Annual Report • Feb 9, 2022
Annual Report
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| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Group, EUR thousands | 2021 | 2020 | % | 2021 | 2020 | % |
| Operating revenues | 300,233 | 177,658 | 69% | 1,068,777 | 561,134 | 90% |
| EBITDA | 206,915 | 96,219 | 115% | 734,650 | 332,213 | 121% |
| EBITDA margin EBITDA excluding items affecting |
68.9% | 54.2% | - | 68.7% | 59.2% | - |
| comparability | 206,915 | 115,605 | 79% | 734,650 | 351,599 | 109% |
| Adjusted EBITDA-margin | 68.9% | 65.1% | - | 68.7% | 62.7% | - |
| Operating profit | 184,541 | 84,837 | 118% | 654,004 | 299,700 | 118% |
| Operating margin | 61.5% | 47.8% | - | 61.2% | 53.4% | - |
| Profit for the period | 171,557 | 80,600 | 113% | 605,435 | 284,622 | 113% |
| Profit margin | 57.1% | 45.4% | - | 56.6% | 50.7% | - |
| Earnings per share before dilution, EUR | 0.80 | 0.42 | 90% | 2.83 | 1.55 | 83% |
| Equity per share, EUR | 14.91 | 12.84 | 16% | 14.91 | 12.84 | 16% |
| OCF per share before dilution, EUR | 0.83 | 0.52 | 60% | 2.80 | 1.72 | 63% |
| Average number of FTEs | 8,707 | 5,731 | 52% | 7,917 | 5,118 | 55% |
| For more information, please contact: |
|---|
| Jacob Kaplan, CFO |
| [email protected] |
Visit and follow Evolution: www.evolution.com www.twitter.com/EvolutionIR
Evolution develops, produces, markets and licenses fully integrated B2B Online Casino solutions to gaming operators. Since its inception in 2006, Evolution has developed into a leading B2B provider with 500+ operators among its customers. The group currently employs 13,000+ people in studios across Europe and in North America. The parent company is based in Sweden and listed on Nasdaq Stockholm with the ticker EVO. Visit www.evolution.com for more information. Evolution is licensed and regulated by the Malta Gaming Authority under license MGA/B2B/187/2010. Evolution is also licensed and regulated in many other jurisdictions such as the United Kingdom, Belgium, Canada, Romania, South Africa, and others.
The fourth quarter 2021, with continued top-of-the-line results, reflects the strength in our scalable business model and the value of our strategy to focus on the player experience.
Revenues in the fourth quarter increased by 69 percent to EUR 300 million, while the EBITDA increased to EUR 207 million corresponding to an EBITDA margin of 68.9 percent. Top-line growth continued to be driven by strong global demand for Live Casino, but also positively impacted by the increased revenue from the RNG business. Live Casino revenue continued on a high level and increased by 48.6 percent year-on-year. This compares well to the pre-pandemic growth rates of our Live business.
RNG revenue was slightly above plan and increased by 9 percent compared to the pro-forma figures of Q4 2020. Supported by new games and our one-stop-shop (OSS) solution which allows operators to access our games through one integration. Our ambition is to deliver stronger growth in RNG during 2022 compared to 2021 however the path to higher growth will not be linear and I expect the growth rate to vary through the coming quarters.
EBITDA margin is 68.9 percent for the quarter and 68.7 percent for the full year. This is in line with our guidance for the year. Margin has been relatively stable through 2021 and I consider this an achievement in a year of such strong expansion. For 2022 we expect to continue to invest heavily in expanding existing studios, in building new studios and in game innovation. With this said, for full year 2022 we expect the EBITDA margin to be in the 69%-71% range.
Towards the end of the quarter, a dubious, anonymous and falsified report with the clear intention to harm Evolution was published. We have over 15 years experience of operations in regulated environments and we are comfortable and confident in our ways of working, our business model as well as in our constant strive to improve in all areas. Evolution is a content provider and we only supply to licensed customers. With the ambition to be even better we will continue to work on all processes in relation to due diligence of our customers and their licensing and regulatory framework. The measures we have taken during the quarter have had insignificant financial effect.
2022 is the year of product and innovation! Yesterday during our world-wide online product launch event we released a record number of products. In total Evolution will release 88 (!) new games 2022. We are with those fantastic new games, in all different categories, together with the one-stop-shop (OSS) showing our customers the true benefit and power of Evolution's ambition and innovation only aimed toward a true enduser satisfaction. Our pipeline for 2022 is filled with both new takes on player's favorites and complete surprises using the power of all our different brands. Among the releases in the first quarter are 'BacBo' - a simplified version of Baccarat with a unique twist: it's played with dice, not cards. Also in Q1 – 'Peek Baccarat' a unique version of the classic game. During the first half of the year we will also launch big new slot games like NetEnt's Knight Rider and Red Tiger's Narcos Mexico. I am very excited of the product roadmap 2022 and truly grateful for all brilliant efforts put into the products by all Evolution teams.
The strong demand for online casino across the globe continued in the fourth quarter, and our expansion in studio capacity is set to follow suit. We exit 2021 with over 1,000 live tables, an increase of over 300 tables during the year, the largest increase in a single year. This dramatic expansion would have been an accomplishment under normal circumstances, but taking into account the challenges posed by the pandemic, I am very proud. It is a testament to the talent, capability and determination that characterizes the global Evolution team.
