Evoke cited challenging UK retail headwinds as the reason for its year on year decline in Q2 of 2024.
Overall H1 losses increased to £143m, having previously been at £32m in the prior year, meanwhile the organisation reported revenue of £862m, a dip of 2% year-over-year but up 4% sequentially on H2 2023.
UK retail falling by 8% was largely cited as being a key contributing aspect as to why the decline had taken place as the firm admitted the retail gaming offering of William Hill had fallen behind competition.
Furthermore, management expectations were met when it came to H1 Group revenues, which amounted to £862m (H1 2022: £881m), however, group accounts detailed double-digit adjusted EBITDA declines across all core business segments.
Group CEO, Per Widerström, stated: “The return on our marketing – primarily in UK Online – was lower than expected, leading to an online marketing ratio of 25%, which was higher than planned. We have put in place a new and experienced commercial leadership team and marketing leadership team, and we are transforming the way we plan and undertake our marketing.
“As I said in our July trading update, while the financial performance in the first half was disappointing and behind our initial plan, the underlying health of the business is continually getting stronger.
“The corrective actions we have already taken give us even more confidence that our strategic approach is sound and that we will achieve sustainable success.”
The group’s UK online verticals fell short in terms of expectation as online sports betting revenues failed to be boosted by key events such as the European Championships, with online sportsbook revenue dropping by 5.3%.
Overall, William Hill registered a 37% decline in adjusted EBITDA to £38m (H1 2023: £61m). Widerström stated on retail challenges: “In Retail, we were pursuing an in-house solution for gaming cabinets and software. The rationale for this was clear: to drive differentiation.
“However, our initial tests indicated that customers were reacting poorly to the different product proposition, despite a broader range of games and some unique promotion tools. All our plans are data-led, and we reassess and act decisively when the data does not support them.”
Meanwhile, despite maintaining growth in the ‘core markets’ of Spain, Italy and Denmark, Evoke’s International Unit registered stagnant revenues of £265m.
The positivity the firm saw in core markets was offset by reduced revenues in international markets where Evoke is changing business models, and by the H1 termination of its US market joint venture.
Seeking to take action and continue a transformative process for the firm, H2 trading will see Evoke’s new leadership team take decisive actions to address H1 underperformance and execute a turnaround in short-term trading, whilst building enhanced capabilities to drive competitive advantage.
Leadership maintains its guidance to return to growth in H2 trading, with revenue up by 5-9% and adjusted EBITDA margin expected to improve to approximately 21%, along with a pledge to deliver “£30m of targeted cost efficiencies for full-year trading.”
Widerström closed the accounts by stating: “We are completely transforming this business. Whilst the scale of change is significant, it is necessary for us to deliver mid and long-term profitable growth and value creation.
“We have already taken bold, decisive actions to both instigate a turnaround in short-term trading performance and simultaneously invest in the group’s capabilities to drive step-change value creation and build a bigger, more profitable, more sustainable, and more cash generative business in the future.
“We have a clear plan, vision and financial targets. As a result of our strategic progress and the enhancements already made to the business, I am even more confident about delivering our Value Creation Plan and driving sustainable profitable growth over the coming years.”
