Evolution AB - The King of iGaming

[Gwertheney]

The company’s report:

3918248.pdf

Fourth quarter of 2025 (Q4 2024)

• Net revenues decreased 3.7% to EUR 514.2 million (533.8) and total operating revenues decreased 9.5% to EUR 565.9 million (625.3)

• Adjusted EBITDA (excluding other operating revenues) decreased 6.1% to EUR 341.5 million (363.6), corresponding to a margin of 66.4% (68.1)

• EBITDA decreased 13.6% to EUR 393.2 million (455.0)

• Profit for the period amounted to EUR 306.8 million (377.1)

• Earnings per share amounted to EUR 1.54 (1.83)

January-December 2025 (2024)

• Net revenues increased 0.2% to EUR 2,066.5 million (2,063.1) and total operating revenues decreased 4.3% to 2,118.2 million (2,214.1)

• Adjusted EBITDA (excluding other operating revenues) decreased 3.2% to EUR 1,365.7 million (1,410.7), corresponding to a margin of 66.1% (68.4)

• EBITDA decreased 9.2% to EUR 1,417.3 million (1,561.8) • Profit for the period amounted to EUR 1,062.1 million (1,244.0)

• Earnings per share amounted to EUR 5.24 (5.94)

Asia:

Zooming in on the fourth quarter, Asia has turned back to growth compared to the third quarter, signaling some progress in our hard work to combat cyber criminality. The progress is slow, methodical, and very important. Our studio in the Philippines is also continuing to develop nicely.

USA:

We continue to grow decently in North America even if we want it to go faster. It is still early days for the online gaming industry, and we believe the region will see an increasing share of Live. To increase penetration and options, we re-launched our second brand Ezugi during the quarter, starting in New Jersey with a clear goal to become the #2 Live Casino provider in the US. As a next step, we will establish a new studio in Grand Rapids to support Ezugi’s expansion to Michigan.

Latin America:

Latin America grew well year-on-year. Brazil is continuing to progress following the new regulation, and we see that players are increasingly discovering and enjoying our wide portfolio of games.

EU:

however, development in Europe was not good, burdened by unfavorable regulatory movements. We believe that Evolution currently has the strongest ring-fencing measures in place among all suppliers, but we also recognize that the regulated markets are losing ground. The regulatory scale is not in balance, and this development is bad for the most vulnerable players. However, the scale tends to swing over time, and we remain as committed as ever to providing European operators and players with the most entertaining experiences

[Blackparta]

I broke out in a cold sweat reading that report. I think a few swear words might have slipped out, too. Pretty horrific numbers, but the silver lining is that we took quite a hit from currencies.

[Gordon_Gekko1]

Asia back to growth​ Strict regulation in Europe, not much growth available there anymore. In America, growth is slow but steady for a very long time yet.

[Odetus]

If the stock has dropped even on good reports in the past, this one will send it down into the 4xx crown range. The operating environment is obviously difficult, as there’s no growth despite the investments. The CEO’s comments sound like making excuses, but at least he admits that things aren’t going well.

[Gordon_Gekko1]

Did it really go that badly after all? A lot of the bad news was already priced in, considering where the share price is languishing. Revenue was expected to be 610m, the result was 565m, and EPS expectations were €1.50, while the result was €1.54.

[Vara-Paavi]

That report looks quite decent to me, especially considering the known strengthening of the euro against most other currencies.

[sillinkutoja]

The company didn’t announce a dividend; instead, they state that it will be decided later. Are they leaving the door open to buy back more shares if the stock price tanks?

Edit: @Jankz yes it is, it has always been announced in connection with the financial statements before.

One more observation: the Asian operations go through European operators.

https://x.com/i/status/2019303909861519545

[Jankz]

“EBITDA amounted to EUR 341.5 million, corresponding to a year-on-year revenue decline of 3.7 percent and a margin of 66.4 percent. Net revenue growth at constant currency is estimated to be 4.9 percent”

Growth of 4.9% at constant currency. It’s not that bad, is it?

I haven’t followed the company very closely, but is it unusual for the board to only announce the dividend and profit distribution “later in the quarter”?

[Vara-Paavi]

I don’t think it’s completely unheard of for a dividend proposal not to be included in the financial statement release, but it is likely rare. At the latest, it must be provided in connection with the annual report and/or the notice of the General Meeting.

[Divinesia]

They might be considering potential acquisitions in addition to buybacks. There’s certainly plenty of cash, whatever they decide; I’m sure we’ll get the reasoning in an hour.

Not a mind-blowing performance, but the company was already valued at low multiples beforehand. Whether they were low enough, though… Evolution certainly doesn’t deserve growth multiples anymore with this performance, even if they’re still raking in cash by the bagful. It’s a bit underwhelming.

[Gwertheney]

Definitely not a catastrophe. A drop is coming, we know that, and why not even to levels starting with 3xx, as there are plenty of shorts. Of course, if it drops even to the previously predicted levels starting with 4xx, I would be very surprised, because the current valuation isn’t for a growth company but for a laggard (mörnijä), so in the current light, all daydreams of double-digit growth can be forgotten. Currencies will start to ease in the coming quarters.

