Solid third quarter for Playtech

The online gambling software developer Playtech plc has issued a trading update predicting that it expects to deliver a generally positive third quarter 2009, with a 12 percent rise in gross income to Euro 31.9 million.
The revenues were down from the Euro 33.1 million reported in the previous three months, which Playtech attributed to a run of “unusual sport results” reducing the sport betting margins of online partner William Hill Online.
The firm said the fourth quarter trading period has started well, however.
Analysts opined that the firm’s third-quarter earnings were ahead of expectations, as a strong margin offset revenue which was slightly behind expectations.
“Overall, this is a solid set of figures, with margin outperformance and strong current trading firmly underpinning our estimates,” brokers Daniel Stewart told clients in a note this morning.
Revenue was broadly flat on the year at Euro 27.7 million with a 10 percent drop in online casino sales to Euro 18.5 million and poker revenues declining around 3 percent to Euro 8.2 million.
A company spokesman said activity improved toward the end of the third quarter and initial trading in October is strong, with daily average royalty revenue more than 5 percent ahead of the third quarter.
Over the course of the nine months to September 30, gross income rose 24 percent on the same period in 2008 to Euro 98.8 million from Euro 80 million. Gross income is income from royalties plus profits generated from Playtech’s share in William Hill Online.
William Hill Online contributed Euro 4.2 million of the Euro 31.9 million gross income for Q3, a decline from the Euro 5.3 million in the prior quarter.
Commenting on the numbers, Playtech CEO Mor Weizer said: “The is a solid set of numbers. Playtech has delivered and the underlying performance has been strong, with an uplift at the end of September which is continuing this month.
“For the first time we are exposed to sports and that is more volatile than gaming, but there are many upsides.  The joint venture is going very well, and we are already seeing a much higher number of new accounts and the gaming activity is in line with expectations.”
Weizer struck a positive note on the Internet poker sector, which he opined still has good potential for growth as countries like France, Italy and Serbia develop regulatory systems in which Playtech stands to prosper.
EBITDA for the nine months to September is expected to come in at no less than Euro 66 million.

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