On today’s (26th March) 888 earnings call, CFO Sean Wilkins acknowledged that the company’s financial performance was “disappointing”, while CEO Per Widerstrom applauded the “new chapter” of the proposed rebranding.
In the company’s results for FY23, reported revenues were PS1.71bn ($2.16bn/EUR1.99bn). This represents a 31.1% increase year-over-year. On a pro-forma basis, however, the revenue dropped 7.5%.
Wilkins stated that the UK revenue was affected by “regulatory pressures”, and the UK revenue reflected “a shift in the player mix to customers with lower spending”. This shift was attributed to the UK’s new safer gambling laws. Nevertheless, 888’s UK & Ireland Online Revenue grew by 44.6% to PS658.5m in 2023.
Wilkins stated that 888’s international business “ended with a smaller but higher-quality operation”. This segment’s revenue grew by 1.8% annually, reaching PS517.4m.
Wilkins noted also that corporate costs increased exponentially. They came out to PS42.3m in the last year, a significant increase of PS37.4m from year-to-year. He said that “this is not an increase in actual costs, but more accounting harmonisation”.
Wilkins acknowledged that 888’s performance was below expectation for FY23, despite the circumstances. We are not under any illusion that the financial performance of 888 has been poor.
Rebranding Evoke “a new Direction”
Widerstrom believes that the proposed rebranding 888 Holdings as Evoke is a fresh start for business. Widerstrom said, that although 888 had “great brands for customers”, Evoke was a new direction.
Widerstrom said, “We have to create a brand for our company.” We need a memorable, translatable company name… a new direction. “A new purpose.”
The executive team has blazed the path for success, he said.
Widerstrom added, “Today is a brand new beginning for our Evoke company. We have much work ahead of us. This is the start of a new business. We know what success is and have a strategy for getting there.
This will be done with laser focus on execution.
Widerstrom was now part of 888’s plan to create value. He explained, alongside the FY23 financial results that his appointment last year as CEO was followed by a stronger executive team.
Widerstrom, in a statement about the initiatives, explained that “[888] is also very clear where our focus lies. We want to provide the best return.” We know that this industry is very competitive.
We want our customers to tell their friends about the brands they love…[888] is moving into a personalisation world that’s infinite.
Putting 888’s Strategy into Practice
Six strategic initiatives are included in the plan for value creation. One of them is Operations 2.0, a strategic data point and AI, which represents a significant value change.
Widerstrom said that Operations 2.0 will focus on AI implementation in a manner that enhances the day-today operations of 888. This would improve cost-efficiency, customer service, and training if done properly.
He said: “I’m a big fan of AI when it is used correctly.” As outlined in today’s Operations 2.0, it is about implementing AI the right way.
Widerstrom added that executing 888’s strategic plan would require meeting specific targets. Widerstrom presented the idea of improving profitability and efficiency by using operating leverage as a key target. Widerstrom stated that 888 will “drive and increase profit margins” to achieve this.
He said, “I, as well as the members of the executive team, are absolutely committed to this Plan.” You can have the most brilliant strategy, but if it is not executed effectively it will be meaningless.
When and where to compete
Despite 888’s good results in the UK & Ireland segment and International, it continues to closely examine its geographic operations for 2023. In the first week of this month, it was announced that 888 would be conducting a review of their B2C US business. As part of this review, 888 terminated its partnership with Authentic Brands.
Widerstrom stated that 888, while it has the means to expand globally, must still be selective about its investments. Our capabilities enable us to invest anywhere on the planet. We know that we have to be careful with the money and time of our shareholders.
In the future, he said, a “laser emphasis” would be put on 888’s core markets – UK, Spain Italy, and Denmark – which represent 85% of 888’s revenue. He also added that more markets are expected to come in the near future.
Wilkins stated that 888 has a clear vision of where and how it will compete in the future. “We will speak to the correct customers at the appropriate time, on the right markets.”
The “cultural change” at 888 and the optimal allocation of resources are key areas to finance growth in future. Wilkins stated that 888 “is driving and embedding cultural change in the business” as well as “only spending money where we can see sustainable, profit returns”.
