Update on current trading and FY23 guidance

Ongoing improvements to the sustainability and quality of revenues impacting short-term performance while synergy delivery remains on track and the Group is focused on delivering future growth

888 (LSE: 888), one of the world’s leading betting and gaming companies with internationally renowned brands including William Hill, 888 and Mr Green, today announces an update on current trading and FY23 guidance. 

Current trading commentary

Performance across the Group has been mixed, with overall revenue for Q3 2023 expected to be down around 10% to approximately £400m. The Group has made significant and ongoing improvements to the sustainability and quality of the mix of the business, and while this is weighing on short-term performance, the Group continues to drive strong double digit active customer growth. The main drivers of the year-over-year revenue decline include:

• Ongoing significant impact from compliance changes implemented in dotcom markets, with slower recovery in customer activity and revenues than initially anticipated.
• Customer friendly sports results impacting win margin across both UK and International markets in September.
• The ongoing impact of safer gambling changes within the UK, with trends consistent with prior commentary, with strong growth in active customers supporting a return to revenue growth in 2024.
• A short-term impact from the change in marketing approach to focus on higher return marketing and in line with the Group’s clear market focus strategy and refined brand-led marketing approach

Retail continues to perform strongly, with broadly stable revenues relative to last year despite customer friendly sports results, and no change to the expectation of mid-single digit revenue growth in the full year, with strong customer engagement and the positive impact of the continued rollout of additional proprietary SSBTs and expansion of content on our retail gaming platform.

As of Friday 22 September, cash (net of customer balances) was approximately £162 million, with undrawn committed facilities of £150 million, giving total liquidity of more than £300 million. 

Outlook and FY23 guidance

• Synergy delivery is on track and significant cost savings are being delivered that have helped to mitigate the year-to-date revenue performance versus initial expectations. Further synergy opportunities have been identified but additional savings will be reinvested in growth initiatives, with the Group having significant growth opportunities available to it underpinned by its new operating model and brand-led marketing strategy.
• The Group now expects revenues in Q4 2023 to be sequentially higher than Q3 2023 but lower year over year by a mid-single digit, before returning to growth in 2024.
• The priority of driving sustainable growth in 2024 and beyond means that FY23 Adjusted EBITDA margin is now expected to be approximately 18-19%, with the emphasis on investing in and focusing the business to deliver its previously stated 2025 targets, which remain unchanged

Lord Mendelsohn, Executive Chair of 888, commented:

"This has been an important quarter for the business with the announcements of Per Widerström as our new CEO and Sean Wilkins as our new CFO, who I am very confident will lead the business through its next phases of growth and I look forward to Per starting as CEO in mid-October.

We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with EBITDA below our prior expectation. 

The hard work the team has undertaken so far this year has set very strong foundations for the future of the business and our synergy delivery is well on track. We are strongly focused on investing to deliver good levels of expected revenue growth in 2024 as we progress towards our clear target of more than £2 billion of revenue in 2025 and I look forward to the coming years with confidence.”