888 reports losses and eyes regulated markets

Lea Hogg March 27, 2024

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888 reports losses and eyes regulated markets

888 Holdings PLC, the Gibraltar-based online betting and gaming company, has reported a mixed financial performance for 2023. Despite a widened pretax loss of GBP121.3 million, up from GBP115.7 million in 2022, the company’s revenue and EBITDA have shown remarkable growth. The revenue increase of 38 percent to GBP1.71 billion is attributed to the consolidation of William Hill’s revenue from the latter half of 2022 and a strategic shift towards higher quality revenue streams.

Moving away from dotcom markets

888 Holdings PLC is strategically pivoting away from dotcom markets to prioritize regulated markets, a move designed to cultivate higher quality revenue streams. This shift is evident in the company’s financial performance for 2023, which, despite a widened pretax loss, saw a significant increase in revenue and EBITDA. The growth is attributed to the incorporation of William Hill’s revenue post-acquisition and a deliberate adaptation of customer mixes in the UK, prompted by enhanced safer gambling measures. Operational changes, including an operating model reset, are projected to yield annual cost savings.

The company’s earnings per share saw a significant drop of 55 percent, falling to 12.6p from 28.3p. However, earnings before interest, tax, depreciation, and amortisation more than doubled to GBP261.3 million, with adjusted EBITDA rising by 41 percent to GBP308.3 million. Despite these gains, depreciation and amortisation expenses surged by 90 percent to GBP228.3 million.

In line with its medium-term targets, 888 Holdings has a positive outlook for 2024, expecting consistent growth in active players to drive strong revenue growth online in both the UK and international segments. The company forecasts an adjusted EBITDA of about GBP340 million for 2024 and anticipates first-quarter revenue to be between GBP420 million and GBP430 million.

The launch of the new “Value Creation Plan” (VCP) marks a turning point for 888 Holdings. The VCP outlines a clear route for success, including new executive appointments, an operating model reset aimed at delivering annual cost savings of GBP30 million, and a new strategic framework to guide the company towards its vision of success. The plan is expected to foster profitable and sustainable revenue growth of 5 percent to 9 percent annually.

CEO Per Widerstrom expressed excitement about the VCP, stating that it signifies the beginning of a new era for the company. With these strategic initiatives, 888 Holdings aims to navigate its current challenges and position itself for future prosperity. The company did not recommend any dividends for the period, maintaining its stance from 2022. The announcement of the VCP and the company’s financial targets have been met with optimism, as reflected in the 7.2 percent increase in stock price to 89.80 pence on the morning of the announcement.

Rebranding to Evoke plc

International revenue grew despite compliance changes, with notable growth in Spain and Italy. The company plans to exit unprofitable markets and has written off ￡28.1m for a new US platform. 888 Holdings plans to rebrand as Evoke plc, subject to shareholder approval, reflecting its multi-brand operating model and new profit improvement strategy.

The UK and Ireland remain the main revenue sources, with significant increases in both revenue and adjusted EBITDA. A strategic shift towards targeting recreational customers in the UK is expected to improve long-term sustainability.