Bwin.party profits hit by regulated focus
Shift from "volume to value" wipes 25% off 2013 company profits as regulated revenues also fall
Bwin.party posted a “disappointing” 25% fall in clean EBITDA for 2013 after the operator completed its first full-year implementing its shift from unregulated to regulated markets.
According to its results this morning, its “volume to value” focus led to EBITDA for the 12 months ended 31 December falling from 143.6m to 108m, while revenues fell 19% from 801.6m to 652.4m.
Bwin.party pointed to ISP blocking in Greece, increased gaming taxes in Germany and start-up costs in New Jersey as major factors behind the drop.
However, the operator highlighted that 53% of revenues were now derived from nationally regulated markets, up from 43% in 2012.
In absolute terms regulated revenues having fell marginally from 345.5m to 342.3m.
The majority of the loss was felt in the unregulated business where the company saw revenues fall 32% from 456.1m to 310.1. Unregulated gaming revenues made up more than half of this total (53%), partly due to the inclusion of those derived from Germany.
All four egaming verticals suffered a fall in revenues, with poker seeing the biggest decline as revenues slumped by 35% to 114m despite the re-launch of its PartyPoker client last September.
Sports betting revenues, which fell 10% during the year, contributed more than double that of poker with 235.8m with 67% of revenues derived from regulated markets.
Bwin.party CEO Norbert Teufelberger (pictured) said the company had reasons to be optimistic and drew attention to the potential for growth in mobile, which saw revenues grow by 77% to 76.9m and higher than expected cost savings of 97m due to its focus on fewer markets.
In addition, the company figures for the first ten weeks of 2014 saw sequential single-figure growth in every area of the business.
“Having streamlined the shape and size of our business we now have the foundations to return our business to sustainable growth,” Teufelberger said in a statement.
Teufelberger added he expected bwin.party to have entered at least one additional US state by the end of 2015 while he also estimated regulated revenues would grow to 75% in the same time period.
The results come shortly after activist investment group SpringOwl led by Jason Ader purchased a 6.1% stake in the company from the trusts owned by PartyGaming founders Ruth Parasol DeLeon and Russell DeLeon.
Jane Anscombe, analyst at Edison Investment Research, said bwin.party results would need to improve in 2014 or the company could be faced with divisions at board level.
“With activist US investor Spring Owl on board since February there have been suggestions that the group could be broken up if 2014 does not show real signs of change. It is trading below the peer average, reflecting its regulatory profile,” Anscombe said.
Bwin.party’s share price had risen 3p to 126 in early morning trading.