Does anyone know what this means, it was also last year, and I'm scratching my head.
"The annual general meeting resolved to reduce the share capital by EUR 22,631.83 through cancellation of 7,371,042 shares held by the company and an increase of the share capital of the company by EUR 22,631.83 by way of a bonus issue without issue of new shares. The purpose of the reduction of the share capital is for transfer to the company's non-restricted equity. The purpose of the increase of the share capital through bonus issue is to restore the share capital to its original level after the completed reduction of the share capital. Following the completion of the bonus issue, the share capital of the company will thus be equal to the share capital before the reduction."
The way I would interpret it, is that instead of deleting the share buybacks, they distribute them to the shareholders through bonus issue (giving a few extra shares for every x amount of shares owned). Yet no such thing has happened last year, and the share count is constantly going down as if they were deleted.
No you have got it wrong. The company bought back some of its own shares and is now permanently deleting them. To keep the "share capital" number the same, they move money from another part of equity to share capital. No new shares are given to anyone.
The total number of shares continues to decrease as the company cancels more treasury shares.
I think I get it now. What tripped me was the "EUR 22,631". Somehow I thought that's the value of the shares, but it's thousands, that's like nothing. The math suggests it's the nominal value of shares. Wonder why they had to put that confusing detail in there.
Echo the above. It is important to distinguish the certainty aspect of regulated markets commanding a higher multiple but the lower growth and margins as detrimental to multiples. I think the latter will have a stronger impact - increasing share of revenues from mature markets with increasing gambling protections limiting market growth rates
Thank you for all your analysis and for sharing them.
Just one point the change in regulated vs unregulated markets comes due to Brazil inclusion in regulated markets this year. Probably (I did not do some estimates yet) if you exclude Brazil from regulated markets, revenue will have declined comparing Q4. Hope makes sense my comment.
Why would that matter? As certain countries make regulations, you switch to regulated.
Regulated markets increased almost 20% yoy. Yes, a lot of that is just from moving unregulated revenue to regulated.
The question is how much are ebitda margins regulated vs unregulated. I estimate to be 85% u and 40% r (very rough estimation based on ebitda decline vs regulated revenue percent change). Probably a bigger discrepancy in terms of EPS.
Now is the time to accumulate, not sell, imo. Until now the stock fell on basically very good results. I don't know how, but the market almost always manages to position itself in such a way that the bottom of results will coincide with a certain recovery of stock price (since people hate selling at the bottom, but not after a bump in price, making them act quickly and take advantage of the hike before the price plummets again). If we're there yet or not, I don't know, but certainly it's good that finally there are some bad results to satisfy the rule of 'buy the rumor sell the news'.
Not sure I agree with this. Do you have a basis for the calculation? Evolution does not disclose revenue specifically from Brazil, and the Latin America region includes other countries as well. Additionally, management noted that growth in Brazil this quarter was actually slower due to teething problems.
No I haven't got any as I need to analyse a bit more in deep the results. Is Martin who points out in the call that the change in regulated vs unregulated comes due to Brazil. As far as I understand that ringfencing is done mainly in Europe so should not affect unregulated markets. I do not think they are trying to pivot towards regulated markets at all. Just my opinion 😊.
Okay, well then based on that, revenue from regulated markets would not have declined when excluding Brazil. If we assume regulated revenue in Q1 was 41% instead of 45%, then it actually grew by 9% YoY, excluding the impact from Brazil (€195 million in Q1 2024 vs €214 million in Q1 2025).
“Even if regulated revenue grows at a mid- to high-teens pace, continued erosion in unregulated markets would weigh on total growth and shareholder returns.”
I find this comment very interesting and could go both ways. While I agree slower growth in total could harm shareholder returns. I question if Evolution would trade back to a 20+ P/E multiple IF their regulated revenues become a majority of their revenue / profits. I tend to believe the high risk unregulated market revenue is what scares investors and is suppressing their multiple. If investors see consistency and decrease of risk from unregulated markets Evolution may become an investable asset for more institutions.
I agree that it definitely swings both ways. It's worth remembering, though, that regulated markets are lower margin than unregulated ones so while you may gain in certainty, you lose in pure profit. In the long term, however, it's now clear that Evolution will generate the majority of its revenue from regulated markets.
Does anyone know what this means, it was also last year, and I'm scratching my head.
