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October 21, 2005 - LONDON (AFX) - PartyGaming PLC, owner of the world's most popular poker website, reported in-line third quarter trading, an encouraging start to its fourth quarter and reassured on the outlook, helping to restore confidence to the recently battered internet gaming sector and sending its shares about 10 pct higher.
The group, which floated in June, said it 'remains comfortable' with market forecasts for revenue and EBITDA (earnings before interest, taxation, depreciation and amortisation) before share option and IPO costs for the year to end-December 2005.
Going into today analysts were forecasting revenue of 917 mln usd and clean EBITDA of 528 mln usd.
On Sept 6 PartyGaming's shares lost a third of their value after the company admitted to revenue growth in July and August below internal hopes.
Today chief executive Richard Segal said although this trend continued in September trading in October had seen a marked improvement.
Third quarter group revenue increased 32 pct to 220.0 mln usd. New poker player sign-ups totaled 209,372, up 12.6 pct on the third quarter last year,while active poker player days were 12.0 mln -- an increase of 5 pct on the second quarter and a 53 pct increase over the same period last year.
Yield per active player day in poker fell to 16.6 usd from 18.9 usd in the third quarter last year, and in casino it fell to 59.2 usd from 82.1 usd.
'All of those key metrics were within the range of expectations with active player days towards the top of the range and yields towards the bottom,' Segal told reporters.
He pointed to 'a material uplift' in performance in both poker and casino since the end of the third quarter.
This month's move to shift PartyPoker.com to a stand-alone operating platform had contributed to a 10 pct increase in daily gross poker revenue (excluding 'skins' or third party sites) versus the average for the third quarter.
The initial response to cross-selling casino games, such as Black Jack, to PartyPoker.com customers had been 'much stronger than anticipated', said the CEO.
Finance director Martin Weigold said it was difficult to say how much of the October uplift was due to the new platform and how much due to the normal seasonal pick-up.
'You do get our players playing more in the winter months. So I think it's early days yet to tell ... but the pick-up post the [platform] split in the fourth quarter is consistent with what we expected,' he said.
Referring to PartyGaming's Sept 6 announcement, he noted: 'What we said was simply that we thought that the rate of growth that we saw in the market was slowing, no one ever said that the market had gone ex-growth.'
The company stressed it is on target to launch a fully integrated, Party-branded platform featuring a shared purse and the first of two new games in the first half of 2006.
'Between now and the end of the year we fully expect that the 3 billionth hand of poker will be played on our PartyPoker.com tables,' said Segal, adding: 'We remain confident about the group's prospects.'
At 11.15 am shares in PartyGaming were up 8 pence at 86, valuing the business at 3.44 bln stg. The stock floated at 116 pence in June.
House broker Dresdner Kleinwort Wasserstein repeated its 'buy' recommendation and 150 pence target, arguing that poker revenue growth of 10 pct quarter on quarter since the launch of the new platform, combined with lower poker customer acquisition costs (down to 29 pct of revenue) is highly encouraging.
Paul Leyland, analyst at Seymour Pierce, said PartyGaming's statement suggested the July-August difficulties were a temporary hiatus rather than a structural issue with the market. But he noted the group's communication to the market 'could have been considerably better.'
Other online gaming stocks benefited from PartyGaming's update. BETonSPORTS PLC added 2 pence to 133-1/2, 888 Holdings PLC gained 4-1/4 pence to 143, and Sportingbet PLC gained 18 pence to 278. |
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