In a significant overview of its performance, 888 has shared encouraging news in their recent trading update, revealing that revenue for the first quarter was 2% higher than in the final quarter of last year. According to the operator, such an uptick in earnings can be attributed to growth in several key markets where its brands have a notable presence.
Breaking expectations, total revenue for the company was marginally above what was originally forecasted, with predictions initially ranging from £420m to £430m for Q1. Despite this positive overall picture, there were mixed outcomes across various regions and sectors of the business.
In the UK and Ireland markets, online revenue experienced a slight quarter-on-quarter decline of 1%. Nonetheless, this dip was balanced out by a 4% increase in gaming revenue, which offset a decrease in sports betting returns. The latter was attributed to an accumulation of customer activities around the Cheltenham Festival compared to the previous year.
Looking forward, 888 has conveyed an optimistic outlook, expecting to witness a return to year-on-year growth in the UK and Ireland from the second quarter onwards. The company suggests that this will be fueled by a highly engaged player base, a pipeline of new product launches, and the annualizing effects of safer gambling adjustments.
Furthermore, 888’s online international business continues its own trajectory of positive growth, with revenues climbing by 6% from Q4 of the prior year. This success was linked to the normalizing influence of stringent regulatory changes enacted in February 2023, with specific market growth resuming year-over-year in February and March—led by strong performance in core markets such as Italy, Spain, and Denmark.
Conversely, 888’s retail operations painted a less rosy picture, with a 7% fall in revenue during Q1. The company associates this downturn with strategic shop optimization, which includes a 2% year-on-year reduction in overall shop numbers, as well as challenging comparative bases.
As we look further into 2024, 888 maintains its forecast of sustained growth, aligning with its mid-term ambition of achieving an annual growth rate between 5% and 9%. CEO Per Widerström expressed satisfaction with the first quarter’s over-performance in terms of revenue. He attributes the improved revenue run rates to robust player volumes and having navigated past various changes in regulatory and compliance landscapes during the quarter. With bolstered marketing expenditure and an exciting lineup of product releases, 888 upholds a confident posture concerning growth resumption from Q2 2024.
Mr. Widerström also drew attention to last month’s announcement of 888’s comprehensive multi-year value creation plan, which heralds a significant rebranding of the company to Evoke plc. This strategic move aims to better convey the strength of the group’s multi-brand operational model, albeit pending shareholder consent at the next Annual General Meeting scheduled for May 13.
While the rebranding initiative marks a forward-looking stride for the company, 888’s recent full-year performance data offers a mixed story. Though revenue surged 37.1% to £1.70bn, and the net loss was significantly reduced, adjusted profit after tax saw a 25% decrease. Widerström referred to these outcomes as “disappointing” despite an increase in adjusted EBITDA.
The results were administered shortly after 888 shared news of impending job losses across the company, which were viewed as necessary steps towards realizing long-term objectives. Departments affected by these cuts were not disclosed.
Further recent developments include 888’s agreement to sell certain U.S. B2C assets to Hard Rock Digital, with a phased completion process pending regulatory approvals. While the specifics remained under wraps, this negotiation aligns with 888’s review initiated in March, exploring various strategic options to enhance group value, including a partial or complete sale of U.S. B2C operations.
888 also reported positive regulatory news in March, with the Gambling Commission opting against taking any regulatory action following the operator’s licensing review. The review, initiated after an attempted management takeover by FS Gaming and subsequent license jeopardy, saw no further action required by the Commission.
Looking ahead, as the firm prepares to step into its rebranded identity and execute on its strategic plan, investors and industry observers will closely monitor 888’s—or soon to be Evoke plc’s—movement in the coming months.
