Evolution: Interim report January-September 2022

Third quarter of 2022 (Q3 2021)

• Operating revenues increased by 37.1% to EUR 378.5 million (276.0)
• EBITDA increased by 35.3% to EUR 261.0 million (192.9), corresponding to a margin of 69.0% (69.9)
• Profit for the period amounted to EUR 221.3 million (157.4)
• Earnings per share amounted to EUR 1.04 (0.73)

January-September2022 (9M 2021)

• Operating revenues increased by 36.5% to EUR 1,049.3 million (768.5)
• EBITDA increased by 38.1% to EUR 728.9 million (527.7), corresponding to a margin of 69.5% (68.7)
• Profit for the period amounted to EUR 619.9 million (433.9)
• Earnings per share amounted to EUR 2.91 (2.03)

CEO’s comments

We delivered a strong revenue growth in the third quarter of 2022. Total revenues amounted to EUR 378.5 million, an increase of 37.1 percent compared to last year. EBITDA amounted to EUR 261.0 million, corresponding to a margin of 69.0 percent. For the nine-month period, the EBITDA margin was 69.5 percent.

Live Casino reported a continued rapid growth of 45 percent in the quarter. We continue to see very strong global demand for our new as well as existing products and we are increasing market shares and our distance to competitors. The roll-out of the full product suite to all regulated markets continues.

Total RNG revenue increased by 11 percent compared to last year, including the acquired Nolimit City business, comparing to pro-forma figures growth year-on-year is 2 percent. This is not yet satisfactory. We have delivered too few slot games during the past period, however we remain fully committed to the target of double-digit growth. We continue to see great potential in OSS and are now focusing on accelerating rollouts. On the road to double digit growth, we will continue to see fluctuating quarterly performance, as earlier stated the development will not be a straight line.

We completed the acquisition of Nolimit City during the quarter and the acquisition is fully consolidated in the third quarter. Operations have started off strongly, but it is worth noting that the double-digit growth target for RNG is set excluding Nolimit City. As already communicated, the acquisition was financed through our cash flow and highlights our financial strength. Our very strong balance sheet, with no debt, is in the current unstable macro environment an even stronger asset.

End-user entertainment, satisfaction and preference are always the most important factors for any game we create. We always go the extra mile to create something exceptional to the end-users and I am very satisfied with the product rollout of Live 2022. Our game shows continue to attract players, and in this quarter, we introduced a bingo-style live game show called MONOPOLY Big Baller, also new in this quarter is Crazy Coin Flip – a game combining both Live and RNG game mechanics. We also introduced a new addition to the live Roulette family called Gold Bar Roulette, in which a spectacular studio and some fresh game features take Roulette to a new exiting level. As part of expanding the portfolio in the North American region, we launched Live Craps - our version of the classic dice game - in Pennsylvania and after end of the period we also launched in New Jersey, with more states to follow.

Our offering continues to find an audience across the globe and OSS is just in the beginning of showing traction. All regions reported growth in the quarter. In North America, we continued to expand studio capacity, and the European markets reported stronger growth in the quarter than earlier this year. We continue to experience an increasing end user preference for our products in Asia, driving a continuous strong growth. The Other region which includes Latin America and Africa shows very good growth once again and we continue to see good potential in both markets over time.

Online Casino continues to grow world-wide and the growth path in a long term perspective is very strong. With that said, increased interest rates, increased inflation, signs of a weakening economy in some markets as well as an uncertain geopolitical situation are all factors that also affect our business. It is difficult to separate the effect of these circumstances to conclude what the implications may have been in the quarter or what they will be in the next. We certainly see higher cost in supplies, electricity, transport and also upward pressures on salaries. Our guidance at the beginning of this year was an EBITDA-margin in the 69-71 percent range for the full year. So far for the nine-month period margin is at 69.5 percent. I am satisfied with our delivery under the current circumstances. We make no change to our previously guided range of EBITDA-margin of 69-71 percent for the full year.  

Evolution employees are fantastic. The delivery of Evolution is due to them! I am proud of the way that the Evolution-team handles the difficult world we currently see. Evolution continues to push forward, working across multiple time-zones full of energy with a hunger to improve - always striving to be a little bit better, every single day. I look forward to the final months of this year and onwards to 2023.

Presentation for investors, analysts and the media
CEO Martin Carlesund and CFO Jacob Kaplan will present the report and answer questions on Thursday, 27 October 2022 at 09:00 a.m. CEST via a telephone conference. 
The presentation will be in English and can also be followed online. Number for participation by telephone:
SWE: +46 8 505 163 86
UK: +44 20 319 84884
US: +1 412 317 6300 

Pin code: 0818791#

Follow the presentation at: https://ir.financialhearings.com/evolution-gaming-group-q3-2022

For further information, please contact:
Jacob Kaplan, CFO, ir@evolution.com.

This information is such that Evolution AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact person set out above on 27 October 2022, at 07:30 am CET.

Evolution AB (publ) (”Evolution”) develops, produces, markets and licenses fully-integrated B2B Online Casino solutions to gaming operators. Since its inception in 2006, Evolution has developed into a leading B2B provider with 600+ operators among its customers. The group currently employs 16,000 people in studios across Europe and in North America. The parent company is based in Sweden and listed on Nasdaq Stockholm with the ticker EVO. Visit www.evolution.com for more information.

Evolution is licensed and regulated by the Malta Gaming Authority under license MGA/B2B/187/2010. Evolution is also licensed and regulated in many other jurisdictions such as the United Kingdom, Belgium, Canada, Romania, South Africa, and others.