888 Holdings plc

Good morning, everyone, and thanks for joining us today for our H1 2025 results. I'm Per Witteström. I'm joined today by Sean Wilkins, our CFO. To start with the agenda on slide two, I will give you a quick introduction and then on to financial performance, which is consistent with the trading update we gave you three weeks ago. But Sean will talk through the details of this, as well as covering our current trading and outlook for the year ahead. I will then cover strategic progress and how we're executing against the value creation plan before taking your questions. Turn to slide three and a quick overview of some of the key highlights for the half. Firstly, have returned the business to growth last year. This has continued with our fourth quarter in a row of growth. while first half growth of 3% or 4% in constant currency was a little bit low where we wanted it to be, with improving trends through the half with Q2 growth of 5%. This has been driven by continued very strong performances in our international core markets and retail returning to growth. Secondly, we have significantly enhanced the profitability of the business. This is through direct actions cost reductions, as well as driving operating leverage by growing the top line and being more effective and efficient with our bonusing and marketing improving margins. As I've said before, we're executing both a short-term turnaround and investing in building out our longer-term capabilities, and we made great progress on both of these fronts through the half, which we'll cover in more detail later. The strategy is working, and we are pleased with our progress, but we know there is a lot more to do. We're excited about H2 and remain laser focused on execution as we strive to deliver our revalidation plan. Sean will now cover the financial results.

Thanks, Per, and good morning, everyone. Before we jump into the detail, I just wanted to start by saying I'm delighted to be reporting a strong set of numbers for the first half, which deliver on exactly what we said we would do. Drive profitable growth. Four quarters in a row now of revenue growth and the improvement into Q2 at 5% gives me confidence in the rest of the year. Improved profitability. We delivered a step change in EBITDA with 44% growth for half one and LLTM EBITDA of £363 million. De-leverage. Our leverage is down to five times, which is 1.7 turns better than just 12 months ago. and down from 5.7 at the end of 2024. In terms of the detail, you can see on slide five, total revenue for the half was rather poetic 888 million pounds, which was up 3% as reported and 4% in constant currency. On adjusted EBITDA, we delivered 166 million pounds, which was at the higher end of the range we gave with our trading update and up a fantastic 44% year over year. We talked last year about the poor first half performance with additional marketing that failed to deliver, so we knew we had an easier comparative, but the strong growth in EBITDA is reflective of a real step change in profitability, which I'll talk through shortly. In UK Online, we saw revenue down 1% for the half, with Q2 showing sequential improvement in both absolute terms and growth rate, but still only flat. Per will walk through in more detail, but one of the reasons for the lower revenue growth is our evolving marketing approach, particularly on the 888 brand. Historically, 888 had very poor marketing returns in the UK, and we're addressing this now, which is acting as a bit of a drag on revenue, but aiding significantly better profitability. These marketing changes, as well as optimising our bonusing and delivering structural cost savings in OPEX, mean that adjusted EBITDA was up 16 million pounds or 37% year over year. In retail, the business returned to growth for Q2, which was the first full quarter with all our new gaming machines rolled out. However, for the half as a whole, it was still down 2% driven by sports, which is primarily affected by market-wide issues, such as the racing industry being under pressure and wider high street footfall dynamics. We're also addressing some competitive gaps in H2, which, along with the good performance of the gaming machines, is driving our confidence in the second half. On EBITDA, we saw the impact of negative operating leverage for the half, along with higher fixed costs from national insurance and national living wage changes, which offset savings we have made. The international segment continues to perform really strongly, with revenue growth of 13% driving excellent operating leverage. which has been helped by structural cost reductions and more efficient bonusing and marketing. As a result, EBITDA more than doubled to £86 million and made up over half of overall group EBITDA for the half, highlighting the improved diversification we're getting from the international growth. Central costs increased slightly, with most of the cost reductions landing in the divisions, meaning inflation and investment in capabilities added a little bit to the costs here. In the appendix to this presentation, there are the usual additional slides covering quarterly performance, as well as the reported results, including details of any exceptional items and adjustments. Turning to slide six, these charts focus on our adjusted EBITDA development. On the left-hand side, the bridge walks through how we went from 115 million EBITDA in half one last year to 166 million in half one this year. You can see the key movements here being the