- The bookmaker says it will return to year-on-year growth in the second quarter
- Investors are concerned about regulatory issues and the company’s debt pile
Bookmaker 888 exceeded revenue expectations in the first three months of the year thanks to a rebound in player volumes, while the owner of William Hill targets a return to growth in the second quarter.
The group recorded a turnover of £431 million, shifting previous forecasts from £420 million to £430 million and up 2 percent from the final quarter of 2023.
Revenues fell 3 percent compared to the same period last year, but 888 told shareholders they expect to see year-on-year growth return in the three months to the end of June.
888 shares rose 2.8 percent to 82p in early trading on Friday. They have fallen 8.4 percent since the beginning of the year, reflecting investor concerns about regulation and debt.
The owner of William Hill has faced stricter player protection regulations in Britain
The group, which will soon be rebranded as Evoke, unveiled a new strategy in March to focus on core markets while reducing costs through investments in automation and AI.
It followed a difficult 2023, which saw 888 players struggle with the UK’s new player safety rules and slower growth in some international markets.
Rival Entain has also faced regulatory issues, which weighed on first-quarter sales.
Boss Per Widerström said: “I am pleased to report that revenue in the first quarter of 2024 was slightly ahead of our expectations, with strong player volumes translating into improved revenue figures.
“Having navigated several regulatory and compliance changes during the quarter, and thanks to increased marketing investment supported by an exciting product pipeline, we remain confident of a return to growth from the second quarter of 2024.”
International markets were the main driver of sales in the first quarter, rising 6 percent from the previous three months thanks to particularly strong performances in Italy, Spain and Denmark.
Sales in Britain and Ireland fell 1 percent, due to ‘increased customer investment’ in the run-up to the Cheltenham Festival, but average monthly user activity rose 9 percent.
·Retail revenues fell by 7 percent, demonstrating the impact of 888 closing 2 percent of its stores as part of a more online-focused strategy.
Widerström added: ‘I was pleased 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 resolute and on track to position our business for long-term success, and I look forward to providing further updates on our progress in the coming months.”
Commenting on 888’s first quarter performance, Sophie Lund-Yates, chief equity analyst at Hargreaves Lansdown, said: ‘Today’s trading update should boost confidence that the turnaround has legs.
‘Despite all the positive points, it is not all smooth sailing. Leverage remains eye-wateringly high, and reducing it remains a priority.
“At the same time, the overarching risk for any gambling company is its ability to deal with regulations.
‘888’s valuation has taken a hit as several issues have been resolved, and there could be room for upside in the short to medium term, especially as debt levels move towards more sensible levels.’