【f1 stake team】FY24: Evoke shares drop 18% despite revenue recovery

However, the company cautioned that Q1 2025 revenue is expected to lag behind its full-year forecast.

The operator’s share price dropped 18% during early morning trading.

Nonetheless, evoke stated that its transformation strategy is “showing results”.

H2 2024 adjusted EBITDA reached £197m, reflecting 33% year-on-year growth and 71% growth compared to H1.

The company said this increase was driven by a return to revenue growth, strong cost control, and a more efficient operating model.

For FY24, the adjusted EBITDA marginstood at 17.8%.

Despite the improvement in adjusted EBITDA, however, reported 2024 EBITDA fell to £230.6m, impacted by £79.3m in exceptional costs, mainly tied to evoke’s exit from the US B2C market and the sale of its US B2C business to Hard Rock Digital, expected to complete in 2025.

The company recorded a reported after-tax loss of £191.4m, compared to a £65.2m loss in 2023.

On an adjusted basis, after-tax losses stood at £28.8m, reversing a £39.3m profit from the previous year.

Online leads recovery

Evoke’s transformation efforts appeared to bare fruit during 2024, as the business marked a return to revenue growth for the first time in three years.

The online segment spearheaded this recovery, with UK&I online revenue rising 5% year-on-year, accelerating to a 10% gain in the second half.

International online markets performed even better, growing 10% year-on-year, with core international markets achieving a 25% increase.

UK retail revenue declined 5% against strong 2023 comparatives, however, but showed sequential improvement in the second half.

The rollout of new gaming cabinets, completed in March 2025, is expected to support future growth.

Meanwhile, cost-cutting initiatives delivered £30m in recurring savings, with an additional £15m identified and implemented in the second half.

Evoke also continued to execute its strategy aimed at delivering sustainable profitability and disciplined capital allocation.

In Q4 2024, it acquired Winner.ro in Romania, adding the country as a fifth core market alongside the UK, Italy, Spain, and Denmark.

The company also enhanced its digital capabilities, incorporating data-driven decision-making, artificial intelligence, and intelligent automation — initiatives that contributed to a 6% increase in average revenue per user (ARPU).

CEO commentary

“2024 was a pivotal year for Evoke as we launched and implemented our new strategy for success, radically transforming almost every area of the business, and moving decisively to create a more sustainable, profitable, and cash-generative company,” said CEO Per Widerström.

“I was delighted to see the results of our transformation start to materialise during the year, with the business returning to revenue growth in Q3 for the first time in almost three years, in turn delivering a step change in profitability as a result of our increasingly efficient operating model.

“Whilst a transformation of this scale is never easy, I am pleased with the strong progress we made during the year as we built a winning team and delivered a consistently great customer experience.”

Looking ahead to 2025, Widerström expressed confidence in evoke’s growth trajectory: “Our exciting product pipeline, continued UK retail optimisation programme, and ever-improving capabilities around data and personalisation all reinforce my confidence in making further progress in 2025 as we continue to execute against our plans to create significant shareholder value.”

2025 outlook

Evoke has started FY25 on solid footing, though Q1 revenue growth is expected to be in the low single digits due to temporary factors, including safer gambling measures and last year’s elevated promotional activity.

However, Q1 adjusted EBITDA is forecast to rise by £18m-£28m compared to Q1 2024, with a full-year target of 5-9% revenue growth and an adjusted EBITDA margin of at least 20%.

The company remains committed to cost efficiency, identifying an additional £15m-£25m in savings for FY25, which are expected to offset headwinds of approximately £10m from National Insurance and National Living Wage increases in the UK.

Evoke’s deleveraging efforts are also on track. After reducing leverage from 6.7x to 5.7x in the second half of 2024, the company expects to bring it below 5.0x by the end of 2025.

Over the medium term, Evoke is targeting leverage below 3.5x by 2027.

Analyst opinion

Paul Leyland of Regulus Partners noted that the full-year figures somewhat mask the scale of the firm’s H2 cash flow turnaround, with 85% of its full-year EBITDA generated in the second half.

Nevertheless, he remarked: “The current turnaround is good enough to satisfy the lenders if sustained but not improved — but not yet in comfortable equity growth territory, in our view.

“It is also worth remembering that the early stages of a turnaround are the easiest: cutting costs and stopping value destruction is much easier than generating underlying growth.

Leyland expressed hope that evoke has learned “from over a decade of near continuous ‘disappointment’ (cock-up) and is simply setting guidance to be as low as possible without effectively admitting defeat to its long-suffering shareholders.”

However, he stressed that cost savings on sluggish revenue growth will only buy time. Double-digit revenue growth is essential to dig Evoke out of its operational and balance sheet struggles, he added.

“After a decade of self-inflicted underperformance, the difference between starting a multi-billion-pound market cap turnaround and a highly value destructive takeover of failing assets from wiped-out shareholders and nervous lenders will probably be decided in the next 12 months,” Leyland concluded.