Evolution Posts Strong Q3 Results Despite Challenges in Georgia, Asia

The third quarter marked a challenging period for Evolution, the leading business-to-business (B2B) solution provider for casino operators across the globe. Despite challenges, the company reported strong operating revenues marking an increase year-over-year but saw a dip in its adjusted EBITDA margin.

Adjusted EBITDA Margin Was Slightly Lower than Expectations

Released Thursday, Evolution’s Q3 2024 results reveal that the company recorded €579.0 million ($625.2 million) in operating revenues, a figure that signals a 27.9% increase when compared to the corresponding period in 2023. Not unexpectedly, EBITDA also saw an uptick by more than 30% to €415.3 million ($448.3 million), suggesting a margin of 71.7%. The EBITDA margin represented an increase when compared to the Q3 2023 figure of 70.4%.

Similarly, adjusted EBITDA hit €355.6 million ($383.9 million), a result that shows an 11.6% increase year-over-year. However, adjusted EBITDA margin took a hit during the latest trading period after halting at 68.5%, down from 70.4% from Q3 last year.

Martin Carlesund, Evolution’s CEO, commented on the latest development, acknowledging the decrease in the adjusted EBITDA margin, recognizing the result is “slightly lower than anticipated three months ago.” Moreover, he predicted: “We expect margins to remain around the same level for the final quarter of the year and therefore we expect to complete the year slightly below our expectation from the beginning of 2024, of full year EBITDA margin in the 69%-71% range.”

The Third Quarter Brought Challenges for Evolution

Carlesund addressed the main challenges Evolution faced in Q3, namely the strike in Georgia as well as the cyberattacks against the company’s Asian video distribution. The executive said that the company’s negotiations with unions hit a snag after two years, resulting in the strike.

While Carlesund supported the workers’ right to collectively bargain, he said that a “small number of union affiliated activists began to illegally block entrances, vandalize buildings, take violent actions and harass working employees, actions that disrupted our operations and forced us to down-size capacity in Georgia.” He explained that some of those activists have also spread lies and misinformation regarding Evolution, vowing that the company will take legal action against this defamation.

Carlesund also pointed to the cyberattacks on Evolution’s Asian video distribution which affected negatively the company’s revenue in the region. Although he admitted that the required actions to combat such threats have been taken, the executive acknowledged the company’s revenue took a hit. “We continue to see attacks and we will continue to aggressively scale up counter measures,” added Carlesund.

On the bright side, focusing on the January through September period, Evolution once again reported an increase in its revenues. In total, revenue for the period hit €1.53 billion ($1.65 billion), a result that points to a 15.6% year-over-year increase. However, the adjusted EBITDA margin between January and September this year decreased to 68.5%, down from 70.3% from the same period in 2023.