888 Reports 10% Revenue Decline in Q3 2023
Date: 2023-10-18 Author: Dima Zakharov Categories: EVENTS, PAYMENT SOLUTIONS
In the most recent trading update released today, 888 reported a 10% year-on-year drop in revenue for the third quarter of 2023, amounting to £405.0 million (€466.8 million/$494.4 million). This decline had been anticipated due to several factors impacting the company's financial performance.
Compliance Changes and Slower Recovery
888 had previously forecasted this decline, citing various factors for the revenue dip. Compliance changes in dotcom markets and a slower-than-expected recovery in customer activity and revenue were among the prominent reasons. These changes affected both customer engagement and revenue generation.
Safer Gambling and Sports Results
888 also noted the influence of safer gambling changes in the UK and customer-friendly sports results in September, which impacted the company's win margin in the UK and international markets. These changes were significant contributors to the overall decline in revenue.
Retail Segment Grows, Online Business Struggles
Despite the overall revenue decrease, 888 reported a 1% year-on-year growth in its retail segment. The growth was primarily driven by improved product offerings, including self-service betting terminals and gaming cabinets. However, customer-friendly sports results partially offset this growth.
In contrast, the UK and Ireland online business experienced a 10% drop in revenue due to ongoing safer gambling measures and a refined marketing approach. Additionally, lower-than-expected betting net win margins from sports results in September further impacted online revenue.
Challenges in International Operations
International operations faced even greater challenges, with revenue falling by 19% and a 2% decrease in average monthly actives. Compliance changes in dotcom markets, particularly in the Middle East, had a substantial impact. Furthermore, the recovery in revenue and customer activity in these markets was slower than initially anticipated.
Acquisition of William Hill Assets
888 acknowledged the ongoing impact of its acquisition of William Hill assets, acquired from Caesars for £1.95 billion in July last year. The integration process and synergy delivery have helped mitigate the impact of regulatory and compliance changes.
Future Expectations
Looking ahead, 888 maintains its expectations for the fourth quarter, with a forecasted single-percent decline in revenue. The company also anticipates its adjusted EBITDA margin for the full year to be between 18% and 19%, aligning with last month's forecast.
Business Continuity and Leadership Change
888 also addressed its ongoing situation in Israel, emphasizing the activation of business continuity plans, which are expected to have no significant impact on business operations. The company continues to prioritize the safety and well-being of its employees in Israel and their families.
This trading update comes in the wake of Per Widerström assuming the role of CEO at 888, succeeding Lord Mendelsohn. Widerström expressed optimism about the company's future and its potential for profitable growth. Despite the regulatory challenges faced, 888 is committed to achieving its goals and maximizing value creation under new leadership.
