888 nets positive Q1 results ahead of VCP reset

888 Holdings has detailed a positive start to year trading, as the LSE gambling group prioritises the objectives of its Value Creation Plan (VCP).

Publishing a Q1 trading update, 888 revenues stand at £431m, with results tracking slightly above the £420-430m guidance outlined by FY23 Results on 26 March 2024.

Improved headline results carry notice that “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.”

In the UK & Ireland, 888 detailed that its home market online portfolio saw a 9% increase in customer engagement, while revenue results showed a decrease of 1% with gaming growth at 4% helping to offset reduced sports revenues.

888 has attached a positive outlook to UK online performance as “revenues are expected to return to year-on-year growth from Q2 onwards, driven by strong customer engagement, new product launches, and the annualisation of safer gambling changes.”

Within international markets, online revenues increased by 6% as 888 detailed positive sequential growth after having managed compliance challenges.

February and March results saw 888’s international segment grow by 4% in the core markets of Italy, Spain and Denmark.

Despite online growth, 888’s corporate performance continues to be affected by the declining results of its William Hill retail unit.

Period trading saw William Hill report a 7% decline in revenues, as the unit adjusts to its continued reorganisation, reflecting a 2% year-over-year reduction in shops and a challenging basis of comparison. 888 maintains that William Hill Q1 2024 revenues are consistent with corresponding Q4 2023 results.

Group CEO Per Widerström, commented on Q1 results, “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 navigated 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.”

As announced in Q1, 888’s new executive leadership team continues to execute the Value Creation Plan (VCP) with “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.

888 maintains its objective to change to the new corporate identity of Evoke Plc to align with its ‘One Company’ strategy, with a rollout set for May 2024, pending approval at the Annual General Meeting (AGM) on May 13, 2024.

The VCP aims to reset the PLC’s operating model, securing £30m in 2024 operating cost savings to be reinvested into more profitable marketing to drive growth.

Stage 1 of the VCP saw 888 discontinue its US joint venture with Sports Illustrated, with the divestment of US wagering assets expected to conclude in 2024. The closure of US operations is expected to “deliver an ongoing EBITDA improvement of £25 million per year from 2025.”

Widerström noted: “I was delighted to outline our multi-year value creation plan alongside our full year results in March, and I 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.”

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