Gaming inspires Q3 growth for 888 as sports betting revenue dips 15%

888 has reported a 7% (3% constant currency) year-on-year rise in overall Q3 2021 revenue to $229.9m (£166.6m). In a 19 October trading update, the London-listed operator confirmed an annual B2C revenue rise of 7% to $220.3m (£159.6m). B2C gaming revenue was the big winner of Q3, jumping 11% to $193.5m after 888 launched more than 150 new casino titles during the quarter. The operator also introduced AI-powered recommendation engines and personalised offers, which it said contributed to market share gains in the UK, Italy, Spain and Romania. In contrast, B2C sports betting revenue dropped 15% to $26.8m, from a prior 2020 high of $31.7m, during a tough comparative period following the return of sporting events due to Covid-19 in the same period of last year. B2B revenue grew modestly at 4% to $9.6m (£6.9m), thanks in part to the group’s World Series of Poker (WSOP) product. Average daily active customers increased by 6% year-on-year. 888 CEO Itai Pazner welcomed Q3 as a period of “outstanding strategic progress”, highlighting the launch of the SI Sportsbook in the US in Colorado and the “transformative” £2.2bn acquisition of William Hill International and its UK retail portfolio. In fact, the Israeli described the quarter as the most important in 888’s history from a strategic perspective. “Alongside these important strategic milestones, I am pleased with the group’s continued positive trading, particularly as we lap very tough comparative periods,” Pazner explained. “This performance reflects the continued success of our data-driven investments and execution against our product-leadership plan that delivers ongoing improvements in the usability, quality and safety of our sports betting and gaming products. “Underpinned by our advanced technology, leading products and strong brands, as well as the increased scale, talent and diversification that the group will benefit from as a result of its combination with William Hill International, we have a very exciting platform for long-term growth,” he added. In line with the regulation of online gambling in the Netherlands, 888 has blocked access to its online gambling services from Dutch players with effect from 1 October. “The group continues to believe the Netherlands represents an attractive medium-term opportunity and intends to apply for a local licence in the coming months,” the firm said in its Q3 update. “Notwithstanding this unforeseen development within the Netherlands, the board remains confident that the performance of the group during the current year will be in line with its expectations,” 888 added. 888 expects to be licensed and fully operational in the Netherlands by H2 2022. However, the firm has said the temporary closure of its Dutch business will cause a $10m hit to full-year 2022 EBITDA. Peel Hunt analyst Ivor Jones reiterated his Buy rating for the London-listed business following publication of the results. He said: “We believe the potential upside from 888’s US strategy is not reflected in its share price. In part, this is because it is at such an early stage relative to larger peers. “Today’s news that the SI-branded sportsbook has launched successfully in Colorado shows that the in-house betting platform works in the US and gives us increased confidence for the rollout,” he added.