In a trading update, 888 said revenue in Q1 was 2% higher than in the final quarter of 2023. This, it said, was driven by growth in certain areas across a number of markets where its brands are active.
Total revenue was slightly ahead of the initial range forecast by the operator. 888 had been expecting revenue of between £420m and £430m for Q1.
Mixed UK and Ireland Q1
Beginning with the UK and Ireland, online revenue here fell 1% quarter-on-quarter.
Here, a return to growth in gaming, where revenue climbed 4%, offset its reduced sports betting revenue. This was due to increased customer investment across the Cheltenham Festival relative to the prior year.
888 said revenue in the UK and Ireland is expected to return to year-on-year growth from Q2 onwards. This, it adds, will be driven by strong player engagement, new product launches and the annualisation of safer gambling changes.
International business grows but retail struggles at 888
Turning to its online international business, positive sequential growth continued during Q1, with revenue 6% higher than Q4 of 2023. 888 referenced the impact of the annualisation of significant compliance changes from February 2024.
In terms of specific markets, 888 said the segment returned to year-on-year growth with 4% growth in February and March. This was helped by its performance in the core markets of Italy, Spain and Denmark
As for 888’s retail business, revenue fell 7% in Q1. This, 888 says, reflects shop optimisation, with a 2% year-on-year drop in total shop numbers and challenging basis of comparison.
On track for full-year growth
Looking to how Q1 is set to impact full-year performance, 888 expects continued growth for 2024. It says revenue will be consistent with its mid-term target of 5% to 9% annual growth.
“I am pleased to report that Q1 2024 revenue was slightly ahead of our guidance,” 888 CEO Per Widerström said. “Strong player volumes converted into improved revenue run rates.
“Having lapped various regulatory and compliance changes during the quarter, and with increased marketing investment supported by an exciting product pipeline, we remain confident in a return to growth from Q2 2024.”
Planning for the future
Widerström also noted last month’s announcement regarding 888’s new multi-year value creation plan. Announced alongside its full-year results for 2023, this will see a major rebrand of 888 to Evoke plc.
888 said the rebrand will better reflect the strength of the group’s multi-brand operating model. However, such a move remains subject to shareholder approval at 888’s next AGM, scheduled for 13 May.
“I am pleased to report a strong quarter of progress against these plans,” Widerström said. “We are moving decisively and at pace to position our company for long-term success.
“I look forward to providing further updates about our progress in the coming months.”
Earnings fall at 888 despite revenue rise in “disappointing” 2023
As for the full-year results published last month, these made for mixed reading.
Revenue for the year was 37.1% higher at £1.70bn and net loss was reduced from £120.5m to £56.4m. Adjusted EBITDA also increased from £217.9m in 2022 to £308.3m last year.
However, adjusted profit after tax was down 25% to £48.1m. Speaking in an earnings call after the results were published, Widerström branded the results “disappointing”.
The results also came after, just several weeks earlier, 888 confirmed job losses across the company. 888 said the changes will help the business achieve its long-term plans. It did not disclose which departments will be impacted by the redundancies.
US asset sale agreed
In the days after the results were published, news also broke that 888 has agreed to sell select US B2C assets to Hard Rock Digital.
Details of which assets Hard Rock Digital will purchase have not been disclosed, nor have financial terms of the deal.
The sale is set to complete in phases. Subject to relevant regulatory approvals, 888 said the deal will be finalised by Q4.
This agreement comes just weeks after 888 launched the strategic review. This began in March, with 888 saying it would consider “potential alternatives” to deliver value for the group. A partial or full sale of US B2C operations were some of the alternatives considered.
888 said this action will not impact its existing B2B arrangements in the US.
888 avoids regulatory action for FS Gaming talks
There was also good news for 888 in March, with confirmation that the Gambling Commission will take no regulatory action against 888 following the licence review sparked by an attempted management takeover by Kenny Alexander.
The review launched in July 2023, following FS Gaming, the investment vehicle backed by former GVC Holdings (now Entain), CEO Kenny Alexander, who looked to acquire a stake in 888.
After purchasing a 6.57% stake, plans were set for a trio of former GVC Holdings executives to take charge at 888. This led to the Commission initiating the investigation.
888 terminated discussions with FS Gaming as the appointments had “no reasonable prospect of being approved”. Therefore, its UK licences would be at immediate and significant risk, prompting it to terminate discussions over the matter.
This was enough for the Commission to decide not take further action over the matter.
Original article: https://igamingbusiness.com/finance/quarterly-results/888-slightly-ahead-of-guidance-in-q1/
