According to an analyst from Regulus Partners, Evolution’s strategic performance in random number generator (RNG) gaming is described as “embarrassing”. This assessment came in response to the news that Evolution’s revenue growth had pushed net profits past €1bn, with growth in both its live and RNG sectors contributing to this success.
While the live casino revenue experienced a significant increase of 28.1%, reaching €1.52bn, the revenue from RNG gaming only rose by 2.6% to €275.3m. Additionally, RNG revenue fell by 3.7% to €69.8m in the fourth quarter. Regulus believes that Evolution has failed to execute its RNG strategy effectively, specifically criticizing its acquisition of NetEnt and its handling of the company since.
The analyst firm expressed disappointment with Evolution’s RNG performance and believes that the company was not the right buyer for NetEnt due to its poorly run operations and overpriced commercial offerings. Regulus is concerned that as a significant player in the industry, Evolution’s struggles in the RNG market could have wider negative implications for the sector.
Regarding Evolution’s global expansion, Regulus acknowledged the encouraging geographic growth and praised Evolution as the best live infrastructure provider. However, it also warned about potential challenges, including the volatile Asian market and regulatory pressures in Europe. The lack of regulation in the US is cited as a barrier to growth, with only seven states currently legalizing igaming.
Regulus expressed skepticism about Evolution’s potential for double-digit growth in Europe and raised concerns about the maturing North American market. Despite these challenges, the firm identified Latin America as a promising region for Evolution’s growth.
Regulus also highlighted Evolution’s growing reliance on top clients, with 1xBet identified as the top customer, followed by Flutter and Entain. The firm expressed concerns that Evolution’s sheer scale means its success or failure has a significant impact on the industry as a whole.
In response to Evolution’s slowing growth, Regulus cautioned against the company trying to buy its way out of trouble, warning of potential supply chain issues if its RNG operational execution continues to falter.