Internet gaming software developer CryptoLogic Ltd. (CRYP,CRY.TO,CXY.TO,CRP.L) reported Friday a narrower loss for the third quarter, helped mainly by its cost reduction efforts, despite a decline in revenues on sluggish wagering activity. The Dublin, Ireland-based company also said it expects to record a loss in the fourth quarter, including a significant impairment charge, while it continues to expect a steady rise in branded game revenue.
Third-quarter net loss before minority interest was US$3.43 million compared to a loss of US$6.28 million in the prior year. Net loss and comprehensive loss narrowed to US$3.20 million from US$5.89 million in the prior year. On a per share, loss for the quarter was US$0.25 compared to a loss of US$0.45 in the previous year.
On average, two analysts polled by Thomson Reuters expected a loss of US$0.23 per share for the quarter. Analysts' estimate typically exclude special items.
In the quarter, revenues declined 31.7% to US$9.59 million from US$14.05 million a year ago. Branded game revenue was US$0.78 million, Hosted casino revenue was $7.1 million, and revenue from Poker was $0.5 million.
According to the company, branded game revenue saw strong growth for the third consecutive quarter, while sluggish wagering activity and a slower-than-expected rollout of games by new licensees adversely affected the overall results.
Expenses for the quarter were US$13.09 million, 38.2% lower than prior year's US$21.17 million. This, according to the company, reflects its continued efforts to reduce costs across the business.
The company said in a statement, "Uncertain macroeconomic conditions and sluggish wagering activity contributed to a significant decline in wagering volumes in both casino and poker compared with the previous year. While the third quarter is traditionally the slowest season for Internet gaming, the seasonal uptick in demand normally seen in September was well below historic trends."
For the nine months of fiscal 2009, CryptoLogic's net loss before minority interest was US$11.12 million compared to a loss of US$6.91 million last year. Net loss and comprehensive loss widened to US$10.69 million from loss of US$6.77 million a year ago. Loss per share was US$0.81, wider than loss of US$0.50 last year. Nine-month revenue fell to US$29.87 million from US$50.17 million in the previous year.
Looking ahead, CryptoLogic said it expects a loss in the fourth quarter, due to the continued impact of the economic environment and the delays in rolling out branded games. The company's branded games, of which the implementation is in the hands of its licensees, has been slower than expected. However, the company continues to expect a steady rise in branded game revenue in the fourth quarter.
CryptoLogic added that it expects to record a significant impairment charge in the fourth quarter, as it is undertaking a review of the carrying value of its assets in conjunction with its annual planning and budgeting process, in light of the company's performance and the current trading and economic environment.
The company expects more than 80 games to be on the market by the end of the year, in comparison to 50 games that are currently on the market.
Brian Hadfield, CryptoLogic's President and Chief Executive Officer, said, "Despite a disappointing third quarter, CryptoLogic's business strategy is delivering tangible progress, albeit at a slower pace than anticipated. With a lower cost base, the largest customer roster in CryptoLogic's history and our third consecutive quarter of increased revenue from branded games, we remain focused on executing our plan - and returning to profitability and long term growth."
Further, CryptoLogic said its board of directors declared a dividend of US$0.01 per share for the quarter, down from US$0.03 in the first two quarters of 2009. The company said that the dividend will be paid on December 15, 2009 to shareholders of record of CryptoLogic Ltd. and CryptoLogic Exchange Corp. as of December 1, 2009.
CRYP closed Thursday's regular trading session at US$4.07, up US$0.02 or 0.49%, on a volume of 78,750 shares.
CRY.TO settled at C$4.30, and CXY.TO closed at C$4.10 on Thursday.
On the London Stock Exchange, CRP.L declined 7.00 pence or 2.82% on Thursday to close at 241.00 pence.
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