Evoke has released its financial results for the first half of 2024, revealing a complex picture of challenges and ongoing transformation. The company reported a 2% year-on-year decline in revenue, bringing the total to £862 million ($1.1 billion). This performance, influenced by varied market dynamics, underscores the strategic changes the company is undergoing to reposition itself for future growth.
Evoke Reports Mixed Results for H1 2024 Amid Strategic Transformation
Revenue Decline Amid UK Market Weakness
The revenue decline was predominantly driven by an 8% drop in UK retail revenue, highlighting the pressures faced in the domestic market. However, the UK and Ireland online segment managed a modest 1% increase, showcasing resilience in digital operations despite the broader challenges. Meanwhile, international revenue remained largely flat, indicating stability in Evoke’s global operations but also a lack of significant growth momentum in these regions.
Decreased EBITDA Reflects Strategic Challenges
Evoke’s Adjusted EBITDA for H1 2024 came in at £116 million, marking a 26% decrease compared to the same period last year. This decline reflects not only the lower revenues but also a reduction in gross margins, influenced by changes in the company’s product and country mix. These figures suggest that while Evoke is making strategic adjustments, the financial impact of these changes is still unfolding, with profitability currently under pressure.
Significant Post-Tax Losses Due to Exceptional Costs
One of the most striking figures in Evoke’s H1 2024 results is the £143.2 million post-tax loss, a significant increase from the £32.5 million loss recorded in H1 2023. This sharp rise in losses is attributed to £72 million in exceptional costs, primarily related to the company’s exit from the US B2C market and ongoing integration and transformation expenses. These exceptional items highlight the financial burden of Evoke’s strategic shift but are positioned as necessary steps towards long-term profitability.
Strong Liquidity Position Despite Losses
Despite these financial challenges, Evoke reported a cash position of £116 million as of 30 June 2024, with total liquidity nearing £300 million. This strong liquidity position is crucial as the company navigates its transformation, providing a buffer to absorb short-term financial hits while investing in strategic initiatives aimed at future growth.
Increased Investment in Marketing Amid Transformation
Evoke has significantly ramped up its marketing efforts, with marketing expenditure increasing by 12% to reach £16 million. The online marketing ratio temporarily surged to 25%, reflecting the company’s aggressive strategy to bolster its digital presence and capture market share in a competitive landscape. This increased marketing spend is part of Evoke’s broader strategy to rejuvenate its brand and drive future growth, even as it deals with current financial headwinds.
Strategic and Operational Overhaul for Long-Term Growth
2024 has been a year of profound change for Evoke, with the company undergoing a comprehensive rebranding and implementing a new strategy aimed at achieving mid- to long-term profitable growth. This includes a reorganisation of the company’s operating model and a complete overhaul of its executive leadership team. These changes are expected to deliver £30 million in cost efficiencies by the end of FY24, positioning Evoke for a more streamlined and effective operation.
Future Outlook: Gradual Recovery and Profitability
Looking ahead, Evoke is cautiously optimistic about the second half of 2024, projecting revenue growth of 5-9%. This expected growth is driven by cost-saving initiatives and enhanced product offerings, which are anticipated to improve profitability. The company has maintained its FY25 targets, including an adjusted EBITDA margin of at least 20% and annual revenue growth of 5-9%. These targets reflect confidence in the strategic direction, despite the short-term challenges.
CEO’s Vision for Sustainable Success
Per Widerstrom, Evoke’s CEO, acknowledged the mixed results but emphasized the underlying strength of the business and the progress made in its strategic transformation. He stated, “While the financial performance in the first half was disappointing and behind our initial plan, the underlying health of the business is continually getting stronger. The corrective actions we have already taken give us even more confidence that our strategic approach is sound and that we will achieve sustainable success.”
Widerstrom highlighted that the scale of change at Evoke is significant but necessary to achieve mid- and long-term profitable growth and value creation. He reiterated the company’s commitment to bold, decisive actions that will not only turnaround short-term trading performance but also build a more profitable, sustainable, and cash-generative business in the future.
Strategic Partnerships and Innovations
Evoke is also investing in strategic partnerships to enhance its operations and customer offerings. In July 2024, the company partnered with Mindway AI to integrate AI-driven solutions for player protection. This partnership is part of the company’s broader commitment to responsible gaming and innovation, which are seen as key pillars for sustainable growth in a competitive industry.
Conclusion: The Results
Evoke’s H1 2024 results reflect a company in the midst of a significant transformation. While the financial performance has been challenging, the strategic actions taken by the company’s leadership are laying the groundwork for future success. With a clear plan and a commitment to innovation, the company is positioning itself for a return to growth and profitability, with the second half of 2024 set to be a critical period in this journey.
FAQs About Evoke’s for H1 2024 Results
1. What was Evoke’s financial performance in H1 2024?
It reported a 2% year-on-year decline in revenue for H1 2024, totaling £862 million ($1.1 billion). The company also experienced a significant 26% decrease in Adjusted EBITDA, which amounted to £116 million. Additionally, the company posted a £143.2 million post-tax loss, primarily due to exceptional costs related to strategic changes.
2. What were the main factors contributing to the revenue decline?
The revenue decline was mainly driven by an 8% drop in UK retail revenue. While the UK and Ireland online segment saw a modest 1% increase, international revenue remained flat. The decrease in overall revenue was also influenced by changes in the company’s product and country mix.
3. What were the exceptional costs that led to a significant post-tax loss?
The Company incurred £72 million in exceptional costs during H1 2024. These costs were primarily associated with the company’s exit from the US B2C market and ongoing integration and transformation expenses as part of its broader strategic overhaul.
4. How is Evoke’s liquidity position as of June 30, 2024?
Despite the financial challenges, the company maintained a cash position of £116 million as of June 30, 2024. The company’s total liquidity was nearing £300 million, providing a strong financial buffer as it continues its strategic transformation.
5. What changes has Evoke made to its marketing strategy?
The company increased its marketing expenditure by 12%, reaching £16 million in H1 2024. The online marketing ratio temporarily rose to 25%, reflecting the company’s strategy to strengthen its digital presence and capture more market share.
6. What strategic and operational changes is Evoke implementing in 2024?
It is undergoing a significant transformation in 2024, including a comprehensive rebranding and a new strategy focused on achieving mid- to long-term profitable growth. This includes a reorganisation of the company’s operating model and a complete overhaul of its executive leadership team, expected to deliver £30 million in cost efficiencies by the end of FY24.
7. What is Evoke’s outlook for the second half of 2024?
It expects revenue growth of 5-9% in the second half of 2024, driven by cost-saving initiatives and enhanced product offerings. The company is optimistic about improving profitability and meeting its FY25 targets, which include an adjusted EBITDA margin of at least 20% and annual revenue growth of 5-9%.
8. How is Evoke leveraging AI in its operations?
In July 2024, the company partnered with Mindway AI to integrate AI-driven solutions for player protection. This partnership aligns with the company’s commitment to responsible gaming and innovation, which are central to its strategy for sustainable growth.
9. What are the long-term goals of Evoke’s strategic transformation?
It aims to achieve mid- and long-term profitable growth and value creation through its strategic transformation. The company is focused on building a more profitable, sustainable, and cash-generative business, with a clear plan, vision, and financial targets for the coming years.