revenue growth, but also the gross margin improvement. This has come from online, both UK and international, and is driven by a combination of the actions we've taken in the past year or so since Per and I joined. We closed US B2C. This means saving on the market access and other fees that went through cost of sales. We have migrated more of the business onto the in-house platform, including Mr. Green in all international markets. as well as utilizing more of the in-house sports trading platform. These are driving revenue share savings from removing third parties. And crucially, as we've talked about before, we have really optimized our use of bonuses and free bets, focused on being more personalized. We pay tax on gross revenue in most locations, meaning this reduction in bonus spend drives an improved effective tax rate on our revenues. Marketing was £12 million lower year on year, and we drove 4% revenue growth despite this, evidencing the better returns we're getting this year. And finally, our cost base is £4 million lower in the year despite NIC and living wage headwinds, along with the underlying inflation. This is due to the direct actions we have executed to take costs out of the business, and this is something we continue to do. We know there is more to go at. On the right-hand side, we show a similar bridge to what we had at this point last year as well, walking through how we go from the 166 million we delivered in the half one to what we need to deliver to meet our guidance for the year, which remains unchanged. We know our marketing will be lower in the second half, in line with a normal seasonality profile of marketing, despite being a bit more balanced this year as we've got greater control over the marketing functions. Our total cost base is expected to be higher in the second half, with a full impact of NIC and living wage, along with recent increases in tax in Romania, and our plans for significantly improved staff bonuses if we hit our targets. We've also identified some additional cost savings that should deliver £5 to £10 million benefit in the second half. As you can see on the bridge, though the main driver of the half on half improvement is the operating leverage we will get from the revenue growth, which will deliver 40 to 50 million pounds EBITDA. I won't talk at length about this here as Pair will cover a lot of the plans for half two and the improvements we've made and are making, particularly on product. But I'm confident we have some really clear plans to drive growth in the second half. And the improvement from Q1 to Q2 shows me we're heading in the right direction. One final point worth calling out is that we have some flexibility in that we have more closely aligned wider remuneration to business performance. So if we achieve our targets, there is an enhanced staff bonus. Clearly, to the extent we might miss any revenue growth, that would be self-correcting through the bonus to some extent, meaning we have strong confidence in our ability to grow EBITDA. Turning to slide seven in our cash flow, This is our usual bridge, taking you from opening to closing cash, excluding customer balances. Just a few things worth calling out here. On tax, we received tax refund earlier in the year, and you'll recall at full year results, I'd said this is why we didn't expect much cash tax for the year as a whole. On working capital, we expect this to be positive for the year, one of the drivers being the second half growth I just discussed, which should drive positive working capital. The first half was slightly negative, driven primarily by timing of PSP receivables. Exceptional costs for the half of £13 million in line with our plans, and we continue to monitor the cash cost of exceptional items closely to ensure we're getting strong ROI on any of the spend. Interest was in line with the £175 to £180 million guidance for the year as a whole. We repaid £14 million of the RCF during the first half, and other represents the ongoing amortisation of the dollar term loan, as well as some additional funding for 888 Africa, and a £9 million translation effect from movements in foreign exchange. You can see on the top right table how the growth in LTM EBITDA has delivered significant deleveraging in the period. While net debt was broadly stable, we are balancing reinvestment to drive growth, But as that growth comes through and as exceptionals reduce, we remain confident in our ability to drive strong future cash generation and hit our fiscal 27 target of less than 3.5 times leverage. Turning to slide 8, and just to close this section with some comments on current trading in our outlook for the year. July was a relatively flat month. but this was expected as we lapped the end of the Euros, and July is always a quiet month, so it's difficult to extrapolate anything from that. We have seen a good pick-up in August as the football returns, and with the Premier League starting this coming weekend, we're seeing really strong engagement on our new free-to-play game. Underpinned by the continued growth in gaming, retail cabinets performing as planned, and a strong product pipeline for the second half, I remain highly confident we can achieve our plans and our guidance for the year is unchanged. We should end the year below five times leverage and remain confident in our medium-term targets and delivering the VCP. I'll now hand back to Per to provide some details on our strategic progress this year and the plans for the second half. Thanks, Sean.

