In a business environment punctuated by external hardships, gaming company Webis Holdings, owner of the acclaimed advance-deposit wagering (ADW) site WatchandWager.com, reported a dip in turnover for the six months ending on the 31st of November, 2023. The figures, resting at $5.9 million, saw a modest retreat of 4.8% from the $6.2 million mark established the year prior. Despite this, the firm’s leadership maintains a confident stance on future growth trajectories.
Webis attributes the shortfall primarily to incidents beyond its control, with poor weather conditions leading to widespread cancellations of racing events in the US during the second quarter. CEO Eke reflected on the mixed start for Webis in the fiscal year, citing strength during the summer periods which helped offset earlier losses.
Although turnover has seen a retraction and spending has plateaued, Webis reassured stakeholders that it is well-positioned to rebound in the second half of the financial year. Eke pointed to a new B2C marketing strategy, which WatchandWager.com commenced rolling out, as a catalyst for renewed optimism for the upcoming months.
A closer analysis of H1’s outcomes reveals that while specific struggles were encountered, Webis’s core B2C sector soared beyond expectations, suggesting resilience amid broader market turbulence. It’s noteworthy that the US’s overall advanced deposit wagering market suffered a 10.8% year-on-year downturn, primarily attributed to the cost-of-living crisis and the burgeoning popularity of other gaming verticals like online sports betting.
Yet even as the market faced headwinds, WatchandWager.com managed to keep both the handle – the total amount bet – and active user numbers stable, with its B2C sector now contributing more than 80% of the ADW’s gross margin; a testament to the platform’s strong customer retention and engagement.
The company’s B2B arm, while remaining integral to the operation, is described as “increasingly competitive” and capturing a significantly smaller margin when compared to B2C activities.
In a positive stride, Webis successfully renewed and extended its variety of licenses within the US and the Isle of Man, an accomplishment Eke regards as a cornerstone asset to the group, alongside content rights.
Operational expenses did experience a marginal decrease across the board including a slight drop in cost of sales at $4.1 million and betting duty paid at $48,000. Operating costs shrunk by 0.4% to a total of $2.3 million. Nevertheless, these reductions couldn’t prevent the operating loss from widening by 90.2% to $464,000 when juxtaposed with the first-half results of the preceding year. Finance costs chipped in an additional unfavorable impact of $77,000, culminating in a pre-tax loss of $541,000, far exceeding the loss of $325,000 witnessed in 2022-23.
With no tax payment made in H1, the net loss mimicked the pre-tax figure, widening from the former year’s $325,000. Eke, however, steers the narrative back to growth strategy, outlining four vital components that the board believes will drive forward momentum.
Key among the strategic focuses are the expansion of the B2C platform, with an emphasis on escalating both the number of players and the handle which in turn is expected to bolster the margin. Webis seeks to capitalize on its existing Cal Expo licenses and scout for new opportunities in other states. In addition, harnessing the growth of regulated markets in the US, the firm aims to offer third-party services to established operators and new market entrants alike.
Highlighting market dynamics, Eke suggested that large incumbents and fresh participants are scouting for reputable and established operations for merger or acquisition prospects. WatchandWager, according to Eke, embodies such a stable candidate—poised for potential synergies that could enhance shareholder value.
The board has mandated key executives to pursue avenues that would prove advantageous for shareholders, and promises to maintain transparency with stakeholders regarding any significant developments. Despite the setbacks witnessed in H1, the spirit at Webis is one not of detraction but of determined aspiration, looking boldly into the rest of the fiscal year with plans for rejuvenation and expansion.
