Five things we learned from Ladbrokes' results

Ladbrokes’ management team tried to keep a lid on expectations yesterday after the operator posted a set of results which suggested the Magic Sign’s digital business may have finally turned a corner.

We’ve been here before, of course. Under the tenure of Richard Glynn, Ladbrokes endured a number of false dawns, something which chairman John Kelly readily admitted when addressing analysts on Tuesday.

“The second half numbers are encouraging and we have reason to be confident but we understand you’ve heard this before which is why we are not getting carried away,” Kelly said.

And speaking to eGaming Review, chief executive Jim Mullen (pictured), who only implemented his turnaround strategy in July, was keen to stress the recovery was still at an embryonic stage.

Below we take a look at some of the key findings from Ladbrokes’ full-year report which may help us decipher whether we are really beginning to see the revival of one of Britain’s best-known bookies.

1. Moving in the right direction

Dot.com revenues in H2 were up around 14% year-on-year but with Mullen’s plan only being implemented in July, Q4 numbers perhaps give a more accurate reflection of how the new strategy is working. Digital net revenues were up 31% in the final quarter while staking within its core Ladbrokes.com sportsbook grew 44%, a rise which is even more impressive considering sporting results went the bookmaker’s way during the period, so there will have been a minimal recycling uplift here. Early signs in Q1 2016 are also positive.

2. A sportsbook or a gaming firm?

When taking the helm, Mullen said he wanted to re-establish Ladbrokes as the bookmaker of choice for the sports punter. During H1 online revenues from its Ladbrokes.com sportsbook fell to ?34.5m, down 27% on the previous year – albeit against tough World Cup comparatives and a significant HVC loss. This dip, coupled with a growth in gaming, meant that at ?43.3m gaming was the biggest digital revenue stream. And while this remained the case in H2, the numbers were a lot closer with gaming generating ?47.9m and sportsbook ?46.5m. A flip-flop is expected in Q1 2016.

3. Upwardly mobile

A large proportion of Ladbrokes’ sportsbook growth has been coming through the mobile channel. Mobile staking was up 77% in Q4 and represented the same percentage of total staking on Ladbrokes.com, compared with 63% in 2014. At the start of H2 Ladbrokes switched its desktop site to the mobile Mobenga platform to give greater consistency across all channels while also adding a number of new features to mobile. And for the first time more than half (52%) of all gaming play was carried out on mobile, up from 34% last year. Mullen believes Ladbrokes has “one of the best, if not the best” mobile product in the market.

4. Spreading the word

During the second half of the year Ladbrokes’ invested 33% of NGR in the marketing of its digital products. Exactly how the operator comes to this figure, with brand advertising felt across both digital and retail, is unknown. However, the firm said much of its budget had been invested in pay-per-click and affiliate marketing. Coupled with this, the firm is currently on a retail charm offensive with shop staff having been trained and incentivised to convert land-based customers to its digital products. Mullen yesterday said this ploy had resulted in more than 60,000 additional active customers and described its network of high street shops as “the biggest affiliate” it has. It’s also worth noting that any migration of FOBT players to online gaming will see play taxed at a lower rate and without the restrictive retail staking limits.

5. Recreational play

Splashing the marketing cash and offering sign-up bonuses is all well and good so long as you can ensure you are attracting the right kind of customer that will, over time, result in healthy LTV rates. Mullen has previously said Ladbrokes is targeting the recreational customer and believes the firm has so far been successful in bringing them on board. And the firm’s Q4 numbers appear to embody that confidence, with staking and revenues increasing at a quicker rate than active customer growth. As mentioned previously, a large number of these new customers are omni-channel, of which the firm said more than half are in the 18-35 age bracket and are also twice as valuable as online-only customers.