Ladbrokes looks towards online and mobile
With egaming profits growing in 2010, chief executive Richard Glynn has earmarked online, mobile and international expansion as key areas of future development.
Ladbrokes will look to build on its growing egaming profits this year with online, mobile and international expansion marked out by chief executive Richard Glynn as key areas of development.
Pre-tax profits for Ladbrokes’ egaming, now referred to by Ladbrokes as digital, grew by £4.5m in 2010 from £58.2m to £62.7m, while net revenue rose £8.7m from £160.7m to £169.4m.
Retail, particularly in the UK, still dwarfs online in terms of both revenue and profit figures, but Glynn was keen to stress the company’s devotion to its non-retail and non-UK activities which make up approximately 25% of the bookmaker’s activities. “Ladbrokes is currently perceived as a retail-led business with evolving international and online business,” he said. “We want to be an e-enabled international betting and gaming business, and have a clear plan of how to achieve this.”
Glynn remained realistic about the enduring value of the brand when it comes to developing and expanding an online customer base. He revealed that 25% of Ladbrokes’ new digital customers arrived at no cost through directly typing Ladbrokes.com into their internet search-bar, while a further 30% arrived at nominal costs through the use of search engines. “This is only made possible by awareness of brand, which comes through our retail presence,” he added.
Within the digital side of operations, the CEO drew attention to the growth of mobile in the last 12 months. Its contribution to “digital customer transactions” grew from 3 to 9% over the course of 2010, and so far in 2011 has risen to 15%.
“We see the use of mobile as a key bridge between online and retail,” explained Glynn, who went on to draw attention to Ladbrokes’ mobile app “Kick-off” “ released in 2010 “ winning top prize at the Future Mobile Awards
As well as mobile, Ladbrokes is actively pushing in-play betting and international development. The number of in-play events offered by the bookmaker grew by 27% to 23,000 in 2010, bringing its total contribution to digital sportsbook revenue to 42%, excluding horse racing. Net revenue for online sportsbook was £65.1m and overall net revenue £169.4m for all digital.
Ladbrokes’ digital operations enjoyed a 36% profit growth to £62.7m, despite poker declining. Sportsbook net revenues rose 16.9% to £65.1m, casino rose 6.3% to £55.3m, and bingo was up 11.4% to £13.7m but poker was down 20.7%. Active customers rose 4.2%.
Glynn also admitted that unregulated revenues and profits were ” a pretty insecure form of revenue.”
“We have been gaining a reputation for integrity and this offers a great opportunity for expansion into regulated markets, but only where we can build things of real value, quite probably with local partners,” he added.
Nick Batram, an analyst for Peel Hunt, gave a hold recommendation.
He said: “Final results came in above our expectations helped by a better margin performance across all divisions. The hope for Ladbrokes is that Richard Glynn delivers a more aggressive online strategy and that the retail margin gap with William Hill narrows.
“While both are deliverable the former comes with execution risk and the latter will be pushing against tough economic headwinds. Therefore, at the current point in time we are happy to hold for the yield.”