Evolution Gaming: A Solid Investment Opportunity

Hey fellow investors,

I wanted to share some insights on Evolution Gaming (EVO) based on their recent Q2 2024 report. Evolution continues to impress with its robust financial performance and strategic initiatives. Here's why I believe EVO is a solid investment:

1. Strong Financial Performance:

• Revenue Growth: Evolution reported a 15.3% increase in operating revenues, reaching EUR 508.4 million for Q2 2024 compared to EUR 441.1 million in Q2 2023. This growth is even more impressive when adjusted for constant currency, which shows a 19% increase.
• EBITDA and Profit Margins: Despite some fluctuations, Evolution maintains a strong EBITDA margin of 68%, slightly lower than the previous year but still impressive. The profit for the period amounted to EUR 269.1 million, showcasing a stable increase from the previous year.

2. Strategic Expansions and Innovations:

• New Markets: Evolution is making strides in entering new markets such as the Philippines, Brazil, and the Czech Republic, which are in various stages of regulation. This expansion is crucial for future growth.
• Innovative Games: The company is set to release over 100 new games in 2024, including significant launches like Lightning Storm, which promises to be a game-changer in the industry. The successful launch of Balloon Race and new versions of popular games like SicBo and Dragon Tiger also demonstrate their innovative edge.

3. Acquisition and Share Repurchase Program:

• Galaxy Gaming Acquisition: Evolution's acquisition of Galaxy Gaming for USD 85 million strengthens its presence in the US market, where Galaxy is licensed in 28 states. This strategic move accelerates their market penetration and regulatory relationships.
• Share Repurchase: The Board has announced a share repurchase program of up to EUR 400 million, indicating confidence in the company’s value and a commitment to returning value to shareholders.

4. Market Leadership and Growth Potential:

• Live Casino Growth: Revenue from Live Casino increased by 18% year-on-year, driven by strong demand and continuous innovation. Evolution operates over 20 studios worldwide, ensuring high capacity and game variety.
• RNG Games Improvement: Revenue from RNG games also saw an increase, with incremental improvements and new functionalities being added regularly.

5. Solid Financial Position:

• Cash Flow: The company generated EUR 312.8 million in operating cash flow for Q2 2024, reflecting strong operational efficiency.
• Investment in Growth: Investments in new games, studio expansions, and technical improvements ensure Evolution remains at the forefront of the online casino market.

6. Attractive Valuation:

• Undervalued Stock: Currently, Evolution Gaming's stock is trading below its fair value, making it an attractive buy. Market conditions and temporary fluctuations have presented a buying opportunity for investors looking to enter or increase their positions in a high-potential stock.
• Growth at a Discount: Given the company's strong performance and growth prospects, the current stock price offers a significant discount relative to its intrinsic value.

In summary, Evolution Gaming's Q2 2024 report highlights their strong financial performance, strategic market expansions, innovative game development, and solid financial management. With continuous growth and a clear focus on innovation, EVO remains a promising stock in the online gaming industry.

Happy investing!

(Note: This is not financial advice. Please conduct your own research before making any investment decisions.)