Against the backdrop of fiscal challenges, 888 Holdings has delivered a mixed bag of financial results for the fiscal year ending December 2023, with significant rebranding on the horizon. The company unveiled its adjusted EBITDA at £308.3 million, a sharp rise from £217.9 million the previous year, while managing to increase full-year sales from £1.24 billion to £1.70 billion. In spite of these gains, 888 reported a troubling net loss of £56.4 million, an improvement over the prior year’s £120.5 million loss. Shareholders observed a halving of the basic loss per share from continuing operations, which dropped to £0.126 from £0.283 experienced in 2022.
In a bold move signaling a new strategic direction, the group aims to reinvent itself as Evoke, pending shareholder nod at the forthcoming Annual General Meeting (AGM). The rebrand seeks to capture the essence of 888’s diversified portfolio of brands. The proposed rebranding was disclosed during the earnings call, presented as an integral component of a broader strategy intended to rebound profitability.
The group is helmed by new leadership with the appointment of CEO Widerström, an industry stalwart with a remarkable 17-year tenure in executive positions at renowned betting and gaming firms. Widerström, the ex-CEO of Fortuna Entertainment Group, is spearheading the company through an evolution that he fittingly describes as “the beginning of an exciting new dawn.”
888’s strategic realignment encompasses a definitive plan to position itself for future triumphs through six targeted initiatives, potentially including the pivotal rebrand to Evoke. Despite the higher revenue and earnings, adjusted profit after tax slumped by 25% to £48.1 million. The company’s redirection was foreseen in its January 2024 Post Close Trading Update, which also announced layoffs to stay on track with long-term aspirations. These restructuring efforts lacked clarity on affected departments.
Revenue growth was driven by strategic decisions, including moving away from dotcom markets and adjusting to customer behaviors in the UK, spurred by new gambling regulations. Moreover, the company’s marketing adaptations signified a shift towards emphasizing sustainable revenue and profitability.
The company boasted an Adjusted EBITDA margin of 18.0% for the fiscal year, aligning with projections and marking an increase from 16.8% in the prior year. This performance reflects enhanced profitability and a commitment to prudent marketing expenditures, overcoming the headwinds from market changes.
As of December 31, 2023, 888’s liquidity was bolstered by a robust cash position of £128 million, further supported by an undrawn revolving credit facility of £150 million. Net debt saw a marginal decrease to £1.7 billion partly due to favorable foreign exchange movements, maintaining an adjusted net debt/EBITDA ratio of 5.6x.
Although it was not the day’s focal point, 888 previously emphasized that the UK and Ireland remain its primary revenue streams. However, revenue from these markets was reported at 8% lower than the previous year, totaling £658 million.
The newly launched Value Creation Plan (VCP) is 888’s roadmap to a prosperous future, carefully curated by the CEO and senior leaders. This plan entails an operational reboot promising to realize annual costs savings of approximately £30 million. 888’s strategic market approach is now streamlined into two classifications: ‘core markets’ — like the UK, Italy, Spain, and Denmark — and ‘optimize markets,’ with an emphasis on investment concentration and maximizing cash flow.
There is also ongoing strategic review of the US B2C business, which may include cost reductions and precedes potential divestment. On a numerical front, the company commits to achieving medium-term targets, targeting a return on equity growth rate of 5%-9% annually, alongside an improved adjusted EBITDA margin.
CEO Widerström’s reaction to the earnings report conveyed a sense of optimism about the company’s future,
“Our Value Creation Plan, new financial targets, and new corporate identity herald an exciting new dawn for our business,” he said, reinforcing his conviction in the group’s recipe for long-term success that blends market leadership, proprietary technology, a distinguished management team, and strong brand names. With expectations for Q1 2024 revenues to fall between £420 million and £430 million, the group positions itself to surmount the previously disappointing results and drive forward on a path of revitalization and growth.
