CEO's optimism as 888 anticipates Q3 2023 decline in revenue
In its latest financial report for the third quarter of 2023, 888 Holdings plc, under the leadership of its new CEO, Per Widerström, acknowledges both “positive momentum” and a strong “foundation for profitable growth.” This assessment comes following a 10 percent year-on-year revenue decline to £405 million for the said period.
Mixed Q3 Performance as previously warned
888 Holdings had cautioned investors in September about the anticipated mixed performance for Q3 2023, specifically highlighting a 10% decrease in revenue. The official trading update posted on October 18 reiterates that the current performance trends align with the prior warning, shedding light on the factors influencing this outcome.
Online, Retail and International Performance
Examining the divisional performance, the UK and Ireland’s online segment saw a 10 percent decrease in revenue to £157.2 million, attributed to shifts in safer gambling practices, refined marketing, and lower net win margins. Customer engagement, however, remained robust with a 17 percent increase in monthly active users. In contrast, the retail division reported a more favourable trend with flat year-on-year revenue growth of 1 percent to £125.6 million, driven by investments in self-service betting terminals and gaming cabinets. The International division faced a significant challenge with a 19 percent year-on-year decrease in revenue to £122.2 million, linked to compliance changes in dot com markets.
CEO’s Perspective: optimism and challenges
Newly appointed CEO Per Widerström expressed optimism about the company’s potential for profitable growth despite regulatory challenges. He stressed the need for improvement to unlock the company’s full potential and create value.
Looking ahead, 888 Holdings maintains its expectations for Q4, foreseeing a mid-single-digit decline in revenue. The company projects a full-year adjusted EBITDA margin in the range of 18 percent to 19 percent demonstrating its commitment to adapting and thriving in an evolving industry.
“I am happy to note that despite the regulatory challenges the group has faced this year, the hard work by the team is already showing signs of results meaning that we head towards the end of the year with positive momentum, and well placed to grow in the coming years.” said CEO Per Widerström.
Declaine relating to compliance charges in Middle East
In the past financial quarter, 888’s international division faced a significant challenge, reflecting in the 19 percent year-on-year revenue decline to £122.2 million in this quarter’s financial results. At that time Lord Mendelsohn, the non-executive chair of the group, assumed the role of executive chair on an interim basis while the board initiated the search for a permanent CEO. Under former CEO Pazner’s leadership, 888 Holdings acquired William Hill’s European operations for approximately £1.9 billion, albeit incurring substantial debt of £1.76 billion for the acquisition. The company’s decision to suspend VIP activities in some .com markets within the Middle East due to a compliance investigation further impacted revenues.. Pazner’s departure was associated with the challenges by “grey-market operating practices,”. Despite these challenges, 888’s CFO, Yariv Dafna, has agreed to remain in the position until the end of 2023.
Expectations for Q4 and beyond
In conclusion 888 anticipates a 10 percent loss in revenue, with Q3 2023 expected to reach £157.2 million (US$ 191.8 million) compared to Q3 2022’s £174.4 million. This decline is attributed to decreases in both betting and gaming revenue, with betting revenue falling by 17 percent to £54.4 million and gaming revenue dropping by 5 percent to £102.8 million. Sportsbook stakes are expected to decrease by 10 percent totalling £607 million in Q3 2023, compared to £674.5 million in Q3 2022. Despite these challenges, 888 expects an increase in active players, with 1,186 in Q3 2023, a 17 percent rise from 1,014 in Q3 2022.
Year-to-date, 888’s revenue is down 10 percent compared to 2022, with gaming revenue experiencing the largest drop at 11 percent, falling to £302.4 million. The betting division also saw a 7 percent yearly loss, totaling £190.6 million.
Per Widerström as the new CEO,expressed optimism about the company’s potential and its strong foundation for profitable growth while acknowledging the need for improvement to unlock its full potential and drive value creation.
888 Holdings plc (888.L) is trading at GBp82.70 (-3.56%).
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