Evolution announced its revenue for the first quarter of 2025 as 520.9 million euros (592.1 million USD), a growth of 3.9% compared to the same period last year.
Despite the positive revenue growth, both profit and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) have declined compared to the first quarter of 2024, by 5.4% and 1.1% respectively. Indeed, this performance was achieved after the company established two new studios in North America and the EU market this quarter, and initiated a stock buyback program.
Financial Condition in Q1 2025
More specifically, Evolution's adjusted EBITDA for Q1 2025 decreased by 1.1% year-over-year to 341.98 million euros, with an EBITDA profit margin of 65.6%, lower than last year's 69%. On the other hand, the profit decline was slightly more significant at 5.4%, amounting to 254.7 million euros, with a profit margin of 48.9%. Evolution's profit margin in Q1 2024 also slightly decreased from 53.7% to 48.9%.
Excluding other operating income, the adjusted EBITDA also fell by 1.1% to 341.97 million euros, while earnings per share before dilution decreased by 2.8% year-over-year to 1.24 euros.
Live games account for the majority of Evolution's revenue, generating 448.7 million euros, a growth of 3.9% year-over-year, while RNG games accounted for the remaining 72.3 million euros.
Geographically, Asia was the main revenue driver for the company in Q1 2025, contributing 201.9 million euros, up 2.2% year-over-year, but slightly down from 202.2 million euros reported in Q4 2024. Following Asia is the European market, with revenues of 189.7 million euros, down by 300,000 euros from 191 million euros reported in Q1 2024.
Highlights of Q1 2025
In Q1 2025, Evolution embarked on a global expansion phase, opening its third studio in New Jersey and its second studio in Romania. Subsequently, Evolution initiated a stock buyback program.
Additionally, in the first quarter, the company was also subject to some legal scrutiny as its license was investigated by the UK Gambling Commission in February, causing a sudden drop in stock prices. Recently, in March, Evolution established a new content integration partnership with Hard Rock.
CEO Comments
Evolution CEO Martin Carlesund commented on the latest performance, saying: "The slowdown in growth rate this quarter is not only influenced by currency exchange fluctuations but also related to the conscious actions we have taken that are favorable for long-term business.
Firstly, we are addressing ongoing issues in Asia and implementing technical countermeasures to curb cybercrime activities, which have pressured revenue growth. Secondly, in addition to the measures we have already taken in the UK to meet regulatory requirements, we also took proactive and voluntary actions in February to establish firewalls in other regulated markets in Europe. The effectiveness of these measures varies, with markets with lower levels of channelization experiencing the most significant negative impact on revenue.
This quarter, we had constructive dialogues with all major regulatory bodies in Europe and will continue to do our utmost to support them. However, it is important to remember that channelization largely depends on factors beyond our control, namely how regulatory parameters are structured.
Creating a long-term sustainable regulatory environment that both protects end-users and allows them to have an enjoyable gaming experience requires a balance between these parameters. In the long run, the regulatory environment is positive, and over time, it will attract new end-users, but regulation must be conducted in a way that serves the needs of players in each country. Due to these factors, profitability in the first quarter was lower. We believe that the measures we are taking will also impact the second quarter, but profitability in the second half of the year will be stronger.
