888, one of the world's leading betting and gaming companies with internationally renowned brands including William Hill, 888 and Mr Green, announces a trading update for the three months ended 31 March 2024 ("Q1-24" or the "Period").
Financial highlights
· Group: Revenue of £431m, slightly ahead of the £420-430m guidance range previously outlined at the FY23 Results on 26 March 2024. Revenue up 2% relative to Q4 2023, reflecting a continuation of positive sequential quarter-on-quarter trends. The Group continues to expect revenues to return to year-on-year growth from Q2 2024 onwards, with full year 2024 revenue growth expected to be consistent with the mid-term target of 5-9% annual growth.
· UK&I Online: Continued strong customer engagement with average monthly actives +9%. Revenue -1% with a return to growth in gaming (+4%) more than offset by reduced sports revenues, primarily driven by increased customer investment across the Cheltenham Festival relative to the prior year. Revenues are expected to return to year-on-year growth from Q2 onwards driven by strong customer engagement, new product launches, and the annualization of safer gambling changes.
· International: Continued positive sequential growth with Q1 2024 revenues 6% higher than Q4 2023. Following the annualisation of significant compliance changes from February 2024, the segment returned to year-on-year growth with 4% growth in February and March, driven by the Core markets of Italy, Spain and Denmark.
· Retail: Revenues -7%, reflecting shop optimisation (2% reduction in shops year-over-year) and challenging basis of comparison, with Q1 2024 revenue consistent with Q4 2023.
Strategic highlights
· On 26 March 2024 the Group announced its new strategy, Value Creation Plan (VCP) and clear medium-term financial targets, namely to grow revenue by 5-9% per year, improve adjusted EBITDA margin by approximately 100bps per year and focus on deleveraging to reach net leverage of 3.5x or below by the end of 2026. Strategic focus on embedding new ways of working across the business.
· New corporate identity - evoke plc - to better reflect new 'One Company' approach, to be launched in May 2024, subject to shareholder approval at the AGM on 13 May 2024.
· Reset of operating model well progressed, with £30m 2024 operating cost savings being reinvested into more profitable marketing to drive growth, in-line with the VCP.
· Conclusion of strategic review of US B2C business announced on 28 March 2024, with the sale of selected assets and closure of remaining operations expected during 2024 subject to regulatory approvals. This is expected to deliver an ongoing EBITDA improvement of £25 million per year from 2025.
Per Widerström, CEO of 888, commented:
"I am pleased to report that Q1 2024 revenue was slightly ahead of our guidance, with strong player volumes converting into improved revenue run rates. Having lapped various regulatory and compliance changes during the quarter, and with increased marketing investment supported by an exciting product pipeline, we remain confident in a return to growth from Q2 2024.
I was delighted to outline our multi-year value creation plan alongside our full year results in March, and am pleased to report a strong quarter of progress against these plans. We are moving decisively and at pace to position our company for long-term success, and I look forward to providing further updates about our progress in the coming months."
