Evolution CEO: European geo-blocking more expensive than expected

Speaking during Evolution’s Q2 earnings call on Thursday, CEO Martin Carlesund said efforts to block the supplier’s products from being used on the illegal market had proven more expensive during the first half of the year than the company had anticipated.  

In Q1, the games provider adopted geolocation blocking technology across Europe to ensure its games were provided only in locally licensed markets.  

This followed an investigation launched by British regulator the Gambling Commission in December into Evolution providing to unlicensed operators in the country.  

Evolution unsure of Gambling Commission review timeline

Speaking to analysts during the Thursday call, Carlesund said he could not provide an update on the timeline of the Gambling Commission review.  

“I don’t have visibility of the timeline, it’s up to the regulator,” he said. “We answer them and provide any information [as quickly as possible], but we have no guidance on the timeline.”  

In Q1, Evolution said profitability had taken a hit during the period as a result of it exiting a number of black or grey markets in Europe.  

“On top of what we have already done in the UK to meet regulatory requirements, we have taken proactive and self-initiated actions in February to ring-fence additional regulated markets in Europe,” the CEO said at the time.  

Although he said geo-blocking black markets had continued to hurt earnings in Q2, the impact was less than in Q1 when profit was down 5.4% to €254.7 million ($289.7 million).  

“We don’t guide on [the impact of] each market, but we are working hard to ensure we are in a position proactively in the European market and that is a little bit more expensive than we anticipated,” Carlesund said during the Q2 analyst call.  

“I am not satisfied with the financial development during the first half of 2025, but I am very satisfied with how we are addressing our challenges” he added in the earnings report.

Profit slips 8%, although impact of Europe closures softens 

In terms of profitability during the second quarter, operating profit amounted to €306.4 million, down 1.5% year-on-year. Total net profit for the period was €248.3 million, down 8% from Q2 2024.  

Carlesund said he was “cautiously optimistic” about the company’s Q2 results. He said it was a good improvement on the last quarter and Evolution was “more or less within [its] range” in terms of profitability.  

Despite “external events” impacting Evolution’s Q2, he said the company was “laying the foundation to increase growth going forward”.  

Evolution’s Q2 revenue hit €524 million, up 3% from last year’s €508 million. When split by vertical, live games accounted for 87% of total revenue.  

New Evolution studios launched in Brazil and Asia 

Operating expenses for the period increased 10.4% to €218 million in Q2, which included investment into new games studios launched in Sao Paolo and the Philippines, marking Evolution’s expansion into Brazil and Asia.  

“The new Brazilian studio is a state-of-the-art studio, a bit larger, and is aimed at serving a growing Brazilian market,” Carlesund said in a statement.  

“It is a perfectly timed launch considering Brazil’s transition to regulation earlier this year. These two new studios symbolise our constant strive for growth, and we warmly welcome them into the Evolution studio network.”  

When asked by analysts how much these studios would contribute to earnings, Carlesund said they would contribute as much as any other studio, which is not much (by themselves) in the short term.

Acting against cyber threats

Finally, Carlesund said the company was acting to protect itself from ongoing cyber threats in Asia which threatened the Evolution IP. He said that thanks to these actions, the Asian market had returned to growth in H1.

“We know that we are in the absolute technological forefront in defending our intellectual property and our products. As we have stated before, it will take time, patience and resources, but as we deploy new measures constantly we are starting to reap some benefits,” he said.

In January the company had flagged these ongoing cyber attacks in Asia as a continuing challenge, resulting in flat revenue in the market.

Evolution’s Asia revenue in Q2 grew 4% year-on-year to €209 million.