Online business stabilises at William Hill

Online business stabilises at William Hill

Tuesday, November 15, 2016 Posted by Andy McCarron
Revenue declines reversed on sports bounce

The analysts professed themselves “broadly” reassured by the William Hill trading statement this week, suggesting the company’s online operation had stabilised, albeit with the caveat that it is likely still losing market share.

In the third quarter, the online sportsbook enjoyed wagering growth of 4% while total online wagering rose 6%. Total online net revenue also rose 4% driven by an 11% rise in sportsbook net revenue which helped overcome a 2% decline in gaming net revenue. The company said the sportsbook growth was due to enhancements in the mobile offering over the period.

Interim chief executive Philip Bowcock said the improvements showed it was the “right time to invest in online” and to this end, it is dedicating £15m of marketing efficiencies identified by an internal review that will now be reinvested in promoting its online business.

At a recent online teach-in with the analysts in October, William Hill said the turnaround in the online business would likely take two years. The event took place as the company sought to offer reassurance the problems identified at the time of the profit warning earlier this year were being addressed.

Analysts at Barclays suggested the third-quarter figures provided further evidence of the “green shoots of recovery” in online while Gavin Kelleher at Goodbody said the online performance was a “small move in the right direction.” However, Paul Leyland, founding partner at gambling consultancy Regulus Partners, noted that set against the performance from rivals Paddy Power Betfair and Ladbrokes Coral, where the third-quarter revenue rises ranged between 15% and 32%, suggested William Hill was suffering an “absolute decline” in the UK in particular and “implies continued market share losses.”

“William Hill is refocusing on more valuable customers, improving content, and driving efficiencies, but achieving even market levels of growth (circa 20%) will be a considerable challenge given competitor momentum,” he said.

There was more general caution around the retail side of the business. The company said total retail net revenue was flat year-on-year, with a declining over-the-counter (OTC) figure of 6% being cancelled out by a matching rise in gaming machine net gaming revenues.

The consensus analyst view is that the UK high-street bookmakers need to be wary of what the recently announced UK Triennial Review might hold in store.

Kelleher at Goodbody said regulatory concerns would “continue to weigh” on William Hill’s recovery story. Leyland at Regulus said the underlying trends for the retail business “remain concerning.”

“The Triennial Review is likely to have a material impact on the only significant area of the business that seems to be working,” he added.

In Australia, the company said trading continued to improve with amounts wagered rising 14% on a constant currency basis and net revenue rising 27%. The company said it had introduced a new in-play option for its racing offering in tie for the recent Spring Carnival, however, like the rest of the corporate bookmakers it has now been forced to end its other in-play offerings following new rulings from the regulator in Northern Territory.

In other news, the company also announced new appointments to its board including John O’Reilly, former online chief at both Coral and before that Ladbrokes, and Mark Brooker, who was most recently chief operating officer at Betfair before it merged with Paddy Power.

Totally Gaming says: William Hill’s road to recovery will not be a straight path. Operational issues are tricky enough, particularly in online where even limited forward progress means the company is effectively falling behind the pace. But the Triennial Review now looms and it is unlikely to spell good news for the retail sector.

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