Evoke shares plunge despite return to growth for revenue in 2024

Evoke has reported a 3% uptick in full-year 2024 revenue to £1.8bn, with the London-listed operator returning to growth for the first time in three years.

Revenue rose from £1.7bn in 2023, as bosses said gains across the William Hill, 888 and Mr Green parent company were driven by online performance.

Management also cited a strong H2 showing, in which revenue was up 8% year on year (YoY).

Adjusted EBITDA came in at around £2m ahead of previously issued guidance, increasing 4% to £312.5m.

However, reported EBITDA declined 9% due to a £79.3m impact from the US B2C exit, integration and transformation costs.

Reported losses also slumped, falling 194% to £191.4m, with the cause cited as “higher finance expenses, and there being a tax charge in 2024 compared to a tax credit in 2023”.

Investors reacted negatively to the results, as the firm’s shares tumbled around 18% in early trading to 60p. Evoke stock is down 30% in the past 12 months.

Within the revenue mix, evoke said its core markets saw revenue rise 6%, with a 12% jump in online revenue. The five jurisdictions – UK and Ireland (UKI), Romania, Denmark, Italy and Spain – make up around 90% of group revenue.

In UKI, revenue was flat YoY at £1.2bn, as a 5.3% jump in online revenue was offset by a 5.4% decline in retail.

Online revenue rose from £658.5m to £693.2m, with a 9.4% increase alone in igaming revenue, driven by product and promotion improvements.

Digital sports betting revenue slipped 1.3% on the back of an 11.5% decline in sports betting stakes. Meanwhile, Net win margin rose by 1.1 percentage points due to increased bet builder use and operator-friendly results.

Online adjusted EBITDA dipped 0.6% to £142.7m, although retail adjusted EBITDA slumped 32.9%, giving a blended mix for the UKI a 13.7% decline to £209.1m.

International revenue increased 7.3% to £555.2m, while adjusted EBITDA improved by £30.6m to £130m during the reporting period.

The group made market share gains in Italy, saw a “significant growth” in Spanish actives, and Mr Green solidified itself as a leading brand in Denmark, bosses added.

The core markets of Italy, Spain, Denmark and Romania reported a combined 21.5% jump in revenue, with organic growth of 19.2% when excluding Romanian contribution from the acquired Winner.ro brand.

However, evoke’s other international markets, known as optimise markets, reported a 14% decline in revenue.

This was due to the exit from Latvia and US B2C markets, the lapping effect related to dotcom changes implemented by the business and a focus on profitability.

The group’s earnings report also made reference to the ongoing changes being implemented via CEO Per Widerström’s value creation plan, including the £30m cost savings programme.

The scheme saw evoke cut costs, including removing layers of management, closing its offices in Bulgaria and increased outsourcing to its Manila base.

In H2, a further £10m in cost savings were identified and delivered upon. This year, management have pinpointed a further £15m to £25m in savings, which will offset the £10m impact from National Insurance and National Living Wage changes in the UK.

Looking to 2025, evoke said Q1 performance is expected to be low single-digit revenue growth compared to last year, below the group’s target of 5% to 9%.

Multiple reasons were given for this forecast, including new safer gambling measures implemented in Q4 2024 and operator-friendly results last year.

Additionally, 2024 had a leap year, which evoke said the single extra day of trading contributed around 1% growth in Q1.

Despite the slow start to the year, the group remains confident in its 5% to 9% growth target and securing an adjusted EBITDA margin of at least 20%.

Debt ratio is expected to fall below 5x by year’s end from 5.7x currently, and then 3.5x in 2027.

Widerström said: “2024 was a pivotal year for evoke as we launched and implemented our new strategy for success, radically transforming almost every area of the business, and moving decisively to create a more sustainable, profitable and cash generative company.

“I was delighted to see the results of our transformation start to materialise during the year, with the business returning to revenue growth in Q3 for the first time in almost three years, in turn delivering a step change in profitability as a result of our increasingly efficient operating model.

“While a transformation of this scale is never easy, I am pleased with the strong progress we made during the year as we built a winning team and delivered a consistently great customer experience.”