Party Gaming Shows Strong Q1 Results
6th May, 2010
According to an article on eGaming review, Q1 results have been released for Party Gaming with casino, bingo and sports betting showing strong results however poker seems to be suffering at the hands of the competition from Full Tilt and Pokerstars.
Total group revenue rose year on year to $127.1m, a 27% increase. This is mostly due to such a strong performance by their casino arm which was up 25% due to a 43% increase in yield per active player and a new marketing strategy for casino.
There was also a surge in bingo revenue after the acquisition of Cashcade in July 2009 which saw a rise from $1m in Q1 2009 to $17.7m. This is in addition to a 58% increase in their small sports arm.
Despite this growth, poker fell year on year by 11% even though active players rose by 22%. Yield per active user fell by 27% due to pressure from online poker sites that take US players where full tilt and Poker stars dominate.
EBITDA in Q1 is better than expectations. CEO of Party Gaming Jim Ryan said: "Total revenue was up by 27% year-on-year with strong increases in all product verticals except poker, which fell due to competition from US-facing sites… While Clean EBITDA margins for the year to-date were ahead of our expectations in the first quarter of 2010, we are maintaining our previous full year guidance for 2010 Clean EBITDA margins of approximately 28%.”
James Hollins of brokerage Daniel Stewart commented on the figures “the shares offer solid long-term upside from continued penetration of the European online gaming markets, possible US re-entry and likely M&A activity. We have a Buy recommendation”.
However Paul Leyland of Collins Stewart argued, “Party’s organic growth potential is limited, with the Q1 results bearing this out. Moreover, as casino becomes increasingly supported by better marketing and content, margins are likely to come under pressure… As well as revenue and margin pressure, we remain concerned that the increasing tax and competition implied by regulated markets, combined with the likelihood of onerous product restrictions… will significantly reduce Party’s revenue and operational flexibility.”
By Faye
