Shares in Evolution AB plunged more than 5% on Wednesday after the Swedish online casino supplier disclosed first-quarter results that missed EBITDA forecasts. Europe revenue, the company's biggest market, tumbled 12% year-on-year to its lowest since the second half of 2022, signaling persistent headwinds. The miss underscores regulatory pressures weighing on the live-dealer gaming sector amid self-imposed safeguards and market volatility.
Disappointing Core Metrics Signal Profit Squeeze
EBITDA fell 2% to €335.3 million, undercutting the Bloomberg consensus of €338 million and last year's €342 million. The margin contracted to 65.4% from 65.7%, trailing expectations of 65.9%. Net revenue dipped 1.5% to €513 million, matching forecasts, though constant-currency growth reached 6.8%.
Operating profit declined 3.6% to €292.6 million, with the margin narrowing to 57.0% from 58.2%. Net profit edged down 1.1% to €251.9 million, while earnings per share ticked up to €1.26 from €1.24. Cash reserves strengthened to €1.098 billion from €969.2 million, bolstering the balance sheet despite softer earnings.
Europe Slump Overshadows Global Gains
Europe revenue sank to €345.3 million, down 12% annually and 5.9% from the prior quarter. CEO Jens von Bahr highlighted regulatory volatility and subjective enforcement as key drags on player activity. The company's ring-fencing measures—designed to limit exposure in high-risk areas—exacted a steep short-term cost, even as leaders deem them essential for sustainability.
Morgan Stanley, maintaining an equal-weight rating with a SKr 680 target, noted Europe's revenue now mirrors levels from late 2022. This reflects forecasts of subdued 2026 profit growth amid lingering regulatory uncertainty. Regulated markets now comprise 48% of revenue, up from 45%.
Emerging Markets Drive Revenue Diversity
Latin America shone with €64.4 million in revenue, surging 29.3% year-on-year. North America expanded 10.1% in euros to €75.5 million, or 21.4% in local currency terms. Asia posted sequential growth to €16.9 million from €16.3 million, though instability clouds the outlook through 2026.
Live games generated €434.9 million, down from €448.7 million, while RNG-based revenue climbed to €78.2 million from €72.3 million. Mobile devices captured 76% of operator gross gaming revenue, rising from 72%, as players shift to handheld access. The board recommended no dividend for the 2025 financial year, prioritizing reinvestment amid uneven growth.
