PartyGaming Q4s: rev up a third as Cashcade kicks in
03/02/2010

PARTYGAMING'S revenue is up almost a third year-on-year, the company’s fourth quarter update reveals, rising 32%, while earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be ahead of management’s expectations. 

Poker revenue fell to $49.1m, down 11% from the $55.1m it recorded in 2008, while casino soared 44% to $57.6m, from $39.9m, due to higher player retention and the first full quarter of side revenue from the Cashcade bingo brand PartyGaming acquired in July. 

The Cashcade boost to bingo revenue saw that vertical become a major contributor for the first time, blasting 1136% to $17.3m, from just $1.4m in 2008, while the company’s small sportsbook saw strong organic revenue growth of 82% to hit $7.1m, from $3.9m, although industry speculation about merger talks with Bwin to increase Party’s strength in sports betting continues. 

Chief executive Jim Ryan said: “Having recaptured the number one spot in the world in terms of poker liquidity and with our integration of Cashcade and the World Poker Tour well on track, our performance in the first four weeks of 2010 has been in-line with the Board’s expectations and we remain confident about our prospects for the full year.” 

The liquidity estimate is according to PokerScout.com, and Ryan referred to PartyGaming’s acquisition of the World Poker Tour in November.

Ryan continued: “With the introduction of ring game poker, casino and bingo anticipated in Italy in the first half of 2010, the opening of the French market later this year and Denmark in 2011, we believe the outlook remains positive. Whilst the regulatory picture in some countries remains uncertain, the momentum towards creating commercially viable and regulated markets is strong.” 

PartyGaming has a business-to-business (B2B) tie in Italy with Intralot; has pledged to launch poker in France via a B2B deal there; and this month signed a five-year deal with Danish monopoly Danske Spil. As reported on EGRmagazine.com, Jim Ryan has stated the importance of B2B deals as a hedge against protectionism when markets regulate. 

Analysts differed in their interpretations. James Hollins at Daniel Stewart described the KPIs as “testament to an improved product offering (notably casino and its smaller sports betting division), successful industry consolidation and wider industry QoQ growth,” and recommended investors buy shares. 

Paul Leyland at Collins Stewart, by contrast, said the brokerage “remains concerned that casino will require more stand-alone marketing support, which is likely to dilute margins from very high cross-sell levels… [and that]  …improving poker liquidity is likely to become increasingly expensive to sustain.” 

Highlighting that European Court of Justice Advocate General Bot asks only “for consistency rather than liberalisation,” it concluded that “the adoption of ‘walled garden’ liquidity policies as undermining Party’s business model, which relies upon cross-boarder pooling,” and recommended investor sell. 

 Daniel Stewart predicts EBITDA of $131m, Collins Stewart of $133.1m or more.

Don't miss out on egaming news: sign up for our free, daily Snapshot email. Or get the news as its breaks with the free eGaming Review RSS feed.

Posted: 03/02/2010