888's Pro-Forma Revenue Drops 6.5% in H1 Due to Online DeclinePublished August 22, 2023 by OCR Editor
888 experienced a 6.5% decline in pro-forma revenue, reaching £881.6 million during the first half of 2023. A decrease in the online segment counterbalanced growth in retail, resulting in subdued performance despite integration efforts.
Leading online gambling operator 888 faced a 6.5% fall in pro-forma revenue, marking £881.6 million for the first half of 2023, as reported by IGB News. This decline can be attributed to a downturn in its online sector, offsetting the gains in the retail segment.
The six-month period ending on June 30 marked the second half-year since 888's acquisition of William Hill's non-US assets for £1.95 billion. The integration process unfolded throughout the second half of 2022, following the deal's completion on July 1, 2022.
The aftermath of the acquisition was a period of significant activity for 888. The departure of CEO Itai Pazner in January, due to revealed AML and KYC failings, reshaped the management landscape. However, after the second-quarter results announcement, the company resolved its issues with Gibraltar's regulator regarding these shortcomings.
In recent developments, industry veteran Per Widerström was appointed as 888's new CEO, set to assume office from October 16. The emergence of FS Gaming, backed by former Entain CEO Kenny Alexander, chair Lee Feldman, and CFO Stephen Morana, who acquired a 6.75% stake in 888 in June, introduced a sense of uncertainty. This trio's bid for control prompted concerns from the Gambling Commission, potentially leading to a GB license suspension should they take control. The discussions were eventually terminated by 888's board, who deemed the appointments unlikely to receive approval.
Despite these challenges, H1 pro-forma revenue declined, reflecting the online sector's struggles, overshadowing retail growth. Of note is the upbeat attitude of executive chair Lord Mendelsohn, who highlighted the efficient integration of legacy William Hill assets, leading to the realization of £150 million in synergies a year ahead of schedule.
We have successfully delivered against our focused market strategy, changing our revenue mix and creating a more profitable and sustainable platform for future growth.
An in-depth analysis reveals that the UK and Ireland's online revenue contracted by 9.4% to £335.9 million due to changes in customer behavior and a shift in marketing strategy. In contrast, the retail sector in the same region experienced a 6.0% surge in pro-forma revenue, reaching £279.4 million, driven by strong customer engagement and the net win from sports betting.
The international division, however, faced a revenue fall of 13.8% to £266.3 million, primarily due to regulatory changes leading to reduced revenue from optimized markets, specifically VIP suspension in the Middle East. Despite these challenges, the operator observed double-digit growth in Italy and Spain, while regulatory restrictions impacted Germany's market.
Despite the overall revenue decline, 888 remains aligned with its full-year expectations, anticipating a low- to mid-single-digit decline on a pro-forma basis, leaning towards the mid-single-digit end of this range. A slower recovery pace in the Middle East contributes to this outlook.
While 888's pro-forma revenue in H1 2023 witnessed a dip, challenges emanating from management transitions, regulatory concerns, and market dynamics were counterbalanced by the realization of synergies from the William Hill acquisition. The operator's strategic path to stability continues, showcasing adaptability amid a dynamic landscape.