Evoke has released its trading update for the first half of 2024, reporting a mixed bag of results and leading to revised expectations for the fiscal year.
In the second quarter of 2024, Evoke reported revenue of approximately £431 million ($560 million), with both quarter-on-quarter and year-on-year stability. The revenue in the UK online sector grew by 3%, thanks to improvements in products and promotions, with gaming revenue up by 6%.
However, sports betting faced challenges in 2023 from marketing and proposition changes, and lower-than-expected returns from promotions in the first quarter. Adjustments in leadership and business strategy, including new pricing and promotional tactics, have started to show positive early results.
Internationally, Evoke's revenue grew by 2% (4% on a constant currency basis), with significant growth in key markets such as Italy, Spain, and Denmark, which now account for about 60% of that department's revenue.
The withdrawal from the US B2C business, due to a focus on profitability, offset these gains in other markets.
In UK retail, revenue for the first half of 2024 remained stable compared to the second half of 2023 but saw an 8% decline from the same period the previous year. Plans to address performance issues include leadership changes, the introduction of new gaming machines, and improved sports betting technology.
Evoke's adjusted EBITDA profit margin for the first half of 2024 is expected to be around 13-14%, influenced by heavily skewed marketing costs and revenues falling short of expectations in the first half of the year.
Evoke launched a new strategic and value creation plan in March 2024 and was officially renamed Evoke in May. This strategy focuses on medium to long-term profitability growth by investing in the group's capabilities and transforming the business around a clear customer value proposition and competitive advantages.
Significant progress was made in the first half of 2024, including restructuring operational models to simplify decision-making and increase efficiency. This restructuring aims to achieve the previously announced cost efficiency of £30 million for the fiscal year 2024. The company also completed a restructuring of its executive team, bringing in new talent from various industries.
Product development has progressed, with the Mr Green brand repositioning and improvements in William Hill's customer value proposition. The new Betbuilder product launched before the European Championship was successful, and further product improvements are expected in the second half of the year.
Evoke expects its adjusted EBITDA for the first half of 2024 to lag the plan by approximately £35 million to £40 million, impacting the fiscal year 2024 expectations. However, the company remains optimistic about the prospects for the second half of 2024, expecting revenue growth to align with the mid-term guidance of 5-9%.
The cost optimization plan is expected to yield savings of £30 million this year, with earnings gradually increasing in the second half. Marketing costs (expected to be higher in the first half) are anticipated to drop by £35 million to £40 million in the second half, significantly enhancing profitability.
The adjusted EBITDA profit margin for the second half of 2024 is expected to be around 21%. Evoke has reaffirmed its expectations and mid-term goals for fiscal year 2025, including at least a 20% adjusted EBITDA profit margin and a 5-9% annual revenue growth.
