Ladbrokes Posts Q1-2016 Results

Cheltenham racing takes the shine off sports betting performance

UK online and land gambling group Ladbrokes has posted its Q1-2016 results, noting that bookie-negative outcomes from this year's Cheltenham horse racing took some of the shine off performance, but that digital operations continued to impress.
In Digital, Ladbrokes.com and Exchanges net revenue increased by 38.4 percent with strong growth in both sportsbook and gaming.
Sportsbook actives were up 27.8 percent and stakes up 35.2 percent – the ninth consecutive quarter of year-on-year growth – which coupled with improved margins at 7.9 percent resulted in sportsbook net revenue rising 59 percent.
Mobile staking increased by 57.6 percent and now accounts for 77.1 percent of sportsbook staking.
Gaming delivered its sixth consecutive quarter of year-on-year growth with net revenue up 27.3 percent and 43.8 percent more players.
In Australia, on a local currency basis staking was up 51.5 percent and revenue rose 38.4 percent driven by an 86.9 percent increase in active players. Margins were flat at 9.8 percent and net revenue increased 6.5 percent.
Overall group net revenues on a year-on-year basis were up 10.6 percent.
The group's European Retail (land) enterprises recorded net revenue up 6.5 percent.
Highlights flagged by the company included:
* UK Retail: estate wide SSBTs and focused call-to-action offers delivered football stakes +9.0 percent and gross win +87.6 percent;
* Multi-channel underpinned by colleague reward programme delivered a further 43,000 active players in Q1;
* 73 shops refurbished under first phase of targeted UK Retail capital expenditure programme
* Ladbrokes.com sportsbook delivered a ninth consecutive quarter of y-o-y staking growth, and a 43.8 percent increase in active players helped deliver a sixth consecutive quarter of net revenue growth;
* Sustained marketing and sponsorship activity in Australia delivered more players in both the active and recreational player bases;
Group chief executive Jim Mullen said the first quarter of the year had started well and was encouraging
"Results throughout the first few weeks were largely in our favour and our customer metrics have continued to be strong.
"Our focus remains on best in class customer service, superior quality of product and maximising the multi-channel potential of our business," he said, expressing pleasure at the positive reaction to the group's increased marketing and its multi-channel proposition," he reported.
"We have enjoyed record weeks across key metrics including actives and staking in digital, SSBTs and multi-channel sign ups in retail," he added.
Commenting on the bad results impacting almost all bookmaking companies from player-friendly outcomes at Cheltenham, Mullen said.
"At Cheltenham we were reminded of the intense competition with offers and pricing at levels which, in our view, abandoned bookmaking principles. We competed hard but refused to pursue unsustainable strategies and our stance remains that we will compete where we know we can get the right returns from the right customers."
He concluded: "We are currently a little ahead of our plans on key customer metrics and benefited from favourable results up until Cheltenham. However, experience tells us to expect results to normalise over time. We remain confident to deliver a result in line with our expectations."
Interestingly, the report shows that if break-out football club Leicester City continues its winning ways and tops the English Premier League, Ladbrokes has made provision for a hit to its coffers of GBP 3 million despite already cashing out for some early punters who took odds of up to 5000 to 1 against such an eventuality.
In related news, this week the UK CMA updated its administrative timetable to extend the timescale on the Ladbrokes-Coral merger until mid-May for the publication of their provisional findings and possible remedies.

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