Interim Management Statement
November 19 2008 - 2:00AM
UK Regulatory
RNS Number : 4399I
PartyGaming Plc
19 November 2008
19 November 2008
PartyGaming Plc
("PartyGaming" or the "Company" and, together with its subsidiaries, the "Group")
Interim Management Statement
Third Quarter 2008 Key Performance Indicators and Trading update
Highlights
* Total revenue of $117.7m (2007: $118.0m); strong growth in casino, sports betting and bingo offset by Poker decline; nine month
revenue up 11% to $372.5m (2007: $335.4m)
* Appreciation of US dollar has impacted revenues but benefited costs; Clean EBITDA margin for nine month period in line with previous
guidance of 29-30%
* Board confident about delivering full year Clean EBITDA in line with our expectations
* Poker revenue of $65.0m (2007: $76.3m) reflecting lower player frequency and yield; nine month revenue down 1% to $218.9m (2007:
$220.9m)
* Casino revenue up 25% to $45.9m (2007: $36.7m) on higher player numbers and yields; nine month revenue up 33% to $135.8m (2007:
$101.8m)
* Sports revenue up by 19% to $5.1m (2007: $4.3m) with continued growth in live betting; nine month revenue up 29% to $14.1m (2007:
$10.9m)
* Bingo revenue up 143% to $1.7m (2007: $0.7m) driven by UK growth; nine month revenue up 106% to $3.7m (2007: $1.8m)
Commenting on the third quarter KPIs, Jim Ryan, Chief Executive Officer, said:
"We are making solid progress on executing our strategic plan, albeit against a challenging economic backdrop and strengthening US
dollar. The launch of the next generation of PartyPoker at the end of September has been well received by our players and the next stage of
its three-stage rollout is on track for launch next month. The substantial appreciation of the US dollar has adversely impacted our revenues
but has had a corresponding benefit on our costs, most of which are incurred in Euros and Sterling. Consequently, the Clean EBITDA margin
achieved in this nine-month period is in line with previous guidance of 29-30%. We have continued to generate good cashflow in the period
and retain a strong balance sheet. The Board remains confident of delivering full year Clean EBITDA in line with our expectations."
Consolidated Key Performance Indicators
Three months to 30 September 2008 % change % change versus 2007
versus Prior year
Q2 2008
Active player days (m) 5.9 (12%) (11%) 6.6
Daily average players (000) 63.9 (13%) (11%) 72.1
Yield per active player day 20.0 6% 12% 17.8
($)
Yield per unique active player 218.5 8% (5%) 230.9
in the quarter ($)
New real money sign-ups (000) 137.6 (10%) 6% 129.7
Unique active players during 538.7 (13%) 5% 510.9
the period (000)
Average daily revenue ($000) 1,279.4 (8%) 0% 1,282.2
The Group delivered total revenue of $117.7m in the third quarter of 2008. Casino, sports betting and bingo grew revenue year-on-year by
25%, 19% and 143% respectively. However, total revenues were flat versus the same period in 2007 due to a 15% decline in poker.
Seasonality and a deferral of some marketing spend until the relaunch of PartyPoker resulted in a 12% decline in the number of new poker
player sign-ups versus the previous quarter. However, a concerted marketing push in casino, bingo and sports betting meant that total
sign-ups were up by 6% versus the prior year. The total number of unique active players grew by 5% with increases in casino, sports and
bingo being partially offset by a reduction in poker. The average number of daily players fell by 11% to 63,900 due to reduced frequency of
play, particularly in respect of poker and casino. The reduced frequency of play also affected yields. The yield per active player day
increased by 12% but the yield per unique active player in the quarter fell by 5% to $218.5 (2007: $230.9). Overall, across all products,
net revenue per day in the third quarter of 2008 averaged $1,279,400, which was marginally lower than the same period in the prior year
(2007: $1,282,200).
The sharp rise in the US dollar that began in August 2008 and continued into September, together with the early effects of the economic
downturn resulted in lower than expected customer deposits and revenue which was 6% lower than in the second quarter.
While total revenues were softer than expected during the third quarter, marketing costs were also lower and as a result, the Board
reaffirms its previous guidance for distribution expenses of approximately 40% of revenue for the full year.
In poker, revenue was down by 15% to $65.0m (2007: $76.3m) reflecting lower yields driven by a reduction in the number of unique active
players and their frequency of play. The Group's biggest challenge in poker continues to come from sites that still take bets from customers
in the US. Trading in the period was also impacted by some adverse reaction to our new customer loyalty programme and by unplanned downtime
in August and planned downtime for the launch of the next generation of PartyPoker. An improved loyalty and VIP programme, incorporating
extensive player feedback, will be launched next month.
Total casino revenue increased by 25% to $45.9m (2007: $36.7m). New games such as Top Gun and The Godfather helped to increase player
yields that were up by 22% versus the prior year to $46.3 (2007: $37.8), as well as attract new players to PartyCasino. The number of unique
active players increased by 11% year-on-year thanks to a strong increase in the number of new casino sign-ups, but fell 16% versus the
previous quarter, reflecting seasonality and the softer performance in poker that continues to be the main source of casino players.
