Online gaming and sports betting company 888 (888) delivered record revenues for the year to December 2021, up 15.4% to $980.1 million with adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) coming in 6% higher at $165 million.
While the performance was impressive, it was already baked into market expectations. In addition, looming uncertainties ahead of a UK gambling review left shares in 888 trading 3% lower at 187.3p. The firm derives around 42% of revenues from the UK.
STRONG CORE MARKETS
The core markets of UK, Italy and Spain increased revenues by 18% and 888 believes it made gains in market share.
The performance in the UK was particularly impressive given the tough comparative growth of 63% in the prior year.
Revenue in growth markets including Canada, Romania and Ireland increased by 26% despite regulatory changes in Germany and the withdrawal from the Netherlands.
888 insisted it had made ‘significant’ market share gains in these territories. The firm has applied for a gaming license in Germany and recently sponsored Bundesliga football team, RB Leipzig.
Growth in the US was only 6%, held back by reduced investment ahead of the launch of Sports Illustrated sportsbook in the third quarter.
Chief executive Itai Pazner commented:
‘Alongside the strong organic growth and operational progress, 2021 was a busy year for strategic expansion, including the long-term strategic partnership with Sports Illustrated and launch of SI Sportsbook, the announcement in September of our proposed acquisition of William Hill, and the sale of our bingo business as we look to increase focus on our core B2C strategy.’
GOOD START TO 2022
The company said it has seen improved momentum since the end of 2021 with average daily revenues in the first couple of months up mid-single digits compared with the last quarter.
Compared with last year revenues declined in double-digits reflecting tough comparative growth of 56% in the first quarter of 2021.
UNCERTAINTIES AHEAD
888 confirmed the acquisition (September 2021) of the non-US assets of William Hill will close during the second quarter of 2022, and will add significant scale to the group.
Management expect the addition of William Hill will enhance adjusted earnings per share by more than 50% in the first full year of ownership.
The £2.2 billion acquisition will be part-funded by an estimated £500 million share increase.
The UK gambling white paper review is expected to be published in May 2022. Leisure analyst at Numis Richard Stuber thinks the review could have a significant impact on 888’s UK business, potentially halving EBITDA.
