888 has reported a 14% year-on-year uptick in annual revenue to $972m in a post-close trading update for 2021.

The London-listed operator’s B2C division provided the bulk of revenue at $934m, up 15% on last year. This was primarily driven by a 24% rise in casino, compared to just 4% for sports betting after the vertical was impacted by regulatory changes in the Netherlands.

B2B revenue came in at $38m amid an annual rise of 8%.

888 said 74% of revenue came from regulated and taxed markets in 2021, while a year of strong performance in the UK, Italy, Romania and Portugal was partially offset by declines in Germany.

Q4 trading was less positive after the operator reported revenue of $214m between 1 October and 31 December.

This was in line with board expectations, but still marked a year-on-year decrease of 16%, albeit on a strong comparative period in Q4 2020.

In the US during Q4, 888 said positive initial progress following the launch of its SI Sportsbook brand in Colorado had been partially offset at a revenue level by the heavy cost of marketing promotions to drive customer activity – a familiar story for US operators.

888 CEO Itai Pazner described 2021 as a year of outstanding strategic progress for the business after it acquired William Hill International and sold its bingo business for $50m.

“We continue to execute our plan to build a global online betting and gaming leader,” said Pazner.

“In addition, we successfully launched SI Sportsbook in the US shortly after signing a long-term brand partnership and began operating 888sport under a new licence in Germany, all using our in-house sports platform.

“I am pleased to report another year of record revenue alongside these important strategic milestones, delivering double-digit revenue growth despite a very tough comparative period.

“This performance reflects the continued success of our data-driven investments and execution against our product-leadership focus that delivers ongoing improvements in the usability, quality and safety of our sports betting and gaming products,” he added.

The share price dropped just over 1% following the trading update to 265p per share at the time of writing. Despite the dip, investment banks remain bullish on future performance.

Both Numis and Peel Hunt have reiterated their Buy rating for the stock, which they believe to be currently undervalued due to investor concern over the regulatory fallout of the UK government’s review into the 2005 Gambling Act.

“Q4 2021 revenue was down 16% overall, but this was relative to a very strong, partly locked-down Q4 2020,” said Peel Hunt analyst Ivor Jones.

“From the perspective of 2019, it is clear 888 has been transformed and appears to be holding on to the revenue gains consequent on a structural shift to higher volume, lower-risk mass-market players.

“The acquisition of William Hill, expected in Q2, will effect another step change.

“The share price is weighed down by regulatory uncertainty and, we believe, the planned equity issue, but there is material upside and we reiterate our Buy recommendation along with our 750p target price,” he added.

Nodding in agreement, Richard Stuber, a director and travel and leisure analyst at Numis, commented: “888 shares have fallen by 30% since it announced the acquisition of WH last September, underperforming peers by >10%.

“We think this has been driven by concerns over the potential impact from UK regulatory review (most exposed of the listed gaming operators) and deal execution risk (equity raise, leverage etc).

“Undoubtedly 888 is cheap, trading on pro-forma P/E of <6x, but we think investors may need to wait until Q2 for the share price to react,” he added.

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