For the three months ended March 31, 888 announced record quarterly net revenue of $94.4m, up 25.4 percent year-on-year and 3.6 percent sequentially from the previous record of $91.1m achieved in the final quarter of 2011.
While the group’s flagship casino product followed on from a successful 2011 by registering 26.3 percent year-on-year growth in net revenue to $42.2m, it was poker that caught the eye with net revenue of $21.2m, up 87.6 percent year-on-year and 14.6 percent sequentially.
Tuesday’s interim management statement (IMS) highlighted an 87.4 percent increase in the number of customers active on both the casino and poker platforms to 566,400, “driven by successful new customer recruitment and marketing initiatives”.
A follow-up note to investors from analysts at Deutsche Bank stated that 888’s poker vertical continues to show “above market growth”, adding that “the group’s strategy of focusing on more social poker players continues to more than pay off”.
The above chart shows the extent to which 888’s customer recruitment efforts have driven new traffic to the poker and casino platforms since the third quarter of 2010, delivering compound quarterly growth rates of 23.3 percent and 20.8 percent in poker actives and casino actives respectively over the last 18 months.
While sustained growth in actives has tended to correspond with declines in average yields per customer, especially in casino, the latest quarterly figures suggest that the firm’s revenue per active player in the two verticals may have reached a plateau.
Quarterly poker yields per customer have settled between $50 and $60 in each of the last six quarters, while quarterly casino yields per customer have equalled around $185 in each of the last three quarters.
In terms of current trading, 888 management reported a “strong” first three weeks of the second quarter, with average daily revenue up 1 percent quarter-on-quarter and 26 percent year-on-year.
Ivor Jones at Numis Securities told followers that inclement UK weather “has probably helped to delay the start of the normal seasonal slowdown in trading”, before noting that the Euro 2012 football tournament in June would likely have a negative effect on the final second quarter figures.
With 888 CEO Brian Mattingley having flagged “significant growth opportunities offered by the liberalisation of new markets” in his comments accompanying the announcement, Peel Hunt analyst Nick Batram wrote: “The risk to forecasts look very much on the upside but the impact from Euro 2012 and the Olympics is uncertain as is the timing of newly regulated markets.”
Attributing 888’s “dramatic improvement in fortunes” to “a refocusing on the core as opposed to a radical restructuring”, Batram added: “The improvement in the business is unlikely to have gone unnoticed by potential partners in emerging/newly regulated markets – particularly in the US… 888 is clearly a business on the top of its game and, with a clearly focused management team, we believe that there is much more to come.”
888 data can be found here.