"The annual general meeting resolved to reduce the share capital by EUR 22,631.83 through cancellation of 7,371,042 shares held by the company and an increase of the share capital of the company by EUR 22,631.83 by way of a bonus issue without issue of new shares. The purpose of the reduction of the share capital is for transfer to the company's non-restricted equity. The purpose of the increase of the share capital through bonus issue is to restore the share capital to its original level after the completed reduction of the share capital. Following the completion of the bonus issue, the share capital of the company will thus be equal to the share capital before the reduction."
The way I would interpret it, is that instead of deleting the share buybacks, they distribute them to the shareholders through bonus issue (giving a few extra shares for every x amount of shares owned). Yet no such thing has happened last year, and the share count is constantly going down as if they were deleted.
So what does it actually mean?
No you have got it wrong. The company bought back some of its own shares and is now permanently deleting them. To keep the "share capital" number the same, they move money from another part of equity to share capital. No new shares are given to anyone.
The total number of shares continues to decrease as the company cancels more treasury shares.
I think I get it now. What tripped me was the "EUR 22,631". Somehow I thought that's the value of the shares, but it's thousands, that's like nothing. The math suggests it's the nominal value of shares. Wonder why they had to put that confusing detail in there.
Echo the above. It is important to distinguish the certainty aspect of regulated markets commanding a higher multiple but the lower growth and margins as detrimental to multiples. I think the latter will have a stronger impact - increasing share of revenues from mature markets with increasing gambling protections limiting market growth rates
Good post. So does this mean you’ll just hold it ? No action for now.
I’m holding but not buying.
Hi Wolf,
Thank you for all your analysis and for sharing them.
Just one point the change in regulated vs unregulated markets comes due to Brazil inclusion in regulated markets this year. Probably (I did not do some estimates yet) if you exclude Brazil from regulated markets, revenue will have declined comparing Q4. Hope makes sense my comment.
Regards,
Why would that matter? As certain countries make regulations, you switch to regulated.
Regulated markets increased almost 20% yoy. Yes, a lot of that is just from moving unregulated revenue to regulated.
The question is how much are ebitda margins regulated vs unregulated. I estimate to be 85% u and 40% r (very rough estimation based on ebitda decline vs regulated revenue percent change). Probably a bigger discrepancy in terms of EPS.
Now is the time to accumulate, not sell, imo. Until now the stock fell on basically very good results. I don't know how, but the market almost always manages to position itself in such a way that the bottom of results will coincide with a certain recovery of stock price (since people hate selling at the bottom, but not after a bump in price, making them act quickly and take advantage of the hike before the price plummets again). If we're there yet or not, I don't know, but certainly it's good that finally there are some bad results to satisfy the rule of 'buy the rumor sell the news'.
Not sure I agree with this. Do you have a basis for the calculation? Evolution does not disclose revenue specifically from Brazil, and the Latin America region includes other countries as well. Additionally, management noted that growth in Brazil this quarter was actually slower due to teething problems.
No I haven't got any as I need to analyse a bit more in deep the results. Is Martin who points out in the call that the change in regulated vs unregulated comes due to Brazil. As far as I understand that ringfencing is done mainly in Europe so should not affect unregulated markets. I do not think they are trying to pivot towards regulated markets at all. Just my opinion 😊.
Have a nice weekend!
Regards,
Egoitz
Okay, well then based on that, revenue from regulated markets would not have declined when excluding Brazil. If we assume regulated revenue in Q1 was 41% instead of 45%, then it actually grew by 9% YoY, excluding the impact from Brazil (€195 million in Q1 2024 vs €214 million in Q1 2025).
“Even if regulated revenue grows at a mid- to high-teens pace, continued erosion in unregulated markets would weigh on total growth and shareholder returns.”
I find this comment very interesting and could go both ways. While I agree slower growth in total could harm shareholder returns. I question if Evolution would trade back to a 20+ P/E multiple IF their regulated revenues become a majority of their revenue / profits. I tend to believe the high risk unregulated market revenue is what scares investors and is suppressing their multiple. If investors see consistency and decrease of risk from unregulated markets Evolution may become an investable asset for more institutions.
I agree that it definitely swings both ways. It's worth remembering, though, that regulated markets are lower margin than unregulated ones so while you may gain in certainty, you lose in pure profit. In the long term, however, it's now clear that Evolution will generate the majority of its revenue from regulated markets.