite the challenges, the company continues to prioritize growth, as evidenced by ongoing investments into new products and capacity expansion.
In conclusion, while Evolution Gaming faces several challenges, including slower revenue growth and increased expenses, the company remains committed to its expansion and product development strategies. Positive developments in North America and recruitment growth are promising, but the impact of ringfencing and cyber issues cannot be ignored. Investors will be keen to see how the company navigates these challenges in the coming quarters.