H2 drives revenue and EBITDA growth for Evoke plc in 2024

Evoke plc has reported an impressive group revenue of £1.8 billion for the fiscal year 2024, reflecting a 3% increase from the previous year. This growth was predominantly propelled by an 8% uptick in the second half of the year, while the first half saw a slight contraction of 2% year-over-year. The company’s management attributes this turnaround to strategic initiatives and product enhancements that successfully revitalized performance in H2.

In an official announcement detailing its FY2024 results on March 26, Evoke plc’s CEO, Per Widerström, emphasized that the structural and product improvements implemented throughout the company significantly enhanced customer engagement and subsequently, financial outcomes.

The adjusted EBITDA for the year experienced a robust 4% growth, reaching £312 million, driven largely by second-half profitability. Notably, 63% of this adjusted EBITDA stemmed from H2 alone, with even more favorability—85% of total EBITDA—attributed to this latter half of the fiscal year.

Evoke plc confirmed that it successfully fulfilled all commitments earmarked in its H1 results, which were aimed at delivering a considerable enhancement in profitability during H2.

Key elements of this strategy included a £30 million cost-saving initiative, more targeted marketing efforts focused on core customer demographics, and notable advancements in product offerings, as outlined in its H1 earnings report.

The UK Remains the Dominant Contributor to Evoke’s Revenue

When analyzing revenue distribution, the online segment surged by 6% compared to 2023, totaling £1.2 billion, with the UK market accounting for a substantial 55.2% of this revenue, leaving 44.5% attributed to international operations.

Further breakdown reveals that UK online revenue experienced a commendable 9% growth across the twelve-month span, while international revenue rose by 7%. However, these gains were partially offset by a persistent decline of 5% in UK retail performance.

To address the stagnation in retail, Evoke is undertaking transformative initiatives, including the rollout of a fleet of new betting machines scheduled between October 2024 and March 2025.

During the earnings call, an analyst inquired whether favorable sports outcomes contributed to the revenue and profit growth observed in H2. Group CFO Sean Wilkins responded candidly, noting that while there were positive sporting results in Q4, they merely compensated for the negative results experienced previously.

Wilkins emphasized that what he termed “dreadful results” had significantly impacted the business in earlier quarters; however, overall results for the year were seen as largely neutral.

For the year, total cost savings amounted to £48 million, attributed to a simplified operating model that prioritized customer experience, redesigned product functions, enhanced speed-to-market for new offerings, and increased use of AI and automation, which ultimately improved supply chain efficiency.

Shifting Towards a Higher-Quality Revenue Mix as Customer Value Grows

Addressing declining betting stakes paired with increasing sportsbook margins reported by other operators, one analyst highlighted the evolving customer mix at Evoke. Widerström assured stakeholders that the company is witnessing a transition toward higher-value customers. This shift has led to fewer bets placed yet higher revenue generated per customer.

“Our strategy now targets core, high-value customers over volume. This refined customer mix is proving more sustainable, which will inherently influence stake levels,” Widerström explained.

This positive change correlates with enhanced personalized betting promotions and the introduction of a new bet builder feature within the William Hill offering, further amplifying customer attraction and retention.

Evoke plc: A Turnaround Fueled by Sustainable Growth

Looking ahead, Widerström expressed confidence in the company’s trajectory towards sustainable profitable growth, bolstered by a high-quality revenue mix. Regulated revenue has risen to account for 95% of total revenues in 2024, up from 94% the previous year and 90% in 2022.

This increase is a testament to Evoke’s unwavering focus on core markets, such as the UK, Italy, Spain, and Denmark. Additionally, the company reinforced its international footprint by acquiring the Romanian brand Winner.ro in August 2024.

Furthermore, the company has drastically reduced its exposure to dotcom markets, accounting for only around 4% of total operations compared to 13% in 2021. This trend underscores the firm’s growing reliance on a more stable customer base, particularly in the UK, strategically positioning them ahead of impending regulatory changes.

In response to inquiries about their regained market share in the UK, Widerström highlighted numerous core product upgrades instituted over the year, which included innovative landing pages for racing and football betting segments. He reported overwhelmingly positive customer feedback and revealed plans for additional updates slated for 2025.

As for market presence, Evoke plc’s newly acquired Romanian division currently commands a 7% market share, inclusive of its 888 casino product. In the UK, the William Hill Online brand holds a 9% share of the market, while its retail operations boast a 22% share.

Gross Profit Remains Stable Amidst Industry Challenges

A review of the financials indicates that gross profit remains largely stable, seeing a modest increase of 1.6% to £1.15 billion. However, Evoke reported an operating loss of £200,000 compared to a profit of £24.2 million reported in the prior year.

On the expense front, capital expenditures for the year ranged between £100 million and £110 million. The company incurred an exceptional one-off payment of £20 million associated with its exit from the US market, alongside another £10 million related to the Winner acquisition.

The operator attributed the cash outflow to these exceptional expenses arising from the ongoing transformation and turnaround initiatives. Consequently, net debt saw a slight increase of 0.5% year-on-year as of the end of 2024.