Evolution Reports Q3 Revenue Growth Despite Cyber Attacks and Strike Disruptions

Despite facing significant challenges in Q3 2024, including ongoing strike action in Georgia and cyber-attacks targeting its Asian operations, Evolution has reported a strong financial performance. The company’s net gaming revenue (NGR) for the quarter rose by 14.7% year-on-year to €519.4 million, with an even higher growth rate of 19% when measured in constant currency. Evolution’s live casino business continued to drive much of this success, while the RNG (random number generator) segment also saw improvements.

Evolution’s live casino offering once again performed exceptionally well, achieving 16% year-on-year growth. The company launched new tables in both Colombia and the Czech Republic during the quarter, which contributed to its continued dominance in the live gaming space. Total operating revenues also increased significantly, reaching €579 million, boosted by a one-off gain of €59.7 million related to a reduced earn-out liability.

Meanwhile, Evolution’s RNG business, which includes popular slot providers like NetEnt, Red Tiger, Big Time Gaming, and NoLimit City, experienced growth after several quarters of struggling. The RNG segment posted a revenue increase of 8.5%, up to €72.5 million, marking an improvement over the €70.3 million reported in Q2.

Evolution’s CEO, Martin Carlesund, attributed this turnaround to the company’s efforts to enhance its RNG product offerings by releasing new games and adding innovative features.

“We are beginning to see the results of our incremental improvements in the RNG offering,” Carlesund said, emphasizing the company’s commitment to refining its RNG product lineup.

Evolution’s operations in Georgia have been significantly impacted by strike action that began in July 2024, involving around 550 employees out of a workforce of 7,000 in the region. Although the company has managed to mitigate some of the disruption by shifting capacity to other studios, the Georgia facility is currently running at only 60% capacity.

Carlesund acknowledged the negative effects of the strike, stating, “We are able to offset lost capacity using other studios to limit the impact on our customers, but overall, the disruption has had a negative effect.”

Industry consultancy Regulus Partners noted that the ongoing disruptions in Georgia, which makes up 40% of Evolution’s overall operations, could pose a significant risk to both growth and profit margins if the situation persists. Regulus described the Georgia studio as “too big and historically too efficient to be easily replaced,” underscoring the importance of restoring normal operations at the site.

While Carlesund expressed support for workers’ rights to unionize, he also pointed out that illegal disruptions by a small group of union activists had worsened the situation in August. However, the company is focused on stabilizing its operations and rebuilding capacity in other locations to support future growth.

In addition to the strike action in Georgia, Evolution faced cyber-attacks that targeted its Asian video distribution. Although the attacks caused temporary disruptions, Carlesund assured that Evolution had strengthened its cybersecurity measures and successfully countered the threats. Nevertheless, Regulus Partners warned that these attacks could signify the end of Evolution’s period of rapid growth in Asia, as the region’s regulatory environment becomes more challenging.

Regulus speculated that the attacks might be linked to the closure of the  (Philippine Offshore Gaming Operators) sector in the Philippines, which has uncovered connections to organized crime. Despite these disruptions, Evolution’s revenue in Asia still grew by 17.5% year-on-year, reaching €202.2 million in Q3.

Carlesund emphasized that Evolution will continue to ramp up its cybersecurity efforts to protect its operations in Asia, stating, “We continue to see attacks, and we will continue to aggressively scale up countermeasures.”

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Despite the challenges in Q3, Evolution’s overall financial performance remained robust. Group EBITDA rose by 30.3%, reaching €415.3 million, with a profit of €328.6 million for the quarter. The EBITDA margin also remained strong at 71.7%, highlighting the company’s resilience amid operational and external disruptions.

Source:

, igamingbusiness.com, October 24, 2024.