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Evolution reported Q3 revenues of EUR 507.1 million, down 2.4% year-over-year - the company’s first revenue decline in recent memory.
At constant currency, growth would have been positive 3.9%, but that’s still disappointing.
CEO Martin Carlesund didn’t mince words:
“We have not been satisfied with the growth so far this year.”
I share his sentiment.
The Good:
Americas continues forward with 14.5% year-over-year growth, becoming a genuine growth engine at 15% of revenues (up from 12% last year).
Europe appears to be stabilizing after ring-fencing issues, with sequential growth returning.
EBITDA margins improved to 66.4% despite the revenue miss, showing cost discipline.
Capital returns remained robust with EUR 187 million in buybacks and EUR 572.5 million in dividends year-to-date.
The Bad:
Asia remains the problem child - down 6.5% year-over-year and nearly 10% sequentially.
Despite management’s confidence last quarter about cybercrime countermeasures, they admitted to overcorrecting with measures so stringent they hurt legitimate players.
Two overhangs persist: the UK Gambling Commission review (resolution expected by year-end) and the bizarre revelation that competitor Playtech paid Black Cube years ago to produce a defamatory report.
These distractions should eventually clear, though timing remains uncertain.
The Interesting:
The business is quietly transforming.
RNG outpaced Live for the first time (+4.2% vs -3.4%), with Nolimit City performing well.
More importantly, the geographic mix is shifting - Asia now represents 37% of revenues versus 39% last year, while regulated markets climb to 46% of total revenue.
It’s painful medicine, but the business arguably becomes higher quality and less risky with each quarter.
I believe this structural improvement gets lost in the headline numbers.