Q3 Insights: Decoding 888’s Financial Landscape

In what it called a “mixed third quarter for the business,” 888 anticipates group revenue to decline by 10% to about £400.0m (€462.2m/$485.5m) in 2023.

In a trading update, 888 claims that various significant events affected business performance in the third quarter. One of these is the implementation of compliance reforms in dotcom markets, which had a slower recovery in customer activity and revenue than previously anticipated.

888 also reiterated the access to safer gaming reforms in the UK. It does, however, note that with the market’s robust customer growth continuing, it anticipates a return to revenue growth in 2024.

Consumer-friendly sports results from September that affected win margins globally are among the other variables affecting performance.

Change in marketing strategy also had a short-term impact, which was noted by 888. The operator claims that it is currently concentrating on marketing with a greater rate of return and a more sophisticated brand-led strategy.

888 says its retail operation is still doing well, so it’s not all bad news, according to the operator. Even though sports results were favourable to consumers, revenue was largely unchanged compared to last year. Hence, there has been no adjustment to the forecast for mid-single-digit sales growth throughout the year.

888 anticipates missing its annual EBITDA objectives

888 provides a conflicted overview of the Q4 and full-year results. According to the statement, synergy delivery is proceeding as planned, and considerable cost savings are reducing year-to-date revenue performance below initial projections.

Additional synergy possibilities have been found, and these will be invested in growth-oriented projects. According to 888, the company’s new operational model and brand-led marketing approach have created fresh growth potential.

Regarding Q4, 888 anticipates sales to increase sequentially from Q3. However, before starting to increase again in 2024, revenue is anticipated to decrease year over year by a mid-single-digit.

The adjusted EBITDA margin for the entire year is now anticipated to range between 18% and 19%. According to 888, this is in line with their aim of promoting sustainable growth.

888 Executive Chair Lord Mendelsohn stated, “We are taking significant steps to improve the standard and durability of our revenues.” “However, Q3 performance fell short of our expectations, and as a result, we now anticipate that EBITDA will be lower than we had anticipated at year’s end.

“Our synergy delivery is on schedule thanks to the hard effort the team has put in so far this year, which has laid very strong foundations for the company’s future.

As we move closer to our specific goal of more than £2.00 billion in revenue in 2025, we are intent on investing to produce good levels of predicted revenue growth in 2024. I have confidence about the upcoming years.

Important managerial changes in Q3

Lord Mendelsohn mentioned several significant changes to the 888 board that appeared in Q3.

Next month, Per Widerström will start serving as CEO. He was confirmed as the chief executive officer in July and will begin serving in that capacity on October 16. Mendelsohn returned to a non-executive position after being appointed. Since Itai Pazner was fired in January, Mendelsohn has served as executive chair of the company.

Sean Wilkins, a former employee of Superbet and Tesco, was also named as 888’s new CFO earlier this month. Wilkins will take up the position on February 1st, 2024. He takes Yariv Dafna’s position, who declared his intention to leave the company in January.

With Per Widerström’s appointment as our new CEO and Sean Wilkins’ appointment as CFO, this quarter has been significant for the company, according to Lord Mendelsohn. “They will guide the company through its upcoming growth phases, I am extremely optimistic. Per taking over as CEO in the middle of October is exciting.

FS Gaming’s Management Offer for 888 Breaks Down

When the new management team was revealed, FS Gaming, an investment firm backed by former ex-Entain CEO Kenny Alexander, made unsuccessful bids to acquire 888.

In June, the group bought a 6.75% interest in 888. It was then suggested that former GVC chairman Lee Feldman take on the same position at 888. Alexander and Stephen Morana, a former GVC director, were going to succeed as CEO and CFO, respectively.

The plan would also raise FS Gaming’s ownership in 888 over the 10% level required to result in a change in management. However, the Gambling Commission’s consent was necessary for this.

The Commission expressed worry about an ongoing HRMC inquiry into GVC’s earlier Turkish activities. This led the Commission to reconsider 888’s eligibility for a licence.

The 888 board then unanimously decided to end talks with FS Gaming since the proposal would jeopardise its GB licences.