Key Moments:
- Evolution (STO: EVO) grew Q3 revenue by 3.7% to €526.1 million ($590 million)
- Brazil’s ban on regulated online gambling prompted Evolution to close its local studio on October 5
- Share buybacks are set to decelerate as Evolution targets further U.S. expansion, including a new New Jersey studio
Financial Results Signal Stability
In its latest Q3 report, Evolution (STO: EVO) announced a 3.7% revenue increase, bringing the figure to €526.1 million ($590 million), underscoring what CEO Martin Carlesund described as a welcome period of stability despite notable regulatory turbulence in Brazil.
The company’s adjusted EBITDA rose by 2.7% to €345.9 million ($388 million), although the adjusted EBITDA margin slipped from 66.4% to 65.8%. Net profit declined 3.6% year-on-year, reaching €243.3 million ($273 million).
“This was an uneventful quarter, which I believe is something good,” Carlesund told analysts on an earnings call on Friday (October 23).
| Metric | Q3 Value (€ millions) | Q3 Value ($ millions) | Change (%) |
|---|---|---|---|
| Total Revenue | 526.1 | 590 | +3.7 |
| Adjusted EBITDA | 345.9 | 388 | +2.7 |
| Net Profit | 243.3 | 273 | -3.6 |
Geographical Trends and Segment Performance
Live casino revenue edged higher by 2.6% to €443 million ($497 million), while RNG revenue advanced by 10.1% to €83.1 million ($93 million). North America posted 13.6% revenue growth. Latin America and Africa also delivered strong results, increasing by 23.1% and 23.7%, respectively.
However, Europe continued to pose challenges, with revenue from European players falling 4.7% compared to the previous year. Carlesund commented: “No matter the regulatory situation or low channelization rates, we should do better.”
Brazil’s Regulatory Impact and Future Outlook
The earnings call put special emphasis on Brazil, following the enactment of a ban on regulated online gambling. Evolution shuttered its Brazilian studio on October 5 and indicated uncertainty about when operations may resume. President Lula, who enacted the ban, secured another term in Sunday’s (October 25) election, casting further doubt on the regulatory outlook.
“It’s highly unfortunate that populistic agenda can overthrow a regulatory framework that has only been in place for one and a half year,” Carlesund said.
Carlesund noted Evolution is equipped to reopen quickly should the Brazilian government reverse course. Notably, Brazil represents well below half of Evolution’s Latin American revenue. The company recorded €49 million ($55 million) from the region in Q3, a period that was not impacted by the new ban. On the call, analysts questioned whether all Brazilian revenue would evaporate in Q4, but Carlesund did not provide specific estimates. He observed, “I think that everyone is flabbergasted about the situation in Brazil, that it is a total negative for anyone in this business that it happens in this way.”
Despite these uncertainties, Evolution’s guidance for its full-year margin has not changed.
Share Buybacks Slow as U.S. Expansion Advances
Through the end of September, Evolution repurchased about €1.13 billion ($1.27 billion) worth of its own shares as part of its €2 billion ($2.24 billion) buyback program. CFO Joakim Andersson told analysts that repurchases would decrease during Q4 and Q1 2027, in order to maintain alignment with the company’s cash flow generation. “We want to push forward, and we want to be free to make the investment we need, and we want to be self-sustained,” he said.
The company signaled ongoing expansion in the U.S. market, planning to open a fourth New Jersey studio in Q4. This new facility will also serve Delaware and increase Evolution’s nationwide studio presence to eight. Additionally, Evolution is preparing the debut of Spinning Whale, a new RNG brand tailored for American audiences.
- Author
Daniel Williams
