888 burnt by costly summer as group enters new debt arrangements to soothe 2022 targets

888 burnt by costly summer as group enters new debt arrangements to soothe 2022 targets

888 Holdings maintains a confident year-end outlook as its enlarged business continues to adjust to enhanced UK online player safety measures and its temporary withdrawal in the Netherlands

Publishing its Q3 trading update, 888 registered group revenues of £449m, down 7% on comparative Q3 2021 results of £484m.

The group’s enlarged online portfolio of 888, William Hill UK and William Hill International registered a 10% decline in year-on-year revenues to £325M (Q32021: £360m).

The decline in online results are reflective of  “the impact of UK player safety measures and the closure of the Netherlands,” 888 asserted, adding that “online revenue excluding UK and Netherlands would remain flat year over year”. 

Period trading saw UK online revenues total £171m (-13%), with unit trading reporting a “reduction in average spend per player, which was down 14% year over year following the introduction of more stringent measures through Q3 and Q4 of the prior year”. 

Further performance impacts, see the closure in the Netherlands reflect a year-on-year respective revenue loss of 4% and 6% of 888 and William Hill International units. 

Additionally, tough seasonality factors saw “sportsbook staking impacted on a year over year basis as a result of the Euro 2020 tournament taking place in the prior year period, together with racing cancellations because of the UK heatwave in Q3 2022.” 

Positive results were garnered by William Hill’s Retail unit, which maintained flat revenue results of £124m despite tough seasonality impacts.

Year-to-date group revenues stand at £1.39bn, down 3% on corresponding YTD 2021 results of £1.43bn. YTD performance sees 888 register double-digit revenue declines across all online units: 888 (-10%), William Hill Online (-24%), William Hill International (-24%).

The Group’s operating focus is maintained on the continued integration of William Hill’s business to deliver early progress on cost and enlargement synergies.

888 leadership remains confident that “the operating model of the enlarged business is appropriate to address these near-term headwinds whilst also being able to deliver on the strong potential of the enlarged business.”

Itai Pazner, CEO of 888, commented: “Having completed our transformational combination with William Hill, I am pleased to report that during Q3 our teams continued to make rapid progress in integrating these two market-leading and highly complementary businesses.”

“This has enabled us to progress towards our new target operating model while delivering a series of ‘quick win’ synergies, that will benefit our adjusted EBITDA margin for the second half of this year.”

On corporate financing, 888 has entered a “series of hedging arrangements” that will secure fixed costs on its current £, € and $ debt holdings.

However, the firm noted: “Given the hedging in place, and based on current market conditions and spot rates, cash interest costs are currently expected to be approximately £75 million in H2 2022 and would be approximately £150 million for the full year 2023.”  

Providing a year-end outlook, the board of 888 expects revenues in Q4 2022 to outperform Q3 2022 and to match Q4 2021 performance.

Meanwhile, the first series of enlargement synergies will be delivered to improve the group operating costs base, helping  “adjusted EBITDA margin in H2 2022 to meet the current market expectations for full-year 2022 Adjusted EBITDA.”

“As we look forward, we remain focused primarily on successful integration, execution and de-leveraging in order to unlock the huge potential from our enlarged business,” Pazner concluded.

“We are building a stronger group that will leverage our leading technologies and portfolio of world-class brands to create a leading global betting and gaming company, with clear plans to grow market share and profitability in some of the most attractive markets in the world.”

Source: SBC News