William Hill owner 888 Holdings expects its revenues for the current quarter to decline by around 10%, attributing this to changes in its marketing strategy and tighter UK gambling regulation.
The gambling business has shifted its approach “to focus on higher return marketing”, something which it says has resulted in a “short-term negative impact” on its revenues.
888 Holdings updated investors on its revenue expectations today (28 September). It forecasts revenues to be down around 10% in the third quarter of 2023 versus the same period last year. For the full 2023 financial year, the company expects its earnings margin to be 18% to 19%, having previously forecast that it would be above 20%.
The change in marketing strategy was one reason cited by the business for its underperformance in the third quarter. In August, the company outlined its plan to drive “more sustainable profitable returns” through a shift in how it deploys its marketing spend. This “refined marketing approach” means it has upped focus on increasing “marketing efficiency and profitability”, with its marketing more aimed at specific countries and player types.
888 Holdings is aiming to reduce its marketing spend as a percentage of revenue and in the first half of 2023 online marketing costs dropped by 23%.
In August the company said it was cutting out revenue sources driven by “unprofitable or low-return marketing spend”.
These actions have resulted in what it claims will be a short-term revenue decline. It has expressed confidence that the shifted marketing strategy will deliver more profitable marketing spend in the longer term.
The forecast revenue decline has also been driven by the “ongoing impact of safer gambling changes within the UK”, 888 said.
The company has claimed it is well-positioned to adjust to changes in regulation going forward, such as those proposed in an April whitepaper published by the government. The whitepaper called for tighter controls on how customers are targeted, data is used, and promotions are deployed.
The government is currently carrying out further consultation on how to proceed.
The William Hill owner also claimed it had seen more “customer-friendly sports results” in the quarter, meaning it paid out more to customers than it expected to during the period, which negatively affected its revenues.
Despite the challenges to the business seen this quarter, 888 Holdings’ chair Lord Jon Mendelsohn claimed the company is on track to reach its longer-term targets.
“The hard work the team has undertaken so far this year has set very strong foundations for the future of the business,” he said.