The North American online casino market continues to develop rapidly, we see great growth opportunity in all the current regulated states and are expanding all our studios. The next new studio to be launched will be Connecticut in 2022. In the quarter we also strengthened our position in Canada by signing with the provincial lottery and gaming agency, Ontario Lottery and Gaming Corporation (OLG).
In Argentina, we went live with operator BetWarrior and launched our live casino games portfolio in the newly regulated Buenos Aires Province online gaming market. Evolution was the first live casino provider in this market.
In Asia, where growth continued at a proficient level, our Red Envelop feature for Baccarat, a tailored game for the Asian market, was a growth driver in the quarter. This is an example of how our aim of providing the best player experience comes with adding a regional touch to the games.
The more mature European market has lower growth numbers, impacted to some extent by short-term regulatory changes affecting operators. In the quarter, the Netherlands opened its regulated online gambling market and we are powering several of the licensed operators with our offering. We expect the Dutch market to expand further as the number of licenses increase during 2022 and already in December the newly regulated market passed the pre-regulation levels.
To sum up the last quarter of another intense year - we continue to move full speed ahead. Yesterday's 2022 product roadmap announcement set the tone for what will be an exciting product year where we will continue our relentless focus to take the player experience to the next level and increase the gap to competitors. Finally, looking back at 2021, a year where several important milestones have been accomplished, I want to take this opportunity to thank and acknowledge the commitment and impressive work from all Evolution employees, who continue to strive to make Evolution just a little bit better, every day. It is an amazing global team and I look forward to an exciting 2022.
Martin Carlesund CEO
Quarterly results trend
Revenues amounted to EUR 300.2 million (177.7) in the fourth quarter, equivalent to an increase of 69 percent compared with the corresponding period in 2020. EUR 62.9 million (17.8) of the revenue was derived from RNG-games. The positive revenue development within online casino mainly derives from increased commission income from existing customers and, to a certain extent, from new customers. Demand for online casino games continues to grow, partly as a result of our continuous launch of new games and variations on traditional games. The number of bet spots from end users amounted to 20.9 billion (15.3).
| Group, EUR million | Oct-Dec 2020 |
Jan-Mar 2021 |
Apr-Jun 2021 |
Jul-Sep 2021 |
Oct-Dec 2021 |
|---|---|---|---|---|---|
| Live | 159.9 | 183.7 | 203.7 | 214.5 | 237.4 |
| RNG, as reported | 17.8 | 52.2 | 53.0 | 61.5 | 62.9 |
| Total | 177.7 | 235.8 | 256.7 | 276.0 | 300.2 |
| RNG NetEnt/BTG, pro-forma | 57.5 | 61.2 | 61.7 | - | - |
NetEnt and Big Time Gaming are included in the consolidated financial statements from 1 December 2020 and 1 July 2021 respectively.
Operating expenses amounted to EUR 115.7 million (92.8). Expenses were mainly driven by higher costs for personnel, connected to the launch of new tables in the company's studios and the expansion in general compared to the fourth quarter of 2020. The expansion has also increased other operating expenses compared with Q4 2020.
Operating profit amounted to EUR 184.5 million (84.8), corresponding to an increase of 118 percent. The operating margin was 61.5 percent (47.8). The EBITDA margin was 68.9 percent (54.2). EBITDA 2020 included non-recurring items of EUR 19.4 million, adjusted EBITDA margin was 65.1 percent.
Net financial items only had small impact on profits and related mostly to leasing interest expenses and currency exchange differences. The Group's effective tax rate for the quarter amounted to 6.9 percent (4.1). The tax rate is influenced by the countries in which earnings are generated, which may vary between reported periods. Profit for the quarter amounted to EUR 171.6 million (80.6). Earnings per share before dilution were EUR 0.80 (0.42).
Investments in intangible assets amounted to EUR 8.4 million (4.8) during the quarter and were mainly attributable to development of new games and technical improvements of the platform, such as new functionality. See Note 5 for information about acquisition of group companies.
Investments in property, plant and equipment amounted to EUR 13.9 million (6.2) and comprised new studio space, new gaming tables, servers and other computer equipment to meet new technical requirements and maintain capacity and performance in connection with new platform launches.
Cash flow from operating activities amounted to EUR 178.4 million (99.6) during the quarter. Cash flow from investing activities was negative in the amount of EUR 22.3 million (35.1). Cash flow from financing activities was negative in the amount of EUR 127.9 million (negative 194.4) and includes buy back of own shares of EUR 123.3 million. 2020 included redemption of NetEnt's credit facilities of EUR 184.7 million. Cash and cash equivalents amounted to EUR 421.4 million (221.7) at the end of the quarter.
For the January-December 2021 period, revenues amounted to EUR 1,068.8 million (561.1), corresponding to an increase of 90 percent compared with 2020. EUR 229.5 million (17.8) of the revenue was derived from RNG-games. The positive revenue development within online casino mainly derives from increased commission income from both new and existing customers.
Operating expenses amounted to EUR 414.8 million (261.4). Expenses were mainly driven by higher costs for personnel, connected to the launch of new tables and studios. The strong expansion has also increased other operating expenses compared with the previous year.
Operating profit amounted to EUR 654.0 million (299.7) with an operating margin of 61.2 percent (53.4). The EBITDA margin was 68.7 percent (59.2). EBITDA 2020 included non-recurring items of EUR 19.4 million, adjusted EBITDA margin was 62.7 percent.
