When Evoke released its H1 trading update last month, there was little the operator could do to soften the ps. Overall revenue was down 2% compared to last year’s H1 results, falling from £881.6m ($1.12bn) to £862m. Almost all verticals saw a decline: revenue in the UK & Ireland dropped 3%, international ps went from £266.3m to £265m and total adjusted EBITDA plummeted 26%.
So it’s no surprise that when this conference call started, Evoke CEO Per Widerström, started off strong: “These results are disappointing and not acceptable!” He continued that the company “understands exactly what went wrong” and, therefore, knows exactly how to fix things.
Widerström continued that Evoke is “taking swift and decisive actions” in improving its products, for both long and short-term profitability. These initiatives have been aimed mostly at the mid-value customers, which the company has identified as some of the main drivers of growth, along with online players.
Just this morning, Widerström also purchased 900,000 shares in the company.
Sean Wilkins, Evoke CFO, then took over to discuss some of the finer details of the financials. He emphasised how Evoke is undergoing “a total transformation of the business” to deliver “stronger revenues, stronger growth, higher margins and more sustainable market-leading positions.”
Looking at the revenue tables, it seems Widerström was right in his assessment and Evoke really has pd out where some of the shortcomings are. Even though UK and Ireland’s online revenue grew 1% to £338.6m, this was offset by an 8% drop in retail revenue to £258.4m. This has been put down to “marketing investment not as effective as planned.” As for the adjusted EBITDA for this section, Evoke notes that the -26% drop was due to a product shift mixed with a £16m increase in marketing.
“When we look at Italy, when we look at Denmark, when we look at Spain, we are outgrowing the markets” – Per Widerström, Evoke CEO
Wilkins also pointed out that while there was a £21m fee related to leaving the US B2C market, this should see positive returns in time.
Looking at the details
While the above might seem like too much introspection on the details, it’s part of Evoke’s plans to manage the company back to a profitable state. Going forward, each of the initiatives will be tracked individually to make sure that they’re working for the company, such as the Bet Builder products. This will also allow the company to enact corrective plans quicker and with greater accuracy.
One of the aspects already flagged in this is a potential inefficiency in certain betting products, such as a reliance on manual processing. To improve this, evoke has confirmed it will implement AI to “transform the business.”
The final section from Wilkins explored three main areas in which Evoke will change going forward. First of all, there will be a cultural shift to shift the mindset to focus on value creation, encouraged by newly hired talent and the implementation of a monthly profit planning cycle.
Similar to each of the initiatives being tracked separately, by tracking the spending and reporting down to a daily and weekly basis, the company can react faster to any problems that may arise. Alongside this, there will be an optimal resource allocation which will include a “greater ongoing scrutiny of performance” as well as an operating leverage to “take the cost out of the business.”
These initiatives have been aimed mostly at the mid-value customers, which the company has identified as some of the main drivers of growth, along with online players
Widerström then returned to reflect on the “complete reset” of the company due to the board “not being happy with the financial performance in the first half.” Part of this came from hiring a completely new team, with nine out of the 11 executive team being hired since October 2023. “I will not rest until this business is performing the way it should and can do,” Widerström insisted.
The conference call barely touched upon the name change, merely highlighting that it would be used to represent all of its brands in a more coherent way. “We have relaunched Mr Green as the most distinct casino brand in the market,” Widerström continued, “and we are repositioning William Hill with successful campaigns.”
Q&A Section
During the questions-and-answer segment, the questions were asked by the host, rather than having shareholders or analysts ring in.
The first asked whether William Hill would have the decorations and capabilities to attract people into shops. Widerström replied that he is “very proud of the retail outlets we have” but that there is always room to improve. The main way Evoke will improve retail shops will be by increasing the average weekly gross win on the machines from £750 to £1,000, which will be achieved by improving the previous 10-year-old machines. When asked how these will be rolled out without hitting the spending cap, Wilkins replied quite succinctly: “They’re leased.”
Another question passed forward to Evoke was how the company intends to reward long-term investors. Widerström was quick and passionate in his response, doubling down that they are “absolutely obsessed” with driving profit and revenue, for both short-term and long-term, and achieving its value creation plan.
“These results are disappointing and not acceptable!” Widerström continued that the company “understands exactly what went wrong”, and therefore, knows exactly how to fix things
The duo were then asked how Evoke views itself compared to competitors. “When we look at Italy, when we look at Denmark, when we look at Spain, we are outgrowing the markets,” Widerström answered. He went on to say that its fourth core market, that being the UK & Ireland, will see the William Hill brand pushed harder than ever.
The products will receive additional promotions and the business will be more specific with which customer cohorts it’s targeting. Widerström acknowledged that there are some areas in the UK where evoke has some gaps to address, but “we have some gaps to address, we have a very clear plan with Q4 such as best-in-class gaming cabinets being launched.”
Finally, a submission asked whether Evoke will consider any future M&A during this time. “We are laser-focused on our value creation plan, we have no plans for M&A,” Widerström was very firm in this, but he went on to explain that the company will continue to pursue capital-light, high-impact M&A and partnerships.
Widerstrom concluded by reminding everyone that “we are undertaking a total transformation and reset of the business”, but also mentioned that he is looking forward to the Q3 report towards the end of the year. Time will tell whether he remains just as optimistic closer to the time.