So turning to slide 10 with a quick reminder of how we're going to deliver the value creation plan and our strategy to execute on this. Hopefully, this is familiar to many of you now. The data strategic framework is in the appendix, but this slide summarizes what it means across the key areas of what we will do, how we will do it, and where we will do it. They've already completed Transform This Business. business performing the way it should. It is clear to me, though, that the strategy is working. They made great improvements in many areas, and the financial performance has started to evidence that now, too. They're committed to driving value for our shareholders. Turning to slide 11, and while Sean has covered a lot of this already, I wanted to start with the evidence of what we are doing, which is essentially delivering what we said we would. Number one, drive sustainable revenue growth. I am delighted to report a fourth quarter of growth and Q2 being at 5%. Delivering growth while simultaneously taking significant costs out of the business and transforming the ways of working is not easy. So I'm pleased that performance is driving across all the divisions. Number two, improve profitability. This is clear evidence of the step change in profitability. We also know there's still more to go for, and we are laser focused on driving further operating leverage. Finally, number three, deleveraging. 12 months by 1.7 times to now sit at five times. This has been driven by the EBITDA growth with careful reinvestment, meaning net debt is broadly stable, and this trend will continue for a little while longer while we transform the business. We are committed to bringing the leverage down, though, and remain on track for our 2027 target of below 3.5 times. Turning to slide 12, and focusing on how we are driving execution. We break this down into three areas where we are aiming to create long-term competitive advantage, and we made good progress against each of these and a half. We have also been executing a short-term turnaround in performance. And while we are back to growth and have substantially improved our profitability, this relentless focus on turnaround does not stop. We continue to balance our approach to long-term investment and see plenty of areas where we can execute quick wins. On our drive for operational excellence, we have made significant progress in our operations 2.0 strategic initiative. It's all around our AI and automation efforts. In H1, we automated a lot more custom journeys to improve the experience and reduce the need for manual interventions. This includes play safety features, as well as account reviews, withdrawal requests, and enhancing our chatbot. This investment is driving long-term capability and is a key in our ability to both personalize and improve the customer experience, as well as continue to take costs out of the business. These benefits will compound and drive high margins over time. On the marketing side, we are transforming our capability, including new leadership. We have evolved our approach with data-led improvements to our media mix, measurement, and targeting, all supported by our customized cycle management strategic initiative, which has delivered some exciting initial benefits from personalized marketing and improved segmentation. This is an area we continue to focus on. with further improvements to come in the second half as we improve our real-time data capabilities and expand the platform integrations. A winning culture is all about our winning organization strategic initiative, which links in with operations 2.0, but it is all about transforming our ways of working. In the first half, we continue to execute changes to take costs out of the business and streamline our decision-making processes. This business was two slow tankers coming together, and we have had to make and will continue to make drastic changes to make sure we are as efficient and effective as we can be, putting the customer at the heart of our operating model. Leading brands and products. Our customer value proposition strategic initiative sits at the center of our strategy, and everything we do should align around delivering what our customers want. This comes from brand and product, and the first half, we made significant progress here with the launch of the new Willam Hill customer value proposition. If you use our products, you will have seen a new look and feel in our color scheme, but the CVP goes far beyond simple look and feel. It impacts everything we do from price and promotions to product and customer experience. Customer research is informing everything we do, and we are getting really clear about the customers we want to win. changing our product capabilities with much more focus on product rollout and improvements and ongoing focus on simplifying the UX across our products. There have been a lot of exciting new features in H1 and plenty more to come, but I will cover these in more detail over the next few slides. Turning to slide 13, covering the part of the value creation plan and the focus on our core markets, I will start with retail. This was a big half retail as we successfully complete the rollout of 5,000 new gaming machines. Now, I'm pleased to say they are performing in line with our expectations, and we are taking market share. You can see from the chart in the middle that now we have the first full quarter of