Highlights from the $EVO / $EVVTY Earnings Report:
Revenue up 68% to 177.7M EUR (9% beat)
EPS up 63% to 0.41 EUR (in-line)
Net Margins up to 45.4% from 44.2%
Dividend raised 62% from 0.42 EUR/share to 0.68 EUR/share
EBITDA up 72% to 96.4M EUR
EBITDA (adjusted for non-recurring items) up 107% to 115.6M EUR
EBITDA Margin 54.2% (65.2% adjusted for non-recurring items) up from 52.7%
CAPEX down to ~7% of revenue from ~8%
Cash conversion ratio up to ~78% from ~75%
Gave guidance that Q4 2020 margins should be sustained through FY 2021
North America revenues up 91%
Asia revenues up 137%
Saw notable QoQ growth in their European markets for the first time in 2020 (aided by NetEnt)
For a company with 711M EUR run-rate revenues ( $861M USD) to grow at >50% with 59% EBITDA margins is pretty incredible.
The valuation is is pretty fair at this point (36x NTM EBITDA is steep, but you're paying up for a very high-quality business).
Martin Carlesund ( $EVO CEO ) had the best quote (shown below) on the call when asked about competition in the US market.
This pretty much summarizes Evolution's market power at the moment.
The more Evolution scales, the harder it will be for a formidable competitor to challenge their near monopoly.
NetEnt gives them a foothold into slots which vastly expands their market opportunity.
Very strong ER overall.
I added 20% to my position today even given the run-up into earnings.
$EVO is now my 7th largest holding at ~6%, and I have no qualms adding on major pullbacks if that occurs as I am a very strong believer in the business.
I'm sure there will be more, but current analyst updates I have seen:
SEB raises PT from $132 --> $141 USD (converting from SEK)
MS raises base case PT from $102 --> $129 (bull case from $132 --> $200)
BofA raises street-high PT from $119 --> $154
Kepler raises PT from $100 --> $128
Redeye initiates with a base-case PT of $144 (bull case of $204)
Per the sell-side, $EVO has a lot of room to run
• • •
Missing some Tweet in this thread? You can try to
force a refresh
One interesting angle on $EVO is the dividend-growth story that is quickly emerging.
Mgmt. has a policy that ~50% of consolidated net profit be returned as an annual dividend.
$EVO is now yielding .67%, which doesn't sound to appealing as a dividend play.
However, most dividend paying companies aren't near-monopolies growing 53% YoY with significant operating leverage and a variable dividend policy tied directly to net profit growth
Net profit grew 90% in 2020 (the dividend grew "only" 62% because of dilution mainly from the NetEnt acquisition)
There likely isn't another NetEnt-sized acquisition this year, and as $EVO grows, the dilutive effects of small M&A will decrease substantially
Credit to @AltaFoxCapital for the excerpt below, but when you combine $EVO / $EVVTY's stranglehold (via partnerships) on the US iGaming market with % take-rate based contracts, $EVO is by far the best positioned to capture the US iGaming growth with little incremental spend
Reached out to $TRIT IR and they said the 1/18 investor presentation is the same slide deck used at the Northland SPAC Conference
I compared this deck to an old one from Aug. 2020 and the notable differences are below
1) The focus on the new presentation is on Kratos' value proposition and Triterras growth strategy while their older presentation focused on explaining what trade finance was and the niche Triterras sought to fill within the industry
1 cont.) The new deck describes a much more polished company vs. the old deck reading as a proof of concept.
2) The new deck breaks the business down into 3 ecosystems (transaction, financial, and delivery) which each house certain Kratos modules
40.7M YTD revenue (17M in Q3)
24.2M YTD net income (10M in Q3)
Run-rate revenue per trader 1.03M Q3 vs. 750k Q2 (37% increase)
Q3 traders 66 vs. 61 in Q2 (8.2% increase QoQ)
The 66 traders could have been a much larger number but was limited by internal bandwidth. Significant senior exec. hiring initiative is ongoing, touching Europe, North America, and Dubai (already hired).
Recruiting a Chief Revenue Officer
171.6M in cash on hand as of 11/30. Open to accretive M&A to assist organic growth
Koneru will be buying shares when the trading window opens
Slightly skewed to the bulls side but Rhodium's bad trade not being handled on Kratos is very important news because it validates $TRIT's product-market fit.
I don't think Rhodium not routing all its trades through Kratos is a reason there couldn't be fraud here, as any knowledgable bad actor would think to disguise the scheme using other platforms
The counterpoint about Koneru leaving Rhodium is strong, but the concerning trend is that's twice now where Koneru (and Maurer with Exxova + not buying Rhodium) has left a company and it has imploded. That's the true concern.