888 is said to be “on track” to hit full-year expectations after “successfully navigating business, market and regulatory volatility”, the company said during a H1 financial update.
With a retail uplift counteracted by online struggles on a pro forma basis, the group also issued an update after halting discussions with FS Gaming.
This would have seen a number of appointments made to the gambling group’s board after the UK Gambling Commission warned of a potential licence suspension or revocation.
Amid an ongoing licence review, under section 116 (2)(c)(ii) of the Gambling Act 2005, 888 “continues to engage with the regulator as required” and does not expect “any impact on operations”.
Through the January to June time frame, reported revenue and adjusted EBITDA each surged to £881.6m (2022: £332.1m) and £155.6m (2022: £50m), respectively, driven by the acquisition of William Hill International a little over one year ago. Gross profit reached £590m, up 173.27 per cent from £215.9m.
However, reported loss reached $32.5m from a profit of £12m year-on-year, which is aligned to increased interest costs, as well as amortisation of acquired intangibles and one-off costs related to the acquisition and realisation of synergies.
In total, £66m of synergies were delivered through H1, with the full £150m target expected to be hit during 2024. Net debt reduced by a slight £68m to £1.66bn.
“Proactive actions are driving a significant mix shift in the player base to lower spending groups”
“I am very pleased with the progress we have made in the first half of the year as the group delivered against the plans we committed to at our investor day last year, while also successfully navigating business, market and regulatory volatility,” stated Lord Jonathan Mendelsohn, Executive Chair of 888.
“We made very strong progress with the execution of our integration plan and we now expect to realise the full £150m of synergies in 2024, a year earlier than the original plan. Our strong cash discipline and higher profits also enabled a 0.5x reduction in our leverage.”
On a pro forma basis, including the results of William Hill and excluding 888 bingo for both periods, revenue took a seven per cent hit to £881.6m (2022: $943.3m), as online encountered headwinds.
Gross profit followed suit with a 8.1 per cent downfall to £590m (2022: £641.8m), however, adjusted EBITDA tracked a 9.2 per cent uplift to close at £155.6m (2022: £142.5m).
In the UK&I digital domain, actives and AEBITDA were up one per cent and 22 per cent, respectively, while revenue declined nine percentage points through the period.
This, 888 noted, was due to the ongoing implementation of player safety measures, in addition to a “refined marketing approach” that is placing a focus on increased efficiency and profitability.
“Proactive actions are driving a significant mix shift in the player base to lower spending groups, providing a more sustainable and profitable base to drive future growth in the UK, as well as putting the group in a strong position ahead of any changes from the white paper, with various consultations ongoing,” the business’ update read.
Retail tracked increases of six per cent and 23 per cent in revenue and AEBITDA, which is put down to continued strong customer engagement and effective cost management.
“The strategic progress made during the year to date has created a fundamentally stronger business with higher profit margins”
The group’s international online reporting segment saw revenue and AEBITDA drop 14 per cent and 25 per cent, primarily due to compliance changes in certain dotcom markets and a slower than expected recovery in the Middle East.
“We have successfully delivered against our focused market strategy, changing the mix of our revenue and creating a more profitable and sustainable platform for future growth,” Mendelsohn noted.
Looking ahead, pro forma revenue for the year is expected to be down YoY, while it is anticipated that AEBITDA will “be significantly higher”.
To conclude, Mendelsohn once again touched on the future of the business, which, as of October 16, 2023, will be led by new CEO Per Widerström.
“We have successfully delivered against our focused market strategy, changing the mix of our revenue and creating a more profitable and sustainable platform for future growth,” added Mendelsohn.
“I was thrilled to be able to announce the appointment of Per Widerström as our next CEO. Over the coming weeks I will be working closely with Per to ensure a smooth handover and I am highly confident in his ability to lead the team to realise the full potential of this business.
“The strategic progress made during the year to date has created a fundamentally stronger business with higher profit margins and we remain on track to deliver against expectations for the full year.”
