888 Holdings plc

So, good morning, everyone, and thanks for joining us today for our full year 2025 results. I am Fredrik Ström, and I'm joined today by Sean Wilkins, our CFO. We start with the agenda on slide two, and I will start with a brief overview of the year and some opening remarks, including an update on the strategic review. Sean will then take you through our financial performance, which is consistent with the trading update we gave you a few weeks ago, as well as covering Q1 2026 performance. We will then open up for questions. Turning to slide 3, and before getting into the results, I want to address the strategic review and the context for today's presentation. As you know, following the UK duty changes announced in November, The board initiated strategic reviews to assess the full range of options to maximize shareholder value. The process has been comprehensive, including wide-ranging third-party interests. We recently confirmed we were in discussions with Ballast Interlock regarding a possible offer for the whole group, and those discussions remain active. As a result of the ongoing process, we are deliberately keeping today's presentation short and focus on the full year 2025 results and the brief trading update. We are not providing forward guidance. And just a note ahead of the Q&A, we cannot provide further information on the strategic review or possible offer beyond what I have just said. So we will not take questions on these topics. What I will say, though, is that operationally, our priorities remain unchanged. Discipline execution, driving profitable growth, and strengthening the balance sheet. With that, let's move on to the performance summary. 2025 was a year of clear strategic and operational progress. We delivered continued growth with revenue up 2% to £1.8 billion and strong momentum into the end of the year with Q4 our highest revenue quarter. Adjusted EBITDA increased 14% to £356 million, with margins reaching 20%. This reflects the structural improvements we have made across the business, including better market efficiency, improved bonus management, and a more disciplined cost base. Over the past two years, we have reshaped the operating model. We have simplified structures. we have strengthened accountability and embedded a sharper focus on customer value and returns on investment. The progress delivered in 2025 demonstrates that this reset is working. The business today is structured more efficient, more focused, and better positioned to respond to external change than it was at the beginning of this transformation. At the same time, we made further progress on deleveraging, reducing leverage from 5.7 times to 5.2 times. However, the sheer scale of the UK duty changes represents a significant headwind, and we have taken decisive actions to mitigate this. We made it very clear, and we also made it very clear in terms of difficult decisions that we've taken, including closing a significant number of stores and making further changes to ensure we have right sight of our cost base and allocate investment to where it generates the highest returns. Our initial actions are delivering the results we expected, and we are on track to deliver at least 50% mitigations of the impact in the first full year post-implementation. Turning to slide four and an overview of progress against the value creation plan pillars. We had delivered five consecutive quarters of growth up to Q4, but with operator-friendly sports results last year, it was a tough comparative to last. We are back to growth in Q1 2026, though. As you can see from the chart, this consistent return to growth marks a real turnaround from previous years. More importantly for 2025, we delivered a step change in profitability. You can see this clearly in the middle chart, where adjusted EBITDA for fully 2025 being over 40 million pounds higher than any of the previous three years. We have already covered deleveraging, but I would like to add that while we had to remove the medium-term targets following the UK duty changes, deleveraging is absolutely still our focus. We will be disciplined with capital allocation and showing focus on cash generation driving high return from our investments. Overall, while the external environment has become more challenging, the underlying trajectory of the business has clearly improved. and we entered 2026 with improved operational momentum, and we are trading in line with our expectations. I will now hand over to Sean to cover the financial response in more detail.

