King of the Live Casino

Evolution Gaming - King of the Live Casino

Evolution Gaming is the leading B2B provider of live casino solutions. They power the online games you love! Think Roulette, Blackjack, and Baccarat.

Introduction

Evolution Gaming isn't an online casino; it provides the software and infrastructure for online casino operators. Think of them as the picks and shovels of the online gambling gold rush!

They earn money through commissions on winnings generated by their games. The company was founded in 2006 and has a strong leadership team with a long-term vision.

Management

Evolution Gaming benefits from experienced and invested leadership. The founders are still actively involved, and key management has significant skin in the game. This alignment of interests bodes well for long-term shareholder value.

Competitive Advantage (Moat)

Evolution Gaming has a wide moat! They are the market leader in live casino games, with superior technology and a vast network of operators. Their high-quality and engaging games make them a top choice for both casinos and players.

Market Outlook

The online gambling market is growing at ~12% anually!

With increasing mobile penetration and evolving regulations, Evolution Gaming is well-positioned to capitalize on this growth trend. They are also expanding into new markets like Asia.

What are the main risks?

Like any investment, Evolution Gaming faces risks. The main ones are regulatory changes and dependence on key customers. However, their strong track record and experienced management team help mitigate these risks.

Evolution Gaming offers its products in a variety of regulated markets across the globe, including Belgium, Bosnia, Croatia, Czech Republic, Denmark, Estonia, Georgia, Germany, Gibraltar, Greece, Italy, Latvia, Lithuania, Malta, Netherlands, Portugal, Romania, Slovakia, Spain, Sweden, Switzerland, UK, Canada (various states), Mexico, USA (various states), Argentina, Colombia, Belarus, Curacao, South Africa.

Financial Health

Evolution Gaming has a rock-solid financial position. They have been net cash positive every year since 2012 and have a low capital intensity. This financial strength allows them to invest in growth and return value to shareholders.

Capital Allocation

Evolution Gaming is a capital allocation machine! Their high ROIC and ROE demonstrate their ability to generate strong returns on invested capital. They also have a growing dividend, rewarding shareholders for their patience.

Profitability

Evolution Gaming is highly profitable, with a profit margin averaging 55% over the past 5 years. They also convert a significant portion of their earnings into free cash flow.

Strong Track Record

Evolution Gaming has a phenomenal track record of growth. Their revenue and EPS have grown at a CAGR of over 36% in the past 5 years. This impressive performance highlights their ability to execute and deliver results.

Valuation

Despite its strong fundamentals and growth prospects, Evolution Gaming trades at an attractive valuation. Their forward PE ratio is at its lowest point since the IPO. At a fair 18x P/E valuation and 20% growth rate, we expect a return of 35% for the next 3Y and 30% for the next 5Y.