Evolution AB (publ) Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Thank you. Good morning. Thanks for taking my question. So my first question would just be on the ring fencing in Europe. So you said it started in February, and it obviously had quite a big impact on the numbers in Europe. So could you say anything on sort of when that started in February? Was it like 1 month contribution? Or was it two months contribution in Q1?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Perfect. And then I know it's very difficult even for you. But I mean, you obviously had 2-percentage-point FX headwinds and it appears like 2-percentage-point to 3-percentage-point headwind from European ring-fencing in Q1. Is it in any way possible to sort of quantify the cyber attack impact so we can get a little bit better sense of the underlying growth in the quarter?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : All right. Perfect. So and then just again on the cyber attacks. So you have gotten that from, I think you started mentioning that in Q3 last year. So this is now the third quarter that you mentioned it. So can you talk a little bit about how the development has been going? I mean, have you seen more pressures than you initially did after you started that with -- just thinking on the revenue side, if you limit the access to some aggregators possibly and so on. So is the headwind becoming bigger initially when you stop the distribution to some aggregators and we will see that picking up in the next few quarters? Or has it been kind of stable over the last couple of quarters?

Question: Oskar Ronnkvist - ABG Sundal Collier - Analyst : Perfect. And I guess there's no additional comments on any timing when we could expect the quarter-over-quarter growth to pick up?

Question: Raymond Ke - Nordea - Analyst : Hi, good morning. A couple of questions from me as well. Starting on Europe and the sales there impacted by your ring fencing actions. Could you provide some color on whether the growth pace of the countries with high channelization in more recent quarters has been higher or lower than countries with sort of lower channelization? Just to understand the underlying growth pace of Europe. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:00AM, EVOG.ST - Q1 2025 Evolution AB (publ) Earnings Call

Question: Raymond Ke - Nordea - Analyst : Yeah. That was helpful. And then I noticed on the LatAm, sales fall sequentially here in Q1. Trying to understand, was this in line with your expectation? And could you maybe share what you think is behind this development?

Question: Raymond Ke - Nordea - Analyst : Great. And just another question also on Asia and the technical actions you implemented there. You talked about shutting down and also growing in some parts and yielding a flat top line result. But could you maybe elaborate a bit more on technical actions that you've implemented? Or is it just about essentially shutting down in certain parts?

Question: Raymond Ke - Nordea - Analyst : Okay. Perfect, very clear. All for me, I'll get back in line. Thank you.

Question: Georg Attling - Pareto Securities - Analyst : Good morning. A couple of questions for me, starting also with Europe. I'm trying to understand if the ring-fencing that you've done, is that have you done that all at once? Or will we see ring-fencing in more markets in, let's say, two?

Question: Georg Attling - Pareto Securities - Analyst : Okay. So a new base from early February, I guess, you can read that as.

Question: Georg Attling - Pareto Securities - Analyst : And second question on Lat Am. You mentioned Brazil here. I know that the start was quite weak, but could you comment on the trend throughout the quarter's growth pace and was picked up to the Q1?

Question: Georg Attling - Pareto Securities - Analyst : Okay. Perfect. And just a final question on Asia. So you shut down some of your aggregators or distribution partners here. Could you comment on the growth excluding the aggregators that you shut down?

Question: Pravin Gondhale - Barclays - Analyst : I'm Pravin Gondhale from Barclays. So firstly, on Europe, the growth was notably softer in Europe, but we do see reporting -- B2C operators reporting that we have seen so far and then the regulator data in Italy suggests that in the large markets like UK and Italy, the growth was positive and robust. So can you share some more colors on weaker spots in Europe? I know you won't be talking about specific countries here, but sort of what are the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:00AM, EVOG.ST - Q1 2025 Evolution AB (publ) Earnings Call areas where you think EVO can improve the performance in coming quarters? And then when can we expect to see Europe returning to positive growth? I mean, when can we expect this ring testing to be lapped up and then...

Question: Pravin Gondhale - Barclays - Analyst : That's helpful. And then quickly on the current trading. Can you please share some color on Q2 trading so far? And how should we be thinking about the top line growth trajectory for the remainder of the year?

Question: Pravin Gondhale - Barclays - Analyst : Thank you very much. That's really helpful.

Question: Martin Arnell - DNB Markets - Analyst : Guys, this is Martin Arnell with DNB in Stockholm. Can you hear me?

