888 backs long-term strategy despite Q3 falling below expectations

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888 has encountered a series of headwinds concerning the group’s online output through the third quarter of the year, with Executive Chair Lord Mendelsohn labelling the period as being “below our expectations”.

Despite stressing confidence in the group’s long-term strategy, spearheaded by inbound CEO Per Widerström, a knock-on effect of Q3’s performance will be that full-year earnings will also fail to meet past predictions.

Drivers of 888’s quarterly drop

The operator noted that “significant and ongoing improvements” to its sustainability and overall quality mix are weighing heavily on short-term performance. This, however, is also said to have driven double digit active customer growth.

As a result, the company’s performance through the third quarter of the year is now anticipated to fall approximately 10 percentage points to £400m.

Issuing an update on current trading, 888 aligned this to a series of factors, with the ongoing impact of safer gambling changes within the UK once again highlighted.

Compliance changes in dotcom markets is also said to have resulted in a slower recovery when it comes to customer activity and revenue.

Furthermore, the UK and international market are said to have benefited from customer friendly sports results through September, with a change in the company’s marketing approach also bringing a short-term impact.

Despite this, retail is demonstrating broadly stable revenue year-on-year, despite the aforementioned customer friendly sports betting outcomes. 888 has reaffirmed an expectation of mid-single digit revenue growth in the full year within this segment.

Outlook for full-year and beyond

Through the final three months of the year, 888 is expecting revenue to be higher on a sequential basis, but down by a mid-single digit year-on-year. The group expected to return to growth in 2024.

Synergy delivery is said to be “on track”, with cost savings identified as “significant” in helping to mitigate its revenue performance to a higher point than initially believed.

Any further opportunities to this effect will see funds become reinvested in growth initiatives, with the group noting that it has identified “significant growth opportunities” that are available.

Executive thoughts

“This has been an important quarter for the business with the announcements of Per Widerström as our new CEO and Sean Wilkins as our new CFO, who I am very confident will lead the business through its next phases of growth and I look forward to Per starting as CEO in mid-October,” Mendelsohn commented.

“We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with EBITDA below our prior expectation.

“The hard work the team has undertaken so far this year has set very strong foundations for the future of the business and our synergy delivery is well on track. 

“We are strongly focused on investing to deliver good levels of expected revenue growth in 2024 as we progress towards our clear target of more than £2bn of revenue in 2025 and I look forward to the coming years with confidence.”