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.

Thanks for the question. We... We originally said that we'd see an impact of 125 to 130 million impact. I think that's going to be slightly lower now because we've reduced our revenue expectations in the UK. And we're standing today by the 50% mitigation that we called out originally. We're expecting also to see market consolidation. We think that the long tail of players will get hit disproportionately hard by the tax implementations. And that will cause us to improve our market share. I mean, on the first 30 days, the truth is that we've not really seen any impact. And, you know, as I said in our performance summary, we are pleased with the way UK, particularly UK Online, is performing. And so we really haven't seen an impact to date at all.

Thank you. Next question is from Ted Oren Clay from SBC. You mentioned challenging conditions on the high street affecting retail performance. Can you shed any light on any specific challenges affecting the sector?

I mean, we do see, I mean, first of all, thanks for the question. We do see the general macro trends as we all see when it comes to digital versus retail, and that is when it comes to leisure spend. There is the cost pressure. into the sector. But as we outlined in our report today is that we have done a very in-depth review of our retail estate. And as we outlined, we identified 230 shops that we are closing. But what is to say that we have some fantastic plus 1,000 shops that are providing excellent service experience entertainment to our customers and obviously with this more efficient real estate retail estate we'll have a sufficiently more improved long-term sustainability in terms of cash regeneration and profitability thank you the next question is from re prior from prior capital ai developments in the statements and very positive

Is it the biggest benefit to revenues or costs?

Thanks for the question. It's a great question. I mean, we are very focused and very determined to be an AI-first company in the best interest of the customer and of shareholders. And over the last couple of years now, we have invested into, you know, intelligence automation and AI, in particular, organic AI. And if you look at the benefits that we have seen, that is accelerating as well. Initially, we have seen that the primary benefits have been in terms of cost-efficient effectiveness. But more now, we see also the revenue benefits coming through, not least in terms of how we are addressing customized cycle management, but also how we do trading in terms of the sportsbook. But as of today, it is clearly the cost effectiveness where we have seen the benefits.

Thank you. The next question is from Julia Brandstein, which is from Tresdor Investment Management. Hi, could you please confirm how much of the 36 million working capital outflow in FY25 relates to Austrian penalties? Could you break down the rest of that outflow?

So, just to clarify, none of the working capital outflow is due to Austrian duty payments. They're not penalties. Just to be clear, of the 50 million outflow, there are probably two key things to explain. The first is the normalisation of payables. which is the main impact on working capital. So, you know, expect to feel one-off benefit from payables in 2024, and with that moving the other direction in 2025, that's now normalised, and we don't expect any more impact of that in 2026. On top of that, there are more than actually 60 million of just one-off. Those one-offs are our exceptionals, and the exceptionals really are a mixture of platform investment and the cost to achieve our transformation program, and so redundancies and other things. And then on top of that, you've got several one-offs, things like the payment for the Italian licences and the deposit that we have to put down for those Italian licences. And then there's Austrian duty. So Austrian duty in year in 2025 was 8 million. So that gives you a breakdown of that kind of 50 million outflow. But just to reiterate on the question, none of the Austrian duty payment was in working capital. It's not a working capital item.

Thank you. The next question is from David Bruhan from Goodbody. Are you seeing any reduction in the cost of media assets in the UK as operators mitigate the UK tax increase through reduced marketing?

So, thanks for the question. We are yet to see any material changes to the cost as such and the price points. What we do see, though, there is a shift in terms of the media exposure and the media spend. where you see the long-tail operators reducing spend and being absorbed by the tier one operators. But we are still to see a material impact on the media pricing as such.

Thank you. A follow-up question from David. How are you preparing for the upcoming World Cup? Are there specific product improvements planned in different markets? And how much should a World Cup add to the revenue for the year?

So, you know, World Cup coming this summer is a fantastic, fantastic opportunity to deliver our products and services to our customers. I will not here today say that, you know, what we have in our back pocket when it comes to delivering an excellent service to our customers. But absolutely, we are planning for it. We will be ready for it. And we will, for sure, deliver a fantastic experience and proposition to our customers.

Thank you. Our next question is from Scott Rudd. Have you had any further discussions with government about the impact of black market operators and how they are responding to the increase in black market activity?

