REG - Evoke PLC - Q3 2024 trading update

EvokeAnnouncement

18/10/2024 07:00

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RNS Number : 6821I  Evoke PLC  18 October 2024

18 October 2024

evoke Plc

("evoke" or "the Group")

 

Q3 2024 trading update

Double-digit online revenue growth in core markets; no change to full year
expectations

evoke (LSE: EVOK), one of the world's leading betting and gaming companies
with internationally renowned brands including William Hill, 888 and Mr Green,
today announces a trading update for the three months ended 30 September 2024
("Q3-24" or the "Period"). Further detail on the financial results by division
is included as an appendix to this announcement.

Financial highlights (unaudited)

·    Group: Revenue of £417m, 3% ahead of Q3 2023 (+4% in constant
currency ("cc")), the first quarter of year-over-year growth since Q1 2022
supported by market share gains in key international markets. Good underlying
trends including 10% growth in gaming, partially offset by particularly
customer-friendly sports results during September, which impacted Group
revenue by approximately £17m. No change to the expectation for the second
half of 2024 to be in line with the mid-term target of 5-9% year-over-year
growth.

·    Online: Revenue growth of 8%, with 11% growth in Core markets, which
now represent nearly 85% of the Group's online revenues when including
Romania.

·    UK&I Online: 3% revenue growth, with accelerated trends in gaming
(+12%), offset by weaker trends in betting (-13%), where customer-friendly
sporting results in September, particularly UK football, impacted revenue by
approximately £10m.

·    International: 14% revenue growth (+17% cc), driven by 26% growth
(+29% cc) in core international markets of Italy, Spain, Denmark and Romania,
which make up over two thirds of international revenue, including strong
trends in Romania which is now a core market.

·    Retail: Revenues -9%, reflecting weaker than expected betting net win
margins due to the customer-friendly results (c.£5m impact), and previously
indicated market share losses in gaming. New Retail managing director started
in September and identified and actioned a series of measures to improve
trading in the short-term. Rollout of over 5,000 new gaming machines from
October, and on track to complete the entire estate within Q1 2025.

Strategic highlights

In line with the plans laid out at the H1 2024 Results in August, the Group is
executing a turnaround in short-term trading with clear priorities and
decisive actions, while simultaneously executing against its growth strategy
by enhancing its competitive advantages to drive significant mid and long-term
value creation. During the Period the Group made important progress against
these plans:

1.     Drive profitable and sustainable revenue growth

·      Strategic focus on Core markets delivering strong results with
market share gains across several core markets. Italy revenue growth was 31%
cc with the Group taking a podium position in the online casino market for the
first time during Q3 2024, with 888casino now the clear market-leader in the
casino-first segment in Italy.

·      Positive customer reaction to a series of major product launches
including all-new Bet Builder and Impact Sub, and a new William Hill Vegas app
with an extended range of games and promotions. Improved functionality on
William Hill app with a relaunched home page and simpler navigation resulting
in improved ease of use.

·      More effective and efficient approach to player bonuses and
promotions, including launch of all-new customer engagement platform at the
end of the period, which provides the capability to deliver a step-change in
the personalisation of customer communications.

·      Enhanced brand strength, for example William Hill offered more
top prices on horse racing than any other major bookmaker throughout June,
July and August, as verified by Oddschecker, and William Hill launched the Top
Acca for the new football season in August, giving customers access to the
most popular acca in one click.

·      All the above driving strong progress in underlying key value
drivers, with Average Revenue Per User (ARPU) +8% despite the sports results
headwind, driven by focus on core customer cohorts to drive retention,
increase share of wallet, and improve player values.

2.     Improve profitability and efficiency through operating leverage

·      Marketing costs reducing sequentially in line with plans while
still achieving strong online revenue growth. Improved optimisation being
supported by a new MMM (marketing mix model) that enables quick decisions to
scale up and down marketing channels based on near real-time data

·      Cost savings being delivered in line with plans, with cash cost
savings of £23m year-to-date through highly effective new operating model,
with a reduction in layers in the business from 10 to six, and a streamlined
office footprint including significantly expanding capabilities in Manila to
enable further business process outsourcing and automation.

