Evolution Flags Europe’s Quiet Recovery Amid Revenue Dip, UKGC Bill and a Deal on the Brink

Key Points:

• The net revenue for Evolution for Q2 2026 reduced by 1.2% from the previous year to €517.8m; however, net profit increased by 1.3% to €251.4m.
• Net revenue in Europe grew again on a quarter-to-quarter basis by 3.5%, whereas that in Asia reduced by 8.9.
• Evolution settled its UK Gambling Commission licence review for £4.75m; the Galaxy Gaming acquisition deadline expired the same day results were published.

Evolution walked into its Q2 2026 earnings call carrying three separate storylines at once. Net sales for the quarter ending 30 June amounted to €517.8 million, representing a fall of 1.2% compared to €524.3 million reported in the corresponding period of last year, which is a figure that in itself seems rather unimpressive. Behind the numbers, one discovers a company that is geographically divided into two camps, successfully defending a case before the regulators, and waiting out an acquisition agreement to expire. Three stories. One quarter.

Europe Stops the Bleeding, Just About

The regional breakdown is where the Q2 narrative gets complicated. Europe revenue declined 4% year-on-year to €173.0m, which would normally dominate the conversation. Except it did not, because the quarter-on-quarter figure told a different story: a 3.5% sequential rise, ending what CEO Martin Carlesund himself described as “several quarters of decline.”

“Following several quarters of decline, Europe returned to quarter-on-quarter growth,” Carlesund said during the earnings call. “We remain cautious about the low channelisation rates, but the quarter otherwise showed encouraging activity in several markets, with strong development in the game show category and continued demand for native-speaking tables.”

The caution matters. Carlesund had warned separately that channelisation in certain regulated markets had dropped to around 50%, attributing the deterioration partly to higher gambling taxes, citing the UK and the Netherlands as examples. “As soon as you raise tax to a certain limit and to a certain bar, you will lose channelisation,” he said, without attributing the 50% figure to any specific market. Whether Europe has genuinely turned a corner or simply had a better three months is a question the company itself refused to answer directly. “Whether we have had an inflection point, it’s too early to say,” Carlesund noted.

Asia Drags, Americas Pull Hard in the Other Direction

While Europe stabilised on a sequential basis, Asia remained the quarter’s weak point, with revenue falling 8.9% year-on-year and 3.7% quarter-on-quarter to €190.5m. Carlesund pinned the underperformance on increased cybercrime activity, a problem the company has been navigating since 2024, but said the underlying business remained intact. “We know what the challenge is, we will continue to battle it, and we look forward to seeing where we stand in the next quarter,” he said during the call.

The Americas told the opposite story. Latin America posted 26.3% year-on-year revenue growth to €47.5m, backed by the relaunch of Evolution’s newly acquired Argentine studio and the localised release of Ice Fishing in Brazil. North America continued its steadier but consistent climb, with revenue rising 9.5% to €81m. During Q2, Evolution rolled out Monopoly Live across four US states and opened a second studio in Michigan; after the reporting period closed, it expanded into Alberta following the Canadian province’s move to a regulated commercial online gaming market.

Other regions such as Africa also recorded growth, where revenue grew by 10.3%, resulting in revenues being recorded at €25.8 million. RNG revenue increased by 14.0% to €80.5 million, its best quarter in approximately three years, whereas live operation revenue was €437.3 million, down 3.6% year-on-year.

Profit Holds, Margin Steady

The full-year trend in profitability paints a different picture compared to that of revenue. The operating profit fell by 2.8% year-on-year to €297.8m due to increased operating costs impacting revenue. While there was a positive figure of €3.1m in financial items, leading to a change from a loss of €11.9m to a profit of €300.9m, year-on-year, pre-tax profit increased by 2.2%. After deducting tax worth €49.4m, net profit was recorded at €251.4m, representing a rise of 1.3%. The second quarter EBITDA was €341.0m with a margin of 65.9%.

The net income fell 1.4% to €1.03bn, while EBITDA fell 1.6% to €676.3m in the first six months, and the margin was 65.6% in the first half compared to 65.8% in the same period last year. The operating income fell 8.1% to €560.4m, but pre-tax income increased 0.7% to €601.0m, and net income was up 0.1% to €503.4m. Evolution repurchased 5.14 million shares for €303.2m during Q2 as part of its broader buyback programme.

The £4.75m UKGC Settlement That Took 18 Months to Reach

Two days before the results landed, Evolution closed a chapter that had followed the company through much of the past year and a half. Evolution agreed a £4.75m settlement with the UK Gambling Commission, bringing to an end a licence review that had begun in late 2024 and generated persistent speculation about its impact on the company’s UK operating position.

The matter centred on Evolution games appearing via two operators across six websites that lacked a UK licence, in breach of the supplier’s own terms of supply. The regulator’s review found no broader pattern of unlicensed access to Evolution content in the UK. Commercial relationships with the two operators concerned were terminated immediately upon discovery.

“At Evolution, we always want to do what is right, and it is not acceptable that six unlicensed sites offer Evolution content in the regulated UK market,” Carlesund said. “We do not want traffic from unlicensed operators and will always move quickly to address any such situation. We welcome the conclusion of the review and remain focused on continuing to supply our world-leading games to licensed operators in the UK.”

Because the settlement was finalised after the quarter closed, it had no impact on Q2 financial performance. It does, however, remove what had been a persistent valuation overhang. Analysts at Rothschild & Co Redburn had previously suggested the Nevada gaming regulator may have been waiting on the UKGC outcome before moving on to another pending matter.

Galaxy Gaming: Two Years, One Deadline, No Confirmed Deal

That other pending matter is the $85m agreement to acquire Las Vegas table games supplier Galaxy Gaming, announced in July 2024. The agreed closing deadline expired on the same day Evolution published its Q2 results, meaning either party may now walk away without penalty.

Carlesund’s comments on the call did not suggest urgency. “Today, the currently agreed closing period under our agreement to acquire Galaxy Gaming expires,” he told analysts. “After today, either party may choose to terminate the agreement. Two years have passed, and Evolution has spent significant time, effort and resources handling the rather large amount of administration required to close this acquisition. Galaxy is a great company; however, due to its size, the transaction is not significant for Evolution. The outcome has no material impact on our existing business, our US operations, or our long-term ambitions.”

Galaxy Gaming’s share price had fallen to $1.70 against the agreed $3.20 per share deal price, a gap that reflected the scale of investor scepticism over whether the deal would cross the finish line. The Nevada Gaming Control Board had escalated its expectations regarding unregulated markets in language published in February, adding further procedural friction to the approval process.

Expert Analysis

Evolution’s Q2 results confirm a company in transition rather than distress. The headline revenue dip masks a structurally important development in Europe: sequential growth, however tentative, after consecutive quarters of contraction. The UKGC settlement, while carrying a £4.75m cost, eliminates a far more damaging uncertainty about the company’s long-term UK operating position, and Carlesund’s dismissal of the Galaxy Gaming deal as non-material is consistent with the broader signal that the Americas, not M&A in US land-based, is where capital is now being directed. Asia’s cybercrime-driven volatility remains the least predictable variable heading into H2, and the channelisation warning that regulated markets in the UK and Netherlands may be losing players to unlicensed alternatives as tax rates climb carries implications well beyond Evolution’s own quarterly numbers. Regulators building frameworks modelled on those markets should be paying close attention.