Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evoke PLC (EIHDF, Financial) reported a 3% revenue growth for the full year, with an 8% growth in the second half, aligning with their midterm target of 5% to 9%.
- The company achieved an adjusted EBITDA growth of 4% to GBP312 million, surpassing previous expectations.
- Evoke PLC successfully returned to growth for the first time in three years, driven by strong performance in their core markets.
- The acquisition of Winner expanded their market presence in Romania, contributing to a 12% year-over-year growth in online coal markets.
- The company has implemented a GBP30 million cost optimization program, with further savings expected in 2025, enhancing profitability and operational efficiency.
Negative Points
- Evoke PLC's leverage remains high, with net debt increasing by GBP30 million to GBP1.79 billion, and the leverage target of below 3.5 times being postponed to 2027.
- The company faced a cash burn of around GBP65 million in 2024, primarily due to exceptional costs related to business transformation.
- Despite improvements, the retail segment experienced a 33% decline in EBITDA due to a high proportion of fixed costs.
- The company anticipates being slightly below their 5% to 9% revenue growth guidance in Q1 2025 due to various short-term impacts.
- Evoke PLC's stock price has decreased by approximately 30% since the CEO's tenure began, raising concerns about shareholder value and the timeline for dividend returns.
Q & A Highlights
Q: Can you explain the building blocks for achieving your 5% to 9% NGR growth this year, especially considering the challenging Q1 and Q4 comps?
A: Sean Wilkins, CFO: In Q1, we faced short-term impacts from safer gambling measures and were lapping elevated marketing from the prior year. Despite these challenges, we expect improvements in product offerings, retail enhancements, and customer lifecycle management to drive growth. Our investments in AI and strategic initiatives will also support this trajectory.
Q: Is retail growing in Q1 '25, and are you taking market share?
A: Per Widerström, CEO: Yes, we are seeing growth and market share gains in retail. We've made significant improvements, including new gaming machines and enhanced in-store experiences. These efforts are part of our strategy to reset the retail channel and improve competitiveness.
Q: Why has the leverage target been postponed to 2027, and what investments are causing this delay?
A: Sean Wilkins, CFO: The delay is due to increased investments in retail refurbishments, AI, and online products, alongside exceptional costs for achieving cost efficiencies. These investments are expected to pay off over time, contributing to our long-term growth and profitability.
Q: Can you comment on the trend of declining sportsbook stakes and increasing sportsbook margins?
A: Per Widerström, CEO: The shift towards a more sustainable customer mix and focus on high-value customers has impacted stakes. However, our enhanced product offerings and improved trading capabilities are driving higher margins, supporting long-term profitability.
Q: What are the expectations for sports net revenue margin in Q1 '25 compared to Q1 '24?
A: Sean Wilkins, CFO: We anticipate a slight increase in margin due to improvements in customer and product mix. Our ongoing efforts to enhance sportsbook trading and risk management will continue to support margin growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
