888 Holdings recently announced shifts in its business strategy, with a major rebrand and a new action plan. This comes in the wake of a 25% decrease in earnings for the fiscal year 2023 (FY23). Despite this setback, the company remains optimistic about its future prospects.
888 Holdings posted an adjusted EBITDA of £308.3m for FY23, marking a noticeable increase from the £217.9m reported in 2022. Moreover, the revenue for the full year surged to £1.70bn, up from £1.24bn in the previous year. However, the net loss stood at £56.4m, albeit lower than the £120.5m recorded in 2022.
Despite an increase in revenue and adjusted earnings, the adjusted profit after tax took a hit, falling by 25% to reach £48.1m. The company’s performance was in line with its Post Close Trading Update released in January 2024, which also announced several redundancies to facilitate its long-term plans.
The revenue for FY23 reached £1.70bn, marking a 38% increase from 2022. This growth was primarily driven by a strategic shift away from dotcom markets and changes in the customer mix in the UK due to increased gambling measures.
Despite a near doubling of operating expenses from £448.5m in 2022 to £819.1m in 2023, the operating profit showcased a positive trend. From a loss of £4.8m in 2022, the group reported an operating profit of £33.0m for 2023. The adjusted EBITDA margin for FY23 stood at 18.0%, up by 1.2% from FY22.
The UK and Ireland segment continues to be the group’s primary revenue source, with revenue from this segment significantly higher at £658.5m compared to £455.5m in 2022. Despite the group’s struggles, the UK accounted for 81.5% of adjusted EBITDA.
In its international business, the revenue also saw a significant increase, reaching £517.4m for the year, up from £508.3m for 2022. This growth was achieved despite compliance changes in dotcom markets and was bolstered by double-digit growth in Spain and Italy.
In a surprising move, 888 announced plans to rebrand to Evoke plc, subject to shareholder approval at the next AGM. This rebranding initiative is part of a new strategy to enhance profits and better reflect the group’s diversified operating model.
The rebranding announcement came alongside the introduction of new CEO Per Widerström, who joined 888 after eight years as CEO of Fortuna Entertainment Group.
888 also unveiled its new “Value Creation Plan” (VCP) to deliver a long-term strategy for success. The plan includes six strategic initiatives aimed at driving operational excellence and preparing the business for significant value creation.
The group aims to deliver sustainable profitable growth of 5%-9% per year, improve efficiency with an adjusted EBITDA margin expansion of c100 basis points per year, and target disciplined capital allocation, with leverage below 3.5x by the end of 2026.
Despite acknowledging the disappointing earnings for FY23, Widerström remains confident about 888’s future. With revenue for Q1 2024 projected to be between £420m and £430m, the company is targeting revenue growth of 5-9% for 2024 and leverage below 3.5x by the end of 2026.
While these are ambitious goals, the new strategic direction, coupled with the company’s market positions, proprietary technology, and experienced management team, positions 888 well for potential success in the coming years.
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