15 Jul 2014 07:00
15 July 2014
bwin.party digital entertainment plc
('bwin.party' or the 'Company' and, together with its subsidiaries, the 'Group')
Pre-close trading update
Key points
· Revenue performance in the three months to 30 June was mixed with solid performance in sports, which grew year-on-year, partially offsetting a soft performance in poker and casino. Bingo remained broadly flat versus the previous year despite challenging competitive conditions in the UK and Italy
· Since the end of June, volumes and gross win margins from the FIFA World Cup have been strong and overall the tournament performance has been in-line with management's expectations
· Mobile/touch continues to grow strongly and in the three months to 30 June 2014 represented approximately 35% of sports betting gross gaming revenue (Q2 2013: 21%) and 21% of gross gaming revenue overall (Q2 2013: 9%)
· Nationally regulated and/or taxed markets represented approximately 56% of total revenue in the second quarter of 2014 (Q2 2013: 52%)
· Several new product initiatives are now live including mobile products for sports betting, poker, casino and bingo
· The Board expects to deliver additional cost savings in 2014 of €10m in addition to the €20m of cost savings that have already been announced and consequently remains confident in full year outlook
· Further potential cost savings to be delivered in 2015 have been identified by management, details of which are expected to be announced with the half year results on 29 August 2014
Norbert Teufelberger, CEO of bwin.party, said:
"Trading in the second quarter was mixed with revenue a little softer than expected but Clean EBITDA margins were slightly better than expected. While the decline in the dotcom poker market in the period also affected our casino business, the impact was mitigated by an uplift in player activity in sports betting in nationally regulated and/or taxed markets, largely driven by the FIFA World Cup. The UK bingo market has remained highly competitive ahead of the introduction of a point of consumption tax later this year, but our Foxy Bingo brand has maintained a leadership position and our new mobile offering has been well received.
"As expected, the start-up losses in New Jersey, ISP blocking in Greece and the absence of domain sales in the first half have impacted both the revenue and Clean EBITDA performance versus the prior year. However, we are taking steps to improve operating performance, simplify decision-making, reduce complexity and costs and, as a result, remain confident about the full year outlook."
Trading since 31 March 2014The Group's revenue performance up to 30 June 2014 was mixed with a solid performance in sports partially offsetting a softer performance in poker and casino while bingo was broadly flat versus the previous year.
In sports betting, we saw increases in player activity in nationally regulated and/or taxed markets, primarily driven by the FIFA World Cup and continued growth in the proportion of our business coming through mobile and touch devices. Italy proved to be a particularly strong market in the period and we achieved market leadership in terms of sports betting turnover for the first time according to published figures for June 2014[1]. While overall betting volumes were down year-on-year, reflecting the loss of Greece as well as our shift from 'volume to value', increased gross win margins mitigated the impact on revenue. Our new HTML5 mobile product in Spain has proven popular with our customers and we have seen a marked increase in the share of betting volumes and numbers of users on mobile in Spain and intend to now roll this out across our other markets in the second half.
Our poker business saw market declines in several of our key territories which, together with the usual seasonal pattern in the second quarter, compounded by the impact of the FIFA World Cup made for a challenging backdrop. In terms of player numbers, our dotcom network has performed relatively well although in the US the current size of the market in New Jersey remains below initial industry expectations and this has held back the performance of all operators. The recent launch of new mobile products including sit 'n' go tournaments on iOS and Android have been well received by customers and we aim to launch other new products in the third quarter of 2014.
While casino has been impacted by the declines in poker, improved cross-sell from sports betting has helped to minimise the overall impact on revenue in the period. The launch of 40 new games in June 2014, 10 of which are also on mobile, has increased the breadth of our offer that will be further enhanced in the second half with the addition of more third-party and in-house developed games.
Bingo delivered a solid performance in the period and we have been able to sustain our leading market positions in both the UK and Italy despite aggressive marketing campaigns from competitors. Our Foxy Bingo mobile app has proven to be very popular and has helped to drive both player volumes and revenue in the UK and 80% of new player registrations in June came through mobile and touch compared with 16% a year ago.
Our cost reduction initiatives are ahead of schedule and we are expect to deliver an additional €10m of cost savings in 2014 in addition to the €20m of savings previously announced and we are confident of being able to deliver further savings in 2015. In addition to the savings from integrating our technology platforms in France and Italy, we are in the process of reshaping a number of areas of our business, further details of which are expected to be made available at the time of the half year results.
Half year results
The Group's results for the six months ended 30 June 2014 will be announced on 29 August 2014.
Contacts:
bwin.party digital entertainment plc
InvestorsPeter Reynolds +44 (0) 20 7337 0177Media
John Shepherd +44 (0) 20 7337 0141
[1] Agimeg