Martin Carlesund, CEO of Evolution, expressed his dismay over Brazil's sudden ban on licensed betting, labeling it a "total negative" for the sector as the company seeks clarification on future developments. In September, President Luiz Inácio Lula da Silva instituted this ban, just under two years after the establishment of a regulated online gambling market in the country.
As a result of the ban, Evolution has temporarily shut its São Paulo studio, which opened last year. During Evolution's post-Q3 earnings call, Carlesund highlighted that the uncertainty in Brazil is particularly concerning given the short time since the licensed market was launched. "I think that everyone is flabbergasted about the situation in Brazil," he mentioned to analysts. He noted that the abrupt changes are detrimental to everyone involved in the business, stating, "It’s highly unfortunate that a populist agenda can overthrow a regulatory framework that has only been in place for a year and a half."
The Brazilian betting landscape is now eagerly awaiting a ruling from the Supreme Federal Court regarding the constitutionality of Lula's ban. Carlesund maintained that the studio could reopen swiftly, indicating that Evolution is "ready to accelerate" in Brazil if the situation allows.
When asked if Evolution's revenue in Brazil would fall to zero under the ban, Carlesund replied, "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 prevailing uncertainty, Evolution reaffirmed its full-year margin guidance. In response to an analyst's question about meeting profitability targets while Brazil remains offline, Carlesund said the company's outlook had not changed. Evolution's Latin American operations reported a year-on-year growth of 23.1% in Q3, not accounting for the impacts of Brazil's ban, which took effect in early October.
In Q3, Evolution's net revenue increased by 3.7% year-on-year to €526.1 million ($585.2 million), with adjusted EBITDA rising 2.7% to €345.9 million. This quarter marked the first time since 2024 that all of Evolution's regions experienced quarter-on-quarter growth. However, while Latin America (23.1%), Africa (23.7%), and North America (13.6%) showed robust increases, Europe saw only a 0.4% quarter-on-quarter growth and a year-on-year decline of 4.7%. Carlesund characterized the performance in Europe as "not exciting," asserting that the company "should do better" in this market.
He attributed Evolution's challenges in Europe to regulatory changes and taxation that distract from the core business. "If we can just have a couple of stable quarters in Europe where we focus on actually working with our customers, we will see that we will do better," he added.
Asia continues to face cybercrime challenges, with Carlesund noting that the issues with cyberattacks targeting their operations there 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 there is no quick solution to these cybercrime issues that we continue to see," he explained. He reassured investors that Evolution is taking long-term measures to safeguard its products and expressed confidence in the company's technical strategies moving forward.
Lastly, regarding a legal dispute with Playtech, stemming from allegations about Evolution supplying games in restricted markets, Carlesund commented, "We are in a full lawsuit with them, and that will continue as we go forward. We’re doing everything we can, and new steps are taken every day."
