888 begins selective redundancies in Israeli office

888 has begun a series of redundancies across its Israeli office as part of a series of cost-saving measures following its £1.95bn acquisition of William Hill International, EGR understands.

The London-listed operator has not confirmed the number of employees affected or the departments involved, however these redundancies are understood to have arisen from a need to avoid duplication of roles as the integration of William Hill continues. There are understood to have been approximately 590 employees in the office prior to the redundancies.

The redundancies come amid a downturn in the Israeli technology sector, with companies including Salesforce, Bizzabo and Hewlett Packard shedding employees over the last 12 months.

888 has seen its corporate debts increase substantially since the acquisition of Hills, due to a combination of rising interest rates and loans totalling £347m arising from the deal, factors which have seen the operator access debt capital markets.

In addition, 888’s operational environment has become “more challenging” thanks to shifts in global macro-economic conditions across key countries.

This includes the UK, where the white paper into the Gambling Act 2005 review is expected to call for further regulatory changes, measures already affecting the group’s business model.

At its Capital Markets Day (CMD) in November the operator set out a plan for the next three years which will see it focus on key markets, including a highly disciplined capital allocation plan targeting net debt of less than 3.5x by the end of 2025.

“Today the group operates across multiple platforms and multiple teams, with brands that are often competing against each other. These factors currently result in certain inefficiencies, leading to profit margins lower than industry peers,” 888 said in a statement released as part of the CMD.

888’s post acquisition integration plans

Speaking as part of 888’s CMD CEO Itai Pazner confirmed that part of this focus on reducing its debts would come in the form of realising integration synergies derived from having access to a larger workforce.

At the time Pazner said: “As a newly combined business we have significant scope for improving our operating model and delivering efficiencies. Over the next two years we plan to fully integrate our business – creating a bigger, stronger and better organisation with higher profit margins”.

Another part of this includes a rationalisation of 888 and the William Hill brand, as well as a migration of all its brands to one centralised proprietary technology platform, with the aim of scaling the business.

The first phase of the migration, encompassing a review of pre-existing technology, is already underway, having been triggered in 2022.

Towards the end of 2023, a programme of phased migrations of 888/Hills brands will begin which will likely complete by the end of 2024, going into 2025, with the aim of achieving identified cost and growth synergies.

In its Q4 2022 trading update 888 confirmed a 3% year-on-year (YoY) reduction in its group revenue to £458m.

There was also a 5% YoY drop in revenue from its online division to £326m, while the group’s retail business saw Q4 revenue jump by 5% YoY to £131m.