PartyGaming 2009: Revenue down, but Ryan remains upbeat
PartyGaming has reported a net loss of $26.5m for the full-year 2009 against $66.1m profit in 2008. Revenue for the period was also down with poker EBITDA dropping 44%. The company was buoyed, however, by strong fourth quarter growth, EBITDA increases in three of its four key verticals, and significant B2B progress.
PARTYGAMING recovered some ground at the tail-end of 2009, its full-year results show. It achieved $132.2m in gaming revenues in the final quarter, but could not entirely assuage overall net losses of $26.5m against a $66.1m profit in 2008.
The company reported a marginal year-on-year (YoY) dent with total revenue falling 6% to $446.2m from $472.9m in 2008, but with performance up in all key verticals aside from poker where it nevertheless reclaimed top spot in liquidity for non-US facing companies.
Continuing clean EBITDA was also down 6% YoY, with the company achieving $135m, down from $144.2m. Operating profit, however, increased 4% to $81.1m, suggesting a solid performance and one slightly ahead of analysts forecasts. The 2009 results also carried $15m of its $105m non-prosecution agreement costs.
In an interview with broadcaster Cantos, Jim Ryan (pictured) said: “PartyGaming’s performance was resilient, but not immune. In 2009 we focused on operations and improving our operations. In doing so we actually returned the business to growth. If you look at our 4th quarter all four product verticals grew, and grew dramatically.”
The company boasted 17% quarter-on-quarter growth for poker, casinos, bingo and sports betting in that period. Ryan reported that he believes PartyGaming is well-positioned for 2010. Specifically, he pointed to an increased focus on Europe and regulated markets such as Italy, Denmark, France and possibly Spain.
While the company’s poker performance was down on 2008, it has made steady progress and clawed back its top spot for non-US facing poker sites. This followed poker revenues returning for growth for the first time in six quarters in September last year. Ryan pointed to changes in its VIP and loyalty programmes, pricing modifications and promotions for the recent recovery “ which belied a painful YoY fall of 44% in the vertical.
In its casinos vertical, PartyGaming launched 80 games last year and has announced plans to add a further 50 in 2010, including branded Terminator, Sinatra and Rambo games. The product improvements and a major jackpot helped to drive interest and revenues. Ryan was also buoyed by the addition of serious bingo revenues, with clean EBITDA of $13.4m in 2009 following the Cashcade acquisition. Sports betting clean EBITDA also rose slightly from $5.1m to $5.8m.
Ryan also outlined plans to increase revenues from its B2B operations to $30m by 2012. This follows what he described as five meaningful B2B deals in 2009 and the intent to do the same again this year. Daniel Stewart equity analyst James Hollins described the business’ market position as “solid” and suggested the much-rumoured Bwin-PartyGaming consolidation deal would prove popular in the City. “We retain our Key Buy stance on Bwin Holdings also (TP 48.0) and would regard a deal between the two as immensely earnings enhancing and attractive for both sets of stockholders.”