Is the Ladbrokes Coral online turnaround sustainable?
Ladbrokes.com grew 23% in Q3 as Coral.co.uk increased by 29%, but is it just an increase in marketing that’s driving the turnaround?
It is eight months since GVC completed its takeover of Ladbrokes Coral (LCL) and by all accounts, the integration has gone much smoother than anticipated. Speaking to analysts during the operator’s Q3 financial results yesterday, GVC CEO Kenny Alexander said Ladbrokes revenues had increased by 10% annually, with Coral also up 16% in the last year.
In typically bullish fashion, Alexander said: “Quite frankly, I could say all sorts of things, but it’s the numbers that tell the story. Since we’ve done the deal with Ladbrokes Coral it has gone very well – things couldn’t really have gone any better.”
Combined, the Ladbrokes Coral business has grown by approximately 13% year-on-year and the turnaround has been particularly evident online. Revenue from Ladbrokes.com during Q3 increased by 23%, with Coral.co.uk up 29%, equating to“very pleasing” net gaming revenue growth in a tricky regulatory environment.
https://twitter.com/gamblinglamb/status/1052850387479396353
Credit Suisse analyst Tal Grant suggested that GVC may have escaped the “very bad or very negative online numbers” reported by some of its competitors because the operator was quicker to implement due diligence and KYC measures than its rivals, but Alexander refused to be drawn on that assumption.
He said: “I am not too sure what other people have been saying but we have implemented all the relevant KYC source of funds. Did Ladbrokes Coral put them in place before others? Possibly. We don’t have the complete information on that.”
Another analyst, speaking off the record, told EGR Intel that the LCL turnaround is likely due to an increase in marketing activities for both brands in the UK, adding: “Revenues are clearly ahead of expectations but the company is guiding to no change in EBITDA, i.e. offset from reinvesting to continue further revenue growth.
“I don’t follow product development closely but I’m not aware of any recent major product / UX changes so the upturn is likely a result of marketing, although I’m sure GVC would beg to differ.”
GVC’s outgoing CFO Paul Bowtell’s comments on the turnaround were interesting, suggesting that the Ladbrokes brand was in such a sorry state when it was acquired that it was easier to inspire online growth in the site compared to some of its competitors.
Bowtell said: “If you go back 12 months, Ladbrokes.com was not in a good place. In fact, it was going backwards and that was partly through some own goals through the integration with Coral and a number of other things that were going on at the time. So it is coming off the back of a weaker period a year ago and is now back to something that resembles more normal strength – it is worth bearing that in mind.”
https://twitter.com/gamblinglamb/status/1052851647720955904
It is also worth noting that bookmakers were likely still basking in the warm glow of the World Cup at the beginning of Q3, whereas domestic football results conspired against the layers in September. The remainder of the quarter could be tough.