888’s 2023 outlook ‘unchanged’ despite 3% year-end revenue drop to £1.85m

The high costs of the William Hill acquisition continued to drag 888 Holdings trading performance into the latter stages of 2022, as the company declared a year-end revenue of £1.85bn.

Now including Hill’s 1,414 suite of UK high street betting shops in its post-close trading report, the group detailed a slowdown in both online and retail revenues across the year, with full year earnings falling 3% from £1.907bn and expected EBITDA of £305-316m.

The group’s online operations recorded a decline of 15% from £1.570bn to £1.332bn, but a bufferzone was provided by its newly acquired retail segment, which experienced an uptick of 54% from £337m to £519m. 

On a quarterly basis, Q4 revenue also dropped 3% to £458m (£470m), and although online earnings were still negative, it was significantly less so than the full year figures, down just 5% to £326m (£345m).

Retail was again the standout success story in Q4, increasing 5% from £125m to £131m, whilst average revenue per shop was up 7% relative to 2019. 888 added that H2 revenue was relative to partial shop closures in some areas in H1.

The group maintains that 2022 year end trading remains ‘in line’ with Board expectations, attributing general revenue declines to ‘proactive enhanced player safety measures’ in the UK and the group’s exit from the Netherlands in October 2021.

Revenue from these two markets was down 4%, 888 explained, whilst also confirming that Chief Financial Officer and Executive Director, Yariv Dafna, will vacate his role on 31 March.

Group CEO Itai Pazner said: “The Board and I would like to thank Yariv for the contribution he has made to 888 including playing a crucial role in the completion of our transformational combination with William Hill and leading the recent successful financing of 888’s external debt. On behalf of everyone at 888, I wish him the very best in his future endeavours.

“During the fourth quarter of 2022 our teams continued to make rapid progress in integrating these two highly complementary businesses, and have started the process to migrate Mr Green to our proprietary global tech stack, as we execute against our strategic roadmap that we outlined at our recent capital markets day.

“Revenues during the fourth quarter saw continued strong trading in retail, and a robust performance online. As previously discussed, we continue to see pressure on our UK online revenues from regulatory change including the ongoing impact of the enhanced player safety measures, but I am confident we are building a sustainable leading business for the future.”

Concluding its report, 888 attributed the World Cup to its improved performance in the final three months of the year, citing the tournament as driving customer acquisition, engagement and retention across both online and retail operations – William Hill’s online player numbers were 22% on the UEFA 2020 Euros.

Moving forward, the firm has successfully priced £347m equivalent of new debt, which has been used to repay its existing debt under a Term A loan, although it has still ended the year with debt of £1.8bn.

The total 888 balance sheet stands at £170m in cash, with undrawn committed facilities of £150m, for a total liquidity of £320m, and the firm states that its outlook for the year ahead is ‘unchanged’ despite the challenges of 2022. 

Having outlined several key objectives for 2023 in its last Capital Markets Day, 888 is still focused on its 2025 targets of at least £2bn in revenue and an adjusted EBITDA margin of at least 23%.

Pazner concluded: “As we look forward, we remain focused primarily on successful integration, execution and de-leveraging in order to unlock the potential from our enlarged business.”

SBC News 888’s 2023 outlook ‘unchanged’ despite 3% year-end revenue drop to £1.85m

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