Evolution Gaming's Revolting Issues Continue in Q2, But the Long-Term Thesis Remains Intact
I am getting annoyed...
Evolution Gaming reported its second-quarter 2026 earnings on July 17, 2026, delivering results that were largely in line with expectations despite several ongoing operational headwinds.
Generated Net Revenue of EUR 517.8 million, representing a mild 1.2% year-over-year decline but marking a 0.9% growth rebound compared to Q1.
Sustained EBITDA Stability at EUR 341.0 million, maintaining an industry-leading, highly consistent EBITDA margin of 65.9%.
Increased Quarterly Profit to EUR 251.4 million, which delivered a diluted earnings per share (EPS) of EUR 1.27.
Rebounded RNG Revenue by 14% year-over-year to EUR 80.5 million, achieving the segment’s first double-digit growth milestone in nearly three years.
Expanded North American Footprint to counter European regulatory pressure, hitting record-high Americas revenue and launching a second Michigan studio.
Executed Massive Buybacks totaling EUR 303 million to repurchase 5.1 million shares under their historic EUR 2 billion capital return program.
Reaffirmed Full-Year Guidance targeting an EBITDA margin of around 66%, backed by tight cost controls and over 110 scheduled game releases.
Positives
RNG revenue surged by 14% YoY to EUR 80.5 million. This marks the segment’s first double-digit growth rate in roughly three years. RNG makes up roughly 15% of Evolution’s total sales.
Evolution deployed EUR 303 million to buy back 5.1 million shares during May and June.
CEO Martin Carlesund said "We are confident that the EUR 2 billion program, which as far as I'm aware, is the largest ever in the history of Stockholm Stock Exchange, is the right thing to create additional shareholder value."
CFO Joakim Andersson stated that Evolution had effectively reached the program's current execution limit for Q2.
Americas (North and Latin) achieved record-high revenues, helped by the opening of a second studio in Michigan and Hasbro-branded game launches like Monopoly Live.
North American growth logged a steady 9.5% year-over-year climb to EUR 81.0 million.
Latin American revenue increased 26.3% year over year to €47.5 million, driven by the relaunch of Evolution’s flagship studio in Argentina and the continued rollout of localized gaming content for the Brazilian market.
This quarter European revenue rebounded, hopefully hitting a low in Q1. With that said, revenues are still down yoy due to a combination of low market channelization, stricter regional regulations, and rising taxes.
Overall, not the best situation to be in for Evolution. And one of the factors to why it has been trading poorly over the last year. The real decision you need to make is whether these are short term issues AND they do not continue popping up in the future.
Asia - I am getting annoyed
The giant stain on this otherwise solid quarter was Asia. CEO Martin Carlesund referred to Asia as the sole exception to the group’s positive momentum during the Q2 2026 reporting window. Once again, cyber piracy was noted as the issue.
Year-over-year performance also slid 8.9% compared to Q2 2025. Demand and strong consumer adoption patterns in the region were not enough to fully neutralize these illegal redistribution networks.
If you have been keeping up with Evolution, it appeared these issues were in the rearview mirror.
Asia is Evolution’s largest single region by player location and volume.
When Evolution had seen a recovery in Asia, Europe popped up as an issue. Now, when Europe appears to be going in a positive direction, Asia pops up again.
Not only is this frustrating, but it is also very worrisome to me that management is not capable of fixing these issues, and that over the next several quarters we will continue seeing a revolving door of issues for this company.
Thankfully, management has shown that in the past they were able to overcome the cyber piracy issues. With that said, will this be an issue that pops up once every few quarters?
With how aggressive Evolution is with these buybacks, if the business deteriorates, the entire thesis is broken.
On X/Twitter, Eyvind Larre made an amazing point: “You’re not betting on which exit, you’re betting the machine keeps running until one arrives.
Every day it runs, your share of the company grows while you do nothing.”
Wrapping Up
While I am getting annoyed and frustrated with management for not being able to resolve the issues plaguing the company, this gives them an opportunity to continue buying back shares at this cheap valuation.
If they actually get their house in order, start accelerating, and grow the business, these buybacks could look really, really good.
As long as the business remains flat, the buybacks should do some damage.
But there is a real reason this company is trading at such a cheap valuation, and that was highlighted this quarter. There are also other opportunities in my portfolio and the market that are much more attractive than EVO. I am holding onto my shares and letting the buybacks do their work over time.
What concerns me most are the revolting issues plaguing the company. That is something I typically like to stay away from, especially when these are repeating trends and recurring problems.
Disclosure: I have a long position in Evolution Gaming. This article reflects my personal opinions and is provided for informational purposes only. It should not be considered financial advice or a recommendation to buy or sell any security. Investors should conduct their own due diligence before making any investment decisions.