Internet betting giant Bwin.Party Digital Entertainment plc has released its first quarter 2013 financial results, noting that revenues were down 17% from the same period last year.
Key financial indicators for the period were:
Clean EBITDA in the first quarter down 17% to €180.2 million (2012: €215.9 million)
Revenue performance down 17% year-on-year reflecting the introduction of a 5% turnover tax on sports bets in Germany; a corporate shift in tactics from ‘volume’ to ‘value’; continued competitive pressures in poker and a reduced level of cross-sell revenue from sports into poker and casino following the dotcom platform migration in December 2012.
Sports betting amounts wagered in Germany fell by 52% year-on-year, resulting in a 31% fall in the amount wagered to €749.2 million (2012: €1,083.4 million).
Sports betting gross win margin went up to 9.9% (2012: 7.8%) reflecting increased wagering on combination bets together with the partial recovery of the tax from winning German customers.
Overall, sports betting net revenue fell by 5% to €67 million (2012: €70.6 million) and average daily net revenue fell by 4% to €744,400 (2012: €775,800).
Amounts wagered on casino and other games declined by 17% to €1,805.3 million (2012: €2,164.7 million) primarily reflecting reduced marketing in non-core dotcom markets, reduced cross-sell from sports betting customers following the dotcom platform migration, ISP blocking in Belgium and the closure of slots in Spain following regulation of the market in June.
Poker continued to present a dismal picture, compounded by reduced player acquisition marketing in a number of dotcom countries as well as reduced cross-sell on bwin.com following player migration. Average daily players fell by 37% year-on-year and 15% quarter-on-quarter to 61,100 (2012: 96,700).
Poker net revenue fell by 37% year-on-year and by 18% versus the previous quarter to €33.1 million (2012: €52.2 millionj) and average daily net revenue fell by 36% to €367,800 (2012: €573,600). With the impending launch of Bwin.Party's revised poker product, the company plans to improve the revenue trajectory of its poker business in the second half of 2013.
Bingo new player sign-ups increased by 34% versus the previous quarter and by 6% year-on-year following Foxy Bingo marketing campaigns, but the company still posted a 9% fall in revenue year-on-year. Management notes that Italy remains a challenging market, but subsidiary Gioco Digitale is maintaining its market leadership with an approximate 26% market share. In Spain, the group's Binguez brand has performed well despite challenging macroeconomic conditions. Overall, online bingo net revenue fell by 9% to €14.2 million (2012: €15.6 million) and average daily net revenue fell by 8% to €157,800 (2012: €171,400).
Other revenue increased by 37% to €8.9 million (2012: €6.5 million with strong growth performance by B2B partners with support from InterTrader, Kalixa, WPT and a small but inaugural contribution from social gaming activities.
Total savings of €70 million per annum to be delivered in 2013, with further savings in 2014 and 2015.
Cash on hand at end March 2013 amounted to €196.3 million - up y-o-y from €169.7 million in 2012. In addition, a further €30.3 million is held in short term investment vehicles.
The company is carrying debts to the tune of €35.1 million, down from last year's €36.4 million.
First phase of the group's new poker product, new social sports betting product and new bingo product all expected to launch as planned.
Speaking about the results Bwin CEO Norbert Teufelberger said, “The drop in revenue in the first quarter reflects our tactical shift from ‘volume’ to ‘value’ that we announced at the time of the full year results, as well as lower than expected player activity in poker and casino following the dotcom migration in December 2012."
“As previously announced, our shift in tactics will see us optimise the shape and size of our business, a process that is expected to reduce total revenue in 2013 by up to 10% compared with 2012."
"However, our programme to reduce costs is on-track and we remain comfortable with our previous guidance on Clean EBITDA margins, having identified total savings of approximately €70 million per annum to be delivered in 2013 with more to come in 2014 and 2015."
“Whilst seasonality and the absence of a major football tournament this year mean that revenue trends are unlikely to improve until the second half of the year, a series of new product launches and the anticipated opening of poker and casino in New Jersey coupled with a detailed programme of cost savings and a greater focus on regulated markets mean we remain confident about the Group’s prospects.”
In the company's financial report, Bwin management went on to reveal that they are preparing for legalized online betting in New Jersey in Nevada.