888 momentum builds as it future-proofs business

“Staggering” is how Itai Frieberger describes 888’s full-year numbers.

The operator’s chief executive spoke to EGR Intel shortly after publishing the firm’s 2016 results which, in constant currency (cc), showed an 18% growth in revenues and a 24% hike in EBITDA.

According to Frieberger, those numbers are all the more impressive with the firm having simultaneously invested in its proprietary platform and further expansion into regulated markets.

“Some people talk about the growth in revenue but just look at our profit growth,” Frieberger says.

“When you launch in Denmark, Romania, add sports in Italy, and we are also preparing to launch poker in Italy – that all creates a dent in our P&L and it takes time until we are able to get some of that profit back from these new markets.

“But the fact we have invested so much in the future and are still able to post 24% growth in EBITDA means there is very, very strong growth coming out of the business,” he adds.

Frieberger places regulated market expansion at the top of the 888 agenda, commenting that “the leaders of industry in years to come” will be the ones which handle the transition to new and regulated territories.

The market appears to agree 888 has a bright future. The operator’s share price leapt from around the 230p mark to around 256p yesterday (it sits at 252p at the time of writing).

Sporting chance

Part of that share price boost may have also been linked to the positive early trading 888 is enjoying in 2017, with average revenues per day up 11%. In addition, Frieberger says January was 888’s “strongest month ever in terms of revenue”.

The platform for growth has arguably been 888’s Kambi-powered sportsbook, which not only saw revenues grow by 58%cc across 2016, but has provided a lower CPA channel which in turn is seeing growth across the business – casino revenues were up 26%cc.

And while there has been plenty of speculation around whether 888 will build or acquire its own sportsbook, Frieberger says he remains “happy” with the current third-party set-up.

“Kambi is working diligently alongside us to make sure we remain happy, and we are happy,” Frieberger says.

“It’s not about me being able to gloat about having our own sportsbook, what’s more important is being able to generate profits, which we are doing – sports is becoming a very significant part of our business.

“The thing that makes me very happy is to see the share price coming up and that’s what I’m excited about.”

The chief exec says he expects sports (£41.7m 2016 revenues) to overtake poker (£67.8m) as its second-largest revenue generator, if not by the end of 2017, then shortly after.

“That’s the agenda, that’s where we are pushing,” he says. “It’s critically important for the business to push forward, important to penetrate new markets, so sports has become a very important part of our offer.”

Speculation also continues around M&A, which 888 says remains part of its growth strategy.

There have been suggestions the firm was ready to make a move for a B2B business to strengthen both its technology and its B2B division, however, Frieberger seemingly rules this out.

“The real upside when it comes to M&A is taking a large install base of customers and migrating them over to our superior platform,” Frieberger explains. “This is where the synergies are going to happen.

“I would agree that there are opportunities on the B2B side but the upside is going to be less viable,” he adds.