Results prove we can handle PoC, says 32Red chief

32Red chief executive Ed Ware (pictured) told eGaming Review his firm is in “a good place” and doubters should “re-evaluate their opinion” of the operator following a strong H1 performance under the UK Point of Consumption regime.

The firm this morning revealed net gaming revenues for the first six months of the year were up 22% to £18.6m, with active and new casino customers up 22% and 14% respectively.

And Ware told eGR the positive results should be more than enough to make 32Red’s doubters re-assess their view of the firm and its prospects under the new regulatory and licensing frameworks.

“I’d like to think that, after posting a strong set of figures across the board in H1, we have proven we can handle what is now a more challenging environment, and some may be willing to re-evaluate their opinion of us,” Ware said.

And the market may be starting to take notice – when the PoC tax went live on 1 December 32Red’s share price was 38p while today it sits at 71p, and Numis Securities analysts Ivor Jones has set a target price of 120p.

According to Ware, much of the growth in H1 can be attributed to 32Red’s advancements in CRM methodology and marketing techniques, which had seen the firm extract additional revenues from its existing client base.

“That’s the beauty of where we are at the moment,” Ware said. “What we’ve been doing with the marketing platform, CRM and VIPs is absolutely complementary to accelerating our new player acquisition performance – they go hand-in-hand so we are very happy with life and how it’s going.”

However, an increase in marketing spend saw an increase in cost-per-acquisition (CPA) from £180 to £197, although this was of no concern to Ware.

“We don’t really talk CPAs anymore as you can’t take CPAs to the bank,” Ware said. “What we focus on now is ROIs and how quickly we can get a return on our marketing investment from the players we recruit and at the moment that’s about 60 days.

“For instance, if you have a player who spends £4,000, what does it matter if you spent £400 to acquire him?” he added.

Ware also said growth had been organic and not a result of its acquisition of the UK customer database of Go Wild last September, a deal which only saw approximately 1,000 out of Go Wild’s 60,000 registered customers stick following migration.

“Our performance is not at all down to Go Wild – if we hadn’t had Go Wild we’d still be reporting sparkling numbers,” Ware said.

“On a relatively small deal like that, which was risk totally risk free as the money involved was miniature, you’re not able to quantify the quality of the people on the database – for instance, some will have taken the welcome bonus never to be seen again.

“But then 1,000 customers is a pretty valuable entity, which is what we’ve got, so we’d do it again tomorrow,” he added.

The firm’s attention now turns to the migration of fellow Microgaming customer Roxy Palace, which it last week paid £8.4m to acquire, although Ware is confident the process should be relatively pain free.

“There’s a lot of similarities with the technology so most if not all of the risk is removed and we are pleased with how it has been going,” Ware said.

And with the Roxy customer base yet to feel the full effect of the 32Red marketing and CRM strategy, the operator looks set to convince the market that not only is it here to stay but in a position to thrive.