Evolution’s Q1 performance dips due to European market challenges, despite growth in the Americas

Evolution reported a mixed regional performance in the first quarter of 2026, with growth in the Americas failing to fully offset weaker results in Europe, where regulatory conditions continued to affect revenue.

Group net revenue for the quarter declined 1.5% year-on-year to €513 million ($600.21 million), while EBITDA fell 1.9% to €335.3 million ($392.30 million), resulting in a margin of 65.4%.

Profit for the period stood at €251.9 million ($294.72 million), compared to €254.7 million ($298.00 million) a year earlier, and earnings per share before dilution rose to €1.26 ($1.47) from €1.24 ($1.45).

Chief Executive Officer Martin Carlesund said regional trends diverged during the period, noting that “it was somewhat mixed in the quarter, as Europe is not performing well at the moment”.

Based on customer IP data, approximately 48% of the company’s revenue came from regulated markets.

Europe weighed on the quarterly results, with the company citing regulatory volatility and declining channelization rates. Carlesund pointed to conditions in the UK, the Netherlands, and Sweden as particular concerns. 

“Due to regulations in some markets failing to strike the right balance between player protection and entertainment, players continue to access unregulated operators, and channelisation is decreasing fast and significantly. This harms the total business, and the most vulnerable players lose the protection of playing with regulated operators and products from Evolution,” he said.

Chief Executive Officer Martin Carlesund

The company reported that Europe declined 5.9% quarter-on-quarter, extending a weak end to 2025. The company also lamented the pressure of self-imposed ring-fencing measures designed to prevent services from reaching unregulated markets, following a prior investigation by the UK Gambling Commission. 

These measures, while affecting short-term profitability, were described as necessary for long-term positioning.

Outside Europe, performance was stronger. Latin America recorded year-on-year growth of 29.3%, supported by continued demand and the acquisition of a live casino studio in Argentina. The company also indicated plans to expand capacity in Brazil and Colombia through new studios and additional space. 

North America delivered improved growth compared with the previous quarter, although results appeared softer in euro terms due to currency effects. In local currency, year-on-year growth reached approximately 21.4%, compared with 10.1% when reported in euros. During the quarter, Evolution completed construction of a second studio in Michigan, with operations expected to begin in the coming months.

Carlesund said: “Both North America and LatAm reported yet another all-time high revenue. Growth rate in North America improved compared to the fourth quarter. It looks somewhat soft in our reporting currency, the euro, but in US dollars, year-on-year growth was roughly 21% compared to 19% in Q4.”

The company signaled a change in investment priorities toward the Americas, with Carlesund describing Europe as “the main headache right now.” He added, “The US and LatAm are where we will invest the most in 2026. Both regions have high potential with life still being in the early days.”

In Asia, Evolution reported a second consecutive quarter of growth, with revenue increasing 2.2% quarter-on-quarter as it continued efforts to address cybercrime challenges. The company noted that while conditions have improved compared to the previous year, volatility is expected to persist.

Africa also continued to expand from a smaller base, supported by demand for newly launched content. Carlesund said: “Fresh games are widely popular in the region, and our recently launched Red Baron has so far exceeded expectations. Also, our RMG offering is starting to gain traction.”

During the quarter, Evolution launched a second studio in Latvia and acquired the previously mentioned additional studio in Argentina. The company’s revenue remained primarily driven by live casino products, which generated €434.9 million ($508.83 million), while RNG games contributed €78.2 million ($91.49 million).

Operating expenses rose to €220.4 million ($257.87 million), largely due to higher personnel costs linked to expansion and new table launches. Operating profit declined 3.6% to €292.6 million ($342.34 million), with a margin of 57.0%. Cash flow from operating activities totaled €345.8 million ($404.59 million), while cash and cash equivalents stood at €1,098.0 million ($1,284.66 million) at the end of the period.

Despite near-term challenges in Europe, the company maintained a positive long-term outlook for the region. Carlesund said regulators are expected to adjust policies over time to better balance player protection and market participation, enabling a return to regulated channels.

Founded in 2006 and headquartered in Sweden, Evolution develops and licenses online casino solutions to gaming operators. The company serves more than 870 operators globally and employs over 22,800 people across studios in Europe, Asia, and the Americas.