888 proposes rebrand to evoke plc as part of new value creation plan

888 has laid out a new value creation plan (VCP) which could include changing the company’s name to evoke plc following the release of the group’s full-year 2023 results.

Under the tutelage of CEO Per Widerström, the London-listed firm has detailed its key targets for the coming year after a 38% reported increase in revenue in the past 12 months.

The name change to evoke plc will be subject to shareholder approval at the 2024 AGM.

888 said the rebrand would “better reflect the strength of the group’s multi-brand operating model and its vision and mission to make life more interesting by delighting players with world-class betting and gaming experiences”.

The group will now look to action on six strategic initiatives, which management said would “provide the roadmap for delivering” the VCP.

These include: building “personalised and long-term customer relationships”; differentiating group brands from the competition; leveraging AI and automation; unifying the proprietary tech platform; developing a “glocal” approach; and further integrating ESG principles.

As previously communicated, 888 will focus on core and optimise markets as two distinct branches.

Core markets include the UK, Italy, Spain and Demark, which generate around 85% of group revenue, while optimise markets, will be pegged for future podium positions.

888 said that it would exit unprofitable markets, or use alternative operating models such as local partnerships to gain footholds in these battlefields.

On that point, 888 provided no further update to its ongoing review of its US B2C operations after previously announcing it would sever ties with Sports Illustrated.

The group did say it would “consider all potential alternatives that can deliver value for the business, which will deliver significant cost savings”.

The newly refined focus comes after Widerström built out his new senior management team, with seven of 888’s top 10 execs being freshly added.

These include CFO Sean Wilkins, CCO Mark Kemp and chief growth officer Jeffrey Haas.

Financial showing

In terms of financial performance, 888 reported a 38% year-on-year (YoY) leap in full-year 2023 revenue from £1.2bn to £1.7bn as the operator noted a shift away from dotcom markets and a more sustainable approach to marketing.

However, the London-listed firm saw full-year revenue slip by 8% on a pro forma basis from £1.9bn to £1.7bn.

Revenue from sports betting amounted to £648.8m, a 0.9% decline, while total stakes were down 11.3%.

Gaming revenue of a little over £1bn was down 11.2%, with bosses pointing to dotcom markets being more heavily weighted to the vertical.

Similarly, reported adjusted EBITDA leapt 41% from £217.9 to £308.3m, but fell 1% on a pro forma basis.

Reported adjusted post-tax profit dropped 25% from £64.2m to £48.1m while total losses after tax shrunk compared to full-year 2022, decreasing from £120.6m to £56.4m.

Geographically, on a reported basis, UK and Ireland online revenue increased 44.6% to land at £658.5m, while EBITDA for the arm grew 147.2% to £152.3m.

Once again, on a pro forma basis, these figures were not as strong, with revenue dipping 8.2% but EBITDA increasing by 36.1%.

Management said the division had continued to see a sustained shift to a more recreational customer base, with average revenue per customer down by 18%.

Actives increased by 11% but as noted by 888, a lower level of thresholds for financial risk checks, and more customer interventions, did see revenue slip.

On the international side, reported revenue remained flat with a 1.8% uptick to £517.4m as EBITDA fell 16% to £99.4m.

Looking at pro forma, these figures decreased further, with revenue falling 15.7% and EBITDA by 26.9%.

888 said that while it experienced double-digit growth in Italy and Spain, this was offset by a “significant reduction in revenue from […] dotcom markets”.

Those decreases pertain to regulatory and compliance changes as the business suspended VIP accounts in the Middle East.

Looking ahead

As part of the VCP, 888 has outlined new medium-term targets for its financial performance, as detailed by CFO Sean Wilkins.

These include revenue growth of between 5% and 9% per year, an adjusted EBITDA margin expansion of 100 basis points per year, and leverage of below 3.5x by the end of 2026 for the group’s debt.

Net debt stands at £1.7bn, following a £10.8m reduction since the end of 2022, primarily driven by favourable foreign exchange rate movements. Leverage as of 31 December stood at 5.6x, unchanged from 31 December 2022.

Wilkins said: “The business is now at a critical but exciting juncture. We must invest in improving our capabilities in a few critical areas to successfully drive sustainable, profitable growth.

“Our clear plans are outlined in the CEO report and will be supported by robust financial governance including highly disciplined capital allocation. We will ensure our growth plans support deleveraging and enable strong shareholder returns in the coming years.”

Finally, Q1 performance was also briefly detailed, with revenue expected to land between £420m and £430m, with trading being noted as “consistent” with previous expectations.