Evolution Q1 Profits Slip as Company Prioritizes Regulatory Compliance

Live casino giant Evolution AB has seen its first-quarter profit dip as a result of strategic decisions to tighten compliance across Europe and exit unregulated or grey markets. The move, seen as a preemptive alignment with regulatory standards, comes amid heightened scrutiny, including an ongoing review of its UK license.

According to the company’s Q1 2025 earnings release, group revenue increased 3.9% year-over-year to €521 million. However, profit for the quarter fell by 5.4%, landing at €254.7 million. This drop is being largely attributed to the company’s voluntary actions to disengage from markets lacking regulatory clarity or where channelisation remains weak.

“On top of what we have already done in the UK to meet regulatory requirements, we have taken proactive and self-initiated actions in February to ring-fence additional regulated markets in Europe,” CEO Martin Carlesund stated in the quarterly report.

While group revenue showed modest growth, the retraction from less-regulated markets created uneven revenue effects, with Europe taking the brunt of the decline. Revenue from European operations totaled €189.7 million in Q1, marking a 1% decrease year-over-year and a 6% decline from the prior quarter. This occurred just as Evolution began segmenting out its services to remain within strictly regulated jurisdictions.

Carlesund emphasized that profitability suffered most in markets where “channelisation is low,” referring to regions where a large share of gambling activity still occurs outside regulated channels. “The effects have varied, with the largest negative revenue impact in markets where channelisation is low,” he said.

Despite the downward trend in profit, Evolution reaffirmed its 2025 target EBITDA margin of 66% to 68%. In the first quarter, however, that margin dropped to 65.6%, down from 69% in the same period last year.

Carlesund suggested this dip is temporary but acknowledged the impact may carry over into the second quarter. “These actions have resulted in profitability for the period being ‘on the low side’. I believe this impact will also be felt in the second quarter,” he noted.

Industry analyst group Regulus Partners commented that Evolution appeared to have “effectively switched off some black-market revenue it should not have been making in the first place.” The group referenced the UK Gambling Commission’s late-2024 investigation into Evolution’s content being accessible through unauthorized sites in the UK, which prompted the current regulatory response.

In addition to regulatory maneuvers in Europe, Evolution also addressed persistent difficulties in the Asian market. The company cited continued cyberattacks and illicit digital interference as challenges, leading to the implementation of new technical defenses.

Although these disruptions have yet to significantly dent the company’s regional performance, they remain a concern. Asia revenue in Q1 stood at €202 million, down just 2.2% year-over-year, but Carlesund warned that growth in the region remains under pressure due to ongoing criminal cyber activity and previously acknowledged IP blocking issues.

During the company’s 2024 full-year earnings call, Carlesund noted that while the source of the cyberattacks was still unknown, they were having a persistent and disruptive impact on operations.

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Throughout Q1, Evolution maintained open communication with key regulators across Europe in an effort to ensure long-term compliance and business continuity. “We have had constructive dialogues with all the large European regulators in the quarter and continue to support them in the ways that we can,” Carlesund said.

Still, the CEO pointed out that Evolution’s ability to control market channelisation is limited. “It is important to remember that channelisation is primarily dependent on factors outside of our control, i.e. the ways in which the regulatory parameters are structured,” he added.

Despite the near-term profit hit, Evolution’s renewed focus on regulatory alignment and strategic market participation suggests a long-term play for sustainable, compliant growth—an approach that may benefit its brand and standing with regulators moving forward.

Source:

, mb.cision.com, April 30, 2025.