Investments in intangible assets amounted to EUR 28.3 million (13.6) for the year. Investments in property, plant and equipment amounted to EUR 33.3 million (23.3). Investments in other financial assets amounted to EUR 1.1 million (2.4). See Note 5 for information about acquisition of group companies.
Cash flow from operating activities amounted to EUR 598.9 million (316.1) over the period. The increase is primarily due to improved profit. Cash flow from investing activities was negative in the amount of EUR 155.0 million (6.8). Cash flow from financing activities was negative in the amount of EUR 248.5 million
(negative 279.9) and included dividend to shareholders of EUR 144.4 million (76.1) and buy back of own shares of EUR 123.3 million (9.9). 2020 included redemption of NetEnt's credit facilities of EUR 184.7 million.
The global online casino market (Live & RNG) has grown strongly in recent years and is expected to continue to be among the fastest-growing gaming segments in the coming years. Evolution's growth target is to grow faster than the total global online casino market. Market growth is influenced by several underlying factors, such as technological advances with, among other things, improved hardware and increased bandwidth, the migration of land-based casinos to online environments and market regulations. Increased use of mobile devices has been a growth driver for many years, and in the fourth quarter 69.1 percent (70) of the operators' GGR via Evolution's platform was generated by mobile devices. RNG is the largest vertical of the online casino market. However, to a large extent, growth is driven by Live Casino having grown in importance for most gaming operators and has become an integrated and strategically important product for them.
As a B2B supplier, Evolution has customer relationships with gaming operators, who in turn own the relationships with the end users. Generally, the gaming operators are licensed in a limited number of jurisdictions while operating in a global market and allowing play from various geographic areas. The table below shows the geographic markets from which Evolution's revenues originate. Revenues based on player activity are allocated according to the end-users' location, while revenues not based on player activity are allocated to the operator's location. The UK includes the Crown Dependencies.
| Group, EUR million | Oct-Dec 2020 |
Jan-Mar 2021 |
Apr-Jun 2021 |
Jul-Sep 2021 |
Oct-Dec 2021 |
|---|---|---|---|---|---|
| Nordics | 11.1 | 16.4 | 16.4 | 19.5 | 20.9 |
| UK | 13.9 | 21.4 | 19.8 | 19.1 | 21.0 |
| Rest of Europe | 81.1 | 104.1 | 104.0 | 103.2 | 105.6 |
| Asia | 41.9 | 53.2 | 65.7 | 76.7 | 90.8 |
| North America | 12.6 | 21.6 | 27.2 | 31.9 | 33.8 |
| Other | 17.1 | 19.1 | 23.5 | 25.6 | 28.0 |
| Total operating revenue | 177.7 | 235.8 | 256.7 | 276.0 | 300.2 |
| Share of regulated markets | 36% | 40% | 40% | 38% | 41% |
| Revenue, regulated markets | 64.3 | 93.9 | 102.9 | 103.8 | 123.0 |
Revenue per geographical region
The company has decreased its dependency towards its largest customers in 2021. Evolution's largest customer accounted for approximately 11 percent (11) of revenues in 2021, and the five largest customers accounted for roughly 22 percent (33) of revenues.
Customer dependency, % of revenue
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Top 1-5 | 38% | 32% | 27% | 33% | 22% |
| Top 1 | 9% | 7% | 6% | 11% | 11% |
The Parent Company is a holding company. Net sales for the fourth quarter of 2021 amounted to EUR 4.9 million (2.8) and expenses to EUR 5.6 million (2.8). Operating profit was negative in the amount of EUR 0.7 million (0.0). Result for the period amounted to EUR 250.2 million (200.2). The Parent Company's cash and cash equivalents amounted to EUR 80.0 million (34.4) at the end of the period and equity amounted to EUR 2,829.3 million (2,666.3). No significant investments were made in intangible or tangible assets.
As of 31 December 2021, Evolution had 13,410 employees (9,506), corresponding to 8,987 (6,818) full-time positions. The average number of full-time equivalents for the quarter was 8,707 (5,954).
Evolution's operations are exposed to certain risks that could have a varying impact on earnings or financial position. These can be divided into industry, operational, and financial risks. When assessing the Group's future development, it is important to take into account the risk factors, alongside any opportunities for profit growth.
The development of laws and regulations relating to the supply of gaming services that Evolution provides is a central risk factor for the Group's future earnings. Since most of Evolution's licensees are active in Europe, the legal situation in the EU is of particular interest and is continuously monitored and managed by the Group. Despite this, there remains a risk that, in the event of legislation being interpreted in an unfavourable or unanticipated way, Evolution's conditions for growth, profitability, and the games that may be supplied could be changed. Likewise, a favourable interpretation could have a positive impact on the Group.
One or more markets may be affected by events that may result in rapid changes in the business environment. Examples of this kind of events which could lead up to production disruption are extreme weather events, social unrest, diseases (e.g. virus outbreaks) or other macroeconomic or geopolitical events affected by external influences.
For further information about Evolution's risk exposure and handling, please see the Group's Annual Report for 2020, which is available on the company's website.
