GuruFocus -
- Revenue: EUR508 million, 15% year-on-year growth.
- Revenue Growth at Constant Currency: Estimated at 19% for the quarter.
- EBITDA Margin: 68% in the second quarter.
- Life Segment Revenue: EUR438 million, 18% year-on-year growth.
- R&D Revenue: EUR70.3 million, 1.5% year-on-year growth.
- Operating Profit: EUR311 million for the quarter.
- Personnel Expenses: EUR111.4 million, 27% increase year-on-year.
- Depreciation: EUR34.6 million, up 15% year-on-year.
- Other Operating Expenses: EUR51.2 million, 22% increase year-on-year.
- Tax: EUR48.8 million, tax rate of 15.3%.
- Cash Balance: EUR689 million at the end of the period.
- Dividend Paid: EUR564 million for 2023.
- Capital Expenditure: EUR32.5 million for the quarter, EUR69 million for the first six months.
- Cash Flow: Operating cash flow after investments of EUR280 million.
- Buyback Initiated: EUR400 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evolution AB (EVVTY) reported a year-on-year revenue growth of 15% for the second quarter of 2024, with revenue amounting to EUR 508 million.
- The company expanded its presence in the US by launching live casino games in Delaware and entering into an agreement to acquire Galaxy Gaming, which is expected to strengthen its market position.
- Evolution AB (EVVTY) maintained its EBITDA margin guidance for the full year in the range of 69% to 71%, despite a slower quarter.
- The company announced a capital allocation framework and a share repurchase program amounting to EUR 400 million, demonstrating strong financial health and commitment to returning capital to shareholders.
- The launch of new games, including the ambitious Lightning Storm, is expected to drive future growth and enhance player engagement.
- The quarter experienced a slower top-line growth, partly due to a large payout of EUR 35 million in a single game, which negatively affected revenue share.
- Margins were lower than expected due to rapid expansion and consolidation, with an EBITDA margin of 68% in the second quarter.
- The company faced challenges in the North American market, with growth below market rates, particularly in the RNG segment.
- Personnel expenses increased by 27% year-on-year due to significant headcount expansion, impacting overall costs.
- Some regions showed slower development, and the company acknowledged that there are areas where operational performance could be improved.
A: High activity was noted in the quarter, but we believe we could have delivered more in terms of revenue. We are optimistic about the rest of the year and expect improvements across all regions. The studio disruption had no material impact on revenue.
Q: Can you explain the potential synergies from the Galaxy Gaming acquisition?
A: We have a long-standing relationship with Galaxy. The acquisition allows us to expand their games and side bets into new markets. Galaxy is licensed in 28 out of 29 states, which helps fast-track our licensing process as states regulate online gaming.
Q: What is your approach to share buybacks and maintaining a sufficient cash position?
A: There is no set cash position number, but our new framework aligns with past actions. We aim to maintain a net cash position while returning excess cash to shareholders through buybacks or dividends.
Q: How did the large payout in Crazy Time affect your quarterly results?
A: The EUR35 million payout was significant and the largest we've seen. It affects the quarter, but it's challenging to quantify the exact impact as it also drives new game revenue.
Q: Can you discuss the challenges in the North American market and your strategy to improve growth?
A: We have a strong position in slots but are losing market share due to increased competition. We are launching new games and expect our live segment to grow. We are not satisfied with current growth and are working on improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.