Evolution posts revenue and profit growth in Q1

25 April 2019

Live dealer software supplier Evolution Gaming has posted double-digit growth across both revenue and profit in the first quarter, as it felt the benefit of higher commission income from existing customers.

Operating revenue in the three months to March 31, 2019, amounted to €79.3m (£68.5m/$88.4m), up 54% on €51.6m in the corresponding period last year.

In addition to existing customers, Evolution cited the impact of commission from new clients in the quarter as one of the main drivers behind this revenue growth.

Evolution noted higher demand for its live casino games, with the number of bet spots from end users up from 3.1bn in Q1 of 2018 to 5.1bn, while higher revenue from dedicated tables and environments also contributed to the overall increase.

An expanding customer base meant Evolution spent more during Q1, with total operating expenses amounting to €491.m. This was driven by higher personnel costs, connected to the launch of new tables in the company’s studios.

Staffing costs amounted to €29.0m in the quarter, up from €20.9m in the same period last year, while depreciation, amortisation and impairments increased from €4.1m to €5.7m. Other operating expenses jumped from €8.8m to €14.3m.

However, despite these higher costs, Evolution reported a significant increase in operating profit, which was up 64% year-on-year to €30.2m, while earnings before interest, tax, depreciation and amortisation also hiked from €22m to €35.9m.

Profit before tax climbed from €17.8m to €30.1m and, while profit after tax for the period was up from €16.5m to €28.6m. Evolution paid a total of €1.6m income tax in the quarter.

Martin Carlesund, CEO of Evolution, praised the supplier’s strong performance in the quarter, saying that this favourable start to the year means it is likely to end 2019 in the upper end of its 44-46% EBITDA margin for the full year.

“Throughout last year, we expanded studio space and customer environments and the number of tables in line with the increasing demand from our customers, and we can now see how all of this pays off,” he said.

“It is our assessment that Live Casino as a product vertical will continue to take market shares in 2019 and why we consequently will continue to invest based on our customers’ demands in our studios also going forward.”

Carlesund also picked up on the impact of increasing regulation in a number of markets, namely the US, Canada and Sweden. During the quarter, Evolution went live with DraftKings in the US, Lotoquebec in Canada, and both Svenska Spel and ATG in Sweden.

“With hard and focused work and high energy throughout 2018 and in the first quarter of 2019, we have taken our product portfolio to a whole new level, broadened our own market and created a new market for the industry, which in our perspective makes the gap between ourselves and the competitors wider than ever,” he said.