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Evolution: Revenue growth pushes net profit past €1.00bn in 2023

| By Robert Fletcher
Evolution said revenue growth across both its live and random number generator (RNG) during its 2023 financial year pushed net profit up 27.0% to €1.07bn (£913.5m/$1.16bn).

The 12 months to 31 December 2023 was a year of growth for Evolution, with live casino again a highlight. Of the €1.80bn revenue generated in 2023, live casino was responsible for 84.7% of this total.

Evolution said this part of the business continues to grow as interest in live casino increases worldwide. While this is positive for the supplier, CEO Martin Carlesund recently raised concerns Evolution cannot keep pace with demand.

Speaking after Q3, Carlesund committed to opening new games studios in locations around the world. Carlesund has now repeated this pledge, with at least four new studios to open in 2024. These will be in addition to a new Bulgaria facility that launched in Q4.

“We have increased the pace of our studio expansions in the fourth quarter and expect to continue into 2024,” Carlesund said. “We launched a new studio in Bulgaria and have initiated the project to build a second studio in Colombia.

“Investments in 2023 amounted to €94.0m which was below our guidance of €120.0m from the beginning of 2023, as we did not manage to expand quite as fast as we had planned. For 2024 we will repeat the capex guidance of €120.0m. 

“We see strong demand and aim to accelerate investments during 2024 for our live casino product across the globe and will invest in new game development as well as expand table capacity both in our existing network of studios and in new studios. We plan to add at least four new studios during 2024 in addition to expansion in existing locations.”

Live casino drives 2023 growth

Taking a closer look at the yearly figures, revenue for 2023 was 23.5% higher year-on-year. Live casino led the way with revenue up 28.1% to €1.52bn due to increased commission income from both new and existing customers. RNG revenue also climbed 2.6% to €275.3m.

live casino was up 28.1% year-on-year to €1.52bn

Costs-wise, operating expenses were 25.6% higher at €688.9m, with spending higher in all areas. However, such was the impact of revenue growth that operating profit was up by 25.9% to €1.14bn.

Financial items costs reached €5.9m, leaving a pre-tax profit of €1.15bn, up 26.6%. After paying €77.7m in tax, Evolution was left with a net profit of €1.07bn, an increase of 27.0%. In addition, EBITDA jumped 25.7% to €1.27bn.

Busy Q4 contributes to full year success

Turning to the final quarter of the year, Evolution went into more detail on its performance in Q4. 

Revenue during the three months to 31 December was 16.6% higher at €475.3m. Live casino revenue in Q4 jumped 21.1% to €405.6m but RNG revenue fell 3.7% to €69.8m. 

In terms of geographical performance, Europe remains Evolution’s core market. Revenue in the region amounted to €185.8m, a rise of 9.3%. Asia was not far behind with total revenue share of €181.7m. 

Other Q4 revenue came from North America (€59.1m), Latin America (€32.1m) and other areas (€16.6m). Evolution also noted that 40% of all revenue in Q4 came from regulated markets.

Q4 net profit reaches €282.9m 

EBITDA in Q4 increased 20.5% to €337.0m.

Operating spend in Q4 increased 9.7% to €172.7m, with costs higher in almost all areas. Q4 operating profit increased 21.0% to €302.6m, while financial income of €449,000 pushed pre-tax profit to €303.0m, a year-on-year rise of 26.0%.

Evolution paid €20.2m in tax in the quarter, leaving €282.9m in net profit. This was 26.6% up from the same period last year.

In addition, Evolution said EBITDA in Q4 increased 20.5% to €337.0m.

Evolution raises expectations for 2024

Q4 also saw Evolution increase certain guidance for 2024. Looking ahead to the current year, Evolution raised its guided EBITDA margin range to 69% to 71%. This, Carlesund said, was based on its performance over the past year.

“As a company, Evolution remains profitable, strong and all-equity financed,” Carlesund said. “As we look into 2024 and beyond, we do so with excitement, hunger and ambition. 

“We will continue to invest, recruit and expand our operations in the whole world. 2023 was an intense year and I want to thank the amazing team at Evolution for all the great achievements.

“I am looking forward to an equally fantastic and hectic 2024 where we will relentlessly continue to strive to make Evolution a bit better every day!”

Lawsuit hangs over Evolution

Against this backdrop of positive financial results, Evolution faces a class action lawsuit. This suit alleges the supplier deceived investors in relation to growth trajectory and compliance.

It represents entities that purchased Evolution shares between 14 February 2019 and 25 October 2023. The suit alleges that, within this timeframe, Evolution made untrue or misleading statements over growth potential, customer compliance, compliance and the effect of non-compliance on revenue.

The suit aims to recover damages from all investors that purchased securities within the class action period. Both Carlesund and chief financial officer Jacob Kaplan are named as defendants.

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