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1. Company Snapshot

1.a. Company Description

Evolution AB (publ) develops, produces, markets, and licenses live casino and slots solutions to gaming operators primarily in Europe and the United States.The company runs the game from a casino gaming table, which is streamed in real time and end users make betting decisions on their devices, such as computers, smartphones, tablets, etc.Its portfolio of online live table games primarily includes Live Roulette, Blackjack, Baccarat, Super Sic Bo, Dragon Tiger, Craps, Live Casino Hold'em, Three Card Poker, and Ultimate Texas Hold'em; and operates approximately 1000 tables.


The company was formerly known as Evolution Gaming Group AB (publ).Evolution AB (publ) was founded in 2006 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on EVO

Evolution AB (publ) faced challenges due to increasing regulatory scrutiny and market concerns. The company's recent performance was impacted by a lack of significant growth drivers, with some investors expressing caution. There were no major product launches or acquisitions announced during this period. Evolution's valuation has come under question, with some analysts reevaluating their stance. The company's recent earnings release did not provide significant positive surprises, contributing to investor unease. Regulatory headwinds and intense competition in the market have added to the pressure.

1.c. Company Highlights

2. Evolution's Q3 2025: Resilient Performance Amidst Challenges

Evolution's Q3 2025 financial performance revealed a net revenue of EUR 507.1 million, a 2.4% year-on-year decline, and an EBITDA margin of 66.4%, within the target range of 66% to 68%. The earnings per share (EPS) came in at EUR 13.85, slightly below estimates of EUR 14.34. Despite the revenue decline, the company's EBITDA margin remained robust, reflecting its ability to maintain profitability amidst challenging conditions. The company's financial position remains strong, with a cash balance of EUR 656.4 million and an equity position of EUR 3.8 billion.

Publication Date: Oct -24

📋 Highlights
  • Net Revenue Decline:: Q3 revenue fell to EUR 507.1 million (-2.4% YoY), driven by Asia's cybercrime and regulatory issues, though EBITDA margin remained strong at 66.4% (within 66-68% target).
  • Regional Performance:: Europe grew to EUR 182.2 million (QoQ), North America rose 14.5% YoY, and Latin America increased 6.4% YoY, offsetting Asia's volatility.
  • Segment Shifts:: Live revenue dropped 3.4% to EUR 431.7 million, while RNG revenue rose 4.2% to EUR 75.5 million, reflecting product diversification.
  • Financial Strength:: Cash balance reached EUR 656.4 million, with EUR 3.8 billion equity, supporting EUR 500 million share buyback and innovation investments (110+ releases in 2025).

Segmental Performance

The company's performance was impacted by cybercrime activity and regulatory uncertainty in Asia, particularly in the Philippines and India. In contrast, Europe showed growth quarter-on-quarter, with revenue of EUR 182.2 million, while North America and Latin America also performed well, with year-on-year growth of 14.5% and 6.4%, respectively. Live revenue declined by 3.4% to EUR 431.7 million, while RNG revenue increased by 4.2% to EUR 75.5 million, driven by improvements in Evolution's offerings.

Operational Highlights

Evolution has been proactive in addressing cybercrime and regulatory challenges, with a focus on adjusting its cost base to weaker revenue momentum. The company continues to invest in innovation and quality, with over 110 releases in 2025. As Joakim Andersson explained, the Q3 EBITDA margin of 66.4% and year-to-date margin of 66.0% instill confidence in achieving the full-year target.

Valuation and Outlook

With a P/E Ratio of 10.41 and an EV/EBITDA of 8.68, the market appears to have priced in a reasonable growth trajectory for Evolution. Analysts estimate next year's revenue growth at 8.4%. The company's strong financial position, with a cash balance of EUR 656.4 million and an equity position of EUR 3.8 billion, provides flexibility for investments and shareholder returns. Evolution's commitment to returning value to shareholders is evident in its plan to utilize its full share buyback mandate of EUR 500 million before year-end.

