Evoke Plc has reported a disappointing second quarter for 2024, missing its adjusted EBITDA target by £35 million to £40 million. The company attributed this shortfall to high marketing costs and lower-than-expected revenue. Despite these setbacks, Evoke remains optimistic about the second half of the year, citing new leadership and strategic changes as key drivers for future growth. The company plans to implement cost-saving measures and expects to meet its full-year earnings expectations.
Financial Performance and Challenges
Evoke’s financial performance in Q2 2024 fell short of expectations, with the company reporting revenue of £431 million. This figure remained flat compared to the previous year, highlighting the challenges faced by the company. The high marketing costs incurred during the first half of the year significantly impacted the company’s profitability. These costs were heavily weighted towards the first half, contributing to the £35 million to £40 million shortfall in adjusted EBITDA.
The company’s UK online segment saw a modest 3% increase in revenue, driven by a 6% growth in gaming. However, this growth was offset by weaker sports performance due to the lingering impacts of marketing strategies from 2023. The international segment also experienced growth, with revenue rising by 2%, driven by strong performance in Italy, Spain, and Denmark. Despite these positive trends, the overall financial performance remained below expectations.
Evoke’s retail segment faced significant challenges, with revenue falling by 8% year-on-year. The company attributed this decline to a strong comparative period in the previous year and ongoing challenges in the retail environment. To address these issues, Evoke plans to introduce new gaming machines and enhance its product offerings in the retail segment.
Strategic Changes and Leadership Overhaul
In response to the financial challenges, Evoke has undertaken significant strategic changes and a leadership overhaul. The company has appointed Per Widerström as the new CEO, along with 11 new executive hires over the past several months. These changes are aimed at driving a complete reset and transformation of the business, enhancing operational efficiency, and positioning the company for future growth.
Evoke has implemented a new commercial strategy, focusing on price and promotions to drive revenue growth. The company has also adopted a data-driven approach to customer segmentation and personalized promotions. These initiatives are expected to improve customer engagement and drive long-term profitability.
The company has also rebranded from 888 to Evoke, streamlining its operating model to improve decision-making and efficiency. This rebranding effort is part of a broader strategy to enhance the company’s competitive advantage and build enhanced capabilities. The new leadership team is confident that these changes will lead to sustainable success and long-term growth.
Outlook for the Second Half of 2024
Despite the challenges faced in the first half of the year, Evoke remains optimistic about its prospects for the second half of 2024. The company expects to achieve revenue growth in line with its medium-term guidance of 5% to 9%. Evoke also aims to deliver a 20% EBITDA margin in 2025, driven by cost-saving measures and strategic initiatives.
The company plans to implement up to £30 million in cost savings in the second half of the year, which will help mitigate the losses incurred in the first half. These cost-saving measures include reducing marketing expenses and optimizing operational efficiencies. Evoke is confident that these initiatives will drive profitability and position the company for long-term success.
Evoke’s CEO, Per Widerström, emphasized the importance of the strategic changes and the company’s commitment to achieving its goals. He acknowledged the challenges faced in the first half of the year but expressed confidence in the company’s ability to overcome these challenges and achieve sustainable growth. The company is focused on mid and long-term profitable growth and value creation, with a clear strategy to achieve these objectives.
