Evolution AB Q3 2023 Financial Results – Casinoplusbonus analysis!

The largest live casino game provider, Evolution AB Q3 2023 financial results show positive earnings but scepticism on the stock markets. (Photo by m. on Unsplash)

Evolution, the B2B casino solutions provider for gaming operators, released their Q3 financial report on 26 October 2023 with relatively positive earnings results.

The company revenue was up 19.6% in Q3 because of live casino growth, up to €452.64m. However, this was lower than the analyst’s expected growth of €463m. As a result, Evolution missed its estimated growth target by 3%.

For the three months ending 30 September 2023, Evolution’s profit attributable to shareholders was € 272.8m, up from € 221.3m in the same period the previous year. EPS increased from € 1.02 to € 1.26. The profit margin for Q3 was 60% and only up 1% for the same time last year.

On the downside, the Random Number Generator (RNG) revenue in 2022 had increased by € 68.1m. However, the RNG sector has seen a decline of 2% in Q3 2023, the lowest level over the past year.

It is also worth noting that the reported increase in revenue has not revived the falling company’s stock price value. In May this year, Evolution shares were worth 1466.80 SEK each, which is the yearly high. Since then, the live dealer company’s share price has declined to its current Friday 29 October close of 974.3 SEK. However, many factors are at play that affect stock price movement; usually, an increase in revenue boosts stock market value. It is possible that missing the expected target by 3% has unsettled investors. An underlying issue is that while the company’s share price has climbed by 14% annually, earnings per share have increased by 38% annually, which indicates the stock price has not kept pace with earnings growth.

Overall, the above financial metrics show positivity, except for the RNG market. After an excellent start to the year on the NASDAQ, Evolution’s stock price has been downward since last May and hit a yearly low after releasing its Q3 earnings report. The stock is trading at 976.70 SEK and appears to be headed to lower lows.

Comparing Q2 2023: In the previous Evolution AB Q2 2023 Financial Performance news report, Evolution highlighted strong growth, with 84% coming from the live casino sector in Q2. However, the difference over the past 3 months is that Q2 shows overall stability and even growth in the RNG sector. This latest Q3 report notes a  decline in this sector, showing the weakest performance this year.

Evolution Q3 Overview

Official Evolution Financial Figures: For the official figures and CEO comments, you can head directly to the Evolution Investors Financial Reports page. You will find the most current Interim Report, January-September 2023. Plus, there are more financial updates, including the Interim Report January-June 2023, Interim Report January-March 2023, and the Evolution Annual Report 2022.

Can EVO rebound in Q4?

While the Evolution live casino software provider’s company financials have a strong track record of growth and profit, the company expects growth to slow in the coming years. The downward trend is affecting most of the iGaming industry, and analysts believe that Evo’s metrics in Q4 will continue to slow. Their North American market has seen slower growth than expected, but in the upcoming years, new studios might boost growth. Several states regulating online casinos will have a more significant impact on growth than initially estimated. The company believes that European growth will remain unchanged, but they forecast a more marked slowdown in Asian growth than previously anticipated.

The RNGs need to be resolved by their software partners so that this issue will not be a factor in future financial results, which is only one of several of EVO’s immediate challenges.

Other concerns are tax & regulatory issues, inflation, security (fraud/theft) and strong guidance from management. These are all part of the big picture, and metrics will need to be identified, analysed and resolved in the coming months so that investor confidence can be restored.

Latest CasinoPlusBonus stock report: The latest stock report covering Evolution share price was published in this week’s Gambling Share Prices 2023 – Issue 22, published on 24 October 2023. It shows the price on that, say, versus the 2023 market open price. You can also use this report to review the Casinoplusbonus bi-weekly ‘Gambling Share Prices’ updates to understand how the EVO stock has performed in 2023.