Evolution's CEO, Martin Carlesund, expressed his disbelief over Brazil's sudden ban on licensed betting, labeling it a "total negative" for the industry as the company seeks more clarity on the unfolding situation.
This ban was announced by Brazil’s President Luiz Inácio Lula da Silva in late September, a surprising move given that it comes less than two years after the country launched its regulated online betting market. As a direct consequence of this development, Evolution has temporarily shuttered its studio in São Paulo, which was operational for less than a year.
During Evolution’s post-Q3 earnings call, Carlesund voiced his concerns about the uncertain climate in Brazil, emphasizing the short duration since the market's establishment. "I think that everyone is flabbergasted about the situation in Brazil," he stated. "It’s a total negative for anyone in this business that it happens in this way." He noted the unfortunate reality that a populist agenda has the power to dismantle a regulatory structure that had only recently been put into place.
The Brazilian betting industry is now waiting for a decision from the Supreme Federal Court regarding the constitutionality of Lula’s gambling ban. Carlesund indicated that Evolution's closed studio is poised to reopen quickly if the situation improves, reiterating that the company is "ready to accelerate" its operations in Brazil under the right circumstances. When questioned on whether Evolution’s revenue from Brazil would diminish to zero if the ban persists, Carlesund responded, "The country as such is not ring fenced, and we will see what will happen with the players. The only comment I had is that we have to monitor the situation in Brazil. No one really knows what will happen. It could be reopened again."
Despite the ongoing turbulence, Evolution has maintained its full-year margin guidance. Carlesund affirmed that the company’s overall outlook remains steady, even if revenue from Brazil were to fall to nothing in Q4. He noted that Evolution’s operations in Latin America experienced a notable year-on-year growth of 23.1% in Q3, a statistic unaffected by Brazil’s suspension, which took effect in early October.
On a broader scale, Evolution reported a net revenue increase of 3.7% year-on-year for Q3, totaling €526.1 million ($585.2 million), while adjusted EBITDA grew by 2.7% to reach €345.9 million. Q3 was also significant as it marked the first quarter since 2024 when all of Evolution’s regions reported growth compared to the previous quarter.
However, while Latin America, Africa (23.7%), and North America (13.6%) showed strong growth, Europe only increased by 0.4% from the previous quarter and saw a decrease of 4.7% year-on-year. Carlesund characterized the company’s performance in Europe as "not exciting" and asserted that they "should do better" in the region.
He pointed out the distractions posed by regulatory changes and tax issues across European markets, expressing a desire for stability. "If we can just have a couple of stable quarters in Europe where we focus on actually working with our customers and get back from all of these external parameters and regulatory changes and taxes going here or there, we will see to that that we will do better," he stated.
In Asia, Evolution continues to face cybercrime problems; last year, Carlesund noted incidents involving product theft. Following up on this issue after the Q3 results, he said the problems remain unresolved. "Asia increased by 0.8% quarter-on-quarter and by 1.6% year-on-year. It’s one small step forward compared to Q2, but you all know that there is no quick solution to these cybercrime issues that we continue to see."
Carlesund emphasized that the company is taking long-term measures to safeguard its product, expressing confidence in the efforts being made in respecting technical integrity.
On the topic of Evolution’s legal dispute with Playtech, which has arisen after Playtech hired intelligence firm Black Cube to investigate Evolution in 2020, Carlesund confirmed that the lawsuit is ongoing. "We are in a full lawsuit with them, and that will continue as we go forward. We’re doing everything we can, and now there’s new steps taken every day," he noted.
