Evolution AB (ST: EVO/ADR:EVVTY) develops, produces, markets, and licenses online casino systems to gaming operators in Europe, Asia, North America, Latin America, and internationally. It has partnerships with big gambling names such as FanDuel, PokerStars and DraftKings. Evolution is focusing on nascent markets such as Latin America and North America. Sales will increase as more and more American states legalise sports gambling (currently 39) as well as online gambling (currently 7). Its biggest markets remain Asia and Europe. The shift from land-based casinos to online platforms has helped Evolution corner part of the market. It offers fully integrated B2B (business-to-business) Online Casino solutions to gaming operators.
Revenue, operating income and net income have all doubled from 2021. All have steadily increased during that time. Evolution AB is cheap historically and across its sector, trading near its 52-week low. It is extremely profitable with little debt and cash at-hand earmarked for acquisitions.
Sales by geography (EUR) Q4 2024:
Asia: 202.2M
Europe: 201.8M
North America: 70.6M
Latin America: 38.5M
Other: 20.7M
The mean historical PE ratio of Evolution AB (publ) over the last ten years is 34.49 peaking at 90 in 2021.
Current P/E ratio of 12
Market cap: USD $15.5b
Dividend yield of 3.5% (49% payout ratio).
Share buybacks: up to EUR-500m during 2025
Total cash MRQ of EUR-663M
Total debt MRQ of EUR-82M
Return on equity of 30%
Total sales TTM of EUR-2.06B
Operating income TTM of EUR-1.26B
Net income TTM of EUR-1.15B
“We estimate the EBITDA margin for full-year 2025 to be in the range of 66-68 percent.”
Average revenue estimate among analysts: EUR2.31B
EBITDA based on margin guidance: EUR-1.52B to 1.57B
Implied EBITDA growth: 7% to 11%
“2024 has been a difficult year in Asia and the region remains affected by cyber-attacks in the fourth quarter. Revenue in the quarter is flat in comparison to the previous quarter. We continue our work to resolve the situation with full force but as stated in Q3 we expect this to take some time. The development in Asia is also reflected in our lowered margin guidance for 2025.”
“The regulatory landscape in our industry is constantly evolving. An increasing number of countries introduce a national regulation for online casino. We view this development positively and consider it a long-term driver of growth for the industry as it over time attracts new end-users and clarifies how B2C operators can address the market. As a B2B provider of games we hold licenses in several markets and need to adapt as regulation evolves. We have implemented further technical measures to ring-fence the regulated markets and to ensure that our games are available only through the locally licensed B2C operators in markets where local licenses are available. This change is reflected in our lowered margin guidance for the year.”
*I own and recommend shares of Evolution AB*
Devlin Demontigny 