Netherlands exit and UK hit 888 as revenue dips 7% in Q3

| By Robert Fletcher
Gambling operator 888 said it expects to post a 7% year-on-year decline in revenue for the third quarter of its 2022 financial year, primarily due to its exit from the Netherlands and stronger online player safety measures in the UK.
Itai Pazner

In a trading update published today (18 October), 888 said revenue for the three months to the end of September is likely to reach £449m (€517m/$510m), down from £484m in the same period last year.

The preliminary figures were posted on a pro-forma basis and included William Hill’s non-US assets, which 888 acquired in July this year. Results were reported as if these assets were part of 888 over both years, and also excluded its former bingo business that was also sold in July.

Revenue is expected to fall across all areas, with the exception of William Hill retail, where revenue is likely to remain level at £124m for the quarter.

888 said retail revenue was stable despite taking a £4m hit from three days of temporary closures, together with sporting fixture cancellations and postponements during the period of national mourning following the death of Queen Elizabeth II.

William Hill online UK revenue is forecast to fall 14% to £125m, while revenue from William Hill International is expected to slip 12% to £52m. 888-branded online operations will remain the core source of revenue, though this area of the business is also likely to take a hit, with revenue falling 5% to £148m.

888 said total online revenue across the business was down 10% year-on-year partly as a result of its withdrawal from the Netherlands in line with the country opening its regulated market in October last year. Dutch activity represented 6% and 4% of Q3 2021 revenue for 888 and William Hill International respectively. This would suggest that 888 made around £9m from the country in Q3 of 2021 and William Hill brought in about £2m.

888 also noted the impact of stronger player safety measures in the UK, saying that average spend per player was down 14% year-on-year as a result of more stringent measures being introduced in the latter part of 2021.

“Having completed our transformational combination with William Hill, I am pleased to report that during Q3 our teams continued to make rapid progress in integrating these two market-leading and highly complementary businesses,” 888 chief executive Itai Pazner (pictured) said.

“This has enabled us to progress towards our new target operating model, while delivering a series of ‘quick win’ synergies, that will benefit our adjusted EBITDA margin for the second half of this year.

“Revenues during the third quarter continued the trends we have seen in recent quarters, with relatively resilient trading across our main international markets and in our retail estate, but there was continued pressure on our UK online revenues in light of the ongoing impact of the enhanced player safety measures. 

“We are changing the mix of our business to a lower spending, more recreational player base that gives us confidence in the long-term potential for our UK business.”

888 said it continued to make “strong” progress with integration in line with its plans, with synergies and associated cost savings already being delivered from initial actions taken.

The operator also said it remains aware of the increased cost of debt, together with the impact on industry trading conditions in the UK and is taking steps to ensure that the operating model of the enlarged business is appropriate to address this, while delivering on the strong potential of the business.

“As we look forward, we remain focused primarily on successful integration, execution and de-leveraging in order to unlock the huge potential from our enlarged business,” Pazner said.

“We are building a stronger group that will leverage our leading technologies and portfolio of world-class brands to create a leading global betting and gaming company, with clear plans to grow market share and profitability in some of the most attractive markets in the world.”

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