Evolution has been ordered to pay £4.75 million ($6.4 million) to the Gambling Commission following an investigation into its operations that began in December 2024. The Commission found that the gaming content of the supplier giant was being made available through two operators on six unlicensed websites.
During the company's Q2 earnings announcement on Friday, CEO Martin Carlesund assured investors that this regulatory settlement would not bring any changes to Evolution's UK operations. "I mean, we settled with them [UKGC]," he stated during the post-earnings call. "There are no changes in our way of doing things in the UK for a while, and we have no changes coming up."
Carlesund took the opportunity to address concerns over rising gambling taxes in Europe, referencing the UK’s Remote Gaming Duty, which nearly doubled on April 1 from 21% to 40%. He warned, "When it comes to the balance of the regulatory situation in any jurisdiction, not in particular to the UK, but as soon as you raise the tax to a certain limit, you will lose channelisation."
Notably, he pointed out that channelisation in regions like the UK and the Netherlands had already dropped to around 50%. He urged for a more balanced regulatory approach, recognizing the negative impact that tax increases have on channelisation, although he noted, "It’s not for us to decide, and we just act on the rules that are there."
In terms of financial performance, Carlesund described Europe as the "main headache right now" due to multiple quarters of declining revenue. However, Q2 did see a quarter-on-quarter growth of 3.5% from Q1, marking a positive turn in this trend.
In contrast, Latin America emerged as a strong performer for Evolution, reporting a 26.3% year-on-year revenue growth, while North America also saw a 9.5% increase compared to last year. Nonetheless, challenges persist in Asia with a reported quarter-on-quarter revenue decline of 3.7% caused by rising cybercrime activity.
Overall, Evolution’s net revenue fell 1.2% to €517.8 million during this period, and EBITDA decreased to €341 million from €345.3 million in Q2 of the previous year. In the first half of the year, net revenue dropped 1.4% to €1.038 billion, with a decline in EBITDA from €687.2 million to €676.3 million.
Despite the revenue and EBITDA declines, Carlesund expressed satisfaction with the company's Q2 results. He remarked, "Revenue and margin are moving in the right direction compared to the first quarter, cost control remains strong, cash flow is improving and we continue to expand in key markets while executing on our product roadmap."
Commenting on the journey ahead, he added, "The road is almost never straight, but what matters is that we are moving forward. Some curves are harder than others, but they can also be fun. And the same goes for Evolution."
Meanwhile, the acquisition of Galaxy Gaming, announced in July 2024 for approximately $85 million, appears likely to fall through as the deal's closing period expires on Friday, allowing either party to terminate the agreement. Carlesund mentioned that the deal is not crucial to Evolution’s business, saying, "Galaxy is a great company; however, due to its size, the transaction is not significant for Evolution. The outcome has no material impact on our existing business, our US operations, or our long-term ambitions."
In Evolution's Q2 financials, it was noted that 16% of net revenue derived from customers’ players’ IP addresses in North America, trailing behind Asia at 37% and Europe at 33%.
