32Red full-year profits soar 41%

A sharp increase in marketing investment has driven double-digit net gaming revenue (NGR) growth for a fifth consecutive year at 32Red, leading to a 41% year-on-year rise in full-year EBITDA.

EBITDA for the 12 months ended 31 December 2014 increased from £3.8m in 2013 to £5.4m last year following a 49% reduction in losses from its Italian business and a 20% clean EBITDA rise.

The operator increased its full-year marketing spend to £8.8m, up 30% compared to 2013, which led to a 20% increase in CPA to £184, although this cost was offset by a higher gross yield per player, which increased from £485 to £510.

32Red chief executive Ed Ware hailed the company’s marketing strategy in 2014 which included a three-year sponsorship deal with Rangers Football Club and an increased TV advertising presence.

As previously reported, NGR grew 26% year-on-year to £32.1m, up from £25.4m in 2013, as mobile boosted revenues from its core online casino and accounted for over half of all new customers recruited in 2014.

Mobile casino revenues soared 89% compared to 2013 and represented 32% of total casino revenues, up from 21% the previous year, as the number of active 32Red Casino players increased from 71,266 to 82,155.

Revenues from other products – including its recently launched sportsbook 32Red Sport – remained flat year-on-year at £1.7m, while revenues from its Italian business were up 74% to £1.1m.

In September the operator acquired the customer database of online casino rival Go Wild for an undisclosed fee and the company said it would not rule out making another acquisition this year post-Point of Consumption (PoC).

“The successful integration of Go Wild UK demonstrates our ability to source and integrate earnings enhancing acquisitions, which build upon our second to none customer service offering,” Ware said.

“32Red is a highly cash generative business with a strong balance sheet and I believe there are significant growth opportunities that we are well-placed to take advantage of in the market,” he added.

Great Britain’s new Point of Consumption regime, which came into force in December, was expected to negatively impact the business but the operator said it believes it is now in a position to exploit new opportunities in the UK market and reported current trading to be up 35% in the first two months of 2014.

“Despite the recent introduction of a new UK regulatory environment, we have achieved a strong start to the new financial year and I am confident in our ability to continue to grow the business for the long term and look forward to the future with confidence,” Ware said.

32Red’s share price on the London Stock Exchange was down 2.17% to 61.88p at the time of writing.