888 Holdings Reports Rise in Revenues Despite Challenges
Online gambling company 888 Holdings has been struggling since acquiring William Hill's non-US assets, with revenue not living up to expectations. This scenario is expected to continue, but there are signs of improvement ahead.
In the first six months of the year, 888's revenue soared by 165%, totaling $1.12 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 211% to $198 million. However, after paying all taxes, the company reported a loss of approximately $42 million, compared to a $15 million profit during the same period last year.
Even though retail revenue increased by 6%, online gaming revenue saw a significant drop of 11%. This decline can be attributed to high interest expenses, borrowing, and one-time expenditures related to the William Hill acquisition. Overall, group revenue dropped by 7%. This decrease was mainly due to regulatory changes that affected the online segment and a business strategy focusing on market orientation.
In response, 888 quickly adapted its business model, leading to sales largely driven by local regulations and taxes, accounting for 95% of Q2 2023 revenue. Furthermore, pro forma adjusted EBITDA experienced a significant growth of 9%, and the pro forma adjusted EBITDA margin expanded by 2.6%, reaching 17.7%.
888 expects strong year-over-year growth in adjusted EBITDA for the entire year. They predict a considerable increase in the adjusted EBITDA margin for the entire year, reaching a minimum of 20%, a marked improvement from the 16.8% recorded in 2022.
William Hill's operations will play a part in these projected improvements. While the online operator represented 14.1% of the UK market last year, it now owns 14.9%.
Having more players doesn't necessarily mean more revenue. William Hill's data revealed that bettors spent less in 2023 compared to the previous year.
Tighter Regulations in Gibraltar
Gaming authorities in Gibraltar say they will closely monitor the market, which will affect 888. Subsidiary Virtual Global Digital Services will have to pay a fine of $3.7 million due to non-compliance with Gibraltar's Know Your Customer and anti-money-laundering policies.
This fine is significantly less than the $23.7 million 888 paid in the UK for similar offenses. That fine resulted in the departure of then-CEO Itai Pazner, who had worked for the company for 20 years, and the suspension of VIP betting accounts in the Middle East.
Despite the setbacks, the anticipated financial improvements have boosted 888's shares. Although they experienced a sharp decline to £105 (US$133) early Wednesday morning on the London Stock Exchange, the latest information shows the company trading at £111 (US$141.24) at the time of writing. This is the highest it's been in the past six weeks.
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Source: www.casino.org
