Evolution revenues up 48% in 2019 first 9 months, highest growth in Asia and North America

Evolution Gaming released Thursday its interim report for January-September 2019. Revenues amounted to EUR 94.7 million (USD 105.1 million) in the third quarter, equivalent to an increase of 47 percent compared with the corresponding period in 2018. The positive revenue development mainly derives from increased commission income from existing customers and, to a certain extent, from new customers.

Demand for Live Casino games continues to grow, partly as a result of several successful game launches earlier in 2019, and the number of bet spots from end users amounted to EUR 5.8 billion. Revenues from dedicated tables and environments also contributed to the increase as a result of additional customers launching or extending their customised Live Casino environments.

EBITDA increased by 73% to EUR 48.5 million, corresponding to a margin of 51.2%. Operating expenses amounted to EUR 52.7 million, increasing from EUR 41.1 million of the prior year Q3. Expenses were mainly driven by higher costs for personnel, connected to the launch of new tables in the company’s studios. The expansion has also increased other operating expenses compared with preceding quarters.

Operating profit amounted to EUR 42.0 million, corresponding to an increase of 81 percent. The operating margin was 44.3 percent (36.1 in prior year). The EBITDA margin was 51.2 percent (43.5). The EBITDA margin has to some extent been affected by the new lease standard IFRS 16, which is reported in note 4.

Net financial items only had a marginal impact on profits and related mostly to the interest expense on loans for the studio property in Riga. The group’s effective tax rate for the quarter amounted to 5.1 percent (8.4). The tax rate is influenced by the countries in which earnings are generated, which may vary between reported periods. Profit for the period amounted to EUR 39.8 million (21.2). Earnings per share before dilution were EUR 0.22 (0.12).

Investments in intangible assets amounted to EUR 4.1 million (3.1) during the quarter and were mainly attributable to development of new games and technical improvements of the platform, such as new functionality. Investments in property, plant and equipment amounted to EUR 5.1 million (from EUR 2.7 M) and comprised new studio space, new gaming tables, servers and other computer equipment to meet new technical requirements and maintain capacity and performance in connection with new platform launches.

In the first nine months of 2019, revenues amounted to EUR 259.8 million, corresponding to an increase of 48 percent compared with the same period in 2018. The positive revenue development mainly derives from increased commission income from both new and existing customers. Revenues from dedicated tables and environments also contributed to the increase as a result of additional customers launching or extending their customised Live Casino environments.

CEO Martin Carlesund commented: “I am very satisfied to report consistently strong results for the third quarter. Our investments in new games and studios are having an increasingly strong impact, which is reflected in both the high growth as well as stronger margins. We have also seen a further increased demand for Evolution’s products globally. In addition, we now see clearly that we are reaching completely new player types, who to a large extent are playing Live games for the first time. These new players are being converted from other game categories, such as slots, which is very encouraging to see. Through our expansion and construction of studio capacity, together with the 10 new games launched during the first half of 2019, we are also favourably positioned to take advantage of the growing general demand for Live.”

“Evolution’s products experience high demand all over the world, which can be seen in our growth which is truly global. To increase the understanding of our geographical reach, starting in this report we will break down our revenues per region. We are growing together with our customers in all regions, with the highest growth in Asia and North America. We expect this development to continue and it reflects the operators’ focus on new growth markets. In some regulated markets in Europe, online casino has entered a more mature phase, but Live Casino as a vertical continues to grow its share of the total market,” Carlesund added.

The CEO confirmed the company will continue to invest in additional studio capacity to meet the total demand for Live. Evoltion’s all-new studio in Malta is now operational, and the firm is also continuing to expand its existing studios in both Georgia and New Jersey. “In Georgia, we have now doubled the capacity since the launch of the studio in April 2018. By the end of the year, we will also have doubled the capacity in New Jersey in order to add more games from our portfolio and to allow additional space for dedicated customer environments. Currently, we offer 9 out of 21 game titles from our portfolio to operators in the state.”