The Board of Directors proposes that the Annual General Meeting resolve to transfer EUR 303.8 million (145.2) to shareholders, corresponding to EUR 1.42 (0.68) per share and 50.2 percent (51) of net profit respectively. The dividend is calculated by the number of shares 31 December 2021 with the deduction of Evolution's holding of own shares by the same date which amounted to 1,158,865 shares. Evolution has adopted a dividend policy according to which, 50 percent of the company's consolidated net profit is to be distributed over time, with a certain degree of flexibility in terms of the proportion distributed in dividends.
During the fourth quarter the Board of Directors decided to exercise its authorisation from the Annual General Meeting 2021 to repurchase own shares. The maximum amount for which shares may be acquired may not exceed EUR 200 million. Since 6 December 2021 up to and including 30 December 2021, a total of 1,158,865 shares have been acquired within the scope of the programme which corresponds to approximately 60 percent of the maximum of EUR 200 million.
Calendar Annual report 2021 18 March 2022 Annual general Meeting 8 April 2022 Interim report January – March 2022 28 April 2022 Interim report January – June 2022 21 July 2022 Interim report January – September 2022 27 October 2022
Stockholm, 9 February 2022
For further information, please contact CFO Jacob Kaplan, +46 708 62 33 94 or Head of IR Carl Linton, +46 705 08 85 75, [email protected].
| Evolution AB (publ) | e-mail: [email protected] |
|---|---|
| Vasagatan 16 | Website: www.evolution.com |
| SE-111 20 Stockholm, Sweden | Corporate ID: 556994-5792 |
CEO Martin Carlesund and CFO Jacob Kaplan will present the report and answer questions on Wednesday, 9 February 2022 at 09:00 am CET via a telephone conference. The presentation will be in English and can also be followed online. Number for participation by telephone: SE +46 8 505 583 54 UK: +44 33 330 092 73 US: +1 646 722 49 56
Follow the presentation at: https://tv.streamfabriken.com/evolution-gaming-group-q4-2021
This information is such that Evolution AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact person set out above on 9 February 2022, at 07:30 am CET.
This report is published in Swedish and English. In case of any differences between the English version and the Swedish original text, the Swedish version shall apply. This report has not been subject to review by the company's independent auditor.
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| Group, EUR thousands | 2021 | 2020 | 2021 | 2020 |
| Revenues - Live | 237,355 | 159,839 | 839,238 | 543,315 |
| Revenues - RNG | 62,878 | 17,819 | 229,539 | 17,819 |
| Total operating revenues | 300,233 | 177,658 | 1,068,777 | 561,134 |
| Personnel expenses | -55,252 | -38,616 | -207,165 | -133,752 |
| Depreciation, amortisation and impairments | -22,374 | -11,382 | -80,646 | -32,513 |
| Other operating expenses | -38,066 | -42,823 | -126,962 | -95,169 |
| Total operating expenses | -115,692 | -92,821 | -414,773 | -261,434 |
| Operating profit | 184,541 | 84,837 | 654,004 | 299,700 |
| Financial items | -292 | -818 | -6,513 | -1,018 |
| Profit before tax | 184,249 | 84,019 | 647,491 | 298,682 |
| Tax on profit for the period | -12,692 | -3,419 | -42,056 | -14,060 |
| Profit for the period | 171,557 | 80,600 | 605,435 | 284,622 |
| Of which attributable to: | ||||
| Shareholders of the Parent Company | 171,557 | 80,600 | 605,435 | 284,622 |
| Average number of shares before dilution | 214,724,827 | 191,632,153 | 213,714,575 | 183,927,915 |
| Earnings per share before dilution, EUR | 0.80 | 0.42 | 2.83 | 1.55 |
| Average number of shares after dilution | 222,564,458 | 197,388,433 | 221,818,828 | 189,021,346 |
| Earnings per share after dilution, EUR | 0.77 | 0.41 | 2.73 | 1.51 |
| Operating margin Effective tax rate |
61.5% 6.9% |
47.8% 4.1% |
61.2% 6.5% |
53.4% 4.7% |
| Group, EUR thousands | Oct-Dec 2021 |
Oct-Dec 2020 |
Jan-Dec 2021 |
Jan-Dec 2020 |
|---|---|---|---|---|
| Profit for the period | 171,557 | 80,600 | 605,435 | 284,622 |
| Other comprehensive income | ||||
| Items that may be reclassified to profit | ||||
| Exchange differences arising from the | ||||
| translation of foreign operations | -32,154 | -45,342 | -55,834 | 37,449 |
| Other comprehensive income | -32,154 | -45,342 | -55,834 | 37,449 |
| Total comprehensive income for the period | 139,403 | 35,258 | 549,601 | 322,071 |
| Group, EUR thousands | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Assets | ||
| Goodwill | 2,188,482 | 1,834,333 |
| Other intangible assets | 757,250 | 723,187 |
| Buildings | 11,409 | 11,629 |
| Right of use assets | 54,313 | 44,104 |
| Property, plant and equipment | 68,745 | 50,632 |
| Other non-current receivables | 11,096 | 3,302 |
| Deferred tax assets | 2,360 | 2,696 |
| Total non-current assets | 3,093,655 | 2,669,883 |
| Accounts receivable | 200,700 | 120,481 |
| Other receivables | 155,495 | 146,490 |
| Prepaid expenses and accrued income | 31,785 | 10,583 |
| Cash and cash equivalents | 421,432 | 221,675 |