·      Strategic initiatives strengthening overall capabilities at
efficient cost, with Operations 2.0 initiative accelerating investments in
automation and artificial intelligence across all group functions.

3.     Deleverage through disciplined capital allocation

·      Acquisition of winner.ro completed in early October 2024,
building a market-leading position in Romania and the creation of evoke's
fifth core market, enhancing earnings and reducing leverage from 2025 onwards.
Strong trading trends in Romania across both 888 and Winner brands with
customer migration in Q4 2024 to unlock cost and revenue synergies. Targeting
a podium position in the market with a dual-brand strategy operating from a
single and cost-effective platform.

·      Conclusion of sale of New Jersey and Virginia businesses with
full exit from US B2C now expected in Q1 2025 with the sale of Colorado and
Michigan.

Outlook

·      No change to previously issued guidance for H2 2024 revenue
growth of 5-9%, and Adjusted EBITDA margin expected to improve to
approximately 21%.

·      No change to existing FY25 expectations, including Adjusted
EBITDA margin of at least 20%, with unchanged medium-term targets of 5-9%
revenue growth per year, c.100bps of Adjusted EBITDA Margin expansion per
year, and leverage of below 3.5x by the end of 2026.

 

Per Widerström, CEO of evoke, commented:

"I have now been in position for a year, and I am pleased that the turnaround
of the business is working, with the first quarter of revenue growth since Q1
2022 and positive underlying trends. We are achieving our plans to improve
trading in the short-term, while simultaneously radically transforming the
Group's capabilities for the long-term.

Our online business is a clear growth engine for the Group and we saw a return
to double-digit online revenue growth in our core markets in Q3 2024
underpinned by our focused market strategy and supported by important product
investments and the results of our clearer customer value proposition and
segmentation.

I am pleased to report a strong quarter of progress as we continue to
implement our strategy for success and deliver our value creation plan. We are
moving decisively and at pace to position evoke for long-term growth, and I
look forward to providing further updates about our progress in the coming
months."

 

Enquiries and further information:

 evoke Plc                                       +44(0) 800 029 3050
 Per Widerström, CEO

 Sean Wilkins, CFO

 Vaughan Lewis, Chief Strategy Officer

 Investor Relations                              ir@evokeplc.com (mailto:ir@evokeplc.com)

 James Finney, Director of IR

 Media                                           evoke@hudsonsandler.com (mailto:evoke@hudsonsandler.com)
 Hudson Sandler                                  +44(0) 207 796 4133

 Alex Brennan / Hattie Dreyfus / Andy Richards

 

About evoke Plc:

evoke plc (and together with its subsidiaries, "evoke" or the "Group") is one
of the world's leading betting and gaming companies. The Group owns and
operates internationally renowned brands including William Hill, 888, and Mr
Green. Incorporated in Gibraltar, and headquartered and listed in London, the
Group operates from offices around the world.

The Group's vision is to make life more interesting and its mission is to
delight players with world-class betting and gaming experiences.

Find out more at: https://www.evokeplc.com (https://www.evokeplc.com)

 

