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Evolution's Failing RNG Strategy Triggers Analyst Backlash and Growth

Evolution's Failing RNG Strategy Triggers Analyst Backlash and Growth
Posted on February 8, 2024

A recent article from detailed the underperformance of Evolution's random number generator (RNG) vertical and the concerns this raises for the company's future growth prospects. The article cites commentary from gambling industry analyst Regulus Partners, who described Evolution's RNG performance as "embarrassing" and "disappointing to the point of embarrassing."

Regulus called Evolution's acquisition of NetEnt, in particular, a failure, stating that NetEnt was "badly run, commercially over-priced, and offered largely legacy content." They argue that Evolution lacks the capabilities and strategy to turn NetEnt's business around despite its strengths on the live casino side. This raises doubts over the rationale for the NetEnt deal and the value it is adding.

The analyst firm points to the mere 2.6% RNG revenue growth delivered by Evolution in 2023 as evidence that it is struggling to execute on RNG. This is compared to 28.1% growth for live casinos. Weakness in RNG also dragged down Evolution's overall fourth-quarter results. Regulus states, "Tough questions need to be asked about what value the division adds to the group."

Beyond RNG, Regulus also highlights some warning signs around Evolution's broader geographic growth. Asia delivered the majority of growth in Q4 2022 but needs more regulatory stability. Europe faces growth headwinds from tightening regulations. The US presents an opportunity in the longer term, but further state-by-state legalization is required first.

LatAm stands out as the most promising geography in Regulus' view, thanks to supportive regulations. But overall, they argue Evolution's global growth outlook has risks without a turnaround in RNG. Buying growth via M&A also looks increasingly difficult, given Evolution's struggling execution.

In summary, the analysis raises severe concerns about Evolution's strategy and ability to drive continued growth. The pressure will now be on management to show they can revive the RNG division, squeeze more from existing markets in flux like Asia and Europe, and bolster their capabilities to support long-term geographic expansion. Their dominance in live casinos can only carry them so far if RNG continues to be a drag.


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