Revenue for the three months through to 31 March amounted to $224m (£172m/€207m), down from $273m in the corresponding period last year, 888 said in a trading update.
The operator experienced declines in all areas. B2C revenue fell 18% year-on-year to $215m, as B2C gaming revenue was down 14% to $191m and B2C betting revenue was 42% lower at $24m. Meanwhile, B2B revenue was also down 6% to $9m.
Breaking down this performance, 888 said within its B2C business, gaming continues to be predominantly driven by casino. This, the operator said, was helped by the launch of new casino games during the quarter, as well as the launch of its new AI-powered chatbot facility designed to improve customer service.
888 also launched its ‘Made to Play’ master brand campaign in the UK in Q1, under which all of its 888 brands were untied under a single proposition.
In terms of B2C betting activity, 888 said the revenue decline came as a result of a 28% year-on-year drop in stakes, largely as a result of the record performance in several key markets during the comparable period, while it was also harmed by its exit from the Dutch market.
888 also noted the impact of increased promotional investment in Q1, particularly in North America, which in turn led to lower win margins year-over-year. This came after launches of its World Series of Poker brand in Michigan and Ontario, with a further launch in Virginia planned for May.
Turning to B2B, 888 said the revenue decline was primarily due to a strong comparative for its bingo segment, which it has agreed to sell, as well as more challenging market conditions in the UK. In contrast, its US B2B business experienced year-on-year growth following its launch in Pennsylvania.
In terms of sequential performance, 888 said revenue was up 1% quarter-on-quarter from $222m in Q4 of 2021 to $224m in the most recent period.
B2C revenue was 1% higher, with a 19% increase in B2C betting revenue to $24m offsetting a 1% drop in B2C gaming revenue from $192m to $191m. However, B2B revenue was 2% lower at $9m.
“I am pleased with the group’s progress, and we are looking forward to returning to year-over-year revenue growth in the second half of the year, as we benefit from further launches in additional US states, together with our expectation of relaunching in the Netherlands and ramping up our recent launch in Ontario,” 888 chief executive Itai Pazner said.
Pazner also noted the update on 888’s planned acquisition of William Hill’s non-US assets, as the operator this month reached an agreement on a reduced purchase price, with the cash consideration payable upon completion of the acquisition now set at £584.9m.
The original deal stated that 888 would pay Caesars Entertainment £834.9m to acquire the assets, but this has been reduced by £250.0m to “reflect the change in the macro-economic and regulatory environment” since the initial announcement.
This included the revelation that William Hill’s licence to operate in great Britain was under review by the Gambling Commission, with the business setting aside £15m for a potential regulatory settlement.
As a result, the total enterprise value of the acquisition has been lowered from £2.20bn to £1.95bn.
“Having revised the transaction terms for William Hill and completed an equity placing to part-fund the deal, we are on track to complete in June and continue to execute our plan to build a global online betting and gaming leader,” Pazner said.
Regulus Partners noted that – given the Netherlands made up only 3% of revenue in Q1 of 2021 – revenue still declined by double digits in like-for-like terms.
“For two decades 888 has been able to demonstrate usually double digit growth, which has meant global market share erosion could be largely ignored,” Regulus said. “In an inflationary world even mid-single digit growth is unlikely to be enough to stand still in real terms, while market share losses are likely to be much more obvious in increasingly localised markets.
“The William Hill acquisition gives 888 the opportunity to reset growth. Strategically, the group could not have picked a better time to get transformative; operationally, the timing could not be more challenging, however.”
During Q1, 888 also received a fine of £9.4m from the Great Britain Gambling Commission over a series of social responsibility and money laundering failings, including setting its deposit threshold for financial checks at £40,000.
Original article: https://igamingbusiness.com/888-reveals-18-revenue-decline-in-q1-as-william-hill-deal-approaches/