new machines without the temporary disruption of installation, and growth rate per machine per week is around 15% higher than it was on the old machines. This should continue to drive growth through the second half. We are aware that we have lost a bit of ground on the sports side. This largely reflects historical underinvestment on the digital side of things, where we are still operating some very old SSBTs and our user experience on them is not up to par. We have been addressing this through some UX improvements, and in the second half, we plan to replace a significant number of SSVTs, as well as adding some additional ones in select locations to close the density gap we have with some of our competitors. Along with the changes we are making to pricing, promotions, product, and overall in-store experience, including additional channels to expand our content offering, and the store refresh program for select locations, We are confident that retail can continue its growth curve despite tough high street conditions. Retail profitability is down in the first half. Some of this reflects product mix with the new cabinets driving high revenue share and duty charges. And some reflects the additional cost headwinds from national insurance and national living wage. As a result of those cost pressures, we closed a small number of shops in the first half and will continue to keep its state under close review to show we are not carrying a tale of loss making shops. We also continue to look at the cost base where possible to drive efficiency, but the real change will come from the top-line growth where we can generate strong operating leverage on the fixed costs. Turning to slide 14 and Duke and Ireland online. Revenue was broadly flat for the half, and it's fair to say we were somewhat disappointed by that. Do we want and expect more? Absolutely. However, we are not here to chase growth for growth's sake. We are focused on profitable growth. And for this reason, I'm okay with a flat top-line performance in the first half, because we're undergoing a transformation, and we have delivered a step change in profitability. The overall of the marketing function, the shift in strategic performance, The optimization of bonuses. All of these are key factors in driving up our contribution. And with structured cost reduction on top, we are able to report 37% growth in EBITDA for UK and Ireland online. One of the key features of the UK is our multi-brand approach. And the business has struggled in the past to get this right. You can see on the chart here, the revenue growth is being driven by William Hill, and particularly William Hill Vegas, which is performing really strongly. Overall for H1, William Hill was plus 3%, and 888 was minus 14%. Within this, William Hill Vegas was plus 12%, so we believe as a brand, it has clearly taken market share, and this has been supported by the relaunched app and improved CX and UX. The reason for the decline in 888 is our focus on profitable growth. And you can see this on the slide with revenue down double digits, but contribution up double digits. The reality is that the returns on market spend for 888 simply did not stack up. And we have evolved our approach here as part of our overall market transformation that I mentioned earlier. In the UK, we have also onboarded a new brand and media agency and renegotiated some of our key channel partner agreements. Willam Hill is a strong brand and have a good handle on what we needed to do, which address the product gaps that have arisen in recent years. We have done a great job here, and the Willam Hill products are now among the best in the market in terms of features and UX, and we continue to drive ongoing improvements here. During the first half, we relaunched new football and horse racing pages, with much more simple and slick designs and features such as the pre-built poplar actas on horse racing. For the start of the football season, we are improving the bet-builder and cash-out offering, focusing on our ACCA and bet-builders, including our new ACCA booth promotion, and supporting all of this through the launch of a fantastic new free-to-play game called Final One Standing, which mirrors the popular game format of picking one team a week to win. The season hasn't started yet, but we have seen some great engagement on this red-linked sign-ups by the kickoff, and we are really excited about seeing this develop through H2. On the sports trading side of things, we have improved underlying margins through a new pricing risk management approach and seen a significant increase in automation and improved product breadth and quality. On the gaming side, we relaunched a new Willam Hill Vegas app, launched Bonus Drop Boost as an exciting daily engagement feature, and we have some further UX improvements to come in the second half. We also recently launched Jackpot Drop, which is a unique in-house speed jackpot feature, enabling players locked in for a small stake across select games to be in with a chance of hundreds of daily jackpots dropping all the time, from small to big ones. This is a shared feature across 80 days, too, which enhanced the liquidity and the jetballs on offer across both brands. So, We Are Here is growing and has a clear new customer proposition. Our brand CVP, and this is supported by ongoing product improvements. 