| Total current assets | 809,412 | 499,229 |
| TOTAL ASSETS | 3,903,067 | 3,169,112 |
| Equity and liabilities | ||
| Share capital | 647 | 638 |
| Other capital contributed | 2,405,622 | 2,225,817 |
| Reserves | -18,286 | 37,548 |
| Retained earnings including profit for the year | 802,967 | 462,168 |
| Total equity | 3,190,950 | 2,726,171 |
| Deferred tax liabilities | 58,816 | 36,666 |
| Non-current lease liabilities | 53,171 | 38,078 |
| Other non-current liabilities | 230,000 | - |
| Total non-current liabilities | 341,987 | 74,744 |
| Accounts payable | 8,578 | 15,335 |
| Provisions | 2,253 | 11,377 |
| Currrent tax liabilities | 189,053 | 164,082 |
| Other current liabilities | 111,127 | 128,502 |
| Current lease liabilities | 14,639 | 11,891 |
| Accrued expenses and prepaid income | 44,480 | 37,010 |
| Total current liabilities | 370,130 | 368,197 |
| TOTAL EQUITY AND LIABILITIES | 3,903,067 | 3,169,112 |
| Share | Other capital | Retained | Total | ||
|---|---|---|---|---|---|
| Group 2020, EUR thousands | capital | contributed | Reserves | earnings | equity |
| Opening equity 01/01/2020 | 545 | 17,430 | 99 | 262,823 | 280,897 |
| Dividend | - | - | - | -76,140 | -76,140 |
| Warrants | - | 4,504 | - | 717 | 5,221 |
| Repurchase of own shares | - | - | - | -9,854 | -9,854 |
| New share issue | 93 | 2,203,883 | - | - | 2,203,976 |
| Profit for the period | - | - | - | 284,622 | 284,622 |
| Other comprehensive income | - | - | 37,449 | - | 37,449 |
| Closing equity 31/12/2020 | 638 | 2,225,817 | 37,548 | 462,168 | 2,726,171 |
| Share | Other capital | Retained | Total | ||
|---|---|---|---|---|---|
| Group 2021, EUR thousands | capital | contributed | Reserves | earnings | equity |
| Opening equity 01/01/2021 | 638 | 2,225,817 | 37,548 | 462,168 | 2,726,171 |
| Dividend | - | - | - | -144,382 | -144,382 |
| Warrants | - | 8,826 | - | 3,061 | 11,887 |
| Repurchase of own shares | - | - | - | -123,315 | -123,315 |
| Non cash issue | 3 | 147,801 | - | - | 147,804 |
| New share issue | 6 | 23,178 | - | - | 23,184 |
| Profit for the period | - | - | - | 605,435 | 605,435 |
| Other comprehensive income | - | - | -55,834 | - | -55,834 |
| Closing equity 31/12/2021 | 647 | 2,405,622 | -18,286 | 802,967 | 3,190,950 |
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| Group, EUR thousands | 2021 | 2020 | 2021 | 2020 |
| Operating profit | 184,541 | 84,838 | 654,004 | 299,700 |
| Adjustment for items not included in cash flow: | ||||
| Depreciation/amortisation/impairments | 22,374 | 11,382 | 80,646 | 32,513 |
| Provisions | -1,014 | 9,979 | -7,696 | 9,979 |
| Other | -279 | 11,388 | -2,840 | 13,866 |
| Interest received | 48 | 2,435 | 230 | 2,468 |
| Interest paid | -856 | -786 | -3,372 | -1,065 |
| Tax paid | -6,706 | -346 | -26,794 | -6,517 |
| Cash flow from operating activities before changes in working capital |
198,108 | 118,890 | 694,178 | 350,944 |
| Increase/decrease in accounts receivable | -17,608 | -17,370 | -70,442 | -32,345 |
| Increase/decrease in accounts payable | 726 | 1,197 | -7,114 | -253 |
| Increase/decrease in other working capital | -2,790 | -3,093 | -17,727 | -2,295 |
| Cash flow from operating activities | 178,436 | 99,624 | 598,895 | 316,051 |
| Acquisition of intangible assets | -8,432 | -4,767 | -28,285 | -13,635 |
| Acquisition of tangible assets | -13,855 | -6,155 | -33,307 | -23,251 |
| Acquisition of subsidiary | - | 47,466 | -92,230 | 46,085 |
| Increase/decrease in other financial assets | 20 | -1,470 | -1,130 | -2,378 |
| Cash flow from investing activities | -22,267 | 35,074 | -154,952 | 6,821 |
| Repayment of debt to credit institutions | - | -189,633 | - | -190,351 |
| Repayment of lease liability | -3,821 | -1,666 | -12,834 | -5,059 |
| Repurchase of own shares | -123,315 | - | -123,315 | -9,854 |
| Warrants | -724 | -75 | 8,826 | 4,504 |
| New share issue | - | -3,010 | 23,189 | -3,010 |
| Dividend | - | - | -144,382 | -76,140 |
| Cash flow from financing activities | -127,860 | -194,384 | -248,516 | -279,910 |
| Cash flow for the period | 28,309 | -59,686 | 195,427 | 42,962 |
| Cash and cash equivalents at start of period | 391,931 | 283,203 | 221,675 | 182,520 |
| Exchange rate differences | 1,192 | -1,842 | 4,330 | -3,807 |
| Cash and cash equivalents at end of period | 421,432 | 221,675 | 421,432 | 221,675 |
The company presents certain financial measures in the interim report that are not defined under IFRS. The company believes that these measures provide useful supplemental information to investors and the company's management as they permit the evaluation of the company's financial performance and position. Since not all companies calculate financial measures in the same way, these are not always comparable to the measures used by other companies. Consequently, these financial measures should not be seen as a substitute for measures defined under IFRS. The tables below include measurements that are not defined in accordance with IFRS, unless otherwise stated. For definitions and purposes, see also the last page of the report.
