Analysis: Can William Hill repeat 2013's growth story?
UK operator reported a 10% year-on-year rise in online revenues last year but can this growth continue?
Just 24 hours after Ladbrokes informed the market its online business was “on track”, fellow UK bookmaker William Hill released its own trading update to a much warmer response.
But Hills still had to provide its own assurances after a weekend when seven odds-on favourites winning in the Barclays Premier League led to an estimated £13m loss for the firm.
“The one thing you can never do is predict where football will be, but if I was sitting calmly having a cappuccino in central London and talking about [the football results], I’d be saying, look at the sky, look at the size of our business now,” CEO Ralph Topping said in an analyst call.
And he has a point. Despite a difficult start to the year, the Gibraltar-licensed operator demonstrated strong growth in 2013 with a 10% year-on-year rise in online revenues. It also ended the year on a high with a 14% year-on-year increase in net revenue during Q4, driven by sportsbook which grew 30% year-on-year after a 38% increase in wagers.
“You’re not talking about a business from five, six years ago where a loss on a weekend like that would have been about £3-4m in online,” Topping said. “You’re talking about a scale business; 38% growth in the last quarter, 48% in the first two weeks.”
“You’re talking about a mammoth sports betting business,” he added. “We’ve lapped up market share like a greedy person sticking the bread in the dripping after the roast beef comes out of the oven.”
The cross-sell challenge
But Topping’s colourful description of its sportsbook sits less comfortably with its online gaming business, which recorded a more modest 2% growth in the final quarter of the year.
Despite some market closures, the runaway sportsbook growth has left some analysts wondering why the operator has been unable to cross-sell customers into gaming. But there are signs this may be about to change.
There were some positive indications from its mobile business in the final quarter of 2013 with 23% of gaming revenues coming through mobile in Q4. Topping has now set his firm an ambitious aim of beating its current target of reaching the 40% mark by mid-2015.
The planned launch of a seamless login for sports, Vegas, Live Casino and Bingo should boost growth and William Hill’s focus on mobile, backed by its new mobile tech-focussed office in Shoreditch, leaves it in as good a position to grow through touch channels.
“Mobile will help the cross-sell into gaming, especially with the roll-out of a single sign-in,” an industry analyst told eGR. “Gaming should do well this year although growth will remain in the single digits.”
Going global
William Hill also launched mobile in Italy in Q4, continuing what was a busy year for the operator in international markets. During 2013 the firm completed the acquisition of Sportingbet’s Australia and Spanish-facing businesses in addition to snapping up Australian sportsbook business Tom Waterhouse.
The fourth quarter of 2013 proved a mixed bag for both Sportingbet and Tom Waterhouse as the brands struggled to cope with 42% of favourites winning group races during the Spring Carnival period.
However tomwaterhouse.com, which William Hill acquired last year for an initial fee of AU$34m, recorded its first monthly profit in December under its new ownership and ahead of its planned migration on to the Sportingbet platform in H1 2014.
William Hill US also recorded a 150% year-on-year rise in online net revenue, and a 10% increase in amounts wagered, leading to a small profit in its first full-year of ownership.
Australia, alongside Spain and Italy, remains a key piece of Hills growth strategy and is sure to play an increasingly important role in 2014 and beyond with UK profits facing a post PoC squeeze. It’s a challenging task to continue 2013’s growth story, but it’s one the chief executive is confident of meeting.
“[There’s] lots of moving parts,” Topping said. “But [they’re all] moving in the right direction.”
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