You'll remember that we called out when the budget happened that black market was a real risk to the UK market. We still absolutely believe that. I think the government put aside 26 million in order to counteract that. Clearly, that's almost nothing compared to the enormous resources of the black market. So we've been having ongoing dialogue with them to strengthen what they're doing about the black market. And I think there are lots of levers at their disposal to do something about it. So yes, it's absolutely an ongoing discussion that us and the BGC are having with government to strengthen the response.

Thank you. Just a reminder, if you'd like to ask a question, please do so by typing it into the question bar at the bottom of the screen. The next question is from Nigel from Alexander James Financial. When will we start to see any shareholder value, since yourself and Per have joined The share price has dropped significantly and debt has increased. Are we ever going to see debt repaid and more shareholder value?

So being a shareholder myself, I can reassure you that we are absolutely, absolutely focused on delivering shareholder value. Over the years now, as you have seen, we have had two years where we had the privilege to manage this company. As you have seen today, you know, after years of decline in terms of revenue profitability, you know, we are back to growth. We have substantially improved and expanded the EBITDA margin, and we are dead averaging. That is what we can control. That is what we are focusing on, you know, driving profitable growth. expanding the EBITDA margin and the leveraging. And we will continue to do that. It's the absolutely key three pillars of our verification plan.

Thank you. We've got our next question from Giovanni Maria Parlangeli from Bank of America. How are you positioned against the rise of new players in the betting market like Polymarket or Kalishni? Are you seeing the turn towards those players? How do you expect to defend as they capture a big share of the market?

Hi, it's James Vinnie here, Investor Relations. I'll take that one. I mean, really, they're very US-focused. Clearly, Polymarket or Kelsey would be classed as a betting product over here, so they don't have a license. We've got the Betfair Exchange, which has obviously been around for 20-odd years now. So, don't really see those as a big issue in the UK, and clearly, we're not in US B2C, so less of an issue for us.

That's great. Thank you, James. So, just a reminder, if you'd like to ask a question, please do so by typing into your screen that's there. And James, I think we've got no further questions at the moment. Sorry, we just have one further question there from Nicole Mesto from iGaming Business. Do you expect your revenue mix to change as a result of UK tax impact online and how much of your online revenue does the UK account for today?

So, no, I wouldn't expect our mix of revenue to change as a result of tax within the UK. I don't know whether that's the question. I expect the split between sports betting and gaming to stay the same, driven by other factors. We were really clear in our mitigations that we would take the fire hose, as we think of it, of product development and marketing and point it much more strongly at international. Frankly, because international is now much, much higher margin than UK markets. And so we've been doing that over the course of Q1. We'll continue to do that over the course of 2026. And as a result of that, we'll be earning richer margin revenue going forwards.

So yeah, that's the answer. Thank you. We've got a follow-up question from Julia Brandstein. Could you please elaborate on the cost savings that are coming from the retail portfolio optimisation? I believe you mentioned the shops are breaking even on EBITDA rather than loss making. How are you expecting to achieve 11 million cost savings? Is it through reduction of central costs? Should we expect that to come through once you close down 230 shops? Or does it relate to 86 shops closing in Q4?

So look, the first point on here is We didn't mention that the shops are breakeven on EBITDA. It's not the case. We're strongly EBITDA positive in our retail estate. The second point is that there's quite a distribution within the estate. There's some very, very profitable shops, and then there's a fairly long, large group of reasonably profitable shops, and then we've got lots of And when you close loss making shops, you improve EBITDA alongside most of your other KPIs as well. Shop closures fall into several categories. There are ones that are just straightforward loss making. Then there are the ones that are basically close to other stores where we expect to salvage at least some of the revenue that we make in that shop by transferring it to another shop. And of course, that's very EBITDA enhancing because there's very little very little cost associated with transferring to another shop. So, you know, there are lots of levers to pull to improve EBITDA by 11 million and just to make sure that everyone heard that we are not breakeven on our retailers.

Thanks very much. And we can go for the questions at the moment. So maybe I can hand back to you, Per, for any closing remarks.

Yes. So first and foremost, I'd like to thank everyone that is on the call. We are very excited when it comes to the future of Evoque. We have today called out that we are continuing to see, you know, profitable growth. We are continuing to see that we are expanding our EBITDA margin and deleveraging. And that is a great, great situation to have, obviously, coming into Q1 26 with a great momentum as well. So very, very excited when it comes to welcome forward. Thank you so much, and can't wait to have this opportunity to share response next time. Thanks so much.