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888 share price tumbles after FY23 Trading update

The 888 Holdings share price has dropped 20% since the financial update was released.

888 holdings update

Operator 888 Holdings has disclosed its trading update for the three and 12-month periods ending 31 December 2023, revealing strategic accomplishments and financial insights. 

Financial Performance

In the fourth quarter of 2023, 888 Holdings achieved revenue of £424m ($537m), marking a 7% year-on-year decrease but a 5% increase from the previous quarter.

Full-year revenue for FY23 amounted to £1.71bn, witnessing an 8% annual decline. This dip is attributed to a purposeful shift away from dot-com markets, adjustments in safer gambling measures and a strategic change in marketing focus. Although it must be pointed out these are reasons 888 has given for some time now; with other operators undergoing similar transitions and not necessarily performing as negatively.

However, around 95% of FY23 revenue originated from regulated and taxed markets.

Segment-wise Performance

- UK Online: Revenue declined by 8% to £658m, credited to safer gambling changes and refined marketing strategies. Nevertheless, ongoing customer engagement and efficient marketing were stated to have led to higher adjusted EBITDA for this segment.

- Retail: Revenue increased by 3% to £535m, propelled by investments in gaming cabinets and increased product offerings.

- International: Revenue experienced a 16% decrease to £517m, said to be primarily influenced by compliance changes in dotcom markets. However, core markets like Italy and Spain exhibited double-digit growth.

Operational Highlights

The company achieved the full £150m synergy target savings in 2024, reflecting the "successful execution of synergies."

Moreover, the executive team was fortified with key appointments, including CFO Sean Wilkins, Chief Information Technology Officer Rik Barker, CPO Ian Gallagher, Group General Counsel Fredrik Ekdahl and CGO Jeffrey Haas. 

Outlook 

Anticipating a positive outlook for FY24 revenue, 888 Holdings envisions growth in active players and improved average revenue per user as compliance and safer gambling impacts begin to annualise.

In December 2023, the company initiated a global cost savings programme of approximately £30m, concurrently investing in core capabilities such as intelligent automation and AI-powered data insights.

CEO Per Widerström is set to unveil evolved strategic plans and new medium-term financial targets at the full-year results announcement in March 2024.

Recent Financial Highlights

In the first half of 2023, 888 Holdings achieved a revenue of £881.6m, marking a 165% increase YoY. Gross profit rose to £590m, a significant leap from £215.9m in H1 2022.

Mergers & Acquisitions Consideration

During the summer of 2023, DraftKings engaged in preliminary talks about a potential acquisition of 888 Holdings. The talks revolved around the possibility of an all-stock offer, valuing 888 at a premium to its market capitalisation.

These discussions coincided with regulatory concerns and a management change at 888 Holdings.

Share prices have tumbled at 888 since the trading update was announced. Indeed, they have dropped a staggering 20% from £0.83 to £0.69, a stark contrast from the days when its stock peaked at £4.58 in September 2021.


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