Webis slips to full year loss as customer spending drops

Webis Holdings, the parent company of WatchandWager, has announced a loss of $930,000 (£718,820/€844,335) for the 12 months to 31 May 2019, after the loss of a large wagering syndicate led to a significant year-on-year decline in customer spending.

Turnover for the full year amounted to $47.3m, down by 13.2% from $54.5m in the previous year, while the total amount wagered by customers fell by 70.4% to $136.4m.

Webis put the sharp drop in bets primarily down to the loss of a large wagering syndicate, as previously reported in October of last year. Webis said that this had a particular impact on business-to-business turnover from the Hong Kong Jockey Club and the French PMU.

However, Webis noted that the loss of the syndicate now means it no longer has the risk factor of a reliance on one particular group or agent. In addition, the reduction in business had no impacted on its worldwide licences and content.

In terms of business-to-consumer, Webis said it adjusted its strategy whereby it has a lower marketing spend, as well as some reductions in data feeds and other products. Webis said despite less marketing, player numbers during the period were up by 16%, while costs fell.

Webis also noted its presence in the US, saying that it holds an array of licences to take bets in various states. The company said its US growth and expansion is “critical” to its future performance.

This was helped by its operations at the Cal Expo racetrack in California, which ran 47 race meets between November 2018 and May 2019. Webis, which renewed its licence at the track in August, noted that there were no equine fatalities relating to racing activities incurred during the meetings

Looking at geographical performance, North America racetrack operations were the main source of income, with turnover standing at $44.8m, down 10.8% on last year.

Advance deposit wagering performed best in the US, turning over $1.5m for the year – a year-on-year increase of 16.5% – while UK operations turnover stood at $692,000 and Asia Pacific $273,000.

In terms of spending, operating costs were down 5.1% year-on-year to $5.3m as Webis felt the benefit of cutting back on marketing in its B2C segment. Webis said it expects costs to reduce again in the current financial year as it continues to manage costs across its operations.

However, such was the impact of the syndicate loss – with Webis saying this had a negative impact of $800,000 on gross margin for the period – that it slipped to a loss of $930,000, compared to a profit of $103,000 in the previous year.

Gross profit was down 19.2% from $5.6m to $4.5m, while operating loss totalled $889,000, down from a profit of $143,000 last year.

“It has been a mixed year for our core US-based business, WatchandWager.com, over the financial year reported, with a reduction in amounts wagered, and an overall loss returned, but against that a significant strengthening of our licensed USA position in the increasingly expanded world of USA regulated gaming,” Webis non-executive chairman Denham Eke said.

“Despite the loss reported, the board is overall satisfied with the performance over the year reported for our three core business units.

“Equally importantly, and as shareholders are aware, the company, as an Isle of Man owned operation, still occupies a unique advantage in the US, with our array of US licences, banking, settlement and general business operational skills.”