Online gambling technology supplier Evolution AB reported strong financial results for 2023, with net profit up 27% to €1.07 billion ($1.16 billion). The company saw sizable increases in revenue from its live dealer casino offerings, which now comprise 84.7% of total revenue. However, Evolution faces an ongoing class action lawsuit in the US alleging it misled investors about growth and compliance from 2019-2022.
According to the news article from Gambling Insider, Evolution's revenue reached €1.8 billion in 2023, a 23.5% year-over-year increase driven by live casino sales. Europe remains Evolution's largest market, delivering revenue of €185.8 million in Q4 2023 alone, up 9.3%. CEO Martin Carlesund said Evolution aims to accelerate global investments in new live casino products and studios in 2024 to meet strong demand. The company plans to open at least four additional studios this year.
However, Carlesund recently expressed concerns that Evolution cannot expand quickly enough to keep pace with live casino demand worldwide. This presents both opportunities and challenges for Evolution in the years ahead. While surging interest in live dealer games should fuel further growth, scaling studios, tables, and staff could prove difficult amid tight labor markets globally.
At the same time, Evolution faces a US class action lawsuit alleging it misled investors about growth potential, compliance issues and associated revenue impacts from 2019-2022. The lawsuit hangs over the company's otherwise positive financial performance and future outlook. It names Carlesund and CFO Jacob Kaplan as defendants and seeks to recover damages on behalf of all investors who purchased Evolution shares during the specified period.
The lawsuit asserts Evolution made false or misleading statements about its growth trajectory, ability to ensure customer compliance, regulatory compliance, and the effects of non-compliance on the company's revenues. These allegations relate to business fundamentals that are critical for investor trust and confidence. As such, while Evolution delivered a record year of profits in 2023, the lawsuit represents a significant risk factor that bears monitoring in 2024 and beyond.