- Q1 revenue higher than expected
- Back to year-on-year growth from Q2
- Target to increase margins by 1% a year
Online gambling firm 888 Holdings (888) said first quarter revenue came in higher than its guided range and it expects to return to year-on-year growth from the second quarter onwards.
The slightly higher revenue outcome and positive outlook was enough to send the shares up 3.4% to 82.5p, although they remain around a tenth below where they started the year.
CEO Per Widerstrom commented: ‘I am pleased to report that Q1 2024 revenue was slightly ahead of our guidance, with strong player volumes converting into improved revenue run rates.
‘Having lapped various regulatory and compliance changes during the quarter, and with increased marketing investment supported by an exciting product pipeline, we remain confident in a return to growth from Q2 2024.
‘I was delighted to outline our multi-year value creation plan alongside our full year results in March and am pleased to report a strong quarter of progress against these plans.’
GETTING BACK ON TRACK
Revenue for the three months to 31 March was £431 million, slightly above the top end of the £420 million to £430 million guided range.
A return to year-on-year growth from the current quarter is expected to be consistent with the company’s mid-term ambition of 5% to 9% annual revenue growth.
A new strategic plan unveiled in March targets an improvement in the adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) margin by 1% a year and a reduction in net debt to EBITDA to below 3.5 times by the end of 2026.
Those debts relate to the £1.95 billion acquisition of William Hill’s non-US assets in 2022 which created a business with larger scale.
In addition to the financial targets outlined in the strategic review, 888 is planning a name change to ‘Evoke plc’ subject to shareholder approval at the annual general meeting on 13 May.
The company plans to dispose of selected US business to consumer assets and close remaining operations subject to regulatory approvals. These actions are expected to deliver a £25 million a year EBITDA improvement from 2025.
Following the update, Numis kept its 2024 forecasts unchanged, which see revenue increasing 5.2% to £1.8 billion, the lower end of company guidance, and EBITDA of £440 million, implying a 0.9% margin improvement, again below guidance.
