Webis has seen its share price tumble by a quarter today (Friday) after announcing the loss of a major US customer.
The owner of the US-facing WatchandWager betting operator issued a statement this morning outlining details of a commercial dispute with a B2B syndicate – who are unable to be named under confidentiality restrictions.
With no resolution to the dispute, WatchandWager has refunded the syndicate's player balances, totalling approximately $10m (£7.6m/€8.7m), and said “no further wagers can be accepted” from the client. The importance of the refund is highlighted by it now having just $3.1m remaining in cash holdings.
The company said the cessation of its partnership with the syndicate would mean an $800,000 reduction in gross margin for the financial year ending in May 2019. Webis reported gross profit of $5.3m in its most recent annual report for the year to May 2017.
WatchandWager holds pari-mutuel licences for its ADW business in eight US states, including California and New York. Another Webis division, WatchandWager.com LLC, operates Cal Expo Harness Racetrack in Sacramento, California.
In the statement, Webis said WatchandWager – which is led by president Ed Comins (pictured) – is now in the process of “streamlining” and implementing additional business efficiencies.
The company said it has taken on a number of new clients and is in advanced discussions with a number of other potential leads.
It added: “While these initiatives alone are unlikely to replace gross margin in the short-term, the early indications are that the current client base is both wagering successfully and growing in scale.
“This strategy does have the benefit of removing the primary business risk, being that of concentration and over reliance on one single entity.”
It added that it will continue to update shareholders with regard to the progress of California's adoption of sports betting legislation.
Webis shares fell 25% today on the London Stock Exchange.
In its most recent interim report Webis announced year-on-year turnover and profit growth for the six months to November 30, 2017. Turnover in the first half amounted to $209.3m, which was up more than 40% year-on-year. Gross profit was up by 7% to $2.2m.