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TOP NEWS: William Hill owner 888 slumps on earnings warning

28th Sep 2023 10:15

(Alliance News) - 888 Holdings PLC shares dropped on Thursday, after it announced that its performance so far in 2023 has been "mixed" and warned of a hit to its earnings.

Shares in 888 were down 17% to 92.10 pence each in London on Thursday morning. It was one of the worst FTSE 250 performers.

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.

"The group has made significant and ongoing improvements to the sustainability and quality of the mix of the business, and while this is weighing on short-term performance, the group continues to drive strong double-digit active customer growth," it added.

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.

"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," said Chair Jon Mendelsohn.

Back in August, 888 said it swung to a pretax loss of GBP45.2 million in the six months that ended June 30 from a profit of GBP14.4 million a year earlier, even as revenue leapt to GBP881.6 million from GBP332.1 million.

At the time, it said it expected 2023 revenue to be lower than 2022 by a low-to-mid single digit percentage. Meanwhile, 888 is expected adjusted earnings before interest, tax, depreciation and amortisation to be "significantly higher" on a pro-forma basis from a year earlier, with an adjusted Ebitda margin of at least 20% for the full year.

However, it now expects the adjusted Ebitda margin to be about 18% to 19%.

By Sophie Rose, Alliance News reporter

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