888 Q1 revenue slumps 18% as Dutch exit and safer gambling focus hits financials

888 has reported an 18% year-on-year (YoY) decline in its Q1 2022 total revenue, which slumped to $224m (£171.9m) during the first three months of the year. Delivering its trading update for the period, the London-listed operator confirmed total B2C revenue of $215m for Q1 2022, a figure down 18% YoY. 888 referenced strong performance in a number of key regulated markets, including the US, Romania, Portugal and Italy where the firm saw “strong sequential growth” during Q1. These growth areas offset larger YoY declines in the UK, where 888 was hit with “market-wide trends” including the impact of increased player restrictions arising from its focus on safer gambling. 888’s B2B revenue declined by just 6% during Q1. The firm attributed this decline to strong comparatives and “more challenging” market conditions in the UK market which impacted its bingo operations, falls which offset B2B growth in the US and 888’s Pennsylvania launch. In its B2C operations, 888’s biggest decline was in its B2C betting business, which saw revenue drop by 42% YoY to $24m in Q1. 888 attributed this double-digit decline to the comparatives of 2021’s record betting revenue, coupled with the decision to cease operations in the Netherlands in order to comply with Dutch licensing restrictions. In addition, the operator cited declines in stakes, together with customer friendly results and increased promotional investment, in particular in the US market, which led to lower win margins year-over-year.

Despite the YoY declines, 888 CEO Itai Pazner remained upbeat, alluding to the quarter-on-quarter growth of the business and the “busy period of progress” since the start of 2022. “We have launched in Michigan and Ontario, with Virginia planned to follow in May,” Pazner explained. “Having revised the transaction terms for William Hill and completed an equity placing to part-fund the deal, we are on track to complete in June and continue to execute our plan to build a global online betting and gaming leader. Pazner continued: “Alongside these important strategic milestones, Q1 2022 revenue was slightly ahead of Q4 2021 as we previously announced. “I am pleased with the group’s progress, and we are looking forward to returning to year-over-year revenue growth in the second half of the year, as we benefit from further launches in additional US states, together with our expectation of relaunching in the Netherlands and ramping up our recent launch in Ontario.” On a quarter-on-quarter basis, 888 saw total group revenue increase by 1%, with YoY declines turning into smaller losses and a double-digit increase in its B2C betting division. In its assessment of 888’s Q1, Regulus Partners was also upbeat, suggesting that 888 had  “demonstrated resilience” by holding onto its Q4 2021 performance going into 2022, despite the return to retail betting and the impact of the emerging cost of living crisis. “Going forward comps get easier and inflation may help topline performance, at least optically – although constant currency figures will start to become a lot more important than US dollar-denominated headlines,” Regulus Partners analyst Paul Leyland wrote. “However, the extent to which higher inflation still allows for real growth or simply eats into it remains to be seen. “For two decades 888 has been able to demonstrate usually double-digit growth, which has meant global market share erosion could be largely ignored. Leyland continued: “In an inflationary world even mid-single digit growth is unlikely to be enough to stand still in real terms, while market share losses are likely to be much more obvious in increasingly localised markets. “The William Hill acquisition gives 888 the opportunity to reset growth. Strategically, the group could not have picked a better time to get transformative; operationally, the timing could not be more challenging, however,” he added.