888 Holdings logs impressive 2016 earnings.
In 2016, the giant industry company 888 experienced significant growth. Both casino and sports betting sectors have seen a considerable increase in revenues. The expansion into new markets and the rise in mobile usage are helping to drive this growth.
The total revenue in 2016 increased by 13% to approximately $521 million. The end-consumer business still takes up the majority of activities, with revenue of approximately $460 million. The company's online casinos saw a rise of 21% to around $280 million, compared to 2015. The revenue from the relatively new sports betting segment is on the rise, with an increase of 49% to about $52 million. The pre-tax profit almost doubled from $32.5 million in 2015 to $59.2 million in 2016.
888 had a fantastic year in 2016, with strong organic growth in revenue and profit, said Itai Frieberger, the CEO of 888.
Yet, the Group is facing some challenges in the B2B sector. Here, the company mainly provides software solutions for casino games, poker, and bingo through its subsidiary Dragonfish. However, the poker and bingo segments also pose a challenge for 888 itself. Revenues for both divisions decreased slightly in the single-digit percentage range. One of their main goals for 2017, as stated in the annual report (PDF), is to create new forms of poker and focus more on tournaments.
The UK continues to be the most significant market for 888, with an increase of 5% to $223 million. The continual growth in the rest of Europe showcases a promising future for the Group. Excluding the UK, European regions grew by 29% to $231 million in comparison to 2015. Spain has become the second-largest market since the launch of 888sport.es, with revenue growth of 45%. Other regulated markets, such as Italy, Romania, and Denmark, are responding well to 888's new offerings in the sports and casino sector and are generating strong growth.
The American market, on the other hand, is becoming less important, and revenue is decreasing in 2016. Here, 888 is mainly active through its poker offering in the few US regulated markets. The company mentions the strategic importance of its involvement if more US states regulate online gaming.
The report highlights the growing importance of cross-selling for 888. The inclusion of sports betting in their offering has reduced customer acquisition costs in other divisions. In the technology field, 888 is investing in the development of their own solutions. 60% of 888 customers now access their services through mobile devices, compared to 47% in 2015. The costs for new developments and converting old games to the HTML5 standard have risen by 4% annually to $44 million.
The increased marketing expenditure in the new markets is also reflected in the costs. These climbed from around $140 million in 2015 to $170 million in 2016. The increased revenue from sports betting and live casino is mostly due to licensed software solutions. This has led to an increase in operating costs.
888 Holding is based and licensed in Gibraltar. As a British overseas territory, Gibraltar is an EU member. Several of 888's licenses in regulated markets depend on Gibraltar's membership of the EU. Their involvement in unregulated markets is also derived from the freedom to provide services within the EU. However, it's not yet clear how the UK's withdrawal from the EU might affect 888. The future status of Gibraltar is uncertain. The residents of the peninsula voted 95.9% in favor of remaining in the Union. Nonetheless, there's a possibility that Gibraltar may also leave the EU. 888 sees this as a potential risk for their business model and is considering Malta as an alternative jurisdiction for licensing.
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Source: www.onlinecasinosdeutschland.com