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| Group, EUR thousands | 2021 | 2020 | 2021 | 2020 |
| Operating revenues (IFRS) | 300,233 | 177,658 | 1,068,777 | 561,134 |
| EBITDA margin | 68.9% | 54.2% | 68.7% | 59.2% |
| Operating margin | 61.5% | 47.8% | 61.2% | 53.4% |
| Profit margin | 57.1% | 45.4% | 56.6% | 50.7% |
| Equity/assets ratio | 81.8% | 86.0% | 81.8% | 86.0% |
| Cash and cash equivalents | 421,432 | 221,675 | 421,432 | 221,675 |
| Average number of full-time employees | 8,707 | 5,731 | 7,917 | 5,118 |
| Full-time employees at end of period | 8,987 | 6,825 | 8,987 | 6,825 |
| Earnings per share before dilution, EUR (IFRS) | 0.80 | 0.42 | 2.83 | 1.55 |
| Equity per share, EUR | 14.91 | 12.84 | 14.91 | 12.84 |
| Operating cash flow per share before dilution, EUR | 0.83 | 0.52 | 2.80 | 1.72 |
| Average number of outstanding shares before dilution | 214,724,827 | 191,632,153 | 213,714,575 | 183,927,915 |
| Number of outstanding shares | 213,952,250 | 212,327,008 | 213,952,250 | 212,327,008 |
| Group, EUR thousands | Q4/21 | Q3/21 | Q2/21 | Q1/21 | Q4/20 | Q3/20 | Q2/20 | Q1/20 | Q4/19 |
|---|---|---|---|---|---|---|---|---|---|
| Operating revenues (IFRS) | 300,233 | 276,016 | 256,687 | 235,841 | 177,658 | 140,020 | 128,307 | 115,149 | 105,998 |
| EBITDA | 206,915 | 192,942 | 174,668 | 160,125 | 96,219 | 90,728 | 81,143 | 64,123 | 55,830 |
| EBITDA margin | 68.9% | 69.9% | 68.0% | 67.9% | 54.2% | 64.8% | 63.2% | 55.7% | 52.7% |
| Operating profit | 184,541 | 171,963 | 155,852 | 141,648 | 84,837 | 83,572 | 74,166 | 57,125 | 48,674 |
| Operating margin | 61.5% | 62.3% | 60.7% | 60.1% | 47.8% | 59.7% | 57.8% | 49.6% | 45.9% |
| Revenue growth vs prior year | 69.0% | 97.1% | 100.1% | 104.8% | 67.6% | 47.8% | 49.7% | 45.2% | 50.9% |
| Revenue growth vs prior quarter | 8.8% | 7.5% | 8.8% | 32.8% | 26.9% | 9.1% | 11.4% | 8.6% | 11.9% |
| Cash and cash equivalents | 421,432 | 391,931 | 200,392 | 326,041 | 221,675 | 283,203 | 212,049 | 204,949 | 182,520 |
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| Group, EUR thousands | 2021 | 2020 | 2021 | 2020 |
| Operating margin | ||||
| Profit before tax | 184,249 | 84,019 | 647,491 | 298,682 |
| Net financial items | 292 | 818 | 6,513 | 1,018 |
| Operating profit (EBIT) | 184,541 | 84,837 | 654,004 | 299,700 |
| Divided by Total operating revenues | 300,233 | 177,658 | 1,068,777 | 561,134 |
| Operating (EBIT) margin | 61.5% | 47.8% | 61.2% | 53.4% |
| EBITDA and EBITDA margin | ||||
| Profit before tax | 184,249 | 84,019 | 647,491 | 298,682 |
| Net financial items | 292 | 818 | 6,513 | 1,018 |
| Depreciation/amortisation | 22,374 | 11,382 | 80,646 | 32,513 |
| EBITDA | 206,915 | 96,219 | 734,650 | 332,213 |
| Divided by Total operating revenues | 300,233 | 177,658 | 1,068,777 | 561,134 |
| EBITDA margin | 68.9% | 54.2% | 68.7% | 59.2% |
| Adjusted EBITDA and adjusted EBITDA margin | ||||
| EBITDA | 206,915 | 96,219 | 734,650 | 332,213 |
| Items affecting comparability | - | 19,386 | - | 19,386 |
| Adjusted EBITDA | 206,915 | 115,605 | 734,650 | 351,599 |
| Divided by Total operating revenues | 300,233 | 177,658 | 1,068,777 | 561,134 |
| Adjusted EBITDA margin | 68.9% | 65.1% | 68.7% | 62.7% |
| Profit margin | ||||
| Profit for the period | 171,557 | 80,600 | 605,435 | 284,622 |
| Divided by Total operating revenues | 300,233 | 177,658 | 1,068,777 | 561,134 |
| Profit margin | 57.1% | 45.4% | 56.6% | 50.7% |
| Equity/Assets ratio | ||||
| Total equity | 3,190,950 | 2,726,171 | 3,190,950 | 2,726,171 |
| Divided by Total assets | 3,903,067 | 3,169,112 | 3,903,067 | 3,169,112 |
| Equity/Assets ratio | 81.8% | 86.0% | 81.8% | 86.0% |
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|
| Parent company, EUR thousands | 2021 | 2020 | 2021 | 2020 |
| Net sales | 4,863 | 2,847 | 19,175 | 9,405 |
| Other external expenses | -5,595 | -2,798 | -18,911 | -9,220 |
| Operating profit | -732 | 49 | 264 | 185 |
| Interest income and similar income | 250,917 | 200,136 | 250,941 | 200,136 |
| Interest expenses and similar expenses | - | - | - | - |
| Profit before tax | 250,185 | 200,185 | 251,205 | 200,321 |
| Tax on profit for the period | -27 | -33 | -323 | -88 |
| Profit for the period* | 250,158 | 200,152 | 250,882 | 200,233 |
*Profit for the period coincides with comprehensive income for the period.
