Key Numbers
Group revenue up 3.3% and EBIT of £14.3m down 22% YoY. UK Retail net revenue up 4.3% on 4.8% fall in OTC stakes, 50bps fall in GWM, and 12% increase in Machine Gross win. Online sportsbook net revenue is down 31.5% due to 28% increase in amount staked, 18% increase in actives, and 250bps fall in GWM. Online gaming net revenue is up 13% and actives is up 34%.
Analysis
The GWM problems were much expected but it is good to see growth continued online. Probably the most encouraging point though is just the general tone, Mullen sounds resolute on his first outing as CEO. Obviously, there is a lot of stuff going on behind the scenes but I am starting to feel more positive. Probably a bit early to jump in but I think this company will be one of the most interesting ones to watch over the next 12 months.
Introduction
Ladbrokes has been having a tough time recently. Every year, competitors go from strength to strength but Ladbrokes just look weaker. Ousting Richard Glynn late last month was a big change. Glynn was totally ineffective and had completely lost investor confidence. Jim Mullen is his replacement, he came to Ladbrokes in 2013 to lead up the digital division after a successful spell in the same role at William Hill. Mullen's first move, announced yesterday, was to put the Irish retail business into receivership. Hopefully this is a sign of things to come and Mullen is going to tackle some of the big issues plaguing the business.
Online Growth continues
The big concern with Ladbrokes has been online. William Hill went headfirst into the online market in 2008 and is now far ahead, Ladbrokes really didn't start to deal with the online business until 2013. Partnering up with Playtech, as William Hill did in 2008, has been the first step and this strategy begun to show growth in the second half of last year.
Revenue fell significantly in the online business this quarter. Gross win margin was way down but this was largely expected. I think investors should take this in their stride, swings in GWM happen and this is part of the business. As GWMs are particularly small online though, this swing has proved particularly damaging.
Either way, I suggest that investors focus in on the changes in actives and amounts staked. This is what is going to determine the long-term success of…
