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1Q26 Financials.
Evolution reported 1Q26 and the stock was down -2%.
Reported revenues were -1.5% y/y, but grew +6.8% in constant currency.
They noted that Asia grew q/q for the second consecutive quarter as they made progress against Asia’s cybercrime. Asia grew +2.2% q/q, but is still down -2% y/y.
North America grew 10% y/y in Euros, but was adversely impacted by forex. In local currency North America grew 21% y/y.
LatAm was also strong, growing +29% y/y.
Europe was the biggest disappointment, which was down -12% y/y. The cause of this is two-fold. The smaller factor is their ring fencing effort, which increases some friction to play and potentially bounces out some legal players—but also eliminants players who were playing in these jurisdictions illegally.
The bigger cause of Europe’s weakness stems from strict regulations that are pushing players out of the legal market—and with Evolution’s ring-fencing effort, they are effectively ensuring they are no longer invertedly participating in the black market in Europe. Examples of strict regulation include monthly deposit limits, low max bets on slots, and 5-second delays between spins. Furthermore, high taxes have resulted in gaming operators adjusting the RTP (return to player) downward, which means illegal sites have better payouts.
With poor results from Europe, Evolution reported total Live revenue -3% y/y at €435mn, which is the second quarter ever where Live revenues were down sequentially.
RNG had a better quarter, +8% y/y.
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*At the time of this writing, one or more contributors to this report has a position in Evolution. Furthermore, accounts one or more contributors advise on may also have a position in Evolution. This may change without notice.
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