888 revenue climbs 15.4% in 2021 to reach record levels

888 has posted a 15.4% year-on-year (YoY) increase to reach record full-year revenue for 2021 as the operator navigated regulatory headwinds and Covid-19. The FTSE 250 operator reported a total revenue of $980.1m, up from the $849.7m posted for full-year 2020, with 74% of revenue coming from locally regulated markets. Of this $9801.m total, $941.9m was derived from the group’s B2C arm which posted YoY growth of 15.7% from 2020’s $814.3m. 888 noted that regulatory headwinds had a significant impact on the group’s operations in H2, with B2C revenue down 4% YoY compared to H1’s YoY growth of 41%. The exit from the Netherlands following the market’s regulation, along with “weaker than expected sports margins”, resulted in a 14% decline in Q4 B2C revenue. In fact, H2 revenue was 17% lower than H1 revenue, with 888 noting the figures were in line with expectations given the regulatory changes in the Netherlands and Germany, as well as the evolving landscape in the UK. The operator noted that the average monthly active players rose by 4% YoY. 888’s B2B arm returned a 7.7% YoY increase in revenue from $35.4m to $38.2m in 2021. Its B2C and B2B bingo arm was recently offloaded to Broadway Gaming.

In terms of geographical breakdown, the UK continues to be 888’s largest market with 40% of total revenue, representing $388.9m, coming from the country. Italian revenue leapt 37% YoY to $118.3m, representing a 12% share of total group revenue, while in the Americas revenue surged 34% YoY to $125.6m. In the Americas, 888 said revenue was primarily driven by growth in Canada while its US-only revenue increased by 6% from $20.8m to $22m. The firm is anticipating to launch in a further three to four states during 2022 to add to its 888casino in New Jersey and SI Sportsbook in Colorado. The group also posted a 6% increase in EBITDA from $155.6m to $165m, although its EBITDA margin slipped from 18.3% to 16.8%. The slip in margin was a result of increased investment in its US-facing B2C operations. Pre-tax profit rocketed 205% in 2021 from $26.7m to $81.3m, while the company also increased its available cash by 18% to $174.5m. Elsewhere, 888 increased its marketing spend by 29.3% to $306.5m from $237.1m. 888 said: “Increased marketing investment in new or regulating markets is in line with the group’s strategy to build world-class brands and use its data-driven marketing expertise to drive increased customer activity and deliver market share gains in key markets.” Post-reporting period, 888 noted average daily revenue in January and February 2022 had experienced double-digit decline compared to Q1 2021, with the board noting this was in line with expectations due to regulatory headwinds. The operator also touched on its plans for the integration of William Hill ahead of the completion of the acquisition, which is set to almost triple the size of the group. 888 said: “We have made strong progress in our plans to integrate William Hill and, as we move into 2022, we are excited about the opportunities ahead of us, particularly as we significantly expand the management capabilities of the enlarged group. “We have significant confidence in our integration plans and the delivery of substantial synergies, creating a powerful, scalable global business.” Itai Pazner, 888 CEO, said: “2021 was a very successful year for 888 as we continued to position the group to become a global leader in online betting and gaming. “It was another record year from a financial perspective, and we have truly transformed the scale of the business over the past two years. This step-change in scale has come from a clear market focus on regulated markets, which now make up three-quarters of revenue, and where we are seeing really positive market share trends. “Given this strong financial and operational performance, the board remains confident that, with 888’s advanced technology, products and diversification across markets, the group is well-positioned to deliver long-term sustainable growth for all its stakeholders into the future,” he added. Russell Pointon, Edison Group director, said: “This is a strong set of results from 888 Holdings, with group revenue up by 15% to reach record heights of $980.1m. “Investor focus will fall onto the strategic development of the company in the upcoming 12 months, including the acquisition of William Hill which is expected to complete in Q2. This will almost triple the size of the group and will likely be a cornerstone of the group’s future performance, with management anticipating attractive returns. “888 is facing several potential headwinds within the UK, including the impact of a substantial £9.4m fine, upcoming regulatory changes and the cost-of-living increase. However, these results reflect good global performance and place them in good stead for the year ahead,” he added. Finally, Pazner also touched on the £9.4m fine handed to 888 by the UK Gambling Commission over AML and social responsibility breaches. Pazner said: “This is something that we are not proud of as a company. This is not a happy moment for us in the history of 888. “We see ourselves as a responsible operator. We completely recognise there were clear issues in our policies at the time that didn’t work properly and we deeply regret those,” he added. Despite the strong results, 888 shares were down 2.8% to 187p in early trading.