Webis hit by decline in international activity in first half
Webis Holdings, the parent company of WatchandWager, has reported a drop in revenue and profit for the first half of its financial year, mainly due lower turnover activity in its international B2B division.
Group turnover for the six months to November 30, 2018, amounted to $5.4m (£4.1m/€4.7m), down from $10.3m in the corresponding period last year.
Webis has put this sharp decline primarily down to the loss of a large syndicate wagering into international pools, as reported to shareholders in October.
The company was forced to refund the US B2B syndicate – which could not be named under confidentiality restrictions – its entire player balances, totalling approximately $10m after its WatchandWager subsidiary was unable to resolve a commercial dispute.
At the time, Webis said “no further wagers can be accepted” from the client and as a result of the move, it would mean an $800,000 reduction in gross margin for the financial year ending in May 2019.
This has had a knock-on effect on the company’s first-half performance, with the total amount wagered during the period standing at $61.2m, much lower than $209.3m in the first half of 2017.
Webis said this reduced betting activity also impacted gross profit for the period, with the company reporting $1.7m, down from $2.2m in the previous year.
Although Webis was able to cut operating costs from $2.2m to $2.1m during the first half, it still ended the period with a larger operating loss of $390,000, compared to $12,000 in 2017.
As a result the business posted a net loss of $591,000 for the first half, up from $19,000 in the prior year.
However, despite what Webis said was a challenging six months, non-executive chairman Denham Eke said the loss of international business has allowed the company to focus more on its US operations. This month, Wenis was boosted with the news that WatchandWager has secured an extension to its licence in California.
“Whilst the loss in the international business is not ideal, there are many positives, not least in that it has enabled us to refocus our business in the US,” Eke said.
“As a result, we are operating a more stable business with fewer commercial risks, allowing senior executives to concentrate on demonstrable growth in player numbers, and by positioning ourselves for the expansion of licensed and regulated sports book gaming in the US, where we remain very well placed, and is commented on below.”
In terms of current performance, Eke said Webis has started the new period in a steady manner, with a continued focus on growing player numbers, while also keeping close control on costs and implementing further cost efficiencies across the business.
Eke said B2C remains the company’s core focus, with various development plans in place. These include improvements to payment systems and the batch wagering module on its website.
In addition, in line expansion plans in the US, Webis continues to diversify its offering, including the launch of a new, licensed tournament-based product that allows players to bet head-to-head with other consumers on various races.
In relation to its plans in the US, Eke said that the recent Department of Justice revised opinion on its interpretation of the Wire Act will have no negative effect on the company's operations.
Eke also acknowledged the company’s business-to-business operations, saying that it continues to be encouraged by the spread of players using its content over a wider range of tracks. However, Eke says Webis remains aware of the volatility of this sector, but is now more comfortable with its product mix.
“In summary, although we have seen a significant loss of short-term trading in our international business-to-business sector, this has allowed the board and senior management to restructure the operation,” he said.
“This process of ensuring immediate cost efficiencies whilst focusing on our core assets is now well underway. Overall, we are more confident that now and will, in the future, have a more stable platform, with a wider spread of business, and consequently less commercial risk.”