888 breaks revenue record
Third consecutive record-breaking quarter helps group to revenues of $331m for FY2011.
888 has reported a 28% year-on-year increase in fourth-quarter revenues and a 26% rise in revenues for the full year, driven by a strong performance in poker and casino, the operator revealed in its interim management statement for the three months ended 31 December 2011.
Group revenues rose to $91m for the quarter, up from $71m for the same period in 2010 and 6% higher than Q3’s record revenues of $86m. This marks the company’s fifth consecutive quarter of revenue growth, following Q2’s year-on-year revenue growth of 29% to $79m.
The three record-breaking quarters helped 888 post overall revenues of $331m for the year, up from $262m in 2010. This was helped by a 58% year-on-year increase in poker revenues (up to $61m) and a significant growth in B2C casino, which grew 27% to $148m. B2B revenues from the operator’s Dragonfish subsidiary, which last week extended its supplier agreement with Caesars Interactive to supply its poker software for a US-facing poker offering, rose to $47m, up 16% on $40m in 2010.
B2C revenues for the quarter came in at $79m, up 32% year-on-year, with casino revenues growing from $31m to $42m. This was complemented by poker’s 76% year-on-year growth, with revenues up $8m to $19m. However, this was partially offset with a 7% decline in bingo revenues, blamed on the highly competitive UK market.
Deputy chairman Brian Mattingley, who is overseeing the management of the business following CEO Gigi Levy’s departure in April last year, attributed the successful quarter to a focus on the group’s core verticals: “We are delighted with 888’s strong performance over the last year and in particular Q4. Fourth quarter revenue is the highest on record, and represents five consecutive quarters of revenue growth.
“Strong trading was led by an excellent performance in our B2C casino and poker, and is the successful result of an increased strategic focus on our core competencies and the stand-out success of Poker 6.”
888’s quarterly revenues surpassed Panmure Gordon’s forecast of $89.5m, with analyst Simon French retaining his firm’s ‘Buy’ recommendation, commenting that the group’s B2B deal put it in a strong position ahead of potential US regulation.
“The group is in pole position among UK listed companies for the US market through its Nevada Gaming Commission suitability approval and the non-exclusive software agreement with Caesars in the US. The potential market opportunity for 888 is bigger than is currently being priced into the shares, in our view,” French said.
Nick Batram of Peel Hunt also reiterated his ‘Buy’ recommendation, but warned that the group would be impacted in the short-term by UK regulation:
“We believe the Q4 figures show that the improvement at 888 is sustainable. Our confidence comes from a view that the technology has clearly proven itself, there is much greater management focus and these factors should also enhance the group’s strategic position in a rapidly evolving market.
“There are challenges, and any move to tax UK earnings would come at a short-term cost; but ultimately we believe the team and the technology are in place to cope with that scenario,” he added.