888 Holdings Plc (LON:888), one of the world’s most popular online gaming entertainment and solutions providers, today announced its half-yearly results for the six months ended 30 June 2018.
Financial Highlights
· Group revenue1 increased by 1% to US$273.2 million (H1 2017: US$270.1 million)
· B2C revenue increased by 2% to US$246.7 million (H1 2017: US$242.6 million)
· Continued momentum in regulated markets (excluding the UK) where revenue increased by 30% led by Spain and Italy
· Casino revenue increased by 10% to US$161.0 million (H1 2017: US$146.7 million); Casino revenue excluding UK increased by 24%
· Sport revenue increased by 11% to US$37.5 million (H1 2017: US$33.7 million); Sport revenue excluding UK increased by 34%
· Bingo revenue decreased by 11% to US$17.6 million (H1 2017: US$19.7 million) reflecting heightened regulatory scrutiny in the UK
· B2B revenue decreased by 4% to US$26.5 million (H1 2017: US$27.5 million)
· Release of an exceptional provision of US$22.4 million in respect of a legacy VAT matter in Germany
· Adjusted EBITDA2 increased by 10% to US$52.4 million (H1 2017: US$47.6 million); EBITDA for the period was US$70.0 million (H1 2017: US$7.3 million loss)
· Adjusted EBITDA margin increased by 160bp to 19.2% (H1 2017: 17.6%)
· Adjusted Profit before tax2 increased by 13% to US$42.5 million (H1 2017: US$37.6 million) and Profit before tax was US$60.1 million (H1 2017: US$17.3 million loss)
· Adjusted basic earnings per share increased by 2% to 10.5¢ (H1 2017: 10.3¢); basic earnings per share increased to 15.4¢ (H1 2017: loss per share of 5.0¢)
· Interim dividend of 4.2¢ per share (H1 2017: 4.0¢ per share)
Operational Highlights
· Continued strong momentum in Casino and Sport and European markets (excluding UK) resulted in an increase in new B2C customers and healthy deposit levels
· Revenue from regulated and taxed markets represented the significant majority of Group revenue at 70% (H1 2017: 70%)
· Mobile devices continued to drive growth across B2C verticals representing 75% (H1 2017: 69%) of UK revenue and 62% (H1 2017: 54%) of worldwide revenue
· Average active days per Casino player increased 9% and average revenue per Casino player increased 7% supported by the successful launch in May of Orbit, a new cutting-edge web-based Casino platform, across .com markets
· Continued momentum in Sport with a very strong performance during the FIFA World Cup which continued post the period end
· Successful launch of 888poker.it in January
· Further investment and development in the US market including:
o recent launch of 888Sport in New Jersey
o extension of 888’s unique interstate poker network to include New Jersey and pool poker players across all three currently regulated US states;
o two-year contract extension with the Delaware Lottery;
o extended contract with Kambi, 888’s sportsbook provider, to include the US market in readiness for opportunities presented by repeal of The Professional and Amateur Sports Protection Act (“PASPA”);
o significantly enhanced Casino content in New Jersey.
1Revenue in this document is before VAT accrual release.
2As defined in the financial summary below
Itai Frieberger, CEO of 888, commented:
“We are pleased with 888’s performance during the first half of the year which has resulted in further progress against the Group’s strategic objectives. 888 has continued to focus on enhancing compliance and customer protection, delivering growth in regulated markets and exciting product innovation.
We have maintained strong momentum in Casino and Sport particularly in continental European markets. In the UK, we are pleased to report that since the period end we have started to see positive trends in revenue. This follows the proactive and prudent customer protection measures that we have implemented over the last 18 months which have adversely impacted revenue.
The repeal of PASPA in May was a very exciting development for 888 given our unique experience and established partnerships in the US market. We have continued to invest in our US operations for long-term growth including extending our inter-state Poker network across all three currently regulated states, significantly enhancing our Casino product and, most recently, launching Sports betting in New Jersey.
We have invested in product innovation to ensure that 888 customers continue to enjoy fresh and differentiated entertainment. In May, we launched ‘Orbit’, an innovative new Casino platform, across our .com markets and we have seen exciting early results. We plan to extend Orbit across a number of major regulated markets during the second half as well as introducing new features to 888Sport and launching ‘Poker 8’, 888’s next generation poker platform.