Regulated markets net revenue grew y/o 220.4 → 243.4 and the share of revenue rose 41% → 47%. This is what was hoped for before, but nowadays it doesn’t seem to matter.

Europe is falling apart, down -4.6% from the last quarter

Asia is back on the growth path, up +5.5% from the last quarter

North America is on the growth path, up +2.9% from the last quarter

LatAm is on the growth path, up +3.4% from the last quarter

The CEO’s comments aren’t just excuses or plucked out of thin air, but real challenges for the company. More studios were added, and consequently, money was spent on investments.

Looking at 2025 as a whole from an operational perspective, it might have been one of our strongest years ever with amazing new games and studio expansions in all parts of the world. On top of that, we have handled several tough and sometimes unexpected situations; ring-fencing, extremely questionable or even criminal activities from competitors, and cyber criminality. Despite these challenges we still delivered a solid margin of 66.1 percent and a fantastic cash flow.

If the EU crumbles due to regulation, it crumbles for everyone, but as I noted above

We believe that Evolution currently has the strongest ring-fencing measures in place among all suppliers, but we also recognize that the regulated markets are losing ground.

So, the positions are held

@sillinkutoja

The company didn’t announce a dividend but said it would be decided later. Is the door being left open here so that if the share price tanks, they can buy back more shares more aggressively?

Most likely exactly like that, meaning they are weighing whether to buy anything and how much they want to put into buybacks.

[CitizenJ]

@Gwertheney

The end of the company:

Fixed

Ps. Feel free to flag. I couldn’t resist the temptation.

[Lutuuri]

Those numbers don’t look so terrible, even though I broke a sweat at first. Then again, I’m just a retail investor, and the final reaction won’t be seen for another 24 minutes when Mr. Market gives his take.

My sled is already in position.

[Gwertheney]

In Argentina, one of our competitors has withdrawn from the market, providing us with the opportunity to buy their studio. We look forward to further expanding our footprint and market share in Argentina as a result of this.

It seems things aren’t that easy for others either, which likely suggests that Evolution is doing something right. Expansion at a lower cost than usual and a competitor exiting the market? These are small things, but it’s much nicer to hear it this way than to have been the one withdrawing from the market and selling off a studio.

[Odetus]

@Gordon_Gekko1

Did it really go that badly though? A lot of bad news was already priced in when you look at where the share price is crawling. Revenue was expected to be 610m, the result was 565m and EPS expectations were 1.5e, the result was 1.54e.

Relative to the valuation it didn’t, but Evo has a habit of diving properly even at the slightest noise. Now it seems that so much bad news was baked into the price that a wave of selling didn’t happen. At least not yet. On a red day like this, a drop of just under a couple of percent is practically a defensive victory.

[Gwertheney]

Recording:

Q4 Report 2025

Presentation:

EVO-Q4-2025-Presentation.pdf

The number of studios grew by 20% in 2025 (20→24)

Management was very bullish about the new games coming this year.

Regarding new games: (my own transcripts from the webcast below)

“Game Night will be the largest game show of today” which will then be replaced by the following –>

“later in the year we will release the new game Monopoly filthy rich. This will be a gigantic Hollywood style game show in a studio that would make any movie maker jealous”

"2026 will increase the gap to any competitor more than ever”

The launch of these was also asked about in the Q&A, and management said that customers are constantly asking when these will be launched and released.

In my opinion, the collaboration with Hasbro is very good, because Monopoly, for example, is a very well-known brand globally with a long history, recognized by both young and old.

[Gordon_Gekko1]

Not everyone will want to listen to that anyway, and since the topic is of interest, I’ll add that they mentioned they would announce potential share buybacks + dividends “in a couple of weeks”. In 2025, the total amount of those was about 1.1 billion euros.

[Punainenkala]

@Gwertheney

They were also asked about the launch of these in the Q&A, and management said that customers are constantly asking when these will be launched and released.

In my opinion, the Hasbro collaboration is very good because, for example, Monopoly is a very well-known brand globally from way back, and it is known by both young and old.

edit: So Game Night is not being “replaced,” but it will lose the title of the biggest Game Show later this year to another in-house release. I corrected the text.

Previously, Evolution had a so-called “Roadmap” online that featured the release dates of upcoming games down to the exact day. Last year, they took that page down for some reason (competitors, perhaps?) and now it’s really impossible to say when the games will be coming out.

They are doing some really strong work with the games otherwise. You only need to take a look at the YouTube video under the presentation; they are certainly pulling further ahead of the competitors with this year’s game releases.

[Kappelin_Pimu]

Here’s a quite interesting critical clip in French-accented English about EVO’s Q4: https://www.youtube.com/watch?v=-Ufwg_L-eKM

My faith in management’s talk is starting to waver a bit here. 3/4 of revenue comes from Europe/Asia, and there are big problems in both segments at the moment.

[Viiveka]

One very interesting piece of speculation regarding the postponement of dividends/share buybacks appeared at the 12-minute mark in the video. What if Playtech’s fine is so large that, in the event of bankruptcy, Evo buys Playtech? Would this even be possible in any way from a competition authority’s perspective?