Weak Q1 from Chartwell Tech

The Canadian online gambling software provider Chartwell Technology posted weak Q.1 2009 results this week, reporting a drop in revenues from casino and poker operations of 21 percent to Cdn$ 4.6 million compared to the corresponding period a year earlier.
EBITDA dropped from a positive Cdn 1.8 million down to a negative Cdn$ 400 000 Canadian dollars as the company reported a net loss of Cdn$ 700 000, equating to a loss per share of 4 cents and contrasting sharply with the same period last year, when Chartwell recorded a net income of Cdn$ 900 000 or 5 cents per share.
Business highlights for the three months ended January 31, 2009 included:
* The release of Version 7.0 of Chartwell’s gaming software system, adding new games and the most extensive back office enhancements in the company’s history.
* A multi-title licensing agreement with Paramount Digital Entertainment International.
The company reported higher software development, support and general and administrative expenses, and cash flow from operations before working capital adjustments declined from Cdn$1.4 million to Cdn$ 100 000.
Software development and support expense was $2.8 million in the first quarter compared to $2.3 million for the same period of fiscal 2008. The increased expense came from modestly higher staffing levels in development as well as the absorption of additional costs following the acquisition of Chartwell’s Asia-based managed services capability which was completed in the second quarter of fiscal 2008.
Sales and marketing expenses were Cdn$ 700 000 in each first quarter of 2008 and 2009.
“The company started this fiscal year with challenges to revenue growth as a few of our clients introduced additional gaming products from other suppliers” said Alan Richter, CFO of Chartwell. “The increased competition intensifies our resolve to focus on the depth and breadth of our product and services offerings. We have increased our investment in product and service delivery and we are confident that our unique capabilities in these areas as well as our new sales opportunities should return the company to profitable growth in the near future.”
Richter said that Chartwell continued to maintain a strong balance sheet. At January 31, 2009 the firm had Cdn$ 21.2 million of cash and short-term investments compared to Cdn$ 22.3 million at October 31, 2008.

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