Increased Spending Slows Profits at 888 in H1Published September 21, 2019 by Lee R
Expansion into new regions and new taxes in the UK required more H1spdning by 888 to sustain their overall solid growth.
H1 figures released by 888 Holdings indicate that some adaptive spending should pan out.
H1 Profit Before Tax
888 Holdings attributed a significant year-on-year decline in profit before tax in H1 to higher spending, Meanwhile, revenue increased 2% to $277.3m (£224.9m/€251.1m), up from $273.2m year-on-year.
When accounting for VAT accrual, 888 acknowledged that group revenue was actually down 2% year-on-year, with total revenue for 2018 H1 at $283.9m, including the VAT release.
B2C revenue at 888 increased 6% year-on-year from $246.7m to $262.5m, with growth visible across several verticals.
Casino revenue rose 9% to $175.4m; sport revenue climbed 19% to $44.5m; and bolstered by the acquisition of JPJ Group's Mandalay operating business, which had previously been a client of its B2B division, bingo revenue rose 10% to $19.5m.
Poker revenue dropped significantly for H1 2019 at 888, down 24% decline in poker revenue to $23.1 million, from $30.6m in 2018.
B2B revenue also dropped sharply at 888, a sizeable 44% to $14.8m. The operator attributed this drop to the anticipated migration of Cashcade bingo to its proprietary platform; and higher gaming duties on the Dragonfish network resulting from UK regulatory changes. 888 said this led to a domino effect of lower marketing spend and other cost reductions.
As far as H1 spending, total operating expenses were up 1% year-on-year to $71.5m, with growth attributed by 888 to continued growth in its casino and sport businesses, yielding higher charge rates to third-party sport platform and game providers.
888 Leader Speaks
Overall, 888 executive Itai Pazner called the growth solid:
“The board continues to believe that 888 is very well positioned for the future as a result of the group’s diversification across products and markets, product leadership, and first-class team.”
H2 will tell how accurately the optimism of 888's head manager translates to results.