Ladbrokes chief Richard Glynn today shrugged off a 39% fall in digital profits, saying he was confident the division would rebound in the second half of 2013 following the relaunch of its sportsbook and mobile platforms.
Glynn said the migration of all UK customers to the much-delayed new sportsbook by the end of Q1 and new mobile platform by the end of Q2 were “important milestones”, adding that: “The confidence we have that these will be delivered allows us to focus on customer yields, on our CRM capabilities, which by itself, offers probably the biggest opportunity for this business.”
The Ladbrokes CEO was speaking to analysts in the wake of the company unveiling a 39% fall in digital operating profits in 2012 to £31.8m from £52.4m the prior year, as costs soared 31% to £144.8m due to heavy investment in digital infrastructure and start-up costs in the regulated markets of Spain and Denmark. Net revenue from digtal grew 9% to £178.1m on the back of a 26% improvement in sportsbook revenues to £77.8m, which offset a broadly flat performance from casino - £75.8m – and 23% falls in revenue from poker and 3% from bingo.
Glynn said that despite the delays in its sportsbook, the group’s revamped digital platform - for which Ladbrokes earmarked £50m of investment two years ago - was already displaying signs of turnaround. “We’ve shown we can attract people to our sites, with digital actives up 50% to now over one million”, said Glynn, who added that the company’s strategy to give customers “access to ever increasing amounts of compelling gaming and betting content”, by bringing gaming suppliers other than Microgaming onto the platform, was also delivering revenues.
“The IGT games, which we introduced only in December 2012, now account for 25% of the revenue mix from slots. In fact, games we introduced in 2012 alone now deliver three times more gross win than all the content we delivered to our customers previously,” claimed Glynn, who said Ladbrokes had
In mobile, Glynn said Ladbrokes would focus on introducing multiple, dedicated betting and gaming apps, “without the need to browse”, such as the Kammy Football App, and apps for in-play, coupon betting and horse racing.
The Ladbrokes boss also revealed that the company had successfully protected their sportbook from “sharp customers, or probably more accurately, their algorithmic robots, seek[ing] out trading inaccuracies” by having “strengthened our defences materially and improved our trading capability”.
According to Glynn: “By doing this, profitable business - which accounted for probably 20% of turnover in 2011 - now accounts for approximately 5%. Since August last year, we’ve reduced losses to this segment of the customer base by approximately 70% on average per week. We believe these trading improvements are sustainable.”
The bookmaker’s lacklustre digital performance was however easily offset by a record UK retail performance, as group net revenue grew 7.4% to £1.05bn and group operating profit up 8% to £206.1m. Revenue from the UK retail estate grew 18.6% to £180.7m, driven by machines growth and a run of favourable sports results in the final quarter of 2012 and the start of 2013.
Article written by Stephen Carter
