- Lower than expected Q1 sales
- Full-year growth reiterated
- Core markets back in growth
Gambling firm Evoke (EVOK), formerly known as 888 Holdings, saw its shares sink as much as 19% after the William Hill-owner revealed slower-than-expected first-quarter revenue growth.
The drop in the shares wiped out gains for the year, leaving them languishing 34% lower over the last 12 months compared with a gain of 8% for the FTSE-All Share.
SHORT-TERM HEADWINDS
Despite making a ‘robust’ start to 2025, first quarter revenue growth is expected to be low single digit, falling short of the group’s 5% to 9% full year target.
The company provided a list of specific factors impacting the quarter including additional safer gambling measures, overspending on marketing in the prior year, operator friendly results and one fewer trading day, which knocked around 1% off growth.
Nevertheless, the company is sticking to its full year guidance, as chief executive Per Widerstrom commented: ‘While Q1 revenue growth is expected to be low single digit, we remain highly confident in our full year expectations of 5% to 9% growth in addition to driving further margin expansion as a result of our more efficient operating model.
‘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,’ added Widerstrom.
STRONG FINISH TO 2024
The tough start to 2025 overshadowed a strong finish to the prior year with group revenue growing by 4% overall and by 8% in the second half, driven by online which accelerated to 10% year-on-year growth in the second half.
Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) increased 4% to £312.5 million, roughly £2 million ahead of the top end of January’s guidance range.
The company said it was on a clear path to reduce leverage, with net debt to EBITDA expected to fall below five times by the end of 2025 from 5.7 times in 2024. Net debt increased by £33 million to £1.79 billion.
Paul Leyland at gambling consulting firm Regulus Partners noted free cash flow of £182 million barely covered interest payments of £164 million, while net debt to free cashflow had risen to a ‘rather terrifying’ 9.8 times.
