888 revenue jumps 10% in Q2 on B2C growth in regulated markets

888 has reported a 10% year-on-year rise in group revenue for Q2 2021 to $257m (£186.1m) in a post-close trading update. On a constant currency basis, the London-listed operator confirmed B2C operational revenue of $247m, up 11% from the same period in 2020. However, 888’s B2B operational revenue fell by 13% annually to $10m. 888 attributed the rise in group revenue to long-term positive customer acquisition trends and continued expansion of the business across regulated markets. “The second quarter of the year was slightly ahead of board expectations, reflecting continued momentum in the business and favourable exchange rate movements,” 888 said in a statement. The operator earned 74% of group revenue from regulated markets during Q2, driven by strong performance in the UK, Italy, Spain, Romania and Portugal. This revenue growth offset the impact of regulations in Germany, where online casino operators have been subject to deposit and other restrictions since December as part of the qualification process for a new licence. 888 has received a sports betting licence from German authorities after successfully conforming to the regulatory restrictions over the period. 888 highlighted 13% growth in B2C casino revenue YoY and a 94% uptick in B2C sports revenue due to the reduced number of sporting events in 2020. However, the firm cited a year-on-year decline in Q2 poker and bingo revenue, primarily due to “exceptionally strong” performance of the two verticals during 2020 as consumers switched verticals with no sport to bet on. 888 CEO Itai Pazner said: “I am pleased to report that the strong momentum from the first quarter of 2021 continued into the second quarter, albeit with the year-on-year growth rate moderating in light of stronger comparables from the prior year. “Growth was driven primarily by regulated markets, where we believe ongoing market share gains continue to reflect our product-leadership strategy, highly effective data-driven marketing and our excellent content,” he added. Away from Europe, the 888 CEO highlighted the “significant” strategic progress made by the business during Q2 in the US, where it concluded a long-term strategic partnership with Sports Illustrated (SI). The agreement will see 888 work with the US media brand to launch a SI-branded sportsbook. “The board remains confident that, with 888’s advanced technology, products and diversification across markets, the group remains well positioned to deliver further strategic progress during 2021 and beyond,” Pazner concluded. Assessing the trading update, Peel Hunt analyst Ivor Jones committed to retaining his prior buy recommendation on the firm’s stock. He said: “888 has performed well in a potentially tricky second quarter, with reported B2C revenue up 21% YoY (up 11% at constant currency) and down only 6% relative to a bumper Q1 21. “This is a little better than management expected and we are nudging up FY21 forecasts. “While the balance of FY21 is challenged by regulatory drag and tough comps, we are confident of the upside from geographic diversification, particularly from the Sports Illustrated deal in the US,” he added. Elsewhere, Numis analyst Richard Stuber pinpointed the potential of 888’s partnership with SI, suggesting the magazine’s strong readership and online social media following could lead to the joint venture being worth as much as $500m.