$EVO -5% after reporting results
🩸 $EVO -5% after reporting results
To start with, the results look optically bad. We’re almost getting used to it getting beaten up quarter after quarter:
→ Revenue -1.5% YoY, but +6.8% adjusted for FX, with EBITDA margins falling from 65.6% to 65.4%. Even so, margin guidance is still pretty much in line with 2025, at around 66.9% EBITDA or 66.1% adjusted EBITDA.
→ Live is down -3.1%, while RNG is up +8.1%. As we already suspected, RNG is doing really well and looks set to keep gaining weight.
→ Europe is still fucked: -11.9% YoY and -5.9% QoQ, hit by regulation and ring-fencing.
→ Asia is still weak, but improving a bit: -2.0% YoY and +2.2% QoQ.
→ North America is growing like crazy: +10.1%, but +21.4% in local currency.
→ LatAm is a rocket: +29.3% YoY.
Operationally, I think it was a good quarter. The problem is that regulation and the macro environment really muddy the picture. But of course... this is starting to feel like a trek through the desert where we always think the problem will be fixed next quarter.
On the use of cash, they still haven’t confirmed it’ll go toward buybacks. And honestly, there’s something about all this that doesn’t quite add up for me...
The tone of the quarter seemed subdued, even more than it needed to be given the good things they could have highlighted. But when Martin was asked questions, it felt like a bit of optimism was slipping out.
I don’t know exactly what it is, but I have a feeling something’s going on. Either they don’t want to raise expectations too much... or they don’t want the stock to go up before announcing buybacks... or something bigger is brewing behind the scenes.
As we’ve mentioned before: someone takes Evolution private. Or, though I think this is less likely, they’re preparing a big acquisition.
In any case, my takeaway is pretty clear: I’m still optimistic about the future, but the journey is tough.
Let’s see what news comes out over the next few days about capital allocation.
