Martin Carlesund, the CEO of Evolution, expressed his dismay over Brazil's sudden ban on licensed betting, calling it a "total negative" for the sector as the company waits for further developments.
In late September, Brazilian President Luiz Inácio Lula da Silva announced the ban, barely two years after the regulated online betting market had been established. Consequently, Evolution has temporarily suspended operations at its São Paulo studio, which was opened last year.
During Evolution’s Q3 earnings call, Carlesund highlighted the unsettling nature of the situation in Brazil, given the recent launch of the licensed market. "I think that everyone is flabbergasted about the situation in Brazil," he told analysts. "It’s a total negative for anyone in this business, that it happens in this way."
He further lamented, "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 currently awaiting a decision from the Supreme Federal Court to determine if Lula’s ban violates the constitution. Carlesund stated that Evolution’s closed studio could reopen on short notice, emphasizing the company's readiness to accelerate its efforts in Brazil pending a favorable ruling.
When questioned about the potential for Evolution’s revenue from Brazil to plummet if the ban persists, Carlesund remarked, "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 uncertainty, Evolution maintained its full-year margin projections. Addressing whether the firm could meet profitability goals even if Brazil generated no revenue in Q4, Carlesund assured that the outlook remained unchanged. In Q3, Evolution's Latin American operations reported a 23.1% year-on-year growth, not yet reflecting the impact of Brazil’s ban activated in early October.
In terms of overall performance, Evolution's Q3 net revenue climbed by 3.7% year-on-year to €526.1 million ($585.2 million), and adjusted EBITDA rose by 2.7% to €345.9 million. This quarter marked the first since 2024 where all of Evolution’s regions experienced growth on a quarter-on-quarter basis. However, while Latin America, Africa, and North America showed significant yearly increases, Europe saw a mere 0.4% growth quarter-on-quarter and a 4.7% decline year-on-year. Carlesund characterized the performance in Europe as “not exciting,” asserting the company "should do better" in that market.
He noted that concerns related to regulatory changes and taxation across European countries have been a distraction for the company. "No matter the regulatory situation or low channelisation rates, we should do better," he stated. Carlesund expressed hope that if they could achieve stable quarters in Europe, the company could refocus on serving its customers effectively.
On the topic of ongoing cybercrime issues in Asia, Carlesund reiterated the challenges faced due to targeted cyberattacks, stating, “Someone is stealing our products.” In his update following the Q3 results, he acknowledged the ongoing difficulties, indicating only minimal progress: "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."
Carlesund assured that the company is taking strategic steps to safeguard its products in the long term, expressing optimism about their technical enhancements, notwithstanding potential volatility in outcomes.
Regarding the legal battle with Playtech, triggered by an investigation into Evolution’s operations, 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 now there’s new steps taken every day."
