“Exceptionally high” activity levels in the third quarter of 2020 saw live dealer giant Evolution report strong growth in revenue and earnings for the period.
Total operating revenue for the three months to 30 September reached €140.2m (£126.6m/$166.3m), up 47.8% from €94.7m in the third quarter of 2019.
Analysing its performance, Evolution said revenue development mainly derived from increased commission income from existing customers.
Demand for live casino games continued to grow during the quarter, it added, thanks to its continuous launch of new titles and variations on traditional tables games.
“Our new game show style game – Crazy Time – was launched globally on 1 July and has been a great success; it is our most successful game launch to date,” chief executive Martin Carlesund said.
“Instant roulette was also launched during the quarter and coming up in Q4 is the launch of craps. We continue to build our portfolio of unique innovative games both within traditional table games as well as game shows.”
In terms of geographical performance, Evolution saw significant growth in Asia, where revenue rocketed 150.4% year-on-year to €34.8m. Revenue from the Nordics slipped 4.9% to €5.8m and UK revenue fell 25.8% to €9.5m, but revenue from the rest of Europe jumped 41.1% to €65.6m.
North America’s contribution increased 50.8% to €9.2m, while revenue in other markets increased 62.4% to €15.1m.
Revenue from regulated markets accounted for 45.2% of total revenue in Q3.
Carlesund highlighted growth in the US in particular, with the supplier having recently launched in Pennsylvania and has plans in place to further expand its presence in the wider US market.
During the third quarter, Evolution signed several new customers in the US, including BetMGM and PointsBet. Shortly after Q3 ended, the supplier also brokered agreements with William Hill and Wynn Interactive.
“Regardless of the timing for regulation in additional states we know that Evolution is well positioned and that the US market is a long-term project with very high potential,” Carlesund said.
Turning attention to spending in Q3, total operating expenses came to €56.4m, a 7.0% year-on-year rise, that resulted from investment in its expansion efforts.
Personnel expenses were Evolution’s main outgoing in Q3, despite falling 6.5% to €31.5m. However, other operating costs were up 41.3% to €17.8m, while depreciation, amortisation and impairment expenses climbed 10.8% to €7.2m.
Operating profit for Q3 almost doubled from €42.0m last year to €83.6m, and after taking into account financial items, profit before tax was €83.5m, some 99.3% more than in 2019.
Evolution paid €4.2m in taxes during the quarter, leaving it with a total profit of €79.4m, representing an increase of 99.5% on the €39.8m recorded last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) also jumped 86.4% to €90.4m.
“The past quarter has also been a period of exceptionally high activity operationally within Evolution and after the end of the quarter we are live with our first tables in both Pennsylvania in the US, and Kaunas in Lithuania,” Carlesund said.
“We are still dealing with the limitations imposed by novel coronavirus (Covid-19) but we are slowly coming back towards pre-Covid levels in number of tables.”
Carlesund also provided a short update on Evolution’s proposed acquisition of NetEnt, whereby it has agreed a deal worth SEK19.6bn to purchase the slots giant.
According to Carlesund, Evolution hopes to close the deal before the end of 2020. Last week, Evolution extended the period for shareholders of NetEnt to accept its acquisition offer until 20 November, in order to allow the UK’s Competition and Markets Authority to investigate the deal.
“We see a fantastic potential in combining the two companies and continuing to deliver the best playing experiences for players across the globe,” he said.
NetEnt also posted its Q3 results today (22 October), posting a 119.6% year-on-year rise in third quarter profit, in a period that also saw revenue increase 17.5%.
In terms of how Evolution’s performance impacted its year-to-date results, the supplier said that for the nine months to the end of September, revenue stood at €383.5m, up 47.6% from €259.3m at the same point last year.
Expenses for the period were up 11.7% to €168.6m, and after financial items, tax before profit in the nine months was €241.7m, an increase of 122.6% on 2019.
Evolution paid €10.6m in tax during the first nine months of the year, leaving it with a total profit of €204.0m, some 98.3% more than €102.9m at the end of September last year, with EBITDA also rising 85.7% to €236.0m.
“With increased studio capacity together with a continuous development of the very best products and services, we are well positioned to increase our market leadership within live casino going forward,” Carlesund said.
