Facing Perfect Storm, 888 Holdings Issues Heavy Q3 Revenue Warning
The 888 Holdings hit continues. Hot on the heels of Entain’s Q3 Revenue Warning, which saw some £700 million (US$854.67m) wiped off the supergroup’s share value, comes similar stormy news from the troubled owners of UK betting icon William Hill and Mr Green.
Echoing the same lament as Entain–that Q3 revenues have been severely impacted by responsible gaming and compliance measures, and a run of punter-friendly sporting results–, FTSE-100 888 has warned The City and shareholders that its revenue has slumped in the region of 10 percent, year-on-year, during the third quarter.
888 shares, subsequently, took a massive 16 percent hit on trading today, Thursday, September 28.
This is the latest blow for the company which paid casino giant Caesars Entertainment £1.95 billion (US$2.38bn) for William Hill’s non-US assets last year; an overpriced acquisition that led to the defenestration of long-serving CEO Itai Pazner earlier this year.
And this July the UK Gambling Commission (UKGC) also put 888’s licence under review.
The UKGC expressed deep concerns over 888’s financial links with the cabal of gambling industry executives who were running GVC Holdings–now rebranded, Entain–during a corruption and bribery scandal in Turkey, which is being investigated by British tax authorities.
The troika of former GVC chairman Lee Feldman, CEO Kenny Alexander and director Stephen Morana, operating under the umbrella of the FS Gaming Investment Consortium, has built a seven percent stake in 888 Holdings and looked set to make a bid for the uneasy operator until the UKGC intervention.
According to the just-released profit warning, 888 is estimating revenue of around £400 million (US$488.38m) for Q3, compared to £449 million (US$548.21m) in the third-quarter last year, which was itself down seven percent on Q3, 2021.
With the UK accounting for some two-thirds of group revenues, EBITDA “would be below our prior expectation,” conceded 888 Chairman Lord Jonathan Mendelsohn, who has been leading the Omnichannel’s defensive line until incoming Chief Executive Per Widerström takes the reins.
Said Mendelsohn: “This has been an important quarter for the business with the announcements of Per Widerström as our new CEO and Sean Wilkins as our new CFO, who I am very confident will lead the business through its next phases of growth.
“And I look forward to Per starting as CEO in mid-October.”
888 now expects revenue to pick up in Q4–albeit still lower by single-digit year-on-year margins–and is betting on sustained growth in 2024.
But only one prediction runs certain: Per Widerström and 888 Holdings is facing something approaching the perfect corporate storm.