The Board continues to believe that 888 is very well positioned for future growth underpinned by our diversification across products and markets, technology leadership and a first-class team. Trading during the second half of the financial year to date has been in line with the Board’s expectations with average daily revenue excluding the UK 6% higher year on year, 4% lower overall and an encouraging 9% increase in Group new customers acquisition. We have several exciting growth opportunities ahead and the Board remains confident that the profit outlook for the full year will be in line with market expectations.”
Financial summary
|
|
Six months ended 30 Jun 20181 US$ million |
Six months ended 30 Jun 20171 US$ million |
Change |
|
Revenue – B2C |
|
|
|
|
Casino2 |
161.0 |
146.7 |
10% |
|
Sport |
37.5 |
33.7 |
11% |
|
Poker |
30.6 |
42.5 |
(28%) |
|
Bingo |
17.6 |
19.7 |
(11%) |
|
Total B2C |
246.7 |
242.6 |
2% |
|
|
|
|
|
|
B2B |
26.5 |
27.5 |
(4%) |
|
Revenue before VAT accrual release |
273.2 |
270.1 |
1% |
|
VAT accrual release 3 |
10.7 |
– |
|
|
Revenue |
283.9 |
270.1 |
5% |
|
Adjustment of VAT accrual release |
(10.7) |
– |
|
|
Operating expenses4 |
(70.4) |
(68.9) |
|
|
Gaming taxes and duties |
(37.8) |
(37.4) |
|
|
Research and development expenses |
(16.6) |
(17.2) |
|
|
Selling and marketing expenses |
(82.7) |
(85.4) |
|
|
Administrative expenses5 |
(13.3) |
(13.6) |
|
|
Adjusted EBITDA 6 |
52.4 |
47.6 |
10% |
|
Depreciation and amortisation |
(10.1) |
(9.3) |
|
|
Finance |
0.2 |
(0.7) |
|
|
Adjusted profit before tax |
42.5 |
37.6 |
13% |
|
Share benefit charges |
(5.0) |
(4.1) |
|
|
VAT accrual release |
10.7 |
– |
|
|
Exceptional items7 |
12.0 |
(50.8) |
|
|
Share of equity accounted associates loss |
(0.1) |
– |
|
|
Profit (loss) before tax |
60.1 |
(17.3) |
|
|
Adjusted basic earnings per share |
10.5¢ |
10.3¢ |
2% |
|
Basic earnings (loss) per share |
15.4¢ |
(5.0¢) |
|
|
|
|
||
|
Reconciliation of profit before tax to EBITDA and Adjusted EBITDA |
|
||
|
|
Six months ended 30 Jun 20181 US$ million |
Six months ended 30 Jun 20171 US$ million |
|
|
Profit (loss) before tax |
60.1 |
(17.3) |
|
|
Finance |
(0.2) |
0.7 |
|
|
Depreciation |
2.5 |
3.0 |
|
|
Amortisation |
7.6 |
6.3 |
|
|
EBITDA |
70.0 |
(7.3) |
|
|
Exceptional items7 |
(12.0) |
50.8 |
|
|
VAT accrual release3 |
(10.7) |
– |
|
|
Share benefit charges |
5.0 |
4.1 |
|
|
Share of equity accounted associates loss |
0.1 |
– |
|
|
Adjusted EBITDA6 |
52.4 |
47.6 |
|
1Totals may not sum due to rounding.
2Emerging Offerings segment, which included social games revenue, is now presented in the Casino segment. H1 2017 revenue figures have been re-classified to allow a like for like comparison. These changes are described in note 2 to the financial statements.
3Revenue includes US$10.7 million (H1 2017: nil) in respect of accrual release which relates to receipt of tax assessments in respect of legacy value-added tax in Germany, as detailed in note 11 to the financial statements.
4Excluding depreciation of US$2.5 million (H1 2017: US$3.0 million) and amortisation of US$7.6 million (H1 2017: US$6.3 million).
5Excluding share benefit charges of US$5.0 million (H1 2017: US$4.1 million).
6Adjusted EBITDA is the main measure the analyst community uses to evaluate the Company and compare it to its peers. The Group presents adjusted measures (including adjusted profit before tax) which differ from statutory measures due to the exclusion of exceptional items and adjustments. It does so because the Group considers that it allows for a better reflection of the underlying financial performance of 888.
7Exceptional income of US$12.0 million related to US$22.4 million release of provision following receipt of tax assessments in respect of legacy VAT relating to the provision of gaming services in Germany prior to 2015 (H1 2017: exceptional charges of US$45.3 million) offset by an accrual of US$10.4 million in respect of regulatory matters related to customers’ activity in prior periods as set out in note 4 to the financial statements.