Sports betting revenue increased by 19% to $5.1m (2007: $4.3m), primarily due to increased betting volume that was up 42% on the prior
year. The benefit of a 25% increase in player numbers year-on-year was reduced by a fall in the gross win margin from 5.7% to 5.2%
reflecting growth in live betting which has a lower margin. A number of new features were introduced to PartyBets.com at the end of
September 2008. These features and other upgrades over the coming weeks are expected to improve performance further.
Bingo delivered strong year-on-year growth with revenue up by 143% to $1.7m (2007: $0.7m), driven by growth in new player sign-ups which
were up by 486% primarily due to the success of ITV Bingo, the Group's bingo white label in the UK. The growth in new player sign-ups drove
a 63% increase in the daily average number of players versus the prior year.
For full details of all quarterly KPI data by segment please go to http://www.partygaming.com/investor/documentation.html.
Trading Update
The relaunch of the next generation of PartyPoker at the end of September 2008 as well as the normal seasonal pick-up resulted in a
material uplift in player numbers. However, the economic slowdown and the further strengthening of the US dollar, which against Sterling is
now 22% higher than the average for the third quarter of 2008 and 16% up against the Euro, continue to affect the Group's revenue
performance. In addition, bonus rates have increased due to several retention and reactivation campaigns surrounding the launch of the next
generation of PartyPoker.
In the 6 weeks ended 11 November 2008, average gross daily revenue had fallen by 7% from that achieved in the third quarter to
$1,492,000 (Q3 08: $1,598,000). New poker player sign-ups averaged 1,220 per day (Q3 08: 1,000), and there were on average 57,950 active
poker players per day (Q3 08: 50,600) generating average gross daily poker revenue of $807,900 (Q3 08: $816,200). In casino, average gross
daily revenue was $586,000 (Q3 08: $686,800) and bingo was $19,900 (Q3 08: $25,700) while in sports betting, gross win per day was $77,700
per day (Q3 08 $69,200).
Material Events, Transactions and Financial Position
As at 30 September 2008, the Group had no bank borrowings or other loans and had total cash (and cash equivalents) of $195.5m against
client liabilities of $129.9m.
Discussions with the Department of Justice are progressing and the Group remains focused on seeking a satisfactory resolution to these
discussions as soon as practicable.
There have been no material events, transactions or changes in the financial position of the Group since the half year other than as
outlined in this statement.
Contacts:
PartyGaming Plc +44 (0)20 7337 0100
Peter Reynolds, Director of Investor Relations
John Shepherd, Director of Corporate Communications
Conference call
Wednesday 19 November 2008
For analysts and investors there will be an opportunity to put questions to Jim Ryan, Chief Executive Officer and Martin Weigold, Group
Finance Director, by way of a conference call at 09.30 GMT. The details of the call are as follows:
Dial-In No: +44 (0) 208 609 1270
Password: PartyGaming
Replay no: +44 (0) 208 609 0289 (available for 1 week)
Replay passcode: 239620�
Appendix
Poker* - Key Performance Indicators - Continuing operations
Three months to 30 September 2008 % change % change versus 2007
versus Q2 2008 prior year
Active player days (m) 4.7 (11%) (16%) 5.6
Daily average players (000) 50.6 (13%) (18%) 61.4
Yield per active player day 14.0 1% 4% 13.5
($)
Yield per unique active player 158.7 4% (11%) 177.5
in the quarter ($)
New real money sign-ups (000) 92.1 (12%) (17%) 110.4
Unique active players during 409.7 (15%) (5%) 429.7
the period (000)
Average daily revenue ($000) 706.8 (12%) (15%) 829.2
*includes Emerging Games segment
Casino - Key Performance Indicators - Continuing operations
Three months to 30 September 2008 % change % change versus 2007
versus Q2 2008 prior year
Active player days (000) 990.4 (13%) 2% 972.1
Daily average players (000) 10.8 (14%) 2% 10.6
Yield per active player day 46.3 11% 22% 37.8
($)
Yield per unique active player 225.0 15% 13% 199.9
in the quarter ($)
New real money sign-ups (000) 20.0 0% 102% 9.9
Unique active players during 204.0 (16%) 11% 183.6
the period (000)
Average daily revenue ($000) 499.0 (4%) 25% 399.0
Sports Betting - Key Performance Indicators - Continuing operations
Three months to 30 September 2008 % change % change versus 2007
versus Q2 2008 prior year
Active player days (000) 704.2 (22%) 11% 632.5
Daily average players (000) 7.7 (23%) 12% 6.9
Yield per active player day 7.2 57% 7% 6.7
($)
Yield per unique active player 75.3 60% (5%) 79.5
in the quarter ($)
New real money sign-ups (000) 17.4 (17%) 118% 8.0
Unique active players during 67.2 (25%) 25% 53.7
the period (000)
Average daily revenue ($000) 55.0 20% 19% 46.3
Bingo - Key Performance Indicators - Continuing operations
Three months to 30 September 2008 % change % change versus 2007
versus Q2 2008 prior year
Active player days (000) 116.8 26% 56% 74.7
Daily average players (000) 1.3 30% 63% 0.8
Yield per active player day ($) 14.7 29% 55% 9.5
Yield per unique active player 79.6 49% 104% 39.0
in the quarter ($)
New real money sign-ups (000) 8.2 15% 486% 1.4
Unique active players during 21.5 9% 18% 18.2
the period (000)
Average daily revenue ($000) 18.6 60% 142% 7.7
This information is provided by RNS
The company news service from the London Stock Exchange
END
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