Sports offsets weak gaming performance at bwin.party

Last year’s relaunch of PartyPoker has failed to improve the performance of the vertical for bwin.party, as the firm revealed declines in several key territories leading to “softer” than expected group revenues in a trading update this morning.

Bwin.party said its sportsbook performance had been “solid” in the three months ended 30 June 2014, but added growth in the vertical only “partially” offset a drop in poker and casino revenues although EBITDA margins were better than expected.

Bingo revenues remained flat, but the operator said it had managed to retain its market leading position in the UK through the relaunch of its Foxy Bingo brand.

CEO Norbert Teufelberger (pictured) said the decline in poker was partly due to the seasonal drop-off in player activity in the second quarter compounded by the World Cup, which started on 13 June, describing it as a “challenging backdrop”.

He added that while the diminishing dot.com poker market had an adverse effect on casino revenues, the hit had been mitigated by improved cross-selling from sportsbook into gaming.

Sportsbook performance was “in line with management’s expectations” during the period, the company said.

It highlighted the Italian sports betting market as a key success story, having become market leader in terms of turnover for the first time, according to figures published by Agimeg.it.

Meanwhile the company said its mobile products grew in popularity in key markets having launched new products in all four verticals.

Bets from mobile devices represented around 35% of sportsbook revenue and 21% of gross gaming revenue ““ up from just 9% in the second quarter of 2013. And some 80% of new bingo registrations in June came via mobile, compared to 16% in Q2 last year.

Bwin.party’s shift away from grey markets to regulated territories as part of its ‘volume to value’ strategy appeared to stutter, with dot.country markets accounting for around 56% of revenues.

That is the same figure it reported in Q1 this year but an increase from 52% in the same during the same three-month period in 2013.

Bwin.party’s share price had fallen marginally by 2p at the time of writing to 85.50p. At the turn of the year its share price stood at 125p.

“As expected, the start-up losses in New Jersey, ISP blocking in Greece and the absence of domain sales in the first half have impacted both the revenue and clean EBITDA performance versus the prior year,” Teufelberger said in a statement.

“However, we are taking steps to improve operating performance, simplify decision-making, reduce complexity and costs and, as a result, remain confident about the full year outlook.”

Bwin.party said its cost-reduction initiatives are currently ahead of schedule and that expects to deliver an additional €10m of savings on top of the €20m it announced in its last financial results. It said it was in the process of “reshaping a number of areas of [the] business” to achieve cost savings, however did not give further details.

The firm undertook a complete relaunch of its PartyPoker product and brand during 2013 and despite a short-term boost to traffic after its release last September, the vertical has shown few signs of sustained growth.

After a period Teufelberger described as “a low point” for bwin.party in Q3 2013, the operator has been the subject of activist investor activity and subsequently an overhaul at board level.

More recently is has moved to quash rumours that it is planning to break up its business in order to generate shareholder value.

Reports have suggested it could spin off its B2B payments arm in either a sale or floatation ““ while others, including major shareholder Jason Ader, have claimed it should considering splitting the company into regulated and unregulated businesses.