888 income down 13% at half year; Dragonfish bearing the load
Strong growth in business to business (B2B) arm Dragonfish has saved 888 from a steep dip in the company's half year results, it emerged today, as chief executive Gigi Levy expressed optimism on the US market and PartyGaming's Cashcade purchase
STRONG GROWTH in business to business (B2B) arm Dragonfish has saved 888 from a steep dip in the company’s half year results.
The 888 business’ half yearly results were saved by a healthy rise of 42% in Dragonfish’s operating income, from $US17m to US$24m, which allowed 888’s overall six month operating income to dip only 13% year on year to US$118m, after hitting US$135m in the same period in 2008.
Dragonfish’s success in the second half of the year contrasted sharply with 888’s business to consumer (B2C) arm, which saw a fall of 21% operating income on last year, from US$118m to US$94m.
The B2C division suffered from a fall in poker, where operating income plunged 37% on an annual basis, from US$42m to US$26m, and a 23% slide in casino from US$72m to US$56m.
The sole success in 888’s B2C division was its tiny emerging offering division, where operating income rose 151% from US$5m to US$11m.
However 888 returned to quarter-on-quarter growth after two quarters of falling revenues. Operating income for six months to the end of June rose 7% to US$61m compared with US$57m in the first quarter of 2009.
888 chief executive Gigi Levy (pictured) said he expected 888’s 2009 revenue as a whole to be down on last year, but that profit would not track revenue’s downward path due to cost-cutting measures. However “we didn’t cut costs to the bone because we believe that these are just temporary hiccups”, he said.
“We enter the seasonally quieter summer period with delivery of our strategy on track and we remain committed to investing in the business in spite of the macro-economic environment. We are confident of delivering growth during 2009 based on additional planned B2C activities and a set of newly launched B2B partnerships which we expect to start generating revenues in the coming months.
888 will pursue “a new direction on the corporate side”, Levy said, “trying to target different segments and identify new segments that are not treated well today”.
This will include an “aggressive campaign around the football league and us doing more in sport than before”, as well as promoting bingo harder in continental Europe rather than just the competitive UK bingo market, and the launch of a live dealer product later in the year.
“All combined, these, together with the seasonally strong period, will lead to bigger growth toward the end of the quarter,” he said
On the topic of the US, Levy said that “the Barney Frank bill and efforts to regulate at state level are progressing, but we don’t expect a call from the US saying ‘we’re sorry we threw you away the first time, would you like to come back now'”.
Levy highlighted America’s withdrawal from its GATS agreement trade commitments on online gambling and subsequent compensation to EU . “Legally the US does not need to allow us or any other European company to licence.” As reported exclusively on EGRmagazine.com, Levy recently predicted that America will remain protectionist and restrict egaming licences to US companies even if it does overturn UIGEA and liberalise.
However Levy continued that one of 888’s “key targets on the B2B side is making US deals” and that 888 hopes to sign deals with US companies that operate in Europe.
Levy was also optimistic that PartyGaming’s purchase of Cashcade would not mean the end of 888’s lucrative deal with Cashcade. “I have no reason to believe that anyone would have any reason to end that contract,” he said. “I believe that our relationship with them has been one of the cornerstones of Cashcade’s success, and would like to think that they have no reason for them to move away from our software.”