888 revenue rises 6% on regulated market expansion

888 reported a record 74% of group revenue from regulated markets during 2019 as the full-year figure increased by 6% to reach $560.3m (£447.6m).

B2C casino revenue increased by 13% to $359.3m (£287m) in 2019, while B2C sport revenue jumped by 12% year-on-year to $90m (£71.9m).

Revenue from VIP customers for 2019 was reduced to less than 5% in the UK, reflecting the operator’s focus on recreational punters.

However, B2C poker revenue fell 13% during 2019 to $42.7m (£34.1m), a decline which 888 has attributed to a “challenging competitive environment” for the business.

In the second half of 2019, business revenue from B2C poker rose by 7% year-on-year. Poker remained an important new customer acquisition channel for the London-listed operator with 18% of B2C first time depositors joining through 888poker websites.

B2C bingo revenue increased by 19% to $38.5m (£30.7m) during 2019, a rise which 888 attributed in part to the acquisition of B2C-facing bingo brands from fellow operator Mandalay in February 2019.

Company adjusted EBITDA fell during 2019 to $85.6m (£68.4m), a decline impacted by the firm paying $25.6m of additional gaming duties arising from regulated markets.

888’s B2C new customer acquisition increased by 22% during 2019, with more than one million new customers joining 888 brands during the year. Customer acquisition rises were also reported in poker, up 18%, and bingo verticals, which increased by 23%.

Online casino customer acquisition grew by 43% year-on-year.

888 reported “outstanding” growth in its Italian operations during 2019, with new customer numbers rising by 18% amid a 30% year-on-year increase in sports betting deposits. The group’s Italian online poker vertical reported a 181% year-on-year increase in revenue growth during the same period.

The business has also confirmed double-digit customer acquisition increases in Romania (up 41%) and Denmark (up 15%) during 2019. Like for like, UK sports revenues increased by 44% year-on-year with a 30% increase in customer deposits during the period.

888 CEO Itai Pazner said the firm had delivered “resilient financial performance” during 2019, despite headwinds of increased gaming taxation and challenging conditions in some of its key markets.

“During 2019, 888 welcomed a record number of new customers – more than a million – to its international brands, launched in new regulated markets with very encouraging initial results, and completed the acquisition of a first-class sports betting platform and team,” Pazner said.

City analysts Peel Hunt said 888 was benefiting from an upsurge in recreational gambling across core markets, which was delivering good revenue growth for the business.

“The recovery in 888’s share price reflects the relative strengths of providing online entertainment at a time when many consumers are cooped up at home; however, 888 also has upside from growing its share of the broad spread of geographic markets in which it operates and the payback on continuing investment in product,” Peel Hunt said.

888 said it is “incredibly difficult to predict” how consumers will react during the Covid-19 lockdown.

Regulus Partners Paul Leyland said the big concern for the business going forward was the effects of the Covid-19 outbreak and its general impact on sporting fixtures in the long term.

However, Leyland said the business would be well placed to deal with customers moving from sports betting towards online casino as a result.

“The two potential threats to this, in our view, is if disruption cuts deeply enough to trigger recession globally or in key markets (UK and Spain = 47% of revenue; gambling’s defensive qualities have usually been overplayed) and/or if online gambling is hit by a critical mass of further fiscal/regulatory intervention,” Leyland added.