Thanks, Per. Turning to slide six, I'll take you through the financial performances for 2025. Starting with revenue, where the story was mixed across markets and brands, driven by the actions we've been taking to drive growth and improve profitability. In UKNI Online, revenue declined by 3%, reflecting sports down 12% and gaming up 2%. The reduction in sports revenue is driven by a combination of factors, including lapping operator-friendly sports results in Q4 last year, as well as stakes pressure from our deliberate focus on customer value over volume and the general market trends, particularly horse racing. Gaming remained resilient, driven by strong William Hill performance, while total 888 revenue in the UK was down 10%. Contribution from the brand was up 9%, reflecting our refined marketing approach as we look to ensure we're getting the right ROI before scaling up any investments. International was the growth engine for the year and performed strongly, with revenue up 9% driven by our core markets, which were up 17% combined. Within this, we had the benefit of the winner acquisition in Romania, as well as record revenues being achieved in Italy and Denmark, where we continue to take market share. Spain was broadly flat for the year, which reflects some product gaps, particularly on the sports side, as well as less effective marketing and promo spend compared to the competition. This is an area we've been addressing through Q1 2026 on the product side and continue to place real focus on improving performance here. In retail, gaming revenue was up 5%, driven by the successful rollout of the new machines. This was offset by sports declining 5% due to a combination of ongoing challenging high street conditions, as well as the Q4 operator-friendly sports results last year. Turning to adjusted EBITDA, we delivered £356 million, up 14%, and representing a margin of 20%. It's worth pausing on that improved margin, which is up 220 basis points over fiscal 24. Improving efficiency and driving operating leverage is a key pillar of our value creation plan, and having set out to achieve 100 basis points per annum improvement, we more than delivered this in 2025, even with revenue coming in a bit behind our initial expectations. There are several key drivers for this, evident across all the divisions to a greater or lesser extent. Within online in particular, our focus on promotional and marketing efficiency has driven improved gross margin as well as enabled a lower marketing ratio. Coupled with the operating model efficiencies and disciplined cost focus across the board, we are delivering on our plan. In UK and IL9, EBITDA grew 6% despite the drop in revenue, driven by these improvements to financing and marketing. International EBITDA was a standout, growing 30%. reflecting strong growth and operating leverage, together with the migration of Mr. Green to the in-house platform, and the closure of USDTTC, both big drivers in improved margins. Retail EBITDA declined 17%, primarily driven by cost inflation, with operating costs up 3%, but having an outsized impact on the bottom line, given the large fixed cost base in retail, and 1% revenue declines. During the year, we conducted a detailed full review of our entire estate to identify perennially loss-making shops and identified around 230 shops for closure, 68 of which closed in Q4 2025, with a balance set to close in Q2 2026. Closing these shops is broadly break-even from a cash perspective in-year, given closure costs, but should add $11 million to EBITDA on a fully annualised basis. Turning to slide 7 and our cash flow, the key headlines here are that we delivered $188 million of underlying free cash flow and reduced leverage to 5.2 times. However, notwithstanding that, it's fair to say that I was a little disappointed at our cash flow performance in the year, albeit a good chunk of this is just timing related. I have been indicating a small cash inflow earlier in the year, and we ended with around 50 million outflow. Some of this is just due to our EBITDA being lower than our original guidance, given the lower revenue. The remainder is primarily working capital or one-off related, with a normalisation of accounts payable following a timing benefit in the prior year, as well as starting to pay the legacy Austrian gaming tax liabilities. We are also yet to receive the Romanian license guarantee refund that we expected. CapEx was broadly in line with our original guidance and we'd expect this to come down a bit in 2026, given significant investment in AI tooling and capabilities in 2025, as well as the new leads office and some catch-up CapEx in retail, all of which we wouldn't necessarily expect to see again this year. Leases were higher due to the new gaming machines and Leeds office, but with retail closures, we'd expect this to drop back under £40 million this year. Alongside the tax refund that we received, this meant delivering £188 million of underlying free cash flow. Given the exceptional costs and interest costs, both of which were in line with our guidance, this drove a cash outflow for the year. Despite this, leverage reduced to 5.2 times as a result of a significant improvement in EBITDA. We're not giving detailed forward-looking guidance, but clearly, given the leverage profile and the change in UK duties, our focus for 26 is very much on cash generation and balance sheet strength. Turning to slide 8 and to wrap up with an update on Q1 2026 performance. The year has started in line with expectations, albeit a slightly different profile to what we expected. UK Online is performing well and better than expectations, driven by gaming and the continued strength of William Hill Vegas, which has been seeing record revenue levels. 888 continues to decline in revenue, but overall UK and I Online is seeing double-digit contribution growth in Q1, an important start to the year considering the new duty rates now applicable. International is not doing as well as we hoped with a mixed bag across markets. Italy continues to go from strength to strength and is up 20% in Q1. And Denmark continues to see really strong growth, although it will begin to lap the platform migration soon. Where we're not as happy is Spain and Romania. In Spain, we continue to lag the markets. but we've been making important improvements to the product through Q1, especially William Hill Sports, and with further investment in product and marketing reallocated from the UK, following the duty changes, we are hopeful of a return to better performance soon. Remedia performed very strongly in 2025, but since the tax changes there in Q3 last year, coupled with a recession, the whole market appears to be struggling. Like in other markets, Romania is seeing strong black market growth following tax increases, and as regulated operators, this is hurting us. We have to cut back on marketing and promotions to protect profitability, and the black market doesn't, so this impacts revenue. In particular, among our higher-value players, we have seen a disappointing drop-off in performance, but we are working hard with local teams to make improvements. Retail is seeing good like-for-like growth and market share gains, but given shock closures, we do expect to see reported top-line performance a little weaker, so improved profitability. Overall, a solid start to the year with performance in line with our expectations. With that, we'll move on to take any questions. As a reminder, we won't take questions on the strategic review, given the restrictions on what we can say.

Thanks very much for that, Sean. Just a reminder for people, if they would like a question, please do type it into the question bar at the bottom of your screen. The first question is from Robert Hucot from Vets Play Capital. What do you see in the early days after higher tax implementation in the UK market? Impact to date is stronger than you expected.