888 Holdings ((GB:EVOK)) has held its Q4 earnings call. Read on for the main highlights of the call.
The latest earnings call from 888 Holdings revealed a mixed sentiment, with the company showcasing both achievements and challenges. On the positive side, 888 Holdings exceeded EBITDA expectations and returned to revenue growth, demonstrating strong performance in its core markets and successful cost optimization efforts. However, the company also faced challenges, including a decline in retail EBITDA, postponed leverage targets, and increased net debt.
Exceeded EBITDA Expectations
888 Holdings reported that its adjusted EBITDA was £2 million ahead of the top end of the previous update for 2024. This achievement highlights the company’s ability to manage its operations efficiently and exceed financial expectations.
Revenue Growth Achievement
For the first time in three years, 888 Holdings returned to growth, reporting a full year revenue increase of 3%, with an impressive 8% growth in the second half of 2024. This marks a significant turnaround for the company, indicating a positive trajectory in its financial performance.
Core Markets Performance
The company emphasized its strong performance in core markets, which now contribute to 90% of its revenue. Additionally, 96% of its revenue comes from regulated and taxed markets, underscoring its focus on sustainable and compliant operations.
International Business Operating Leverage
888 Holdings’ international business delivered a 7% revenue growth and a remarkable 31% increase in adjusted EBITDA. This demonstrates the company’s successful expansion and operational leverage in international markets.
Cost Optimization Achievements
The company successfully executed a £30 million cost optimization program and identified further savings of £15 to £25 million for 2025. These efforts reflect 888 Holdings’ commitment to improving its cost structure and enhancing profitability.
Retail Gaming Machine Rollout
The rollout of 5,000 new gaming machines in Italy before Cheltenham showed positive early signs of growth, indicating a strategic expansion in the retail sector.
William Hill Brand Relaunch
888 Holdings relaunched the Mr Green brand and initiated digital work on 888, introducing a new visual identity for William Hill. This relaunch is part of the company’s strategy to revitalize its brand presence.
Retail EBITDA Decline
The retail sector experienced a 33% decline in EBITDA due to high fixed costs, highlighting the challenges faced in this segment of the business.
Postponed Leverage Target
The company’s net leverage target of below 3.5x has been postponed to 2027 due to additional investments and costs. This delay reflects the financial pressures and strategic decisions impacting the company’s leverage goals.
Q1 2025 Revenue Growth Challenges
888 Holdings anticipates revenue growth slightly below the 5% to 9% target for Q1 2025, influenced by factors such as racing cancellations and one less day in the quarter.
Increased Net Debt
Net debt increased by £30 million to £1.79 billion, driven by exceptional costs and first-half performance. This increase in debt highlights the financial challenges the company faces.
Forward-Looking Guidance
Looking ahead, 888 Holdings aims to maintain its strategic focus on its core markets, which contribute to 90% of its revenue. The company expects a sustainable revenue growth target of 5% to 9% and plans to achieve a net leverage below 3.5x by 2027. Additionally, further cost-saving measures are anticipated, with expectations of a 20% adjusted EBITDA margin for 2025.
In conclusion, the earnings call for 888 Holdings presented a balanced view of the company’s current position and future prospects. While the company has made significant strides in revenue growth and cost optimization, challenges remain, particularly in the retail sector and managing net debt. Investors will be keen to see how 888 Holdings navigates these challenges while capitalizing on its strengths in core and international markets.