William Hill Q3 revenue slips 9% despite double-digit US growth
CEO Ulrik Bengtsson hails “reinvigorated” leadership team as operator gears up for regulatory headwinds in UK and Germany
William Hill has reported a 9% year-on-year decline in net group revenue for Q3 2020 despite single-digit online growth.
The London-listed operator revealed an overall revenue rise of 4% for online operations, mirrored by a 4% increase in UK-based online revenue.
The operator cited upgrades to its UK online gaming platform and the introduction of a new sportsbook betslip ahead of the new Premier League season as reasons for the uptick.
“This is the first significant update of our UK architecture in five years and has made placing a bet quicker and more intuitive, while allowing for rapid implementation of new features,” Hills said.
In addition to new UK sports betting features, Hills confirmed the introduction of a one-hour safer gambling session reminder for all UK online gaming customers, as well as enhanced safety measures added during the height of the Covid-19 lockdown period.
Hills International online revenue increased by 6% during Q3, buoyed by the delivery of an updated version of its Mr Green live casino brand across multiple regions and core markets.
The operator has applied for a sports betting licence in Germany and has switched off live casino in line with German transitional measures implemented earlier this month.
Hills revealed the firm would pursue a multi-brand approach in the German market but expects German EBITDA contribution to drop by £10m in 2021 due to the transitional regulations.
William Hill’s US operations continued to drive positive revenue growth during Q3, where net revenue grew by 10% thanks to a 55% rise in sports bets following the resumption of top-tier US sports.
Hills opened sportsbooks in four new states during the quarter, Colorado, Illinois, Michigan and Washington, while a sportsbook also launched in Pennsylvania after the reporting period in October.
However, the operator warned of the impact of Covid-19 on traditional sporting fixture lists, adding that major events being held behind closed doors had created “more unpredictable than normal” sporting results.
“As a result, we continue to see volatile gross win margins, and we would expect this situation to continue,” Hills said.
The impact of Covid-19 on Hills’ retail operations softened following the relaxation of lockdown measures in the UK amid a rise in footfall to pre-Covid levels and net revenue losses narrowing to 2% for Q3.
Hills hailed its Covid-19 lockdown retail response as “timely and appropriate” but admitted to preparing for another lockdown. The operator suggested 10% of its retail portfolio was located in so-called Tier 3 areas, predicting the closure of 100 shops for four weeks would reduce EBITDA by £2m.
“We are very pleased with the trading performance of the group, which has been borne out of the commitment, resilience and hard work of our teams across the business and I could not be prouder of them,” said William Hill CEO Ulrik Bengtsson.
“We have moved the company forward with our relentless focus on our customers, enhancing the competitiveness of our product and maintaining player safety as one of our highest priorities.
“We have reinvigorated the leadership team and they, in turn, have empowered their teams to deliver on our plans,” Bengtsson added.
William Hill CEO Ulrik Bengtsson
Hills confirmed it would “imminently” receive a refund of more than £200m from HMRC for incorrectly applied VAT, while £24.5m of Coronavirus Job Retention Scheme cash will be repaid to the UK government.
Regulus Partners analyst Paul Leyland said of the results: “The quarter after global lockdown was never going to be especially strong, given H1 UK online share losses, the slower speed of US sports coming back on stream and the continuing policy uncertainty affecting UK retail.
“Nevertheless, Q3 performance has been resilient and, in retail, encouraging. The logic of the MRG acquisition, which we struggled with at the time, has been even further tested and the medium-term performance of the William Hill UK brand and operations online remain a standout weakness,” he added.