- The betting house affirms that it will return to year-on-year growth in the second quarter
- Investors are concerned about regulatory issues and the company’s debt.
Bookmaker 888 beat revenue forecasts in the first three months of the year thanks to a rebound in player volume, while the owner of William Hill expects a return to growth in the second quarter.
The group posted revenue of £431m, beating forecasts of £420m to £430m and jumping 2 per cent in the final quarter of 2023.
Revenue was down 3 percent compared with the same period last year, but 888 told shareholders it expects to return to year-on-year growth in the three months to the end of June.
888 shares They rose 2.8 percent to 82 pence in early trading on Friday. They have fallen 8.4 percent since the beginning of the year, reflecting investor concerns about regulation and debt.
William Hill owner has faced stricter player protection regulation in the UK
The group, which will soon change its name to Evoke, revealed a new strategy in March to focus on core markets while reducing costs by investing in automation and artificial intelligence.
A difficult 2023 followed as 888 battled new UK player safety regulations and slower growth in some international markets.
Rival Entain has also battled regulatory issues, which hit its first-quarter revenue.
Boss Per Widerström said: “I am pleased to report that Q1 2024 revenue was slightly above our forecasts, with strong player volumes translating into better revenue run rates.
“Having navigated several regulatory and compliance changes during the quarter, and with increased marketing investment supported by an exciting product portfolio, we remain confident of a return to growth from the second quarter of 2024.”
International markets were the key driver of first-quarter revenue, rising 6 percent from the previous three months thanks to particularly strong performance in Italy, Spain and Denmark.
UK and Ireland revenue fell 1 per cent, reflecting “increased customer investment” ahead of the Cheltenham Festival, but average monthly user activity rose 9 per cent.
·Retail revenue fell 7 percent, demonstrating the impact of 888 closing 2 percent of its stores as part of a more online-focused strategy.
Widerström added: “I am pleased to present our multi-year value creation plan along with full-year results in March, and I am pleased to report a strong quarter of progress against these plans.”
“We are moving forward decisively and at pace to position our company 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, Hargreaves Lansdown senior equity analyst Sophie Lund-Yates said: “Today’s trading update should increase confidence that the turnaround has traction.”
‘Despite all the positives, not everything is in order. Leverage remains incredibly high and reducing it remains a priority.
‘At the same time, the overall risk for any gambling company is its ability to manage the regulatory environment.
“888’s valuation has taken a hit as it has ironed out several issues, and there could be room for gains in the short to medium term, especially as leverage drops to more sensitive levels.”