Evolution AB (EVO.ST) announced its first-half financial results, showcasing a significant increase in profit and operating revenue compared to the previous year. The online casino gaming company reported an attributable profit of 538.3 million euros for the six months ending June 30, an increase from 515.2 million euros in the same period last year.
Operating revenue also surged by 16% year over year, amounting to 1.01 billion euros, with growth seen across all geographical regions. However, growth appeared to slow in most regions during the second quarter, leading to a negative market reaction with the stock price dropping by more than 10% by midday. Despite these impressive figures, Evolution's financial results fell short of analysts' expectations, which had forecast a net income of 542.3 million euros and revenue of 1.02 billion euros, as reported by Visible Alpha.
Furthermore, the company faced increased operating expenses totaling 387.1 million euros for the first half, up from 317.7 million euros a year prior. This rise in costs was primarily attributed to higher personnel expenses linked to the launch of new gaming tables and studios as part of Evolution's broader expansion strategy. Martin Carlesund, the Chief Executive Officer of Evolution, remarked on the current state of the company, stating, "After two quarters heavily focusing on expansion, the second quarter was one of consolidation with a slightly lower margin as new resources were gradually coming up to speed.
We expect a more normalized expansion of staff during the second half of the year." In a strategic move to enhance its offerings, Evolution recently agreed to acquire the US-based company Galaxy Gaming, known for developing and distributing casino table games. The transaction is valued at an equity price of $85 million and aims to bolster Evolution’s games portfolio, particularly within the US market.
The company plans to carry out this acquisition through its subsidiary, Evolution Malta Holding, with an anticipated closure date set for mid-2025. Carlesund noted the significance of this acquisition, emphasizing, "With the acquisition, we accelerate and solidify our presence in the US market where Galaxy is licensed in 28 states.
Through Galaxy, we gain a relationship with regulators in states that are not yet open for online and fast-track all future licensing." As of the latest price update, Evolution shares are trading at $1059.50, reflecting a change of $-103.00 or a percent change of -8.86%. This shift signals investors’ concerns over rising operational challenges amid efforts to grow both domestically and internationally..