The first question of the call was about profit distribution, and they did not comment further, other than stating that the board will provide updates when there is something to report.
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As the final item of the audiocast, the CEO says: (my own transcript)
“…no dividend will be distributed. Cash dividend is not the best way to create long term shareholder value. The board has not made further decision on capital allocation for 2026 yet. Its not dramatic, rather refreshing. When further decisions are made we will let you know about it.”
Martin thinks it is refreshing that the method of profit distribution has not yet been decided (that they haven’t automatically gone with dividends + buybacks?) and that there is no drama in the background.
Then the first question indeed related to this and the answer was roughly:
“The board decides and considers what is the best way from the shareholders’ perspective.”+
Redeye Evolution (Q1 Initial take): Close to our expectations
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https://x.com/M1nvest/status/2046839345324204511
Martin mentioned in an interview with Dagens Industri today that it might take some time to decide on the profit distribution. Since nothing dramatic is supposedly coming, there really shouldn’t be anything to justify such poor investor communication.
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Yep, the communication regarding that profit distribution has been unclear in any case, regardless of how “refreshing” the CEO considers it. The plan was supposed to be near completion months ago, so there is some drama unfolding here, whether the CEO admits it or not. Hopefully, a logical reason for this will be revealed later, though.
Now that it’s still dragging on, it would be an even bigger farce if the end result is just share buybacks. There must be something else in the background that they are negotiating or waiting for. Why else would it take this long? 
And of course, we’ll just have to wait and see what comes out of it. Additionally, the legal dispute against Playtech sounds relatively strong from Evolution’s perspective, and there’s probably always a small chance of reaching an early settlement there too. There are some potential drivers here, regardless.
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I don’t find this state of uncertainty particularly positive either, and I admit that at the start of the year there was talk of a few weeks, but the announcement regarding the non-payment of dividends dragged on for a few months. Regardless, I saw the non-payment of dividends as a positive thing. Or at least the ratio should have been more than 50% of the profit distribution toward buybacks.
Share some bearish views and scenarios regarding the profit distribution. Of course, if they announce a billion in buybacks and the share price jumps 20%, that would be unfortunate. But if the intention was just to execute 100% buybacks, couldn’t they have announced it and started already? Admittedly, if they announce in May that they are now using all the cash for buybacks, it would be a ridiculous outcome, but even then I would believe some master plan had gone awry. I suppose some acquisition or similar maneuver is being considered that cannot be disclosed yet. They are starting to have enough cash to buy just about any kind of company.
Or perhaps Kenneth Dart is devising some way to buy the whole shop that is favorable for himself. Who knows, but cash is flowing into the company’s coffers every month.
Either an investor trusts the management and lets them “cook,” or they don’t trust them and sell. Quite a few don’t trust them or are tired of waiting, and the decline has been steady from the “peak of recent years” to the current 14,723. So, there have been plenty of sellers.
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Evolution has paid a generous and growing dividend since 2016; the 2016 dividend was under one krona, and a year ago it was over 30 kronor.
I would like to believe that management and the board are carefully considering how to communicate the breaking of this streak and how to convince investors that it is a good thing. It’s a bit like if, for example, Nordea decided to stop paying dividends entirely (which might not be technically possible – but as an example), it would certainly cause a huge uproar, and management would have to be very careful about how they communicate it.
And of course, there might be a potential acquisition in the works, about which they naturally won’t say one way or the other.
Evolution also has strong management ownership; the CEO alone has +784k shares. If he were to push through a dividend of, say, €3 per share, he would receive over 2.3 million euros. For some reason, however, they don’t want to pay a dividend at all, meaning they must have surely found some use for the money.
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This makes the whole thing quite strange. Management’s communication on the subject is just total waffle, even though it’s a very important issue for shareholders. Evo’s growth has been flat for a long time, but they’re still raking in the cash. Now even that isn’t being distributed, and no reason is given. It’s starting to get a bit annoying.
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I don’t quite agree. A cash balance like that only means a couple of things:
- An acquisition or some other growth project requiring investment in the pipeline (a bit difficult for Evolution since they can’t really make one-off investments without making an acquisition).
- They see some absolutely massive black swan in the relatively near future.
We have now gone a year without paying a dividend; if a major strategic change is being made and dividends aren’t paid because of it, then it’s perfectly fine with me to freeze dividends for a year or two. This investor impatience that flashy magic tricks must happen in a single year is, in my opinion, poison for companies in the long run.
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The problem with the current situation is not the change or the dividends, but poor communication. I too hope that there is some strategic-level move here that management is playing, but hope is a hell of a bad strategy.
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It’s problematic in a way, but you often end up creating a bigger mess if you make announcements about acquisitions or other strategic projects before they are certain. In my opinion, it’s perfectly fine to work on a strategy for a year or two (at least when conducting a broader market analysis) before going public with it.
Of course, I personally would hope that dividends are paid as usual and that targets are acquired using debt once found, but since EVO has such a low leverage ratio anyway, I’m not surprised they’re building up their cash position instead.
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