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888 confirms redundancies as full-year revenue drops 8%

| By Robert Fletcher
888 has revealed it will make redundances as part of changes to its organisational structure, while the operator has posted an 8% year-on-year drop in revenue for its 2023 financial year to £1.71bn (€2.16bn/€1.99bn).
888 revenue redundancies

Confirming the news to iGB today (17 January), 888 said the changes will help the business achieve its long-term plans. 888 did not disclose which departments will be impacted by the redundancies. 

“We are making some changes to our organisational structure that will better position the group to achieve its long-term strategic plans,” an 888 spokesperson said. 

“As part of this, regrettably, some roles will be made redundant across some of our locations. We will be offering our full support to those colleagues who are impacted.”

Revenue down despite retail growth

The news comes as 888 also published a trading update for both its financial year and Q4 of 2023. The headline figure from the FY results is an 8% drop in group revenue.

888 said this was driven primarily by a proactive mix shift away from dotcom markets. This, it said, impacted revenues by approximately £80m in 2023.

The operator also noted the impact of customer mix changes in the UK due to additional safer gambling measures. In addition, it referenced changes in its marketing approach to focus more on sustainable revenue and profitability. 

Together, 888 said, these changes have created a “higher quality” and “more sustainable” business mix. This includes approximately 95% of revenue being generated from regulated and taxed markets.

Speaking about the past year, Per Widerström, who took over as CEO in October 2023, was largely positive. He referenced the changes made as being positive in terms of supporting future growth at 888.

“In FY23, the group made important strategic and operational progress in the face of some significant regulatory and compliance headwinds,” Widerström said. “I am pleased to say that the business has enhanced its foundations for sustainable and profitable growth including significantly strengthening compliance, refining its approach to marketing investment and increasing its focus on recreational customers.

“There are clear opportunities to unlock our significant potential, but as a business we know that going forward we must be more proactive in adapting to changes in regulation and technology. 

“We are now taking rapid actions to position the group for future success, reducing our overhead costs and freeing up funds to invest in growth based upon our new strategy and value creation plan.”

Retail goes up, online and international go down

Going into further detail on its performance in 2023, 888 said UK and Ireland online revenue was still its main source of revenue. However, revenue from this segment was 8% lower year-on-year at £658m.

Again, 888 referenced the impact of safer gambling changes and a more refined marketing approach. It said strong customer engagement was more than offset by an 18% drop in average revenue per customer.

However, 888 said synergy delivery and focus on efficient marketing means adjusted EBITDA for UK and Ireland online will be “significantly” higher year over year, despite the reduction in revenue.

Turning to its international business, revenue declined 16% to £517m. 888 said the segment was impacted by compliance changes in dotcom markets but saw double-digit growth in Spain and Italy.

In contrast, retail revenue was 3% higher at £535m in 2023. 888 put this down to a strong underlying performance driven by improved product offering through new investment. This, the operator said, more than offset a 3% reduction in estate size during the year.

More changes at the top at 888 as Walker exits as CCO

Since Widerström arrived as CEO, 888 has announced a series of changes to its management team. The latest has been confirmed today, with the news that Phil Walker will be leaving his role as chief commercial officer of the business.

Walker took on the position in July 2023. He was promoted after Alexis Zamboglou joined the business and took on his previous role of managing director for the UK and Ireland.

Walker only took on the MD position in January 2023. He was previously UK MD for William Hill, continuing in the role after 888 acquired William Hill’s non-US assets. Walker also spent time as online managing director at William Hill.

“After five years in leadership roles across the business, Phil has decided to leave 888,” an 888 spokesperson said. “We’d like to thank him for making a hugely significant contribution over the years. We wish him well in his future endeavours.”  

Other changes in recent months include Sean Wilkins being named chief financial officer in October. He will begin his new role next month.

Rik Barker will also assume the position of chief information technology officer in February. Meanwhile, Ian Gallagher was recently appointed as chief product officer. 

Other senior appointments include Fredrik Ekdahl joining as group general counsel back in October and Jeffrey Haas as chief growth officer earlier this month.

One year on from Pazner’s departure

The trading update comes just under one year since Itai Pazner was removed as CEO of 888. Pazner left the business at the end of January 2023.

His somewhat abrupt departure coincided with 888 suspending its VIP activities in certain dotcom markets. An internal compliance review revealed anti-money laundering (AML) and know your customer (KYC) best practices were not followed for Middle Eastern customers. 

Pazner was appointed CEO of 888 in January 2019, having risen through the ranks during two decades at the operator. As CEO, he led the business through a period that included the acquisition of the non-US business of William Hill in July 2022. He also oversaw expansion efforts across North America in both the US and Canada.

Lord Mendelsohn was named executive chair of 888 in the wake of Pazner’s exit. He moved back to a non-executive position when Widerström joined the business last October.

What next for 888?

With a fresh management team now in place, and other members set to join imminently, 888 said it is upbeat about its prospects for 2024.

The trading update references a “positive” outlook for FY24 revenue, with consistent growth in active players driving confidence in strong revenue growth online in both the UK and international segments. 888 also said compliance and safer gambling impacts will begin to annualise in February 2024, leading to a more positive outlook for average revenue per user.

The operator launched its global cost savings programme in December 2023, with the aim of saving £30m. This will be supported by investment in automation and AI-powered data and insights to strengthen core capabilities. Cost savings will also allow for higher marketing spend in 2024.

888 said the initiatives will improve long-term profitability. However, additional investment means it expects 2024 adjusted EBITDA to be at the low end of consensus range.

Further details about its long-term strategy will appear alongside its full-year results, due to drop on 26 March. 

“I’ve been working hard with the board, our strengthened executive team and the talented people across the business to refine our strategic framework, which is being translated into a value creation plan,” Widerström said. 

“I am confident that we are set to deliver deleveraging and strong shareholder returns in the coming years. I am looking forward to outlining our 2024-2026 plan alongside our full-year results in late March.”

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