Shares in Evolution AB plunged more than 5% on Wednesday after the Swedish online casino supplier disclosed first-quarter EBITDA that missed analyst expectations. Europe revenue, the company's biggest market, declined 12% year-on-year to its lowest since the second half of 2022, signaling persistent headwinds in a core region. Chief Executive Jens von Bahr highlighted regulatory volatility as a key drag on player activity, underscoring challenges in the live-dealer gaming sector.
Disappointing Core Metrics Amid Mixed Regional Performance
EBITDA fell 2% to €335.3 million, below the Bloomberg consensus of €338 million, with the margin slipping to 65.4% from 65.7% a year earlier. Net revenue dipped 1.5% to €513 million, aligning with forecasts, though constant-currency growth reached 6.8%. Operating profit declined 3.6% to €292.6 million, narrowing the margin to 57.0%, while net profit edged down 1.1% to €251.9 million and earnings per share ticked up to €1.26.
Europe Slumps as Regulations Bite, Offsetting Global Gains
Europe revenue sank to €345.3 million, down 5.9% from the prior quarter, with CEO Martin Carlesund attributing the shortfall to regulatory volatility, subjective enforcement, and self-imposed ring-fencing limits on player activity. These measures, while positioned as a long-term strategy for sustainable growth, exact a steep short-term cost. Morgan Stanley, maintaining an equal-weight rating with a SKr 680 price target, noted the region's revenue now matches levels from late 2022 and flagged meagre 2026 profit growth alongside ongoing regulatory uncertainty.
Emerging Markets Drive Offset, Cash Position Strengthens
Latin America shone with €64.4 million in revenue, up 29.3% year-on-year, while North America expanded 10.1% in euros to €75.5 million, or 21.4% in local currency. Asia posted sequential growth to €16.9 million, though instability is set to linger through 2026. Live games generated €434.9 million, down from €448.7 million, as RNG revenue climbed to €78.2 million; mobile devices now represent 76% of operator gross gaming revenue, up from 72%. Cash reserves swelled to €1.098 billion, regulated market revenue rose to 48% of the total, and the board proposed no dividend for the year.
