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Last Friday, Evoque PLC reported on its first quarter of year-on-year growth since Q1 2022, marking the London Stock Exchange Gambling Group's first period of sustained growth since its 2 billion acquisition of William Hill. Management highlighted a 3% increase in corporate revenues driven by double-digit growth in the core markets of Denmark, Italy and Spain. However, Evoque's performance was weighed down by clear disparities in the UK. as online casino growth was hampered by declines in sports betting results and continued retail declines. Led by Per Widdestorm, Evoke's new executive team remains confident in achieving the value creation plan target of mid-target growth between 5% to 8% in 2024. Yet, as autumn sets in, Evoke remains deeply exposed to UK headwinds, especially as the with potential changes that could wipe out any value creation achievements. iGaming Daily is brought to you by OptiMove, the number one CRM in marketing solutions for the iGaming sector. I'm Ted Menwear and joining me today is Joe Streeter, editor of Casino Beats. Joe, how are you doing? Yeah, I'm good. Thank you, Ted. A good weekend, interesting weekend of sport and yeah, back at it this morning. Ready to go for another big week of gambling news. How are you? All good? Good, good, good. And I like your positivity as we drill down on more kind of Q3 numbers and PLC performance. So, okay, let's hit it off. Take Me Through kind of entails Q3 performance in which it states that it's posted quarter and quarter growth since 2022. So do you feel this is a comeback? Yeah, I was going to say my opening line to you Ted was, you know, as a Man United fan, a diehard Man United fan, inherently. I love a comeback story and this feels like the start chapter one of a comeback story. It feels like it's yeah, it's rumbling there and we're just trims tenure thus far. He's kind of overseen this trends transformation and it feels like one of many transformations for evoke but he's overseen this transformation and it feels like it's been strong. They are they're moving in the right direction. He will have toasted the turnaround of the business. As you mentioned, they achieved growth for the first time in a quarter since the lucrative acquisition of William Hill. That acquisition, as again you mentioned, is one that's yet to pay off. Largely, their M&A strategy has been fruitful. They've pinpointed their markets they believe they can have success in, tapping into markets with I think a high barrier to entry and looking to build a strong foothold in these markets. If we go into the results, they generated group revenues of $417 million, up 3% on the 2023 comparative figures of $405 million. Importantly, this led to year-to-date evoked revenue standing at $1.27 billion. They maintained expectations for a strong second half of 2024 to be in line with midterm targets of 5% to 9% of year-over-year growth. There's a real focus on I think being impactful when it comes to player bonuses and CRM and just they're just generally seeking to evolve the way they engage players and I do believe that has paid off. Obviously they seem to have gone all in on sports, just looking to drive attention with a focus on what they're bringing to sports players in markets that really have a strong sportsbook base and yeah, without getting into too many details, positivity for the group was largely fuelled. by success in their core markets as you mentioned, namely Italy, Spain, Denmark and Romania, where it made up for, yeah, I think it did make up for UK headwinds as much as they are kind of exposed in the UK market. Core markets represent 85% of the group's revenue and they seem to be very much putting their eggs in that basket. Key here though is that they're eyeing a return to year on year growth and yeah, it will be seen as a glowing light for investors. And the firm shares were up 4% as a Widdestrom provided outlook on their results. Yeah, what did you think Ted? Obviously, I don't know if you're as kind of positive as me. Okay, Joe, thanks for a very thorough breakdown on, let's say, Vogue's progress for the time being, but let's kind of pick it apart here because there's a lot of kind of disparities in what Vogue are presenting. And especially the clear one here is what's going down in the UK. So let's go through that. They've saw 12% revenue gaming, increase in revenue gaming in the UK. However, they continue to be, that continues to be kind of offset by sports betting declines. And do we always have to, with the vote, do we always, do we now have to kind of sideline it's any kind of retail recovery, only retail performance and saying, look, you can't kind of match that with the online performance because they're still recording a 9% decrease in the... the retail performance and it has a direct impact. I think they pointed out a direct impact of five million on group NGR contribution. So Joe, how do you account for that with the disparities in the UK? And what does it actually tell us about Evoke as a company and where it's trying to get to? Yeah, it is concerning, right? And it is an elephant in the room for them as kind of, we laud the