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LONDON (Alliance News) - Gaming Realms PLC Monday reported strong revenue growth in the first half of the year from new players and paying users, but said its losses widened in the period as it continued to invest heavily in marketing, triggering a sharp sell-off of its shares.
Gaming Realms was down 13% at 27.26 pence per share Monday morning, making it one of the biggest decliners on AIM.
The AIM-listed online gaming products developer reported a pretax loss of GBP4.9 million for the six months to March 31, compared with a GBP3.4 million loss a year earlier, which it said included a marketing spend of GBP5.2 million and the cost of building its internal gambling platform. The prior year Gaming Realms spent GBP1.8 million in marketing.
"We invested aggressively in marketing which has translated into a solid foundation for the future growth of our business," said Chief Executive Patrick Southon in a statement.
Revenue increased to GBP3.6 million from only GBP0.9 million the prior year, which the company said was driven by new players, boosted by the acquisition of QuickThink Media.
Gaming Realms said new depositing players rose significantly to 76,465 from only 18,881 the prior year and daily average depositors, which is the number of users paying for its services, increasing by 61% in the second quarter from its first quarter.
The company said it continues to see a strong player take-up, and it is well positioned to continue its strong revenue growth and player acquisition, as it focuses on engaging customers on mobile devices and on new platform features.
"We are in the process of completing our next generation gaming platform to which we intend to migrate Pocket Fruity, our mobile casino, later this year. We expect the new gaming platform to deliver improved margins in addition to enabling us to introduce key aspects of our 'casual gaming' strategy," said Southon.
Gaming Realms said the migration of its products onto the new platform, with the initial launches during the third quarter of this year, is expected to improve overall profitability over the mid-term.
Despite the wider loss in the recent half, the company gave a confident outlook for the business in the year ahead, citing significant market opportunities in 2014 and beyond.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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