| Parent company, EUR thousands | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Assets | ||
| Intangible assets | 681 | 763 |
| Property, plant and equipment | 23 | 50 |
| Participating interest in Group companies | 2,635,756 | 2,495,279 |
| Other non-current receivables | 14 | 41 |
| Total non-current assets | 2,636,474 | 2,496,133 |
| Receivables from Group companies | 258,537 | 212,914 |
| Other current receivables | 958 | 751 |
| Prepaid expenses and accrued income | 11,524 | 368 |
| Cash and cash equivalents | 79,952 | 34,388 |
| Total current assets | 350,971 | 248,421 |
| TOTAL ASSETS | 2,987,445 | 2,744,554 |
| Equity and liabilities | ||
| Share capital | 647 | 638 |
| Retained earnings including profit for the year | 2,828,647 | 2,665,657 |
| Total equity | 2,829,294 | 2,666,295 |
| Accounts payable | 247 | 2,620 |
| Currrent tax liabilities | 390 | 1,120 |
| Liabilities to Group companies | 84,347 | - |
| Other current liabilities | 72,345 | 73,719 |
| Accrued expenses and prepaid income | 822 | 800 |
| Total current liabilities | 158,151 | 78,259 |
| TOTAL EQUITY AND LIABILITIES | 2,987,445 | 2,744,554 |
Evolution prepares its financial statements in accordance with the International Financial Reporting Standards (IFRS) as approved by the European Union. The Group's interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. The Parent Company uses the same accounting principles as the Group, with the addition of the Swedish Financial Reporting Board's recommendation; RFR 2, Accounting for Legal Entities. The accounting policies are unchanged from the 2020 annual report. There are no amendments to IFRS standards in 2021 that have had material impact on the Group's results of operations and financial position.
Amounts are expressed in thousands of Euro (EUR) unless otherwise indicated. Amounts or figures in parentheses indicate comparative figures for the corresponding period last year.
No significant events after the end of the period.
The company has two incentive programmes. Upon full exercise of the warrants within the programme 2020/2023 (adopted by the Extra General Meeting on 16 January 2020), the dilution effect will be approximately 0.45 percent, calculated on the closing price of the share, SEK 1,286.20, 30 December 2021. Upon full exercise of the warrants within the programme 2021/2024 (adopted by the Extra General Meeting on 28 January 2021), the dilution effect will be approximately 1.86 percent. More information about the programmes is available in the 2020 annual report.
Evolution's operations are, to a certain extent, influenced by seasonal patterns in end-user activity. The Group's customers generally notice increased end-user activity and an increased volume of operations in the fourth quarter of each year, which is consistent with the Group's experience of increased online casino traffic and commission income earned in the fourth quarter.
During the first quarter, the remaining additional purchase consideration regarding Ezugi of EUR 2,356 thousand was paid. During the second quarter, the remaining additional purchase consideration regarding Red Tiger of EUR 12,913 thousand was paid.
Evolution entered into an agreement to acquire 100 percent of the share capital in Big Time Gaming Pty Ltd (BTG). The transaction was closed on 30 June and BTG is included in the consolidated accounts from 1 July. The up-front consideration was paid in cash and Evolution shares, corresponding to EUR 80 million and EUR 147.8 million respectively. In addition, Evolution will pay earn-outs, based on BTG's EBITDA for the years 2022/23 and 2023/24. Maximum earn-out is EUR 230 million, payable in 2023 and 2024, of which 70 percent in cash and 30 percent in Evolution shares. According to the preliminary acquisition analysis, a nontax-deductible goodwill of EUR 392.0 million arose that is primarily attributable to the skills that BTG's employees contribute and strengthened presence in important markets. The useful life for customer relationships and game portfolio is estimated to be ten years.