Question: Martin Arnell - DNB Markets - Analyst : So I want to ask you on the U.K. gaming commission review. When do you expect more clarity on that and are you in constant dialogue with them? And do you know anything about the outcome? Have you taken all the necessary actions or is there more to be done?

Question: Martin Arnell - DNB Markets - Analyst : Do you know anything on the outcome so far?

Question: Martin Arnell - DNB Markets - Analyst : Yeah. Okay. And can you just help us understand that a bit more on the ring fencing. I mean, how temporary of an effect is it because a regulated operator that offers your games should just be a click away, right, if the players out for your games. So why is this negative effect at all in a medium-term perspective?

Question: Martin Arnell - DNB Markets - Analyst : Okay. And in your actions from February, how much is this a proactive action from yourself or how much is it that other regulators have picked up the situation in the UK and actually asking you for changes?. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:00AM, EVOG.ST - Q1 2025 Evolution AB (publ) Earnings Call

Question: Martin Arnell - DNB Markets - Analyst : Perfect. My final question. You repeated the EBITDA guidance and how do you reason behind that? Because, I mean, wouldn't it have been more prudent to take a little bit more cautious approach given that you're in the early phase of the changes in Europe?

Question: Monique Pollard - Citi - Analyst : Good morning, everybody. It's Monique here from Citi. I have three questions, if I can. The first one Martin, just coming back to this idea of the geo blocking that you've been doing in Europe. I'm trying to understand how much of the impact is straight, locking of unregulated operators in the region. And whether there's a subsequent impact, which is on those unregulated sites, for instance, maybe your games were being paid at faster spin speeds with no deposit limit. And that has all been removed because now you are just on regulated sites and therefore, began to be in play in line with the regulation in the regulated markets you're in, where you are offering the game to unregulated players, will the gains do they still have the sort of parameters of regulatory backdrop attached to them or not? That's the first question. The second question is just on the RNG momentum. That slowed materially to 3% this quarter versus 7% last quarter. I just wanted to understand what you think you can be doing to get that portfolio performing better. Is it a matter of releasing more games? Is it I don't know, or if it's something else that you feel you've got a handle on now. And then the final question is just a clarification. I'm just trying to make sure there's no material changes, for instance, in commission rates in any part of your business in this quarter. All the slowdown that we're seeing is to do with either the one-offs, if I recap, the geo-blocking or it's to do with a slowdown in player volumes. There's no change in commission rates.

Question: Monique Pollard - Citi - Analyst : And just sorry, coming back to the third question. So as it was before, previous year blocking, where you were offering your games on an unregulated side, they didn't have the regulatory changes attached to them. So you could play at whatever spin feed, et cetera, but you're just saying that doesn't have a big impact.

Question: Monique Pollard - Citi - Analyst : Okay. Thank you.

Question: Edward Young - Morgan Stanley - Analyst : Hello, it's Ed Young from Morgan Stanley. Can you hear me? .

Question: Edward Young - Morgan Stanley - Analyst : I've got three questions, please. The first is on ring fencing. You've talked about in detail this morning about the ring-fencing in the time line. But you've also talked about this being regulated markets in Europe. Could you just clarify for us if there are any regulated markets in Europe you've not chosen to ringfence? And then more broadly, why wouldn't this be applied to all regulated markets, including outside of Europe? So I just want to understand the framework of used decision you've made around the ring-fencing. The second is FX, you've hopefully given a sort of ex FX number in the statement. I just wondered if you could help us -- is that just on the basis of the translation of where you've earned commission revenue in dollars or whatever it might be? Or is this also applying a player purchasing power effect, which you've sometimes referred to in the past? So if you could perhaps just clarify on that? And any thoughts on purchasing power? And then the third, Joakim, obviously newly in the role. I just wondered if you could talk through whether there's anything you said it needs to be done differently from how it's been done in the past from your CFO in your role? And if you could expand a little bit on what you bring as a new face to the Evolution management team? Thank you.

Question: Edward Young - Morgan Stanley - Analyst : I wonder if I could follow up on the first question. You said practically, so maybe there are one or two you have in. So could I ask again what's the framework you've decided whether to do it or not? And can I repeat the global question? -- globally.

Question: Edward Young - Morgan Stanley - Analyst : Okay. Useful. Thank you.