888 had acknowledged awareness of “increased cost of debt” and “impact on industry trading conditions in the UK” as group revenue slipped seven per cent year-on-year through the year’s third quarter to £449m (2021: £484m).
Making the comments in a trading update for the July to September time frame, the gambling group has primarily aligned the decline to enhanced UK online player safety measures as well as closure in the Netherlands.
With retail reported as stable YoY at £124m, despite the impact of three days of closure, total online revenue fell ten per cent to £325m (2021: £360m).
Total UK online revenue of £171m represents a drop of 13 per cent YoY driven by a reduction in average spend per player, while the Dutch market accounted for four per cent and six per cent of Q3 2021 for 888 and William Hill, respectively.
Breaking this digital performance down by division, 888 in addition to William’s Hill UK and international online segments all tracked declines of five per cent, 14 per cent and 12 per cent to £148m (2021: £156m), £125m (2021: £145m) and £52m (2021: £59m), respectively.
“Having completed our transformational combination with William Hill, I am pleased to report that during Q3 our teams continued to make rapid progress in integrating these two market-leading and highly complementary businesses,” commented Itai Pazner, CEO of 888.
“This has enabled us to progress towards our new target operating model, while delivering a series of ‘quick win’ synergies, that will benefit our adjusted EBITDA margin for the second half of this year.
“Revenues during the third quarter continued the trends we have seen in recent quarters, with relatively resilient trading across our main international markets and in our retail estate, but continued pressure on our UK online revenues in light of the ongoing impact of the enhanced player safety measures.
“We are changing the mix of our business to a lower spending, more recreational player base that gives us confidence in the long-term potential for our UK business.”
For the year-to-date, total revenue is down three percentage points to £1.39bn (2021: $1.43bn, due to significant downfalls across each online reporting component. Retail, aided by the removal of restrictions or closure orders, surged 83 per cent to £388m (2021: £211m).
Despite the changing macroeconomic environment and ongoing pressure, the 888 board expects Q4 revenue to grow over the past quarter and be similar to Q4 2021 levels. This saw 888, pre-William Hill integration, report revenue of £255m.
Regarding this aforementioned transaction, 888 provided an update which noted “The group has continued to make strong progress” with its plans, with synergies and cost savings “already being delivered” from initial actions taken.
It was added: “The group is cognisant of the increased cost of debt, together with the impact on industry trading conditions in the UK and is taking steps to ensure the operating model of the enlarged business is appropriate to address these near-term headwinds whilst also being able to deliver on the strong potential of the enlarged business.”
Pazner closed: “As we look forward, we remain focused primarily on successful integration, execution and de-leveraging in order to unlock the huge potential from our enlarged business.
“We are building a stronger group that will leverage our leading technologies and portfolio of world-class brands to create a leading global betting and gaming company, with clear plans to grow market share and profitability in some of the most attractive markets in the world.”