Evolution entered into an agreement to acquire 100 percent of the share capital in Transigo Ltd (DigiWheel), which is included in the consolidated accounts from 1 September. The up-front consideration of EUR 1 million was paid in cash. In addition, Evolution may pay an earn-out, five times DigiWheel's profit for year 2024. According to the preliminary acquisition analysis, a non-tax-deductible goodwill of EUR 517 thousand arose that is primarily attributable to the skills that DigiWheel's employees contribute. The useful life for proprietary software is estimated to be ten years.
| Customer relationships | BTG | DigiWheel |
|---|---|---|
| 1,100 | - | |
| Brand | 2,400 | - |
| Game portfolio | 75,400 | - |
| Other intangible assets | 1,024 | 359 |
| Right of use assets | 161 | - |
| Property, plant and equipment | 22 | 2 |
| Deferred tax assets | 450 | - |
| Accounts receivable | 7,870 | 0 |
| Other short-term assets | 33 | 200 |
| Accrued income and prepaid expenses | 58 | 1 |
| Cash and cash equivalents | 5,285 | 3 |
| Deferred tax liability | -23,670 | -45 |
| Leasing liability | -212 | - |
| Accounts payable | -239 | -1 |
| Tax liability | -3,116 | - |
| Other short-term liabilities | -805 | -36 |
| Total acquired net assets | 65,761 | 483 |
| Purchase consideration, EUR thousands | BTG | DigiWheel |
| Consideration paid, cash | 79,970 | 1,000 |
| Consideration paid, own shares | 147,804 | - |
| Additional purchase consideration, debt | 230,000 | - |
| Total purchase consideration | 457,774 | 1,000 |
| Fair value acquired net assets | -65,761 | -483 |
| Goodwill | 392,013 | 517 |
| Group, EUR thousands | ||
| Investing activities | 2021 | |
| Additional purchase consideration Ezugi | -2,356 | |
| Additional purchase consideration Red Tiger | -12,913 | |
| Redemption warrants NetEnt | -447 | |
| Consideration paid Big Time Gaming | -79,970 | |
| Consideration paid DigiWheel | -1,000 | |
| Cash in acquired companies Expenses directly linked to acquisitions |
5,288 -831 |
|
Expenses related to acquisitions are included in Other operating expenses in the income statement.
| Group, EUR thousands | |
|---|---|
| Big Time Gaming's contribution | 2021 |
| Operating revenue | 21,798 |
| Amortisation of excess values | -3,365 |
| Profit after tax for the year | 11,270 |
Acquisition costs of 831 kEUR is included in BTG's profit for the year. DigiWheel had no effect on revenue and only marginal effect on net profit.
| Group, EUR thousands | BTG | Evolution | Group |
|---|---|---|---|
| Operating revenue | 40,243 | 1,046,979 | 1,087,222 |
| Profit after tax for the year | 16,828 | 594,165 | 610,993 |
Big Time Gaming profit for the year include acquisition costs of 831 kEUR and amortisation of excess values of 6,730 kEUR. DigiWheel would have had no effect on revenue and only marginal effect on net profit.
| BTG, EUR thousands | Okt-Dec | Jan-Mar | Apr-Jun | Jul-Sep | Oct-Dec |
|---|---|---|---|---|---|
| 2020 | 2021 | 2021 | 2021 | 2021 | |
| Operating revenue | 7,843 | 8,995 | 9,450 | 10,602 | 11,196 |
| Key ratios Operating profit (EBIT) |
Definition Profit before tax excluding net financial items. |
Purpose Key ratio used by management to monitor the earnings trend in the Group. |
|---|---|---|
| Operating margin (EBIT)margin | Operating profit in relation to operating revenues. |
Key ratio used by management to monitor the earnings trend in the Group. |
| EBITDA | Operating profit less depreciation. | Key ratio used by management to monitor the earnings trend in the Group. |
| EBITDA margin | Operating profit excluding depreciation and amortisation in relation to operating revenues. |
Key ratio used by management to monitor the earnings trend in the Group. |
| Adjusted EBITDA | EBITDA excluding items affecting comparability. |
Key ratio used by management to monitor the underlying earnings trend in the Group. |
| Adjusted EBITDA margin | Adjusted EBITDA in relation to operating revenue. |
Key ratio is used by management to monitor the underlying earnings trend in the Group. |
| Profit margin | Profit for the period in relation to operating revenues. |
Key ratio used by management to monitor the earnings trend in the Group. |
| Equity/assets ratio | Equity at the end of period in relation to total assets at the end of period. |
Key ratio indicated the Group's long-term payment capacity. |
| Cash and cash equivalents | Cash and bank assets. | Used by management to monitor the Group's short-term payment capacity. |
| Revenue growth compared with the previous year |
Operating revenues for the period divided by operating revenues in the same period last year. |
Key ratio used by management to monitor the Group's revenue growth. |
| Revenue growth compared with the preceding quarter |
Operating revenues for the period divided by operating revenues for the preceding quarter. |
Key ratio used by management to monitor the Group's revenue growth. |
| Average number of full-time employees |
The average number of full-time employees during the period. Full-time equivalents include part-time positions. |
Key ratio used by management to monitor the Group's number of employees' growth. |
| Per share | ||
| Earnings per share before dilution | Profit for the period in relation to the average number of shares outstanding before dilution during the period. |
Key ratio used by management to monitor the earnings trend in the Group. |
| Equity per share | Shareholders' equity divided by the number of shares outstanding at the end of the period. |
Key ratio used by management to monitor the earnings trend in the Group. |
| Operational cash flow per share before dilution |
Cash flow from operating activities in relation to the average number of shares outstanding before dilution during the period. |
Key ratio used by management to monitor the cash flow trend in the Group. |
| Average number of shares outstanding |
The average number of shares outstanding before dilution during the period. |
Used to calculate key ratios in relation to the number of shares during the period. |
| Number of shares outstanding | Number of shares outstanding at the end of the period. |
Used to calculate key ratios in relation to the number of shares at the end of the period. |
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