success and we toast the success of their core markets away from the UK. the UK market and the consistent kind of burden, I guess, maybe the word, or drag of William Hill, it continues to be an elephant in the room. That elephant is only going to get bigger as we kind of tout tax increases and a further drag on the UK market. There is a real focus on improving the UK market for Evoque. because it does carry a two billion pound price tag. It's been hanging over the neck of it for a couple of years. What is their strategy for William Hill? I mean, how are they gonna turn around? And especially its retail segment that just continues to bleed out. Yeah, forgive me for, but you know, one of the ways they've kind of touted is just by a product uplift. They've just spoken quite a lot about a product uplift. I think new gaming machines in the first quarter of 2025. And I... I think just trying to boost footfall in the stores and just provide a better output, a better offering. I think there's been uplifts to the app. Obviously, we're not talking retail there, but I think they are focusing on an omnichannel experience when it comes to William Hill. I do think it's worth as well looking across the sector. Last week, Rank reported their results and they provided some positivity when it came to footfall. for mecha and for Grosvenor casinos. And I think maybe Evoke will be buoyed by that. That there is as much as the high street is failing and the high street is in turbulence, there is a sign there that there is a ray of light that football can happen. And there is an appetite for kind of soft gaming. And so they can benefit from these new gaming machines in the first quarter of next year. Yeah, I think you raised up some good points. I mean, the other thing that came out of Q3s was just growth overall in the UK. Yeah. And I believe that the companies now, especially the PLCs, have kind of adjusted to, I'd say, three or four quarters of kind of regulatory alignment, especially on the online casino segment. So that will return back to growth. It's where the kind of the evoked brands can... supersede their competitors or get back to that level. I think that is the long-term commitment. One more thing on the UK, Ted, because it's really worth drawing attention to it is we are at the mercy of the red briefcase of Rachel Reeves on the 30th of October, because that could very much strangle any value creation for Evoke and not just Evoke for other brands as well. I think that could be massive, right? Absolutely. I think we're going to get that later on. That is in my questions. But I want to focus more on evoke what it's saying to markets, but also kind of a breakdown of its quarter performance. Now, the core markets, as you mentioned, Italy, Denmark, and Spain, have all kind of registered double-digit growth. And you're now seeing like its online gambling really kind of dictating where the company goes at 85% over NGR contribution. How do you think Evoke is kind of balancing UK kind of stagnation against core market growth in Europe? Jason Williams Well, right now, if we're honest, there's not a lot of balance really. One is growing exponentially and one is really struggling. But for this set of results, the thriving in core markets kind of outweighed the stagnation. reported positive growth, they reported some good news for investors. I think it's interesting to look at where they've got it right in those markets. I think the M&A strategy in the core markets away from the UK has really paid off. For example, in Romania with the Winner.ro acquisition, it enabled them to establish a podium position, a market leading position in the country. a country that is not easy to enter. They've got this footprint there with that brand and they've become kind of steadfast. The competition there is limited. They've done well with that acquisition. I think generally speaking, it's about nuances, understanding the nuances in each market, getting that right. We've seen in Italy, they've really taken a casino-focused approach. and that's paid off. They've kind of, yeah, they've done well in that market through being casino focused. So that's, that's interesting too. And I think it's just about taking a nuanced approach and continuing to shift the focus away from gray markets and into their core markets. Yeah. Well, I mean, they have been stunned by that before, as we know, especially in the middle East. I mean, to me with the market always just comes back to, you know, they've got a lot of going on growth initiatives, but it always comes down to they've got that William Hill kind of burden hanging on their neck. And that is an area where I think the investors, the product teams, everyone wants to kind of see where has it moved on, you know, coming up to three years past the acquisition. And that is still very much the kind of burden that hangs over how you evaluate a Vogue's performance. know, you're talking about William Hill. I mean, it's such an established brand, such a strong brand as well in terms of branding and such a big retail presence and online presence in the UK. But I think when you hear Werdestrom talk, he's talking about the investments in William