Important Notices

This announcement may contain certain forward-looking statements, beliefs or
opinions, with respect to the financial condition, results of operations and
business of evoke. These statements, which contain the words "anticipate",
"believe", "intend", "estimate", "expect", "may", "will", "seek", "continue",
"aim", "target", "projected", "plan", "goal", "achieve", words of similar
meaning or other forward looking statements, reflect evoke's beliefs and
expectations and are based on numerous assumptions regarding evoke's present
and future business strategies and the environment evoke will operate in and
are subject to risks and uncertainties that may cause actual results to differ
materially. No representation is made that any of these statements or
forecasts will come to pass or that any forecast results will be achieved.
Forward-looking statements involve inherent known and unknown risks,
uncertainties and contingencies because they relate to events and depend on
circumstances that may or may not occur in the future and may cause the actual
results, performance or achievements of evoke to be materially different from
those expressed or implied by such forward looking statements. Many of these
risks and uncertainties relate to factors that are beyond evoke's ability to
control or estimate precisely, such as future market conditions, currency
fluctuations, the behaviour of other market participants, the actions of
regulators and other factors such as evoke's ability to continue to obtain
financing to meet its liquidity needs, changes in the political, social and
regulatory framework in which evoke operates or in economic or technological
trends or conditions. Past performance of evoke cannot be relied on as a guide
to future performance. As a result, you are cautioned not to place undue
reliance on such forward-looking statements. The list above is not exhaustive
and there are other factors that may cause evoke's actual results to differ
materially from the forward-looking statements contained in this announcement.
Forward-looking statements speak only as of their date and evoke, its
respective parent and subsidiary undertakings, the subsidiary undertakings of
such parent undertakings, and any of such person's respective directors,
officers, employees, agents, affiliates or advisers expressly disclaim any
obligation to supplement, amend, update or revise any of the forward-looking
statements made herein, except where it would be required to do so under
applicable law. No statement in this announcement is intended as a profit
forecast or a profit estimate and no statement in this announcement should be
interpreted to mean that the financial performance of evoke for the current or
future financial years would necessarily match or exceed the historical
published for evoke.

 

Appendix: Divisional Summary

 

Q3 2024

 

                                   UK&I Online                                      Retail                                             International                                       Group

   Unaudited                       Q3                 Q3               %            Q3                 Q3                 %            Q3                  Q3                  %           Q3            Q3            %
   £m                              2024               2023             Change       2024               2023               Change       2024                2023                Change      2024          2023          Change

   Average monthly actives (000s)      1,135              1,186        -4%                                                                     513                 461         +11%            1,647         1,648     -0%

   Sportsbook stakes               548.9                  607.0        -10%             374.4          394.0              -5%               243.1              248.2           -2%          1,166.4       1,249.2      -7%
   Sportsbook net revenue margin   8.6%               9.0%             -0.4ppt      16.8%              17.9%              -1.0ppt      7.5%                7.2%                0.3ppt      11.0%         11.4%         -0.4ppt

   Betting revenue                        47.1              54.4       -13%                63.1               70.4        -10%                18.1                17.9         +2%             128.3         142.6     -10%
   Gaming revenue                      115.2              102.8        +12%                51.5               55.2        -7%              121.5               104.3           +17%            288.3         262.4     +10%
   Total revenue                       162.4              157.2        +3%              114.6              125.6          -9%              139.7               122.2           +14%            416.6         405.0     +3%

 

Year to Date ("YTD") 2024

 

                                   UK&I Online                                 Retail                                       International                                        Group

   Unaudited                       YTD             YTD             %           YTD             YTD             %            YTD                 YTD                 %            YTD             YTD             %
   £m                              2024            2023            Change      2024            2023            Change       2024                2023                Change       2024            2023            Change

   Average monthly actives (000s)      1,230           1,211       +2%                                                              536                 511         +5%               1,766           1,722      +3%

   Sportsbook stakes                 1,755.7        1,991.9        -12%         1,170.4         1,240.0        -6%               855.7               832.7          +3%           3,781.7         4,064.5        -7%
   Sportsbook net revenue margin   10.0%           9.6%            0.5ppt      18.3%           18.8%           -0.6ppt      7.0%                8.2%                -1.2ppt      11.9%           12.1%           -0.2ppt

   Betting revenue                      176.1           190.6      -8%              213.6           233.6      -9%                 59.6                68.2         -13%              449.3           492.4      -9%
   Gaming revenue                       324.8           302.5      +7%             159.3            171.5      -7%               345.1               320.2          +8%               829.2           794.2      +4%
   Total revenue                        500.9           493.1      +2%              373.0           405.1      -8%              404.7                388.5          +4%            1,278.6        1,286.6        -1%

 

 

Note: Subtotals, totals, and percentage changes have been calculated based on
the underlying numbers. Any differences due to rounding.

 

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