888 releases 2018 annual financial results

(PRESS RELEASE) -- 888, one of the world's most popular online gaming entertainment and solutions providers, announces its audited annual financial results for the year ended 31 December 2018.

Financial Highlights

• Group revenue decreased by 2% to $529.9 million (2017: $541.8 million).
• Revenue from regulated and taxed markets continue to represent the significant majority of Group revenue at 70% (2017: 70%).
• B2C Casino revenue increased by 8% to $317.6 million (2017: $293.9 million); B2C Casino revenue excluding U.K. increased by 17%.
• B2C Sport revenue increased by 6% to $80.3 million (2017: $75.5 million); B2C Sport revenue excluding U.K. increased by 18%.
• B2C Poker revenue decreased by 37% to $49.0 million (2017: $77.9 million) reflecting challenging competitive environment.
• B2C Bingo revenue decreased by 17% to $32.4 million (2017: $39.3 million) reflecting heightened regulatory scrutiny in the U.K.
• Resolution of a legacy VAT matter in Germany and subsequent release of an exceptional provision of $22.4 million.
• Adjusted EBITDA2 increased by 6% to $107.1 million (2017: $100.7 million); EBITDA for the period was $129.1 million (2017: $41.2 million).
• Adjusted EBITDA margin increased by 160bp to 20.2% (2017: 18.6%); EBITDA margin increased to 24.4% (2017: 7.6%).
• Adjusted Profit before tax2 increased by 11% to $86.7 million (2017: $78.3 million); Profit before tax was $108.7 million (2017: $18.8 million).
• Adjusted basic earnings per share increased to 20.2¢ (2017: 20.1¢); basic earnings per share increased to 26.3¢ (2017: 3.5¢).
• Final dividend of 6.0¢ per share (2017: 5.9¢ per share), plus an additional one-off 2.0¢ per share (2017: 5.6¢ per share) bring the total dividends for the year to 12.2¢ per share (2017: 15.5¢).

Operational Highlights

• Continued growth across several regulated markets, primarily in Continental Europe, underpinned by momentum in Casino and Sport, resulting in revenue from regulated markets (excluding the U.K.) increasing by 14%.
• Improving trends in the U.K. B2C business towards the end of the year following the prudent and proactive customer protection measures taken by 888 over the past 18 months; positive trends in the U.K. market have continued in Q1 2019 with U.K. B2C revenue up more than 10% year-on-year at constant currency.
• Continued product innovation with the successful gradual launch in May of Orbit, 888’s most exciting Casino product innovation during recent years, delivering encouraging results
• 16% year on year increase in active Casino players.
• 888Sport first time depositors increased by 21% and deposits increased by 10%.
• Further investment in 888’s poker proposition including the launch of 888Poker.it (Italy) at the beginning of 2018 and the development of the Group’s new Poker 8 platform during the year
• Progress in the developing U.S. market with highlights including:

- The strategic acquisition of the remaining 53% interest in the All American Poker Network for $28.5 million.
- The launch of 888Sport New Jersey in September and subsequent sponsorship of the New York Jets by 888.com.
- Enhanced casino content in New Jersey.

• New licenses obtained in Sweden and Malta at the end of the year and in Portugal post the period end.

Post period-end highlights

• Appointment of Itai Pazner, previously Chief Operating Officer, as 888’s new Chief Executive Officer replacing Itai Frieberger who stood down as CEO after more than 14 years with the business.
• Acquisition of a number of bingo brands, including Costa Bingo, for £18 million, strengthening 888’s position in the U.K. online bingo market.
• Strategic acquisition of high-quality, scalable sportsbook technology alongside associated risk management, product and trading capabilities from Dedsert Limited and Dedsert (Ireland) Limited and its affiliates for £15 million.
• Positive current trading with average daily revenue up more than 10% in Q1 so far when compared to Q4 2018 and Group trading during the financial year to date 5%* higher at constant currency year-on-year.

Itai Pazner, CEO of 888, commented, “In my first report as CEO I am delighted to update 888’s stakeholders on the significant strategic progress made by the Group during 2018 and since the start of 2019. Amongst other initiatives, we have continued our geographic expansion by obtaining important new licenses; launched our most significant product innovation in recent years in the form of Orbit, a new Casino platform; and announced three acquisitions including delivering on our long-stated ambition to add proprietary sports betting technology to 888.

"Despite headwinds in some areas of the business, the financial performance in 2018 was resilient and we achieved a record EBITDA outcome for the year. The Group achieved continued growth across several regulated markets, primarily in Continental Europe, underpinned by good momentum in Casino and Sport.

"The positive momentum at the end of 2018 has continued into the first quarter of 2019 with average daily revenue in 2019 to date up 10% compared to Q4 2018 reflecting improvements across major KPIs. In the U.K., we are encouraged by the improving trends we began to witness in the latter stages of 2018 and the Board is pleased to report that these have continued during the first quarter of the current financial year. Average daily revenue at constant currency in our U.K. B2C business up by more than 10% year-on-year in Q1 so far. Overall Group trading during the financial year to date is 5% higher at constant currency year on-year.

"The Group continues to base its success on its unique technology-edge, fantastic team and diversification across products and markets. Underpinned by the strength of 888’s technology and the significant strategic progress made by the Group over recent months, the Board continues to see a number of significant growth opportunities for 888 in both new and existing markets. We look forward to another exciting year of progress in 2019.”