Evolution Stock Climbs 7% After Beating Q2 Estimates, Boosted by Asia

Evolution AB stock rose by over 7% on Wednesday after the company reported better-than-expected Q2 2025 earnings, driven by continued growth in Asia and increased shareholder returns. 

Evolution reported revenues of €524.3 million in Q2, a 3.1% increase from the corresponding quarter last year and slightly ahead of the €518 million that analysts had expected. 

The company estimates a growth rate of 8.8% after excluding the impact of adverse currency movements.

Q2 Revenue Rises Despite Headwinds in Europe

The company posted better-than-expected revenue, despite a decline in its European revenues, which the company stated was worse than anticipated. 

For the quarter, European operations generated €180.2 million, representing a 5.8% year-over-year decline.

The result represented the second consecutive quarter that Evolution’s revenues have fallen in the region, its second-largest market. 

Evolution attributes the fall to the ringfencing measures the company is taking in Europe, where it is voluntarily restricting games to locally licensed operators. 

The impact of these measures is expected to have peaked in the second quarter and then level off in the latter half of the year.

Unlike Europe, other regions experienced growth: 

• Asia: €209.1 million (+3.6% YoY) — Evolution’s largest market by revenue.
• North America: €73.9 million (+22.8% YoY).
• Latin America: €37.6 million (+2.8% YoY).
• Africa & Others: €23.4 million (+20% YoY).

Despite the growth, CEO Martin Carlesund tempered expectations, saying: 

“We are not satisfied with this quarter’s growth, and we are working hard to increase the pace. However, operationally speaking, we are where we set out to be at the beginning of the year.”

Margins Hold Firm Amid Regulatory and Cybersecurity Costs

Evolution reported an EBITDA of €345.3 million in Q2, ahead of analysts’ €337 million forecasts. While EBITDA was slightly lower compared to Q2 2024, the margin stood at 65.9%.   

The company reaffirmed its EBITDA margin expectation for 2025, which is between 66% and 68%, a margin below the one it posted in 2024. 

It cited reasons such as headwinds from ringfencing in regulated markets and the cybersecurity measures it is implementing in Asia. 

The company’s video distribution business in Asia has faced attacks from cybercriminals who have intercepted and redistributed live casino streams

This has prompted significant investment in cybersecurity, which is taking a toll on its margins.

Still, Asia remains a high-growth market for Evolution. In Q2, it opened its first-ever live casino studio in Asia, located in the Philippines.

Commenting on the headwinds in Asia and Europe during the earnings call, Carlesund said: “For both these regions, we remain cautiously optimistic about the remainder of 2025 as we continue to evaluate the effects of these measures.”

Major Shareholder Returns and Buyback Plans

In the first half of 2025, Evolution returned nearly €800 million to shareholders:

• €572.5 million in dividends.
• €219.5 million via share repurchases. 

The company intends to pay at least half of its net profits as dividends, offering a current yield of 4%, which is quite attractive for income-seeking investors. 

As for buybacks, Evolution intends to spend €500 million on repurchases in the whole year.

Other Key Takeaways from Evolution’s Earnings

Coinciding with the Q2 earnings release, Evolution opened its studio in São Paulo, Brazil, on July 16. 

The Brazilian market transitioned to a regulated market earlier this year, which presents opportunities for companies like Evolution, albeit with short-term challenges as the market adapts to the new regulations.

Evolution has also expanded its partnership with Hasbro and will now be the exclusive global provider for online casino games based on Hasbro’s brands, including Monopoly. 

Additionally, the company has recently entered Rhode Island, marking a significant milestone in the US. 

With Rhode Island, Evolution is now one of a handful of content providers available in all US iGaming states.

Meanwhile, after the rise today, Evolution is on the verge of turning positive for the year and is now approaching its 200-day moving average, which would be a positive technical signal if crossed.

Analysts remain bullish, with a current target price of SEK 935.75, implying an upside of over 13% from these levels.

With momentum building and analysts maintaining a bullish outlook, Evolution is nearing a break-even point for 2025 and approaching its 200-day moving average. 

This key technical level could spark further investor confidence.

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