Online gaming company PartyGaming Plc (PRTY.L) Friday reported a decline in fourth-quarter revenues, negatively impacted by currency movements and the increased competition in the online poker business. The company also announced its link-up with Spanish gaming company, CIRSA, to explore business opportunities in Spanish-speaking countries, and added that it now expects full year Clean EBITDA to be slightly ahead of market expectations.
In a trading update, the company reported fourth-quarter group revenues from continuing operations of $100.4 million, down from the $122.4 million reported in the year-ago quarter and 15% lower than the third quarter. For the full year, revenues were $472.9 million, 3% higher than $457.8 million reported in 2007.
The sharp movement of the US dollar against the Euro, Canadian Dollar, and Sterling affected its revenue performance during the quarter, PartyGaming noted. It estimates currency movements to have adversely impacted revenues by over $15.0 million in the quarter.
The company also noted that continued strong competition, particularly in poker, as well as the delay in the launch of its new loyalty scheme, which went live in December 2008, affected revenue further.
According to the company, these two factors contributed to the 14% decline in active player days to 6.3 million, when compared to the 7.3 million registered a year earlier. But, on a quarter-over-quarter basis, active player days went up by 7%.
Revenues were also affected to some extent by the higher promotions related to the relaunch of it poker product, PartyPoker, at September end, the company noted. As a result of the costs associated with the promotion, average yield per active player day came down by 6% to $15.8 from $16.8 last year.
All the three factors combined resulted in total average net revenue per day in the factor to decline to $1.09 million from $1.33 million in the prior year.
In addition, the company noted that for the five weeks ended February 4, 2009, the US Dollar has strengthened against most major currencies, when compared to the fourth-quarter average, which has continued to impact revenue performance.
Segment-wise, total poker revenue fell 26% to $55.1 million from $74.0 million in the year-ago quarter. Total casino revenue declined 6% to $40.2 million from $42.6 million in the prior-year quarter. Total sports betting revenue totaled $3.9 million in 2008, 24% down from previous year's $5.1 million. However, total bingo revenue surged 71% year-over-year to $1.2 million from $0.7 million last year.
Chief Executive Officer Jim Ryan said, "Trading conditions have remained tough with an unlevel playing field in poker and the appreciation of the US dollar against other currencies continuing to impact top line performance."
In a separate release, PartyGaming announced a three-year exclusive global alliance with international gaming and leisure company, CIRSA Gaming Corp. S.A., to explore and develop Internet gaming opportunities in Spanish speaking countries. PartyGaming noted that the agreement with CIRSA is part of its stated strategy to develop a strong business-to-business operation through alliances.
Europe-based CIRSA, originally founded in 1978 as a manufacturer of slot machines, now operates a network of 57 bingo halls and 139 amusement arcades in Spain, as well has a strong presence in Latin America.
Looking ahead to the fiscal year 2008, the company said it expects Clean EBITDA of at least $143.0 million, which is 28% above last year's reported EBITDA and slightly ahead of market expectations.
Ryan added, "Our discussions with the US Department of Justice continue to progress in line with our expectations and the execution of our strategic plan together with tight control over our cost base means we look forward to making further progress to consolidate our position as the world's leading listed online gaming company."
The Group expects to release its preliminary results for the year ended December 31, 2008, on March 11, 2009.
PRTY.L is currently trading on the LSE at 167.00 pence, down $2.75 pence, or 1.62%, with a volume of 384,538 shares.
For comments and feedback: editorial@rttnews.com