888 Holdings Profits Soar in 2016

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Monday, April 10th, 2017 | Written by Lucy Brown

888 Holdings has released its earnings information for 2016, sharing the good news of a successful year in which revenues soared to an all-time high. Based upon the latest results, it is also clear that the Gibraltar-based company is more than holding its own in the industry, and poised to continue further growth in 2017. Commenting on the solid results, Chief executive Itai Frieberger said:

“2016 was another fantastic year for 888, during which we continued to deliver very strong organic revenue and profit growth. This was again underpinned by further outstanding progress in casino, sport and across regulated markets.”

Here are some of the key takeaways from the financial report:

– Revenues are at an all-time high. Overall, 2015 saw a 13 percent increase in revenue with the year finishing out at $520.8 million compared to $362.1 million. Pre-tax profits increased from $39.2 million to $32.5 million.

– Business to consumer revenue is soaring. Business to consumer revenue rose by 20 percent in 2016 compared to 2015 numbers. Online casino revenue accounted for much of the growth, and compared to 2015, the vertical grew by 21 percent, generating gross gaming revenues of $279.3 million. Sports betting grew even more at 49 percent, but accounted for only $51.9 million of gross gaming revenue. Meanwhile, player numbers increased in both verticals, and during 2016, 888 Holdings increased the total number of its active online casino players by 26 percent, and its total number of active sports book bettors by 49 percent.

– Earnings Are Up. As one would expect with such favorable growth, 888 Holdings is delighting shareholders. Basic earnings on stock shares increased by 74 percent to a total of 14.4 cents, and based upon that performance, the board of 888 Holdings approved a dividend of 5.1 cents per share, a whole 4 cents more than 2015.

– Online Poker Is Struggling. Although the overall picture for 888 Holdings was rosy in 2016, online poker did cast a bit of a cloud over the financial picture, with the vertical decreasing by 3 percent to $84.4 million compared to 2015. While the shrinkage was modest, it points to the trend that is taking place almost universally in the industry with online poker revenues decreasing, while online casino and sports betting revenues rise. Part of this is due to the operators shifting their focus and investments away from a less profitable online poker environment, but the trend is also related to the challenges of the highly fragmented international poker market.

Going Forward

During the earnings call, the CEO of 888 Holdings, Itai Frieberger outlined the company’s strategy for continuing its strong performance in 2016 into 2017. The company plans to continue to develop business to consumer verticals, emphasizing profitable online casino games and sports betting. 888 Holdings has also pledged to continue to expand into new markets where it either does not have a foothold yet, or online gambling is becoming regulated for the first time. Elaborating further, Itai Frieberger stated:

“888’s further expansion in the UK, Spain and Italy is a strong demonstration of the group’s ability to drive excellent growth and build leading market positions across regulated markets as the industry continues to head in this direction. These strong results demonstrate the truly outstanding underlying momentum in the business.”

In addition, the company plans to make customer protection and responsibility a key focus for 2017. Not only will this improve its relationships with customers, but it will strengthen its brand image, allowing it to attract new players and more easily navigate the often difficult process of applying for licensing in newly regulated markets.

Analysts Bullish

In the meantime, gaming analysts have reacted positively to the 2016 financial results, with some predicting a 45.6% growth rate by the end of the year, and by 2020 revenues to top $708 million. As of today (10/4/17) shares in the company are currently trading at £274.38, giving 888 Holding a market capitalization of £994.28M. The stock price has risen steadily over the past couple of years, with its latest price representing a near historic high for the firm. Commenting on strong overall performance of the company, Numis Securities said:

“Earnings quality continues to improve with regulated revenues now representing 61% of the group. 888 is well diversified, with proprietary technology and a strong balance sheet.”