28th Sep 2023 12:53
(Alliance News) - 888 Holdings PLC's new management team faces the difficult task of improving the bookmaker's fortunes, amid a backdrop of tough regulatory conditions in the UK and a chunky debt pile on the William Hill owner's balance sheet.
888 shares were 16% lower at 92.30 pence each in London on Thursday afternoon.
The Gibraltar-based betting operator, which owns the William Hill and Mr Green brands, said its performance has been "mixed" so far in 2023.
It noted that overall revenue in the third quarter of the year is expected to be down about 10% to GBP400 million.
888 explained that the main drivers behind this revenue fall were the ongoing impact of compliance changes in dotcom markets, the ongoing impact of safer gambling changes in the UK, the short-term impact of a change in marketing approach and customer friendly sports results hitting its margin.
Hargreaves Lansdown analyst Susannah Streeter commented: "The company is feeling the effect of tougher new rules to reduce the number of problem gamblers in the UK, and higher costs to meet compliance in other markets.
"With favourites scooping titles, and new rules designed to monitor problem gamblers taking effect, 888's winning streak has waned."
Looking forward, 888 expects revenue in the final quarter of the year to be higher than in the third but lower year-on-year by a mid-single digit. It expects to return to revenue growth in 2024.
Chair Jon Mendelsohn said: "We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with [earnings before interest, tax, depreciation and amortisation] below our prior expectation."
While some of the firm's lamentations echoed that of Entain PLC, which also bemoaned punter friendly results, 888 has a big problem of its own.
AJ Bell analyst Russ Mould commented: "888's problems go beyond that factor as its takeover of William Hill's assets in 2021 saddled it with very substantial levels of debt."
The debt pile is an issue hanging over the new members of 888's top team.
888 named Per Widerstrom as its new chief executive officer in July, after a bit of turbulence at the top in the months before that. Former CEO Itai Pazner stepped down immediately in January, around the same time 888 reported it had suspended some activities in the Middle East amid a customer compliance probe.
Earlier in September, it named Sean Wilkins as its new chief financial officer, with Yariv Dafna set to step down from the role next month.
AJ Bell's Mould added: "News the one-time directors of GVC (now part of Entain), including its former CEO Kenny Alexander, had taken a stake helped boost a bombed out share price over the summer. Now the really hard work begins and the incoming management team of CEO Per Widerstrom and CFO Sean Wilkins have a lot to do."
By Eric Cunha, Alliance News news editor
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