Evolution hails new investments as revenue and profit rise in Q3

Live dealer software supplier Evolution Gaming said its investment in new products and the expansion of its studios has led to a year-on-year increase in revenue and profit during the third quarter of 2019.

Operating revenue for the three months to 30 September 2019 amounted to €94.7m (£81.7m/$105.6m), up 47.0% on €64.3m in the corresponding period last year.

Evolution said revenue growth was boosted by increased commission income from existing customers, as well as from new players. The supplier noted a rise in demand for its live casino games, due in part to several game launches earlier in the year.

Revenue from dedicated tables and environments also helped push revenue up in Q3, as a result of more customers launching or extending their customised live casino services.

The wider European market remains Evolution’s core sector, account for €46.5m of total operating revenue for the quarter, up 42% on last year. The supplier saw growth in all other markets, including Asia, which overtook the UK to become its second highest revenue-generating region, bringing in €13.9m, ahead of the UK on €12.7m.

Nordics revenue increased by 30% year-on-year to €6.1m, while North America revenue rocketed 107% to €6.1m and other regions 54% to €9.3m.

Evolution's earnings before interest (EBITDA) increased 73% year-on-year from €28.0m to €48.5m.

In terms of spending, total operating expenses for the quarter stood at €52.7m, up from €41.1m in the same period last year. This was primarily due to staffing costs, with Evolution spending €33.7m in Q3 of 2019, up from €25.6m last year.

Evolution also noted an increase in depreciation, amortisation and impairment costs, with this rising from €4.8m to €6.5m. In addition, other operating costs climbed from €10.7m to €12.6m.

However, such was the magnitude of revenue growth in Q3 that, despite the rise in costs, Evolution was able to post an operating profit of €42.0m, an increase of 81.0% on €23.2m in the same period last year.

Profit before tax was also up from €23.2m to €42.0m, while profit for the period hiked from €21.2m to €39.8m.

“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,” Evolution’s chief executive Martin Carlesund said. “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.”

Carlesund also noted Evolution’s continuing investment in additional studio capacity to help meet demand for its live casino services.

“Our all-new studio in Malta is now operational, and we are also continuing to expand our existing studios in both Georgia and New Jersey,” he said. “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.”

Growth in the third quarter meant that revenue for the year to date, through to the end of September 2019, came in at €259.8m, which is 48.0% higher than at the same point last year.

Profit for the nine-month period was also up from €57.9m to €102.9m, while EBITDA hiked 67% year-on-year from €76.1m to €127.1m.

“For us, 2019 has been a year of products and innovation,” Carlesund said. “We have further strengthened our development capabilities and going forward, we will keep up the pace in the development of new games. Behind the scenes, the work to develop our core games while also expanding the live vertical with new innovations is always ongoing.

“The absolute core of Evolution is built on innovation with a focus to meet the demand for live and to constantly increase the gap to the competition. I have a confident view of what the future will bring.”