Hill. They're constantly talking about how they're trying to evolve William Hill, how they're trying to bring the online William Hill offering into the new era. just uplifts to the app and that type of thing. And then through that, trying to uplift the retail presence, which is obviously massive, through an omnichannel experience. So yeah, it's a real interesting one. I don't know, Ted. Where do you see William Hill in the next two years or even year? Do you have much faith? I don't think it's a question of faith. I think it's a question of how much time and investments afforded to correct. past mistakes. And also, I think what's important to understand is what's very difficult for leadership is that they're making decisions at scale, but with moving, with a sharply turning context of what's happening in key markets. So again, pointing back to the core market growth, yes, it's in Italy, Spain, and Denmark, but these are... markets that are yet to input the same regulatory adjustments as you see in the UK, the Netherlands, Germany, or Spain. So, Spain can be a market that takes a turn forward than Denmark too. I think Evoque and also alongside Kindred Pill Sea, it has such a high exposure to where the markets will go. And I think that kind of it, I wouldn't say it kind of blurs the outlook for how to judge these companies long term. So I think, look, Evoque is doing well in hitting kind of its short and midterm targets. However, if you look at kind of that value creation plan on the long term format, it has still a long, long way to go. Yeah, 100%. It's a long road ahead, I do think though. This was a positive, I guess, first step as much as it's kind of late in the day to be having a first step. The first report of growth for a long time and I guess this was kind of a good first step. So, okay. Let's start to close out and we've got Q4 coming up. How do you see kind of evoked landing for 2024 and do you think that its performance overall will please analysts and investors? It's a tough one, right? It's a tough one. I think as long as they continue to deleverage and manage the debt, I do think investors will be happy. I think retaining that shareholder faith, that investor faith is absolutely crucial. I do want to point out one other thing that we've seen them do that I think will lead to positivity from investors is they've streamlined the marketing spend. We saw, I think, in the first half of the year, they spent north of 30 million on marketing. Marketing to revenue just wasn't there, so we've seen them streamline that. Moving away from the US as well, I think they're just streamlining and just focusing what they're doing. I think that will only serve to please investors. I think investors will have faith in Pierre Wettestrom. It's hard for me to tell exactly where the roadmap leads because there are so many moving parts, but I do think investors know, we'll have a reason to be optimistic, but we'll also be very nervous, like you say, about that William Hill brand. Do you think the investors look at Evoque after all it's been through after three very kind of difficult years? And do they believe that this company is more stable and has better growth prospects? I think it's tricky because a lot of it does hinge on the future of the UK market. What do you think? I think you hit it on the head. Okay, so this kind of drives me to, this drags me to my final question. So all eyes now are on the budget, aren't they? I mean, and I think, look, there's a level of exposure for every PLC out there, but how exposed is a vote to a, to, to UK GAAP, to an increase in UK gambling taxes and to, to an autumn tax hike? Yeah. Well, worryingly so, right? Worryingly, a worryingly amount. worrying amount significantly just because of that William Hill brand. The retail presence is strong. As you say, the growth in the other core markets, they can thrive, but it can continue to be diluted by the UK market if value creation is strangled by the budget. The briefcase on the 30th, fittingly a Halloween budget, it couldn't be the headlines out there. They're just there. They're Yeah, so on point. But I believe there's maybe reason to be listening to the DCMS, Lisa Nandy at the DCMS last week, listening to kind of the sentiment coming from the Labour government with regards to business. I do believe there's reason maybe not to be optimistic, but not to have as much trepidation as... is currently being felt across the industry when it comes to the UK. I don't believe they will strangle the industry as much as is being reported. Aside from that, I think Evoke is continuing to make investments in William Hill, continuing to invest in building that brand and involving that offering, bringing that offering forward. I do think it can grow. I really do. Yeah, but obviously we are at the whims of Rachel Reeves and Keir Starmer on the 30th of October, Ted. Well, Joe, you've been great. And you've given me a great idea of dressing up as Rachel Reeves for how you're carrying a red briefcase and scare all gamut leadership there. So okay, thanks a lot. This has been iGamingDaily. And I hope the audience has enjoyed that. Thank you. What a sight to depart on that is thanks Ted.