80 days is next on the journey to a new brand CVP, and we'll be looking to launch something towards the end of the year. So, for now, I will stay quiet on what that might look like. On the product side, we continue to make improvements such as jackpot drop, as I mentioned, as well as UX improvements, particularly for payments, and adding free spins across a wider range of suppliers. The main focus for 888, though, has been fixing some of the fundamental issues, particularly poor marketing returns. We have recently changed the management of the brands to separate teams so that 888 can get the dedicated folks that need to return it to profitable growth. Overall, we're excited for the potential of the UK business and confident in our plan to return it to profitable growth. Turning to slide 15 and the international segment, a strong first half performance for our international division and led by our core market, which as a group are up 22% for the half in constant currency. You can see on the slide here that all markets are growing, and while Romania managed from the position of winner, they have seen fantastic growth in the 80-day trend here. Importantly, as well as the strong revenue growth, it's still a bit profitable. You can see on the right-hand side, we have seen fantastic growth in contribution. As Sean said earlier, when coupled with cost reduction, this means EBITDA for the division more than doubled. If we go to market by market for a quick summary, Italy, we are a growing share led by 888 Casino, which continues to outperform local brands and even the omnichannel operators with a strong brand and the product resonates well. We made further product improvements in the first half, including bolstering our casino content library with additional new suppliers who are successful in Italy, as well as rolling out our own Section 8 library into Italy for the first time. On the sports side, we migrated Wilhelm Hill onto the Exalogic platform, and this has led to some initial disruption through the migration phase, and it's one of the main contributors to the international sports revenue being down. While this was to be expected on any migration, we understand the gaps, and a number of improvements have already been made ahead of the start of the football season, and have seen improving performance each week recently. We were successful in our two license applications, and we believe there is further opportunity in Italy once the relicensing process is complete later this year. Spain, we are still growing well, even by gaming again, but slightly losing share based on Q1. The Q2 regulated data is not out yet, but we saw slight improvements from Q1 to Q2. The reason for the share loss is partly the market growth being driven by sports, but our sports project is not up to scratch, particularly William Hill, with an 888 brand gaining share on the gaming side. We have focused on the UK first for product improvements on the open bed side, where we are getting better return from this, but we have plans in place to address some of the gaps in Spain across the second half. In Romania, we have doubled the business both through acquiring Winner, but also really strong growth in the 888 brand. The 888 players have now been migrated onto the Winner platform, and this is expected to drive further improvement in the second half. The Winner management team are doing a great job running the whole Romanian business now. And while the recent tax increase was unwelcome, we are well placed with higher scale now to absorb this and continue to grow profitably. In Denmark, Mr. Green is our main brand and one of the strongest brands in the market. During Q1, it was migrated onto the 888 platform. While we saw some initial minor disruption as expected, particularly on sports, Q2 was up 26%, and the in-house platform is driving strong engagement. We also launched a localized version of the free daily wish wheel in Denmark in half. We are now seeing record performance in Denmark post-migration. In the rest of the world, we continue to optimize for profitable growth. And while not core markets, they still get investment where we see a strong business case, such as the relaunch of Swish as a local payment method in Sweden, which is showing possibly early signs. They're almost complete with our US B2C exit now. And while we see a mixed bag of results across the different markets, the portfolio of rest of world is back on stability on revenue with high profitability. which is enabling the core markets to drive overall growth. Finally, on slide 16, with our conclusions before taking your questions. We continue to see the impact of the transformation and reset we have undertaken, with the business continuing its growth trajectory As well as improving short-term trading trends, we have been investing heavily behind our strategy, focusing our resources on our core markets and investing in our long-term capabilities. We have great brands and leading positions, which coupled with our clear strategy and focused executions means I'm confident as ever that we are well-placed to deliver our value creation plan. Improved Q2 momentum and our strong pipeline of product improvement and Operation X initiatives meanwhile reiterating our guidance for 5% to 9% revenue growth and at least a 20% EBITDA margin in 2025, leading to material deleveraging. With that, I would say thank you for your continued support, and we are ready to take your questions.