Evoke LON: EVOK executives said the group delivered higher profitability and improved operating momentum in fiscal 2025, while working to offset the impact of U.K. duty changes and continuing a board-led strategic review that includes ongoing discussions with Bally’s Interactive about a possible offer for the company.
Strategic review continues; no forward guidance provided
CEO Per Widerström opened the call by reiterating that the board launched a strategic review after U.K. duty changes announced in November, aimed at assessing options to maximize shareholder value. Widerström said the process has been “comprehensive,” with “wide-ranging third party interest,” and confirmed the company remains in active discussions with Bally’s Interactive regarding a possible offer for the whole group.
Because of the ongoing review, management kept the presentation “short and focused,” provided no forward guidance, and said it would not answer questions about the strategic review beyond the prepared remarks. Widerström added that operational priorities remain “disciplined execution, driving profitable growth, and strengthen the balance sheet.”
FY2025: revenue up 2%, adjusted EBITDA up 14%
Widerström said Evoke delivered continued growth in 2025, with revenue up 2% to GBP 1.8 billion and Q4 the company’s highest revenue quarter. Adjusted EBITDA rose 14% to GBP 356 million, with margins reaching 20%. He attributed the profit improvement to structural changes across the business, including “better market efficiency, improved bonus management, and a more disciplined cost base.”
He also said leverage declined to 5.2x from 5.7x as the company continued deleveraging. Widerström noted that the company withdrew its medium-term targets following the U.K. duty changes, but said deleveraging remains a core focus, alongside disciplined capital allocation and cash generation.
Segment performance: International growth offsets U.K. online decline
CFO Sean Wilkins described a “mixed” revenue picture across markets in 2025. In UK and Ireland Online, revenue declined 3%, with sports down 12% and gaming up 2%. Wilkins said sports revenue was affected by lapping “operator-friendly sports results” from the prior year and by “stakes pressure” tied to a deliberate focus on customer value over volume, as well as broader market trends—particularly in horse racing. Gaming held up, supported by what he described as strong William Hill performance.
Wilkins also said that while total 888 revenue in the U.K. fell 10%, the brand’s contribution increased 9% due to a refined marketing approach emphasizing return on investment before increasing spend.
International was “the growth engine,” with revenue up 9%, driven by core markets up 17% combined. Wilkins cited the benefit of the Winner acquisition in Romania and said Evoke achieved record revenues in Italy and Denmark, where it continued taking market share. Spain was “broadly flat,” which he attributed to product gaps (particularly in sports) and less effective marketing and promotional spending versus competitors—an area management said it has been addressing into Q1 2026.
In Retail, gaming revenue rose 5% due to a rollout of new machines, while sports declined 5% amid “challenging high street conditions” and the prior-year sports results comparison.
Margin expansion, retail closures, and cash flow details
Wilkins said adjusted EBITDA margin improved to 20%, up 220 basis points versus fiscal 2024, exceeding the company’s target of 100 basis points per year improvement. He credited promotional and marketing efficiency, improved gross margin, a lower marketing ratio, operating model efficiencies, and disciplined cost management.
- UK & IE Online EBITDA grew 6% despite lower revenue, driven by improvements to bonusing and marketing efficiency.
- International EBITDA grew 35%, aided by growth and operating leverage, the migration of Mr Green to an in-house platform, and the closure of SI Sportsbook, which Wilkins said were “big drivers” of improved margins.
- Retail EBITDA declined 17%, primarily due to cost inflation and the impact of a fixed-cost base with slightly lower revenue.
As part of a retail estate review, Wilkins said Evoke identified around 230 shops for closure. He said 68 closed in Q4 2025, with the remainder expected to close in Q2 2026. The closures are “broadly break even from a cash perspective in year given closure costs,” but are expected to add GBP 11 million to EBITDA on a fully annualized basis. In the Q&A, Wilkins emphasized that the retail estate overall is “strongly EBITDA positive,” but includes a subset of loss-making shops, and said closures can also be EBITDA-accretive when revenue transfers to nearby stores with limited incremental costs.
On cash flow, Wilkins said Evoke generated GBP 188 million of underlying free cash flow and reduced leverage to 5.2x, but he described overall cash performance as disappointing, largely due to timing. He said the year ended with roughly a GBP 50 million outflow, driven by EBITDA coming in below earlier expectations and by working capital and one-off items. He cited normalization of accounts payable after a prior-year timing benefit, payments toward a legacy Austrian gaming tax liability, and a delayed Romanian license guarantee refund the company had expected to receive.
Addressing a specific investor question, Wilkins said none of the working capital outflow related to Austrian duty payments. He said Austrian duty in 2025 was GBP 8 million, and also referenced one-offs including exceptional items related to platform investment and transformation costs, plus payments and deposits for Italian licenses.
Q1 2026: U.K. online stronger than expected, international mixed
Wilkins said trading in Q1 2026 started “in line with expectations,” though with a different mix than anticipated. He said U.K. Online performed better than expected, driven by gaming and “record revenue levels” for William Hill Vegas, while 888 continued to decline in revenue. Overall, U.K. and Ireland Online delivered double-digit contribution growth in Q1, which Wilkins called an important start given the new duty rates.
International performance was weaker than management had hoped, with Italy up 20% in Q1 and Denmark continuing to grow strongly, though Wilkins noted Denmark will begin lapping its platform migration. He highlighted concerns in Spain, where the business continued to lag the market despite product improvements—particularly to William Hill Sports—and said investment in product and marketing is being reallocated from the U.K. toward international markets following the duty changes. In Romania, Wilkins said the market has struggled after tax changes in Q3 and amid a recession, with rising black market activity pressuring regulated operators. He said the company has reduced marketing and promotions to protect profitability and has seen a drop-off among higher-value players.
In Retail, Wilkins said the business is seeing good like-for-like growth and market share gains, but that reported top-line performance may look weaker due to store closures, while profitability should improve.
During Q&A, Wilkins said the company has not seen a meaningful impact in the first 30 days following the U.K. tax implementation and continued to expect 50% mitigation of the duty impact in the first full year post-implementation. He also said Evoke expects market consolidation, with smaller operators disproportionately affected.
Widerström said the company has not yet seen material changes in U.K. media pricing, though he observed a shift in spend as “long tail operators” reduce marketing and tier-one operators absorb more exposure. On artificial intelligence, Widerström said the company aims to be “AI-first,” and that benefits to date have been primarily in cost efficiency, with revenue benefits emerging in areas such as customer lifecycle management and sportsbook trading.
Closing the call, Widerström said the company is focused on the “three pillars” of profitable growth, expanding EBITDA margins, and deleveraging, and said Evoke entered Q1 2026 with “great momentum.”
About Evoke LON: EVOK
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