Last month, when Evoke PLC (an online betting and gaming company) released its mid-year trading update, the operator could hardly downplay its performance. Compared to the first half of last year, total revenue fell by 2%, from 881.6 million pounds (1.12 billion dollars) to 862 million pounds. Nearly all verticals saw a decline: revenue from the UK and Ireland was down 3%, international revenue dropped from 266.3 million pounds to 265 million pounds, and adjusted EBITDA plummeted by 26%.
Therefore, it was no surprise when Evoke CEO Per Widerström began the conference call with: "These results are disappointing and unacceptable!" He continued, stating that the company "clearly knows what went wrong," and thus, also knows exactly how to address the issues.
Widerström further stated that Evoke is "taking swift and decisive action" to improve its products for both long-term and short-term profitability. These initiatives are primarily targeted at mid-tier customers, whom the company has identified as the main drivers of growth.
Just yesterday (August 16), Widerström also purchased 900,000 shares of the company.
Subsequently, Evoke CFO Sean Wilkins took over to discuss some financial details. He emphasized that Evoke is undergoing a "comprehensive business transformation" to achieve "stronger revenue, stronger growth, higher profit margins, and a more sustainable market-leading position."
From the income statement, Widerström's assessment seems correct, as Evoke indeed identified some shortcomings. Although online revenue in the UK and Ireland grew by 1%, reaching 338.6 million pounds, retail revenue fell by 8%, reaching 258.4 million pounds, offsetting this growth. This was attributed to "marketing investments not being as effective as planned." As for this segment's adjusted EBITDA, Evoke noted that the -26% drop was due to product transitions and a 16 million pound increase in marketing expenses.
"When we look at Italy, Denmark, and Spain, we find that our growth rate exceeds these markets," CEO Per Widerström continued. Wilkins also noted that while exiting the US B2C market required a payment of 21 million pounds, this should bring positive returns over time.
Looking at the Details
Although the content above may seem overly detailed, it is part of Evoke's plan aimed at returning the company to a profitable state. In the future, each plan will be tracked individually to ensure they are beneficial to the company, such as the Bet Builder product. This will also enable the company to formulate corrective plans more quickly and accurately.
One aspect already mentioned is the inefficiency of certain betting products, such as those relying on manual processing. To address this issue, Evoke has confirmed the implementation of artificial intelligence to "transform the business."
Wilkins' final part discussed three main areas where Evoke will see changes in the future. First, under the push of newly hired talent and monthly profit planning cycles, a cultural shift will occur, shifting the mindset to focus on value creation.
Similar to tracking each plan individually, by tracking expenses daily and weekly, the company can respond more quickly to any potential issues. In addition, optimal resource allocation will be achieved, including "more sustainable performance reviews" and operational leverage to "reduce business costs."
These initiatives are mainly targeted at mid-tier customers, whom the company has identified as the main drivers of growth, as well as online players. Subsequently, Widerström came back to reflect on the reasons for the company's "thorough restructuring," as the board was "dissatisfied with the financial performance in the first half of the year." Part of the reason was the hiring of a completely new team, with 9 out of 11 executive team members having been hired since October 2023. Widerström insisted, "I will not rest until this business reaches the level it should."
The conference call barely mentioned renaming, only emphasizing the use of a more coherent name to represent all its brands. "We have rebranded Mr Green as the most unique casino brand on the market," Widerström continued, "and we are repositioning William Hill through successful campaigns."
Question and Answer Section
In the Q&A session, questions were posed by the moderator, rather than by shareholders or analysts calling in.
The first question was whether William Hill had enough decoration and capability to attract people into the stores. Widerström responded that he is "very proud of the retail stores we have," but there is always room for improvement. Evoke's main way of improving retail stores is to raise the average weekly total winnings from machines from 750 pounds to 1,000 pounds, which will be achieved by improving machines that have already been in place for 10 years. When asked how to launch these machines without reaching the spending cap, Wilkins succinctly answered: "They are leased."
Another question passed to Evoke was how the company plans to reward long-term investors. Widerström's response was quick and enthusiastic, emphasizing that they are "absolutely obsessed with" driving short-term and long-term profits and revenue, and realizing their value creation plan.
"These results are disappointing and unacceptable!" Widerström continued, stating that the company "clearly knows what went wrong," and therefore, also knows how to solve the problems. Subsequently, the two were asked how Evoke views its gap compared to competitors. "When we look at Italy, Denmark, and Spain, we find that our growth rate exceeds these markets," Widerström answered. He then stated that its fourth largest core market, the UK and Ireland, will work harder than ever to promote the William Hill brand.
These products will receive additional promotions, and the company will more clearly define its target customer base. Wider
