This compares with the 12.3% year-on-year revenue growth rate recorded in the business’ Q4 2024 results.
EBITDA actually declined by 1.1% during the quarter to €342.0m, giving a margin of 65.6% compared to last year’s 69.0%.
Evolution CEO Martin Carlesund said: “The decelerated growth rate in the quarter is not only impacted by the development of the currency rates but also connected to conscious actions we have taken that will be beneficial for the business in the longer term.
“Firstly, we are addressing the ongoing issues in Asia where we are implementing technical countermeasures to stop the criminal cyber activity, which has put pressure on revenue growth.
“Secondly, and 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.”
Carlesund noted the effects of these policies have varied, with the largest revenue impact in markets where channelisation is low.
He added the business has had constructive dialogues with all the large European regulators during the quarter and would continue to them in any way it could.
The company’s European moves follow the UK’s decision to place its sever ties with black market operators in several jurisdictions.
Evolution says Q2 likely to also be affected
As a result of these actions, the executive itted profitability was on the low side and Q2 would also likely be affected.
However, he argued the second half of the year would be stronger. As such, he reiterated the company’s full-year estimate of an EBITDA margin between 66-68%.
During the quarter, live casino revenue grew 4% while Evolution’s RNG operations, long considered the slower moving vertical, saw revenue increase a broadly similar 3%.The company’s studio in Georgia, which has faced strikes over previous months, was said to be continuing without disruption but with reduced capacity.
The CEO said one of the Big Four ing firms conducted an independent investigation based on the allegations that were widespread in connection with the strike last year.
Evolution says position vindicated in strike
The report’s conclusions, he said, have vindicated Evolution’s previously stated positions on a range of issues including salary levels, strike participation and workplace environment.
Unions and other relevant authorities now have been given a copy of the report, he said, claiming that for Evolution “the strike is now a closed chapter.”
Carlesund added: “Needless to say, I am not happy with the financial development in the quarter, but one must take into that the results are impacted by necessary steps that contribute to our mission to ever increase the gap to competition.
“It takes hard work in all areas; staying ahead in the ever-changing regulatory landscape, being an attractive employer around the globe, moving our technology to the cutting edge and offering the best product in the world.
“The road cannot always be straight, but what is crucial is that we learn from the challenges we face and relentlessly adapt and strive to make Evolution a little bit better every day.”
Analyst take: the evolving world of B2B compliance
Considering the results, analysts at Regulus Partners highlighted the issue of compliance where Evolution, as a B2B provider, puts most of the duties on its licensee customers, in accordance with established practice.
The analysts said: “The reasoning (or excuse) that a contract demands compliance and so the buck is ed might sound plausible in a boardroom or at an investor meeting, but it is becoming less and less plausible in the real world of regulatory enforcement.
“Evolution’s Q1 therefore provides another layer of evidence that ‘grey’ is being squeezed into tough ‘black or white’ choices.
“The fact that Evolution’s revenue is only 45% domestically regulated (+6ppts YoY) is also largely the choice of governments and the pace of regulatory adoption, but it also demonstrates that the risks of leakage, compliance, and regulatory disruption have got a long way to run, in our view.
“When a business is growing at 20-30% pa, it can potentially afford to cut corners and absorb shocks – but not when it is barely achieving inflation.”
