Shares in William Hill owner 888 dived over 14 per cent on Wednesday morning after it said a move away from dotcom markets and increased gambling red tape caused a drop in revenues in 2023.
In a post-close trading update, the gambling giant said it is expecting that full-year revenues for 2023 fell eight per cent year on year to £1.7bn, which it said was driven “primarily by a proactive mix shift away from dotcom markets”.
International revenue plunged 16 per cent while UK revenue dropped eight per cent year on year. 888 said this was due to tightened gambling regulations.
However, the firm said about five per cent of its full-year revenue was not generated from regulated and taxed markets.
The government introduced its gambling white paper in April last year, including a statutory levy and stricter checks on losses.
Investment director at AJ Bell, Russ Mould, said 888’s plan to increase marketing spend and push earnings to the lower end of the consensus range has “gone down like a lead balloon with investors.”
888 expects adjusted EBITDA margin for the full financial year to be around 18 per cent, compared to the previously forecast 18-19 per cent.
Per Widerström, who became chief of 888 in October, said: “The financial performance of the Group must improve.”
“The actions we are taking will build a leaner, more agile, and more effective organisation structure, as well as establishing a more effective management of the customer and product life cycle,” he added.
888 appointed Widerström as boss six months after its former head stepped down amid a money laundering probe at the gambling giant.
Widerström will detail 888’s strategic and value creation plans in its full-year results, expected to be released on 26 March 2024.
Until this happens, 888 is “in limbo” to some extent, according to Mould.
“Some of the recent hires for the management team hint at how the business is shaping up – with the betting shops acquired as part of the William Hill deal increasingly sticking out like a sore thumb,” he added.
888 starts the year with a fresh management team, including a new chief product officer, chief growth officer and general counsel. New chief financial and technology officers start in February.
Peel Hunt analyst Ivor Jones said the investment bank rates 888 a ‘buy’ as it expects 888’s revenue to grow.
“We believe that this kitchen-sinking of numbers was anticipated in the share price but the growth potential is not. We reiterate our Buy recommendation and 175p target price,” he wrote in a note.
