Evolution: Interim report January-June 2024

Second quarter of 2024 (Q2 2023)

• Operating revenues increased by 15.3% to EUR 508.4 million (441.1)
• EBITDA increased by 10.9% to EUR 345.8 million (311.7), corresponding to a margin of 68.0% (70.7)
• Profit for the period amounted to EUR 269.1 million (264.1)
• Earnings per share amounted to EUR 1.28 (1.24)

January-June 2024 (1H 2023)

• Operating revenues increased by 16.0% to EUR 1,009.9 million (870.6)
• EBITDA increased by 13.0% to EUR 691.6 million (611.9), corresponding to a margin of 68.5% (70.3)
• Profit for the period amounted to EUR 538.3 million (515.2)
• Earnings per share amounted to EUR 2.55 (2.41)

Comments from CEO Martin Carlesund:
For the second quarter of 2024, Evolution reports revenue of EUR 508.4 million (441.1) corresponding to a year-on-year revenue growth of 15 percent and an EBITDA margin of 68 percent. Revenue growth at constant currency is estimated to 19 percent for the quarter.

It has been a very active second quarter at Evolution and I am happy with the progress we have made on several of our initiatives. We are intensively working on introducing our offering to new markets that have recently regulated or are in the process of regulating such as the Philippines, Brazil, and the Czech Republic.  We are also putting the finishing touches on some of the great games that will be released during the second half of 2024. Also this year, our release schedule is a bit heavier in the second half of the year.

I see the financial result in the quarter as solid although not fully reflecting our operational performance. There are some clear reasons, one reason being that we had the largest pay-out ever in online casino during the quarter on our Crazy Time game. Large player wins are part of the game and positive for our games' attractiveness to players, but it does affect us through lower revenue share in the period. We also see somewhat slower development in general in most regions for the second quarter. This is part of the natural variations in our industry. With that said, there are of course things we can do to improve as has always been our focus when faced with these periods in the past. The underlying market drivers and demand for our market-leading products remains very strong.

Revenue from Live Casino increased by 18 percent year-on-year, and we maintain full focus on increasing our delivery capacity and expanding our studio network. During 2024 we expect to go live with our first tables from the new state-of-the art studios in Colombia and the Czech Republic. Today we operate over 20 studios around the globe, creating a unique capacity to deliver both volume and variation of our world-leading games to customers. After two quarters heavily focusing on expansion, the second quarter was one of consolidation with a slightly lower margin as new resources were gradually coming up to speed. We expect a more normalized expansion of staff during the second half of the year.

Revenue in RNG is slightly higher in comparison to the previous quarter as well as year-on-year, delivering a revenue of EUR 70.3 million in the quarter. We continue to make incremental improvements to our RNG business by adding new games as well as new functionality to OSS.

As a result of a faster expansion during the first six months of the year, EBITDA margin came in slightly lower than FY 2023 at 68.5 percent for the first six months. We maintain our full year 2024 guidance of 69-71 percent EBITDA margin.

We have a high pace of fantastic game-delivery in 2024, even better than in 2023, and we are planning for over 100 new releases. Although one of our bigger launches - Lightning Storm - has been pushed into Q3, we are overall on track with our release plan for the full year. The release of Lightning Storm will be one of the biggest releases ever in the industry. We have taken some extra time to make sure we release something spectacular that the market has never seen before.

In Q2 we saw the very successful release of Balloon Race, a latest-generation online live slot game combining game-show features with a simple and easy-to-play slot game, a game that was very well received by end users. Also, Lightning-versions of our popular SicBo and Dragon Tiger games came to market. On the RNG side, we have released 26 titles in the quarter - all fabulous games with the distinct trademark of quality and innovation of our four individual RNG-brands: Red Tiger, Nolimit City, NetEnt and Big Time Gaming.

As already mentioned, when looking at the global market, we see that the underlying growth drivers remain strong and vast potential in all our regions. Europe continues to show a steady pace of growth, and Asia continues to be the fastest growing region. Our presence in North America expands, offering more successful game types in each state. In the second quarter we have also introduced our Live games in Delaware for the first time. LatAm is performing well, even though the Brazilian market is still waiting for the transition to regulation.

We are constantly looking for new ways to strengthen our position as the leading supplier of online casino games and have announced an offer for Galaxy Gaming. With the acquisition, we accelerate and solidify our presence in the US market where Galaxy is licensed in 28 states. Through Galaxy we gain a relationship with regulators in states that are not yet open for online and fast-track all future licensing. Galaxy holds over 130 licenses in total world-wide. Galaxy has a diverse portfolio of great games that further will strengthen Evolution's games-portfolio and secure access to the fantastic titles that our future players are accustomed to already today.

I am pleased that our Board of Directors has more explicitly communicated our capital allocation framework. Accordingly, we will now distribute 100 percent of the excess net cash flow remaining after investments, including M&A, to support our ongoing operations. We will continue to pay a dividend of 50 percent of net profits annually, using the balance to repurchase shares unless an extraordinary dividend provides better shareholder value. The Board currently believes that investing in our own shares is highly value enhancing to shareholders and is initiating a buy-back program of up to EUR 400 million.

As a highly profitable company with a market leading position in a globally growing industry we are focused on providing best-in-class products to our customers, a great place for our team members to work and grow, coupled with superior returns to shareholders. Even though regulation is increasing the workload in many markets right now, it paves the way for a very strong future.

We will continue to innovate and break new ground leading the way in providing the games of the future. We constantly have to move forward to be relevant 10 years from now and well into the future. At Evolution we are never satisfied, we are always pushing to be better at what we do, raising the bar for ourselves and our colleagues. I want to thank my amazing Evolution team - let's make Evolution a little better every day - together!

Presentation for investors, analysts and the media
CEO Martin Carlesund and CFO Jacob Kaplan will present the report and answer questions on Friday, 19 July 2024 at 09:00 a.m. CEST via a telephone conference. The presentation will be in English and can also be followed online.
Webcast: https://ir.financialhearings.com/evolution-q2-report-2024/register

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