Cryptologic coming right

Internet gambling software developer CryptoLogic Limited has posted its financial results for the third quarter ended September 30, 2011.

Q3 2011 highlights include:

— Total revenue increased to $7.2 million (Q2 2011: $7.0 million)
— Total expenses reduced to $5.9 million (Q2 2011: $6.5 million)
— Income before tax increased to $1.3 million (Q2 2011: $0.5 million)
— Cash increased to $15.2 million (Q2 2011: $12.0 million)

Total revenue after amortisation of royalties and games in Q3 2011 increased to $7.2 million (Q2 2011: $7.0 million). Q3 2011 included $900 000 as a result of a re-analysis of jackpot provisions; Q2 2011 included $800 000 as a result of a reduction in liabilities previously provided against revenue following the resolution of a dispute with a significant supplier of games.

Revenue from hosted casinos increased to $6.5 million in Q3 2011, including $900 000 related to the above jackpot provisions (Q2 2011: $5.7 million, including $300 000 related to the above dispute resolution), reflecting a higher contribution from a key licensee.

Branded games revenues declined to $1.4 million in Q3 2011 (Q2 2011: $2.1 million, including $500 000 related to the above dispute resolution).
Three new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 188 from 185 at the end of the second quarter.

Poker and other revenue amounted to $300 000 in Q3 2011 (Q2 2011: $200 000).

Operating expenses were reduced to $4.1 million in Q3 2011 (Q2 2011: $4.5 million), and general and administrative expenses decreased to $1.5 million in Q3 2011 (Q2 2011: $1.6 million).

Income before tax for the quarter amounted to $1.3 million, including $900 000 related to the above jackpot provisions, compared with $500 000 in the second quarter, including $800 000 related to the above dispute resolution.

The company had cash and cash equivalents on hand as at September 30, 2011 of $15.2 million (June 30, 2011: $12.0 million). The increase in cash during Q3 2011 of $3.2 million being primarily due to net cash flows from operating activities. Management said that Cryptologic continues to be debt-free.

Further its announcement on May 12, 2011, Cryptologic management said that the company remains in dispute with a brand licensor.

In June 2011, the Company filed suit against the brand licensor seeking judgment that any breach was cured and the agreement remains in force. In October 2011, the brand licensor answered the
complaint, denying any cure and filed a countersuit.

The company updated shareholders on its strategic review, commissioned in late March 2011 and still in progress.