Interim Report for January-September 2017

Third quarter of 2017 (Q3 2016) 

January-September 2017 (9m 2016) 

Events during the third quarter of 2017 

Summary of the third quarter and the first nine months of 2017

CEO’s Comments

Once again, I can summarise a strong quarter for Evolution Gaming, driven, among other things, by a high level of activity among our customers in the summer months. Revenues amounted to EUR 45.7 million, corresponding to an increase of 56 percent compared with the third quarter of 2016. EBITDA amounted to EUR 21.8 million with a margin of 47.7 percent – the highest margin ever for a single quarter. We have seen continued high growth in existing studios, as several of our customers are extending their dedicated environments. This expansion intensified during the latter part of the quarter, which meant that the cost increase was somewhat lower than expected for the full period. By the end of the year, we expect to have about 400 tables in operation at all of our studios, making Evolution Gaming Europe’s largest casino by a good margin in terms of the number of tables.

During the quarter, a generally high level of growth was noted in all of our products. We are focusing heavily on meeting this growth, which is best expressed by the investments in our upcoming studios in Georgia and Canada. Work is continuing as planned and we expect to open the studio in Canada in early 2018, followed by Georgia during the second quarter. Combined, they entail a significant expansion of Evolution’s delivery capacity – with the new studio in Tbilisi as a primary hub, we will have prepared the company for continued expansion for 2-3 years. At the same time, the studio in Canada marks our first land-based establishment in a market outside Europe.

We are focusing on product innovation, regulated markets and land-based casinos – three key elements of our growth strategy. I am therefore pleased to note progress in all of these areas both during and after the quarter.

Dream Catcher, the latest addition to our game portfolio, continues to gain ground as a popular new game format for a target audience that has not traditionally played Live Casino. We are very pleased with how this has been received and, as an additional achievement, the game was recently named as Digital Product of the Year at the G2E Global Gaming Expo in Las Vegas. Dream Catcher certainly has delivered beyond our expectations.

Another product that continues to attract interest is Dual Play Roulette, which we offer to land-based casinos seeking to expand their brands digitally. During and after the quarter, we launched new Dual Play tables at Genting’s Resorts World in Birmingham and at the popular London casino, The Vic, for our customer Rank Group.

Lastly, we are proud of our agreement with Bulgaria’s largest regulated operator National Lottery AD, signed shortly after the end of the quarter. The operator will launch a complete Live Casino service later this year.

As announced in a press release, the Latvian parliament has decided to introduce, as of next year, a fee for each Live Casino table provided from that country. It is not entirely clear how the decision will be implemented, but it is assessed to not entail any material financial impact for Evolution. We also have good opportunities to focus growth in new tables to our other studios in the future.

We currently perceive a favourable market situation, with good opportunities to continue growing. Next year, the FIFA World Cup will take place, and this has historically entailed a high level of activity among our customers. We continue to work according to our ambition to continually increase our lead on competitors and, with two new studios on the cards, I am convinced that we will progress further along that path.

Martin Carlesund, CEO