Ladbrokes performance hit by sportsbook margin squeeze

Ladbrokes’ digital business suffered a near 18% fall in like-for-like net revenue during the first three months of 2014 after its sportsbook margin contracted by more than 3% to 6.4%.

According to Ladbrokes, “heavy losses on football and horses” suffered during January and March was a major contributing factor to the reduction in sportsbook margin and net revenue; however, gaming also suffered with net revenue also down almost 18% year-on-year and 10% sequentially.

When taking into account the operator’s recently acquired Betdaq and Australia-facing businesses, net revenue fell 1% year-on-year while sequentially the figure was up 1%.

Mobile provided some reason for optimism, with the operator reporting mobile active customers to be up 32% with mobile amounts staked climbing 95% – boosted by the December release of its new Mobenga mobile product.

Although no figures were given, desktop sports stakes continued to fall but Ladbrokes said this area showed “continued signs of stabilisation in staking vs. Q4 2013″.

Despite the results, Ladbrokes insisted it was well positioned going into the World Cup after having made significant operational progress during the first few months of the year as it continued it migration to Playtech product and backend system.

Major milestones included the March launch of Playtech casino products and yesterday’s integration of the Playtech IMS platform offing customers a single wallet across all verticals.

“In Q1 we delivered all of our stated operational targets on track or ahead of plan and our financial performance remains consistent with our expectations at the time of our annual results announcement in February,” Richard Glynn, Ladbrokes CEO, said.

“In digital, with the move to IMS and single wallet capability, we now have in place all of the operational infrastructure from which to drive growth in H2 and beyond,” he added.

Ladbrokes’ share price was down 4p to 139p after early morning trading.