Evolution revenue grows 38% in 2018

14 February 2019

Martin Carlesund, the chief executive of live dealer software supplier Evolution Gaming, has hailed “yet another amazing year” in the company’s history after revenue for 2018 grew 38%.

Revenue for the 12 months ended December 31, 2018 rose to €245.4m (£215.5m/$276.6m), driven by increased commission from new and existing customers. Evolution benefited in particular from growth in dedicated tables and live dealer environments, with more customers customising their offerings over the year.

The supplier’s largest single market was the UK, which accounted for 17% of group revenue in 2018, with 9% coming from the Nordic region. The bulk came from non-UK and non-Nordic European markets, which accounted for 52% of the group total, followed by the rest of the world, including the US, with a 22% share, up two percentage points from the prior year.

Regulated markets accounted for 33% of group revenue in 2018, while mobile was the most popular channel, accounting for 59% of the year’s total.

This growth in revenue was accompanied by growth in costs, which rose 38% to €156m due in part to personnel expenses rising to €97.7m. At December 31, 2018 Evolution employed 5,847 staff, up from 4,014 in 2017.

Costs were also impacted by the launch of new live dealer tables and studios, with the supplier opening new facilities in New Jersey in the US, Georgia in Europe and the Canadian province of British Columbia during the year.

This left the operator with an operating profit of €89.3m, up 34% year-on-year, with the post tax profit for 2018 also rising 34% to €83.5m.

For the fourth quarter, revenue was up 38% year-on-year at €70.2m, driven by high demand for live dealer games over the period. This saw the number of bet spots from end users grow to 4.4 billion, up from 2.8 billion in Q4 2017.

Growth was aided by the supplier’s US expansion, with a number of clients going live in New Jersey during the period, while an agreement was also signed with Loto-Québec in Canada. Evolution has also moved to further strengthen its US growth with its first acquisition, striking a deal worth up to $18m to acquire Ezugi in November 2018.

Carlesund noted that the Nordic market grew particularly strongly in Q4, as did the rest of the Europe aside from the UK. However, growth in the rest of the world, including the US, slowed.

Expenses for the period grew 36% year-on-year to €43.5m, largely as a result of increased personnel costs, related to the launch of new tables. Despite increased costs, operating profit rose 42% to €26.7m, and even with increased financial costs and interest expenses on loans related to Evolution’s Latvian studio, the company saw post-tax profit rise 42% year-on-year to €25.5m.

“All in all, we can look back at yet another amazing year in the Evolution history with expansion outside Europe and many successes in innovation and created customer value,” Carlesund said.

Looking at events following the end of the reporting period, Carlesund noted that several customers were “off to a great start” in the re-regulated Swedish market. Evolution will also invest in a second studio in Malta in 2019, as well as ramping up its release schedule for new games as it looks to meet market demand.

“With a new studio in Malta and all games that will be launched, I am confident that we are in excellent shape to continue increasing our market leadership going forward,” Carlesund said. “In that context, we can also conclude that the first quarter has been off to a good start.”