Evolution Q1 revenue dips as Europe slows, Americas expand

Evolution AB reported Q1 2026 revenue of €513 million, down from €520.9 million a year earlier. EBITDA was €335.3 million and diluted earnings per share were €1.26, narrowly below analyst forecasts. Management attributed weaker activity in Europe to tighter player‑protection checks, lower stakes and higher licensing fees and taxes; under Evolution’s revenue‑share contracts those costs affect the company’s top line.

Performance varied by region. North American revenue rose 10.1% in euros and 21.4% in local currency, supported by partnerships with major operators including DraftKings, Penn National and Hard Rock Digital. Latin America, driven largely by Brazil’s regulated market, delivered strong growth after more than a year of operations. The company reported “progress” in Asia, noting rollout of localized Baccarat variants and improvements to technical delivery and distribution, while saying the region remains difficult to scale.

Evolution said it increased capital expenditure on building studios in Latin America and North America and expanded headcount by thousands in Brazil and the U.S. Management said many hires and hardware costs are incurred before new tables take bets, and these pre‑opening expenses weighed on margins. Cash from operating activities was €345.8 million for the quarter, down from €361.3 million a year earlier. The company will not pay a dividend this quarter, opting to prioritize studio capex and completion of the Galaxy Gaming acquisition, which is expected to close in July 2026 at an estimated valuation of €85 million.

Q1 EBITDA margin was 65.4%, below the company’s full‑year guidance range of 66–68%. CEO Martin Carlesund described the margin as “a reflection of a choice, not a failure,” and said Evolution was deliberately investing in staffing and development for its 20th anniversary game slate. He also pointed to the impact of the company’s self‑imposed ring‑fencing measures in Europe and said reduced channelization in regulated European markets is affecting operators and players.

CFO Joakim Andersson told analysts the margin shortfall mainly reflected one‑off and pre‑opening items, calling them “empty” costs — salaries paid before the first bet — and said operating leverage should improve as new tables come online in Q2 and Q3. He reiterated that the company was keeping full‑year guidance unchanged and that available cash would support expansion in the U.S. table‑game market.

Evolution employs about 20,000 people worldwide and plans more than 110 new games in 2026. Shares on Nasdaq Stockholm fell after the results, trading lower at the time of reporting.