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INTERIM REPORT FOR JANUARY- MARCH 2021
[PR] Evolution released today its Interim Report for January-March 2021.
First quarter of 2021 (Q1 2020)
- Operating revenues increased by 105% to EUR 235.8 million (115.1)
- EBITDA increased by 150% to EUR 160.1 million (64.1), corresponding to a margin of 67.9% (55.7)
- Profit for the period amounted to EUR 132.0 million (54.2)
- Earnings per share before dilution amounted to EUR 0.62 (0.30)
Events during the first quarter of 2021
- Continued high demand generates a positive effect on margin development.
- Completed synergy project related to NetEnt acquisition.
- After the end of the period, Evolution entered into an agreement to acquire online slot machine developer Big Time Gaming.
Summary of the first quarter 2021
The positive trend from 2020 continues into the first quarter of 2021 where we see a good momentum both in terms of growth and profitability. The integration of NetEnt has been successful. I am truly impressed by the work from our teams, who, without losing focus on the daily high-quality delivery, and in a very short time, have managed to merge both workflows and organizational structure. We can already see good results from this work in the first quarter and I believe that we are well-set to continue to capitalize on the growing interest in online casino world-wide.
The revenues for the first quarter, including the acquired NetEnt business, increased by 105 percent to EUR 235 million, compared to the first quarter of 2020. EBITDA increased to EUR 160 million, corresponding to a margin of 67.9 percent. During the quarter we have closed the synergy project reaching EUR 40 million in annual run-rate cost synergies related to the acquisition of NetEnt – 9 months earlier than our original plan. We will continue our constant aim towards cost-efficiency even if not reporting any synergies moving forward.
Our Live Casino business continued to show very strong year-on-year growth reaching 60 percent in the quarter. It is the highest growth rate we have ever recorded in a quarter. We had a great momentum during 2020 and the group has continued to see a strong underlying demand for online casino with operators also in the first quarter of 2021. The RNG business started the year 2021 with growth of 6 percent compared to NetEnt revenues Q1 2020. This is in line with our near-term expectations. For the second quarter, we face somewhat tougher comparable figures, relating, particularly for the NetEnt business driven by the pandemic effects for NetEnt in Q2 2020.
Beyond everything else, our focus has always been to innovate and push boundaries to enhance the player experience. This goes for live as well as for RNG, and I am excited about how the new games that we have lined up for 2021 will further confirm this commitment. This summer will see the release of the first product coming out of the cross-functional collaboration between the live and the RNG product development teams, Gonzo’s Treasure Hunt. This product will combine a popular IP with the best from the live and the RNG worlds. Our slots offering is being re-vamped during the year and will include a new take on some of the most popular titles as well as brand-new games from both the NetEnt and Red Tiger brands. During 2021, we will also add new games to the Live Game Show segment, as well as new innovative takes on traditional live table games. In short, from a product standpoint, we will take the entertainment factor to yet a new high level, and will be delivering more unexpected and thrilling quality gaming experiences to all players.
In terms of regional performance, all regions delivered good growth in the first quarter, with very high growth rates in Asia and North America. Evolution is truly a global operation serving players all over the world. Our commercial organization is now structured in four regions: Europe, Asia, North America and Latin America & Africa. With dedicated commercial resources to each region, we look forward to explore further development for each region together with operators.
Due to the pandemic, several studios continue to operate with somewhat limited capacity to ensure all safety and protective measures for staff can be kept in place. It simply has been and still is a tough period. As all operators have experienced increased traffic over the last year, the pent-up demand for new tables is an important driver of the capacity expansion now taking place in some of our existing studios as well as a reason for our continuous investment in new studio development. Going forward, we intend to keep the investment in operational capacity at similar rates but as always in a trade off between margin and revenue we will always go for market shares. In the first quarter, we invested in additional studio capacity both in North America and in other regions.
With the addition of the NetEnt and Red Tiger brands to our product portfolio, we push forward towards our vision of being a global market leader in online casino. In mid-April, after the closing of the first quarter, we announced that Evolution had entered into an agreement to acquire Big Time Gaming. By adding Big Time Gaming to our portfolio of slot brands, we add more strong IPs and innovative fantastic talent. We take one step further towards the position as a leader in online casino products. The transaction is expected to be completed during the second quarter. I very much look forward to welcoming the Big Time Gaming team to Evolution and to work together on new innovative games.
Supported by a combination of underlying megatrends – like the digitalization of the world in general and the shift from land-based to online casinos in particular – Evolution has relentlessly continued to develop and drive the digitalization of the global casino market. This April marks 15 years since the company set up its first studio in Riga, Latvia, with the ambition to change the online casino industry. Since then, we have not only taken live casino to a quality level which was hard to imagine in 2006, we have also introduced a whole new product category in online casino, won multiple international awards for our products and our services and grown into a multinational group which operates from more than 20 countries worldwide and employs over 10,000 people. There is a lot to be proud of, but what is most exciting is that we have just begun. With the new opportunities now opening up in new markets, our recharged product offer and strong brand line-up and our continuously growing team of creative, talented and hardworking people – the next 15 years are bound to be more revolutionary and more exciting than what we have seen so far. It will be about every one of us, every day, striving to be just a bit better. That is simply how we will continue to widen the gap to competition.