Evolution Q3 Revenue Rises 3.7% as CEO Slams Brazil Gambling Ban

Evolution (STO: EVO) reported a 3.7% increase in Q3 revenue to €526.1 million ($590 million), with CEO Martin Carlesund welcoming a return to stability despite the regulatory disruption in Brazil.

Adjusted EBITDA rose 2.7% to €345.9 million ($388 million), although the margin narrowed a little from 66.4% to 65.8%. Net profit fell 3.6% to €243.3 million ($273 million).

“This was an uneventful quarter, which I believe is something good,” Carlesund told analysts on an earnings call on Friday (October 23).

Live casino revenue increased 2.6% to €443 million ($497 million), while RNG revenue climbed 10.1% to €83.1 million ($93 million).

North America grew 13.6%, while Latin America and Africa recorded increases of 23.1% and 23.7%, respectively.

However, Carlesund acknowledged that Europe remains a challenge. Revenue from European players declined 4.7% year-on-year.

“No matter the regulatory situation or low channelization rates, we should do better,” he said during the presentation.

Brazil Ban Threatens Q4 Growth

Brazil emerged as the biggest concern during the earnings call, following the government’s decision to ban regulated online gambling.

Evolution closed its Brazilian studio on October 5. It said it does not know when operations might resume.

President Lula, who signed the ban into law, won a surprise victory in Sunday’s (October 25) election. But there remain a number of challenges to the ban. 

“It’s highly unfortunate that populistic agenda can overthrow a regulatory framework that has only been in place for one and a half year,” Carlesund said.

He added that Evolution was prepared to reopen quickly if the government reversed its decision.

Brazil accounts for well below half of Evolution’s Latin American revenue. The region generated €49 million ($55 million) during Q3, a period unimpacted by the ban.

On the earnings call, analysts pressed Evolution’s management on whether Brazilian revenue would disappear entirely in Q4. Carlesund declined to put a number on the potential impact.

“I think that everyone is flabbergasted about the situation in Brazil, that it is a total negative for anyone in this business that it happens in this way,” he said.

Despite the uncertainty, Carlesund confirmed that Evolution’s full-year margin guidance remains unchanged.

Buybacks Slow as Evolution Targets Further US Expansion

Up until the end of September, Evolution has repurchased approximately €1.13 billion ($1.27 billion) of its own shares under its €2 billion ($2.24 billion) buyback program.

However, CFO Joakim Andersson told analysts that repurchases would slow during Q4 and Q1 2027 to align more closely with cash generation.

“We want to push forward, and we want to be free to make the investment we need, and we want to be self-sustained,” he said.

Evolution said it was expanding its US operations, with a fourth New Jersey studio scheduled to open during Q4. The studio will also serve Delaware, bringing its total number of hubs in the U.S. to eight.

The company is also preparing to launch Spinning Whale, a new RNG brand specifically targeting American players.