Why Evolution AB’s share price dropped in Q3 2025

I owe you this update on Evolution AB. It should’ve been up earlier, but with all the real estate work these past few weeks — plus rushing to finish my very first Singapore Resale Condo Playbook — I was completely swamped.

Now that the dust has settled a little, let’s talk about Evolution AB, why the share price dropped, and whether we should actually be worried.

If you’ve been following me for a while, you’ll know I own shares of the company. So I’ve been watching this closely, and after studying the Q3 results, the entire situation really comes down to two big issues: Asia’s worsening regulatory climate and the cybersecurity headaches that just won’t go away.

Asia’s regulatory problems are the biggest drag on Evolution AB

Asia is the single most important region for Evolution AB, contributing 37% of total revenue. When something goes wrong there, the entire business feels it immediately. And Q3 was rough — revenue in Asia fell 6.5% year-on-year and nearly 10% quarter-on-quarter. That reversal was especially disappointing because Q2 had finally shown signs of recovery.

The CEO, Martin Carlesund, explained that several Asian markets are shifting at the same time. The Philippines is volatile, India is debating potential federal-level restrictions, and other countries are in flux as well.

He highlighted something that captures the problem well: once governments start talking about regulation, it opens the door to many possible outcomes, and none of them are predictable. Things could tighten further, stabilise, or head in a completely different direction.

As someone who invests based on fundamentals, here’s what concerns me: Asia made up 39% of Evolution’s revenue last year. It’s now 37%. If this trend continues, the region’s importance will shrink — and that naturally weighs on Evolution’s long-term growth rate.

Cybersecurity issues continue to hurt Evolution AB’s performance

Cybersecurity has been a long-running theme for Evolution. Q2 gave investors a little hope, but Q3 took that progress away. Carlesund openly admitted he’s frustrated too and emphasised that solving these issues requires patience, as they can’t be fixed simply by spending more money.

Evolution is a cash-rich company with zero debt. If money alone could fix the problem, they’d have solved it already. But cybersecurity — especially in Asia — is technically complex. Management also made it clear that improvements won’t show up next quarter, and they can’t provide a timeline yet.

As you can imagine, that lack of clarity makes investors uncomfortable.

Source: Evolution AB

Evolution AB’s core business remains strong outside of Asia

Despite all the noise around Asia, the rest of the business actually looks solid. North America is expanding, Latin America is growing steadily, and Europe seems to have stabilised after months of regulatory ring-fencing.

In fact, European regulators recognised Evolution as one of the best B2B suppliers — a small but meaningful confirmation that the fundamentals in that region remain intact.

And here’s a point many people forget: Evolution still maintains an extraordinary net profit margin of about 50%. Very few companies in the world can deliver that. When margins stay that high, it usually means the company’s competitive advantage hasn’t been damaged — the underlying business engine is still working.

Should investors worry about Evolution AB? My personal view.

So after putting everything together — the regional headwinds, the cybersecurity delays, the stabilising markets elsewhere, and the still-excellent profitability — I don’t see a strong, logical reason for the sharp drop in share price.

The reaction feels overly dramatic. Asia will take time to stabilise, but the rest of the business is performing well, and valuation today looks very attractive.

That’s why I’m adding more shares. This isn’t financial advice or recommendation — just my personal decision based on the fundamentals and the long-term growth story. As always, invest based on your own conviction and do your own research before putting money into any stock.