Evoke, the parent company behind notable brands such as William Hill, 888, and Mr Green, has reported a 2% year-on-year decline in revenue for the first half (H1) of 2024. The company’s revenue totalled £862 million ($1.1 billion), reflecting a challenging period marked by a significant 26% drop in adjusted EBITDA to £116 million. This financial update comes amid substantial strategic and operational changes aimed at steering the company towards sustainable, long-term growth. Despite the hurdles, Evoke remains optimistic about its future, forecasting revenue growth of 5-9% for the second half of 2024.
Revenue Decline Across Segments
Evoke’s revenue contraction was primarily driven by an 8% drop in UK retail revenue, signaling tough market conditions in the region. While the UK and Ireland online segment managed a modest 1% increase, international revenue remained flat, offering little relief to the overall financial performance.
EBITDA Decline and Margins Pressure
The company reported an adjusted EBITDA of £116 million, representing a sharp 26% decrease compared to the previous year. The decline in EBITDA is largely attributed to lower revenues and a reduction in gross margins. This margin contraction reflects changes in Evoke’s product and country mix, as the company navigates through a transformative period.
Widening Post-Tax Losses
Evoke’s financial strain is further highlighted by a substantial post-tax loss of £143.2 million, a marked increase from the £32.5 million loss recorded in H1 2023. This surge in losses is mainly due to £72 million in exceptional costs, primarily related to the company’s exit from the US B2C market and ongoing integration and transformation expenses.
Rebranding and New Strategy Implementation
2024 has been a year of significant strategic realignment for Evoke. The company has undertaken a comprehensive rebranding effort, coupled with the implementation of a new strategy designed to achieve mid and long-term profitable growth. These changes are not merely cosmetic; they represent a fundamental shift in how Evoke operates, with a focus on efficiency and scalability.
Executive Leadership Overhaul and Operating Model Reorganization
As part of its broader transformation, Evoke has reorganized its operating model and completely overhauled its executive leadership team. These moves are aimed at enhancing the company’s decision-making capabilities and driving a more agile, responsive business structure. The reorganization is expected to deliver £30 million in cost efficiencies by the end of FY24, providing a critical boost to the company’s profitability.
Increased Marketing Expenditure
In line with its strategic priorities, Evoke has increased its marketing expenditure by 12%, bringing it to £16 million. This rise in spending is primarily concentrated on online marketing, where the company has temporarily elevated its marketing ratio to 25%. This aggressive marketing push is aimed at reinforcing the company’s brands and driving customer acquisition and retention, particularly in key online markets.
Impact of the US B2C Market Exit
One of the most significant challenges Evoke faced in H1 2024 was its exit from the US B2C market. This move, while strategically necessary, incurred substantial exceptional costs of £72 million. However, the decision to withdraw from this market is seen as a necessary step to streamline the company’s operations and focus on more profitable regions and segments.
Player Protection and AI Integration
In response to evolving regulatory demands and a growing emphasis on responsible gaming, Evoke partnered with Mindway AI in July 2024. This partnership aims to integrate AI-driven solutions for player protection, reflecting Evoke’s commitment to safer gambling practices. By leveraging AI technology, the company hopes to enhance its player protection protocols, mitigate risks, and build a more sustainable gaming environment.
Balancing Short-Term Challenges with Long-Term Goals
Despite the disappointing financial performance in H1 2024, Evoke’s CEO Per Widerstrom remains optimistic about the company’s future. He acknowledges the short-term challenges but emphasizes the underlying health of the business and the soundness of the strategic approach. The company’s focus on transformation, efficiency, and growth is expected to pay off in the long run, setting the stage for sustainable, profitable growth.
Strong Cash Position and Liquidity
Evoke’s financial position remains relatively strong, with a cash balance of £116 million as of June 30, 2024, and total liquidity nearing £300 million. This robust liquidity provides the company with the necessary flexibility to navigate through its ongoing transformation and invest in future growth initiatives.
Revenue Growth Projections for H2 2024
Evoke has set an ambitious target for H2 2024, with revenue growth projected to be between 5-9%. This growth is expected to be driven by a combination of cost-saving initiatives, enhanced product offerings, and strategic market focus. The company is confident that these factors will contribute to improved profitability and operational efficiency in the latter half of the year.
FY25 Targets and Long-Term Vision
Evoke has maintained its FY25 targets, which include an adjusted EBITDA margin of at least 20% and annual revenue growth of 5-9%. These targets underscore the company’s commitment to achieving sustainable growth and creating long-term value for its shareholders. As Evoke continues to implement its transformation strategy, it aims to emerge as a more robust, profitable, and resilient player in the gaming and betting industry.
Evoke’s H1 2024 financial results reflect a period of significant challenge and transformation for the company. While the short-term financial performance has been disappointing, the company is undergoing a comprehensive overhaul that is expected to drive long-term growth and profitability. The strategic initiatives undertaken in 2024, including the rebranding, leadership changes, and focus on efficiency, are laying the groundwork for a stronger, more sustainable business.
CEO Per Widerstrom’s optimism is rooted in the belief that these transformative actions, while substantial, are necessary to achieve the company’s long-term goals. With a clear plan and financial targets in place, Evoke is poised to navigate the current challenges and capitalize on future opportunities. The company’s outlook for H2 2024 and beyond remains positive, with expectations of revenue growth and improved profitability as it continues to execute its strategic vision.