Debt drags 888 to a loss
Debt drags 888 to a loss
888’s first half, Playmaker and FansUnite earnings, career moves +More
Good morning. On today’s agenda:
Debt drags 888 into a loss-making first half.
Earnings from Playmaker and FansUnite.
Career moves at B90, GiG and Zeal.
You load 16 tons, what do you get?
Carry that weight
The increased cost of servicing its £1.66bn debt load causes 888 to fall to a first-half loss.
At a loss: 888 fell to a net loss for the first half of £32.5m. Although 888 reduced its debt load by £68m during H1, it was still left with £1.66bn albeit with the leverage ratio reduced to 1.1x from 5.6x at the end of December. Net financing expenses cost £69.6m in H1. The company said the reduction in net debt was largely due to beneficial FX movements.
Revenue fell 7%, which the company blamed on changes in the regulatory environment in dotcom markets.
Recall, in January, 888 admitted to compliance failures related to VIP customers from the Middle East. The company said it reached a £2.9m regulatory settlement with the Gibraltar regulator over the issue.
That scandal cost previous CEO Itai Pazner his job. His replacement Per Widerström starts with the business in October.
Talking about Widerström’s appointment, acting executive chair Lord Mendelsohn said he was the “standout candidate”. “He has a very strong track record,” he added.
The company said the license review on the part of the UK Gambling Commission instigated by the arrival of the Kenny Alexander-led FS Gaming on the shareholder register was “not expected to have any impact on operations”.
Pro forma adj. EBITDA rose 9% to £156m; 888 said it had achieved £66m of synergy benefits in H1 with the full benefit of £150m being achieved by 2024.
UK and Ireland online saw revenue fall 9% to £336m on the back of the implementation of player safety measures, while retail revenues rose 6% to £279m. International online revenues fell 14% to £266m, which the company said was partly due to a “slower than expected recovery” in the Middle East offsetting double-digit growth in Italy and Spain.
Combined UK and Ireland adj. EBITDA rose 22% to £119.8m but international was down 25% to £53.2m.
Mendelsohn noted that 95% of H1 revenues came from regulated or locally taxed markets.
Vaughan Lewis, chief strategy officer, said the remaining 5% of offshore revenue was largely “nice, long-tail” markets.
The company noted that FY revenues are expected to also post a low to middle single-digit decline.
Washes whiter: Lewis said 888 was well-positioned for the introduction of the UK government’s Gambling Act Review White Paper, noting that it had shifted its efforts to attracting high volumes of lower spending customers.
“We’re even more optimistic about returning to growth in the UK,” he added.
He also noted the progress with the 888Africa offshoot after seeing “continued strong revenue growth”.
Barely worth a mention: The US. 888 gave no specifics about the US and Lewis repeated the previous message about focusing on gaming. He noted the company had pressed ahead with a concerted iCasino push in Michigan – and has achieved 1% market share.
“It’s still quite early days,” he added.
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Earnings in brief
Playmaker: Pro forma revenues rose 53% to $12.6m as user sessions across the various media properties surged to 653m. It said its North American-produced video podcasts generated a record 5.1m streams in Q223.
Subsequent to quarter-end, Playmaker acquired Quebec sports media group La Poche Bleue.
FansUnite: Following the sale of the McBookie B2C sports-betting business and the Chameleon OSB backend system to betr for a combined C$7.4m, FansUnite said it is now a more fully focused gaming affiliate provider.
Led by its Betting Hero and Props.com brands, revenues rose 14% to C$5.3m while adj. EBITDA bounded into profit at C$4.3m vs. a loss of C$11.1m in the same period last year.
Diary note: Later in the week, E+M will report on FansUnite’s analyst call scheduled for today.
Galaxy Gaming: The land-based and iCasino table games developer signed a 10-year deal over the quarter with Evolution Gaming, which CEO Todd Cravens said “cemented” its relationship with its largest customer “well into the future”.
Over the quarter, Galaxy also became the exclusive distributor for EZ Baccarat in the US, Canada, UK and for online.
Revenue for the three months rose 33% to $7.5m while adj. EBITDA was up 36% to $3.3m.
Career paths
B90 Holdings: Former Sportingbet boss Andrew McIver is now a non-executive director at the newly launched iGaming operator. This follows the appointment of Mark Blandford as a strategic advisor earlier this year.
The company has also appointed Farzad Peyman as CFO and M&A development officer.
GiG: Former SBTech boss Richard Carter has been appointed as the new CEO for GiG’s platform and sportsbook division. Carter’s most recent position was a CEO at Bragg Gaming, which he left in Nov21.
GiG, which is set to report its latest earnings on Wednesday, is set to split its platform business from the affiliate arm after it initiated a strategic review earlier this year.
The company said Carter’s appointment came after an “extensive evaluation and search process”.
Carter led SBTech into the three-way SPAC merger that saw DraftKings attain a listing back in Apr20 via a deal with Diamond Eagle Acquisition Corp.
Zeal Network: The lottery reseller has appointed Sebastian Bielski as the company’s new CFO to take over from Jonas Mattsson. Mattsson’s final duties came last week when Zeal released its H1 earnings showing revenue up 11% to €54.8m after attracting 349k new customers, a 20% increase.
However, the investment in new player growth hit adj. EBITDA, which was down 15% at €13.8m.
Mattsson said the short-term decline in profits during a “high jackpots phase” was a “perfectly normal development”.
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Datalines – New York
FanDuel and DraftKings were neck and neck in July at $41.1m of GGR or 39% market share each. In third place was Caesars with $10.6m or just over 10% share, followed by BetMGM with $6.8m or just over 6.5% share. GGR for the month came in at $105m, up 43%.
The top two were also held joint top spot by handle at just shy of 40% each.
What we’re reading
Love the one you’re with: ESPN was asking for double what it got from Penn – and it wasn’t its first-choice partner. From Front Office Sports.
M&A newslines
Better Collective has bought four flagship sports media brands from Everysport Group including SvenskaFans.com, HockeySverige.se and Fotbolldirekt.se for €3.7m payable in three yearly installments.
Calendar
Aug 15: FansUnite, Playmaker (calls)
Aug 16: GiG
Aug 17: Rank, Gambling.com, Super Group
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