Marketing costs hit Gaming Realms 2014 profits
AIM-listed firm records an £7.8m loss as increased marketing costs wipe out strong revenue growth
Online gambling group Gaming Realms recorded a loss of £7.8m last year as strong revenue growth failed to offset a substantial rise in marketing costs.
The AIM-listed firm’s losses for the 15 months ended 31 December 2014 widened from £2.3m in the comparative period in 2013 to £7.8m last year as marketing expenses soared from £1.8m to £10.2m.
Operating and administrative costs also increased from £0.3m to £2.5m and £1.1m to £6.4m respectively.
However, chairman Michael Buckley said he was pleased with the progress of the company last year which saw revenues increase eleven-fold to £11.2m.
“Gaming Realms delivered a transformational year in 2014, the acquisition of Quick Think Media and Blueburra Holdings has enabled us to grow the customer base more rapidly,” he said.
“The completion of our proprietary platform and the successful inception of the Spin Genie brand have provided us with the foundations to deliver our unique gaming offering,” Buckley added.
Gaming Realms last year acquired marketing businesses QuickThink Media and Blueburra Holdings to boost player acquisition and in 2014 acquired a total of 138,852 new depositing players at an average CPA of £73.50.
In October Gaming Realms launched Spin Genie on its new proprietary platform, which was recently backed by a major advertising campaign, and has since completed the migration of its PocketFruity gaming brand to the platform.
Earlier this month the group announced the sale of its Bede Gaming-powered Bingo Godz and Castle Jackpot brands to European Domain Management for £500,000.
Jane Anscombe, analyst at Edison Investment Research, said the firm was “one to watch” following the publication of the results citing strong growth in player numbers in Q1 and one off platform costs in 2014.
“We expect accelerating growth from SpinGenie and Gaming Realms’ other casino and bingo brands over the rest of 2015, taking the group to a small EBITDA profit by year end, with material upside potential thereafter,” Anscombe said.