Evoke (EVOK) H1 2024 earnings summary

Executive summary

• H1 2024 results were below expectations, with revenue down 2% year-over-year to £862m and Adjusted EBITDA margin at 13.4%, impacted by retail weakness and higher marketing costs.

• Decisive corrective actions and a new executive team have been implemented, with a business transformation underway focused on operational excellence, automation, and core markets.

• Q3 trading to date is in line with 5%-9% H2 growth targets, and sequential revenue growth was 4% from H2 2023.

• Net loss after tax was £143.2m, driven by exceptional items, integration, and transformation costs.

• Sale of US B2C assets agreed, with completion expected in Q4 2024, supporting capital discipline and deleveraging.

Financial highlights

• H1 2024 revenue was £862.0m, down 2% year-over-year; Adjusted EBITDA was £115.5m, down 26% year-over-year, and margin fell to 13.4%.

• Net loss after tax was £143.2m, compared to a £32.5m loss in H1 2023; adjusted net loss was £29.9m.

• Net debt at 30 June 2024 was £1,727.1m, with a leverage ratio of 6.4x LTM Adjusted EBITDA.

• Free cash flow generation was £79m, but net cash outflow due to exceptional costs; unrestricted cash was £116.4m.

• Exceptional items totaled £70.8m-£72m, mainly from US B2C exit and integration costs.

Outlook and guidance

• H2 2024 revenue growth expected at 5%-9%, with Adjusted EBITDA margin guidance of ~21%.

• FY25 guidance reaffirmed: Adjusted EBITDA margin of at least 20%, 5%-9% annual revenue growth, and leverage below 3.5x by end of 2026.

• Capex for FY24 expected at £75-80m; exceptional items and savings costs c.£60m; US B2C exit fee c.£20m.

• Interest costs for FY24 guided at £150-155m, with positive working capital expected.

• Cash flow is expected to be neutral in H2, with full-year cash burn around £40m.