Partygaming reports quarterly revenue drop

PartyGaming plc delivered a disappointing quarterly result this week, revealing that the significant strengthening of the US dollar and competitive pressures in its core poker division were the primary factors behind a drop in quarterly revenues.
First Quarter Key Performance Indicators included:
* Group revenue of $100.1 million (2008: $128.9m); average daily revenue up 2 percent versus the previous quarter due to growth in casino and sports betting
* Poker revenue of $53.6 million (2008: $80.7m); average daily poker revenue down 1 percent versus the previous quarter due to foreign exchange movements and competitive pressures from US-facing sites
* Casino revenue  of $40.9 million (2008: $42.3m); average daily casino revenue up 5 percent versus the previous quarter due to growth in both bet volume and hold
* Sports Betting revenue of $4.5 million (2008: $4.7m); average daily sports betting revenue up 19 percent versus the previous quarter due to growth in both bet volume and gross win margin
* Bingo revenue1 of $1.0 million (2008: $1.2m); average daily bingo revenue down 27 percent versus the previous quarter primarily due to the conclusion of Bingo Night Live in Q4 2008
* Clean EBITDA margins remain in-line with full year 2008 performance
* B2B strategy well on track with agreements signed with CIRSA, DM Plc and INTRALOT
* Non-Prosecution Agreement concluded with United States Attorney’s Office for the Southern District of New York (‘USAO’)
Commenting, Jim Ryan, Chief Executive Officer, said:
“Total net revenue grew by 2 percent on a daily basis to $1 111 800 versus the previous quarter despite continued competitive pressures in poker, further strengthening of the US dollar and a weak macroeconomic environment all continuing to impact performance.  We are maintaining our market share in poker and our B2B strategy continues to build with the addition of INTRALOT, one of the world’s largest providers of lottery services to governments, to our Italian poker network, that is expected to launch later this quarter, as part of a long-term global agreement.
“Whilst the business environment remains challenging, our strong poker sign-ups together with the addition of 60 new games to our casino by the end of the first half, further B2B deals in the pipeline and our strong control of costs, mean we are well-placed to capitalise on our great products, great brands and strong cashflow.  Having successfully resolved our discussions with the US authorities we are actively reviewing consolidation opportunities that, if concluded successfully, are expected to provide new and additional sources of growth.”
The group also said it expects to report a charge to discontinued operations of between $100 million and $105 million when it reports its interim results after it entered into a non-prosecution agreement with the USAO in respect of its activities prior to the enactment of the Unlawful Internet Gambling Enforcement Act in October 2006.

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