888 Holdings reported a significant improvement in its financial performance for FY2023, with adjusted EBITDA reaching £308.3m, up from £217.9m the previous year.
The company also saw a substantial increase in revenue, totaling £1.70bn compared to £1.24bn in 2022, despite facing a net loss of £56.4m, a notable improvement from the £120.5m loss reported in 2022. Basic loss per share halved to £0.126 from £0.283.
The increase in revenue and adjusted earnings contrasts with a 25% decline in adjusted profit after tax, down to £48.1m.
Despite this, the company’s performance met expectations set in its January 2024 Post Close Trading Update, which announced significant redundancies aimed at achieving long-term objectives. Details on the affected departments were not disclosed.
A key driver of revenue growth was a strategic shift away from dotcom markets and adjustments in customer mix in the UK, prompted by additional gambling measures.
Marketing expenses decreased by nearly £20m, while operating expenses surged to £819.1m from £448.5m. Nonetheless, operating profit turned positive, reaching £33.0m.
The adjusted EBITDA margin for FY23 was reported at 18.0%, reflecting a focus on profitable marketing and an adjustment to the impact of market changes.
The company’s cash position was strong, with £128m on hand and £278m in total liquidity, thanks to an undrawn revolving credit facility.
Net debt slightly decreased to £1.7bn, maintaining a stable adjusted net debt/EBITDA ratio of 5.6x.
In the UK and Ireland, revenue soared to £658.5m from £455.5m, with adjusted EBITDA doubling to £152.3m, underscoring the segment’s significant contribution to the company’s earnings.
The UK market’s strategy shift towards targeting recreational customers with lower stakes but higher margins is expected to yield improvements in the forthcoming year.
Internationally, revenue increased to £517.4m, supported by growth in Spain and Italy despite regulatory challenges in dotcom markets.
The company is also reevaluating its US market strategy, indicating a potential exit or partnership to mitigate unprofitable operations.
An upcoming rebranding to Evoke plc reflects a strategic shift aimed at enhancing profitability, accompanied by the introduction of a Value Creation Plan (VCP) under the new CEO Per Widerström.
The plan focuses on cost savings, strategic market positioning, and operational excellence, aiming for sustainable growth and improved efficiency.
Despite the described challenges, 888 Holdings remains optimistic about its future, targeting revenue growth of 5-9% for 2024 and reducing leverage to below 3.5x by the end of 2026.
The company’s ambitious goals highlight its commitment to improving performance while managing debt levels, although dividends will be on hold until leverage falls below 3x.