Evolution’s Q3 rebound meets a Brazil roadblock

• Evolution’s Q3 net revenue rises 3.7% to €526.1m, with adjusted EBITDA up 2.7% to €345.9m
• All five regions grow quarter-on-quarter for the first time since 2024, but Europe falls 4.7% year-on-year
• The Brazilian studio temporarily closes on 5 October after the country rolls back its regulatory framework

Evolution returns to year-on-year growth in the third quarter of 2026, lifting net revenue 3.7% to €526.1m, according to its interim report published on 23 October.

The Swedish live casino supplier now heads into a fourth quarter shaped by Brazil, where it has temporarily closed its studio after the president rolled back the country’s regulatory framework.

Quiet quarter, steady margins

Adjusted EBITDA rises 2.7% to €345.9m, a margin of 65.8% against 66.4% a year earlier. The adjusted figure excludes a €5.6m UK Gambling Commission settlement. It also excludes a €6.5m termination fee linked to the contemplated Galaxy Gaming acquisition, according to the earnings call.

Profit for the period slips to €243.3m from €252.3m. Nine-month revenue is broadly flat at €1.56bn, up 0.3% on 2025.

Live revenue grows 2.6% year-on-year. RNG climbs 10.1%, its second consecutive quarter of double-digit growth.

Martin Carlesund, CEO at Evolution, said:

“All in all, I am pleased to state that this was an uneventful quarter with focus on core business and stable to good development across our markets.”

CFO Joakim Andersson told analysts the year-to-date margin stands at 65.7%. Evolution keeps its full-year target of 66%, despite the disruption in Brazil.

Operating cash flow after investments reaches €334.1m in the quarter. Cash and cash equivalents stand at €656.4m at the end of September. The balance is lower than before because buybacks are absorbing surplus cash.

A year of overhangs

Evolution now supplies 870 operators and employs around 23,400 people, with headcount up 8.1% year-on-year. It opened its 27th studio in Q3, its third this year.

The quiet quarter follows a busy stretch for the supplier. Evolution’s first-half revenue fell 1.4% to €1.03bn, and Q2 was down 1.2% year-on-year at €517.8m. Andersson said the third quarter extends a recovery from a low point in Q3 2025.

In July, Evolution agreed a £4.75m settlement with the UK Gambling Commission, booked as €5.6m in its Q3 accounts. The case centred on its content reaching six unlicensed sites through two operators.

The same month, Candle Lake Limited, the investment vehicle of billionaire Kenneth Dart, crossed a 30.02% stake. That triggered a mandatory offer of SEK695 per share, which Evolution’s board urged shareholders to reject as undervalued.

The supplier also walked away from the Galaxy Gaming deal. Its legal fight with Playtech continues. In June, a New Jersey judge refused to add the rival as a defendant in Evolution’s defamation case against Black Cube.

In September, a Spectrum report commissioned by Evolution found that its games had reached prohibited Asian markets. Asked about the dispute on the call, Carlesund said:

“We are in a full lawsuit with them, and that will continue as we go forward.”

Capital returns have continued throughout. Evolution has bought back 16.9 million shares for €1.1bn this year under a €2bn framework. It cancelled more than 16 million treasury shares in September after shareholders approved the move.

Europe lags, Americas surge

Every region grew quarter-on-quarter, a first since 2024. That headline hides a softer picture in Evolution’s two largest markets.

Europe edges up 0.4% on Q2 but is down 4.7% year-on-year. Asia gains 0.8% quarter-on-quarter and 1.6% on the prior year.

Carlesund said of Europe:

“It is not exciting, and we should do better.”

He pointed to constant regulatory and tax changes across European markets as a distraction from customer work. On Asia, he confirmed that the cybercrime issues hitting distribution remain unsolved. He said he is happy with the technical progress so far.

Evolution is still investing in Europe. It opened a second studio in Lithuania during the quarter. It also launched an Italian-language version of Ice Fishing to meet demand for localised content. New live titles Monopoly Roll’em and Disco Balls went live in the same period.

North America grows 13.6% year-on-year, LatAm 23.1% and Africa and other markets 23.7%. All three regions post all-time high revenue.

A fourth New Jersey studio, also serving Delaware, opens in Q4 and takes Evolution to eight US hubs. Ice Fishing rolls out across North America in the same quarter. A US-focused slots brand, Spinning Whale, releases its first game in November.

Evolution’s next Hasbro title, Game Night, launches before year-end. Asked about AI dealers, Carlesund said Evolution is exploring the format as a complement to live games, not a replacement.

Brazil goes dark

The LatAm figure predates Brazil’s provisional measure, which came into force in early October. President Luiz Inácio Lula da Silva moved to ban online gambling in late September. Evolution temporarily closed its Brazilian studio on 5 October.

Brazil had been a growth engine. In Q1, Evolution’s LatAm revenue rose 29.3% to €46.8m, helped by Brazilian expansion and the launch of Crazy Time Brasil.

The company now estimates that Brazil accounts for well below half of LatAm revenue, based on player IP data. Momentum elsewhere in the region will offset part of the hit, according to the interim report.

Carlesund said:

“The final outcome of this regulatory decision remains unclear, and it is difficult to predict how player behaviour in Brazil will evolve.”

Brazil is not ring-fenced, he added, so some revenue may still reach Evolution through operators. The studio is ready to reopen at short notice if the market returns.

A Q4 stress test

The ban is already weighing on others. Entain’s Brazil revenue fell 36% in Q3, and Congress has received 99 amendments to the measure.

Q4 is the first quarter shaped by the closure. It will test how far planned expansion in Colombia and Argentina can absorb the gap. Buybacks continue into Q1 2027 at a slower pace, as Andersson aligns repurchases with cash generation and the group’s net cash policy.

The next industry showcase, ICE, is only months away. Carlesund has billed the 2027 roadmap as Evolution’s most ambitious yet. The reception for Game Night will show whether bigger, more complex shows can revive Europe as Latin America turns volatile.