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Investing.com -- Evoke Plc (LON:EVOK) shares fell more than 15% on Wednesday after the company reported a widened full-year loss of £191.4 million, nearly triple the £65.2 million loss recorded in 2023, despite returning to revenue growth.
The sharp decline in profitability was driven by exceptional costs of £79.3 million, largely tied to the company’s exit from the US B2C market, restructuring expenses, and integration-related costs.
Higher finance expenses and the absence of a £27.5 million tax credit that had boosted last year’s results also contributed to the deepened loss.
Revenue for 2024 rose 3% to £1.75 billion, marking a return to growth after multiple quarters of decline.
Adjusted EBITDA increased 4% to £312.5 million, slightly ahead of consensus expectations (£308 million), with improvements in online gaming helping to offset a 5% decline in UK retail operations. However, reported EBITDA fell 9% to £230.6 million, reflecting the impact of one-off charges.
Earnings per share also took a hit, with a loss of 42.7p per share, compared to 14.5p per share in 2023.
Meanwhile, the company’s cash balance (excluding customer funds) stood at £147.1 million, with an undrawn revolving credit facility of £115 million.
Evoke warned that first-quarter 2025 revenue growth will be below its full-year target of 5-9%, attributing this to one-off factors such as new safer gambling measures, lower promotional effectiveness, and one fewer trading day.
However, adjusted EBITDA for Q1 is expected to increase by £18-28 million, as cost savings take effect.
CEO Per Widerström described 2024 as a "pivotal year" for transformation, but acknowledged that structural changes take time.
The company reduced net debt to £1.79 billion, bringing leverage down from 6.7x to 5.7x, with a longer-term target of 3.5x by FY27. Evoke has also identified £15-25 million in further cost savings to offset rising regulatory costs in 2025.
Despite the share price drop, analysts at Jefferies reiterated a ‘buy’ rating, maintaining a price target of 140p, nearly double the current 71.4p stock price. They noted that as leverage declines, equity upside potential remains strong.