888 recovers UK traction following costly H1 2019 trading

London-listed online gambling group 888 Holdings Plc detailed strong ‘strategic progress’ on its corporate strategy and tech initiatives, as the company adjusts to new regulatory demands across multiple operating markets.

Publishing its interim 2019 results (period ending 30 June), 888 recorded a group revenue increase of 2% to $277 million (H1 2018: US $273m) as the company underlined a ‘continued recovery of its business within the UK’.

A breakdown of revenue performance saw 888 record revenue growth across its core B2C product verticals – online casino (+9%), sports betting (+19%) and online bingo (+10%).

Product growth was partially offset by a double-digit 24% revenue decline for 888 Poker, which the company states is adjusting to a ‘general declining trends in the overall online poker market’.

Despite reporting ‘solid revenue growth’, 888 governance outlined a number of operating expenses and costs impacting the firm’s period earnings performance.

The group’s combined gaming duties increased by 19% to $45 million (H1 2018: US$37.8 million) reflecting increased duties across the UK and further regulated markets of Sweden, Portugal, Italy and Romania.

Furthermore, recovering its UK positions, and supporting brand launches in within Sweden and Portugal, 888 reports period  ‘sales and marketing’ costs of $84 million, reflecting broadly 30% of revenues.

In addition, 888 reports administrative expenses of $16.5 million, and further R&D expenses of $18 million attached to its acquisition of defunct sportsbook BetBright’s technology platforms, combined with the platform migration of Cashcade Bingo assets investments which the company underlines will enhance long-term margins and cost controls.

The significant operating costs see 888 report a corporate adjusted EBITDA of $42 million (H1 2018: $52m) reflecting an operating margin of 15% (19%), as 888 closes H1 2019 trading declaring adjusted profits of $27 million (H12018: $43m)

The firm’s interim update would be the first set of results delivered by 888’s new Chief Executive Itai Pazner, who maintains that the company has begun second-half trading in line with corporate expectations.

Pazner commented: “888 has delivered a solid performance in the first half of 2019. The Group’s business in the UK has continued its recovery, which was underpinned by exciting product innovation as well as 888’s successful casual customer focus, and further expanded across several regulated European markets including launching its offering in Sweden and Portugal.

“The Group has also completed two acquisitions including the exciting and strategic acquisition of a first-class sports betting platform and team, thereby giving 888 complete ownership for the first time of its technology and product development across the four key online gaming product verticals.

“The Board continues to believe that 888 is very well positioned for the future as a result of the Group’s diversification across products and markets, product leadership, and first-class team. 888 has a number of exciting growth opportunities ahead which will leverage the Group’s new product developments and marketing innovation. As a result, the Board remains confident that the outcome for the full year will be in line with its expectations.”

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