Glynn insists "far stronger" Ladbrokes can now compete
Ladbrokes digital MD tells eGR the tools are in place to deliver growth in H2 after recording just £3m digital operating profit in H1
Ladbrokes chief executive Richard Glynn insisted his firm is now a “far stronger company” and can deliver growth in H2 after overcoming operational challenges that saw a 72% slump in H1 digital profits.
And speaking to eGaming Review this morning Ladbrokes Digital MD Jim Mullen (pictured) echoed Glynn’s sentiments and said that the firm now has “all the tools and all of the people” in place to deliver growth.
Ladbrokes’ online profits for the six months ended 30 June fell sharply to just £3m after operating costs exceeded £100m for the half-year period, although sequential growth in its sportsbook and mobile businesses gave cause for optimism.
Speaking to analysts this morning, Glynn said that, following the completion of the migration to Playtech’s IMS back-end software and the launch of a host of new products, including the exchange and mobile sportsbook, Ladbrokes was “stronger, more agile, more robust and more competitive” than it was before.
Despite the operational milestones achieved in the period however, Barclays’ Patrick Coffey said the results “throw up many questions which are central to the investment debate”.
“How much reinvestment in marketing is required to compete? What is growth map for the Digital division (note a very wide consensus EBIT range in FY15: (£8m) to £20m)? What is the LTV of recently acquired Digital customers?” he said in analyst note released this morning.
Glynn, however, said the firm should be judged on its H2 performance. “Ladbrokes today is a far stronger company and well positioned for growth,” he said. “We have made substantial progress and while there is more to do there is also much to play for.”
Online sportsbook revenue grew 15% year-on-year driven largely by the firm’s new Mobenga mobile sportsbook, with stakes on the mobile platform having doubled since the new products release in December last year.
Ladbrokes invested 31% of top line revenues back into marketing during the period, higher than analysts’ expectations and slightly above the operator’s full year forecasted range of 25%-30%, as it looked to regain market share following the relaunch of its product suite.
The firm’s exchange product, launched in late 2013 in partnership with Ladbrokes’ Betdaq business, also added what Glynn referred to as a “really compelling product”, with further updates and features set to be implemented to it throughout the second half of the year.
Online gaming revenue fell 18% year-on-year to £37.5m, however, Glynn reiterated his confidence that the vertical would return to growth now that the firm’s marketing team Ladbrokes Israel has been given the chance to work with the product and utilise Playtech’s IMS software to deliver more personalised marketing and cross-selling opportunities.
Ladbrokes has made a string of hires to its digital business in the last few months that Mullen regards as “key” to its future performance. Andrew Bagguley arrived at the firm in November last year to head up its mobile development hub, while Barry Sage joined as its head of ecommerce in February.
Mullen also singled out the firm’s digital CMO Selmi Chakim as having delivered a “fantastic” customer retention performance as Ladbrokes aims to help offset the impact of December’s Point of Consumption tax by boosting CRM efforts.
“He’s brought with him a team that has already got experience of delivering digital gaming growth and it’s of no surprise that he’s doing the same for us now,” Mullen said.