Regulatory Environment and Litigation

The company is navigating regulatory challenges, particularly in Asia, and is actively addressing these issues with countermeasures. Evolution is also involved in litigation with Playtech, which it sees as necessary to protect shareholder value. The outcome of the U.K. Gambling Commission review, expected by year-end, may also impact the company's operations.

3. NewsRoom

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Evaluating Evolution (OM:EVO): Is the Current Valuation Justified After Recent Share Price Fluctuations?

Sep -08

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What Does Evolution’s 15% Slide Mean for Its 2025 Valuation?

Aug -25

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European Dividend Stocks To Consider For Your Portfolio

Jul -18

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Evolution (OM:EVO) Announces €346M Share Buyback

Jun -17

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European Dividend Stocks To Enhance Your Portfolio

Jun -13

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Evolution (OM:EVO) Partners With Caesars Entertainment for New Live Dealer Venue in New Jersey

Apr -02

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Evolution enters Delaware through Rush Street Interactive

Mar -28

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Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against B. Riley, Evolution, NYCB, and LuxUrban and Encourages Investors to Contact the Firm

Mar -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.50%)

6. Segments

Provision of Solutions for Live Casino and Associated Services

Expected Growth: 15.5%

Evolution AB's growth is driven by increasing demand for live casino services, expansion into new markets, and continuous innovation in gaming products and technology.

7. Detailed Products

Live Casino

Evolution's Live Casino offers a range of live dealer games, including roulette, blackjack, and baccarat, providing an immersive and interactive gaming experience for players.

Random Number Generator (RNG) Games

Evolution's RNG Games provide a suite of online casino games, including slots, table games, and instant wins, offering a diverse range of themes and gameplay styles.

Game Shows

Evolution's Game Shows offer a unique blend of live dealer games and game show-style entertainment, featuring popular titles like Monopoly Live and Deal or No Deal Live.

First Person Games

Evolution's First Person Games provide a range of RNG-based games, including roulette, blackjack, and baccarat, offering a unique and immersive gaming experience.

Dual Play

Evolution's Dual Play allows land-based casinos to integrate their live games with online players, creating a converged gaming experience.

8. Evolution AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Porter Forces of Evolution AB (publ) is medium due to the presence of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for Porter Forces of Evolution AB (publ) is high due to the concentration of customers and their ability to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Porter Forces of Evolution AB (publ) is low due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Porter Forces of Evolution AB (publ) is medium due to the presence of barriers to entry and the company's established market position.

Intensity Of Rivalry

The intensity of rivalry for Porter Forces of Evolution AB (publ) is high due to the presence of several competitors and the company's need to differentiate itself.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 1.94%
Debt Cost 6.76%
Equity Weight 98.06%
Equity Cost 9.24%
WACC 9.20%
Leverage 1.98%

11. Quality Control: Evolution AB (publ) passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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BMW

A-Score: 6.3/10

Value: 9.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 6.5

Volatility: 5.7

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VW

A-Score: 6.3/10

Value: 10.0

Growth: 3.6

Quality: 2.4

Yield: 10.0

Momentum: 5.0

Volatility: 7.0

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Mercedes-Benz

A-Score: 6.3/10

Value: 8.9

Growth: 4.9

Quality: 3.3

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

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Michelin

A-Score: 5.9/10

Value: 6.4

Growth: 4.7

Quality: 4.7

Yield: 8.8

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Evolution

A-Score: 5.8/10

Value: 5.1

Growth: 9.4

Quality: 9.5

Yield: 5.0

Momentum: 2.0

Volatility: 4.0

1-Year Total Return ->

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Flutter

A-Score: 3.5/10

Value: 1.5

Growth: 5.9

Quality: 3.5

Yield: 0.0

Momentum: 6.0

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

622.4$

Current Price

622.4$

Potential

-0.00%

Expected Cash-Flows