2nd May 2007 07:02
PartyGaming Plc02 May 2007 2 May 2007 PartyGaming Plc ("PartyGaming" or the "Company" and, together with its subsidiaries, the "Group") First Quarter Key Performance Indicators and Trading update Highlights O Group revenue up 26% to $94.8m (2006: $75.3m) O Active player days up 129% to 7.1m (2006: 3.1m) O Real money sign-ups up 117% to 233,900 (2006: 108,000), substantiallyahead of the Board's expectations but resulted in higher than expecteddistribution costs O As a result, Clean EBITDA in 2007 expected to be significantly below thecurrent market consensus O Higher than expected active players and sign-ups should improveprospects for 2008 and future periods Consolidated Key Performance Indicators - Group* Three months to 31 March % % change change versus versus 2007 Q4 2006 prior year 2006Active player days (m) 7.1 27% 129% 3.1Daily average players (000) 79.3 29% 127% 34.9Yield per active player day ($) 13.3 -5% -45% 24.0Yield per unique active player in the quarter ($) 176.2 -7% -43% 310.7New real money sign-ups (000) 233.9 50% 117% 108.0Unique active players during the period (000) 538.0 29% 122% 242.1Average daily revenue (excluding skins) ($000) 1,053.4 23% 26% 835.7 *excluding EOL/IOG acquisitions so as to be comparable with prior periods One of the Company's primary objectives is to grow our player base from the lowpoint reached following the enactment of the Unlawful Internet GamblingEnforcement Act ("UIGEA") in October last year. Substantial progress has beenmade on this front. New player sign-ups have been much stronger than expectedwith sign-ups across all segments totalling 233,900 in the first quarter versus156,200 in the previous quarter. On the back of the substantial number of newplayers added, unique active players also grew strongly reaching 538,000 versus418,000 in the previous quarter. Sign-ups from CPA1 or hybrid2 affiliates havebeen particularly strong, with a 117% increase in the first quarter of 2007 overthe final quarter of 2006. While the associated up-front cost of growing theplayer base using this route during the first half will impact the results forthe full year, this investment in developing the Group's active player base isexpected to result in higher growth in future years. Overall, net revenue per day in the first quarter of 2007 averaged $1,053,400compared with $857,100 in the fourth quarter of 2006. Average net daily pokerrevenue was $750,900 versus $632,200 in the previous quarter with strong growthin the number of unique active players to over 448,000 being partially mitigatedby a drop in yield per active player day to $11.4, reflecting increased play onPartyCasino as well as the increasingly casual nature of new player sign-ups inthe quarter. The sharp drop in yield year-on-year reflects the loss of a numberof high value players to competitor sites that are able to offer greaterliquidity at high stakes at certain times of the day because of their decisionto continue accepting players from the US following enactment of the UIGEA.However, we believe that as payment solutions continue to close, these siteswill find it increasingly difficult to operate in contravention of US law. Another stated objective was to broaden our product base through the launch ofnew games as well as promoting our casino offerings, in particular, PartyCasino.Casino has performed particularly strongly with daily net casino revenueaveraging $248,900 in the first quarter versus $180,100 in the fourth quarter of2006, benefiting from the cross-selling of casino to a higher number of pokerplayers than expected. The number of unique active players grew by 50% to211,800 over the previous quarter. In sports betting, Gamebookers continues to perform in line with expectationsbut the delay in integrating PartyBets and Gamebookers into a single book thatwas expected to take place at the end of the first quarter held back overallsports-betting performance. The integration is now expected to occur at the endof June 2007. Accordingly, PartyBets made only a modest contribution to thefirst quarter sports betting result, and we anticipate a similar result for thesecond quarter. Average net daily revenue for sports betting as a whole in thefirst quarter of 2007 was $48,700 versus $37,500 in the previous quarter. Average net daily revenue from Emerging Games declined to $4,900 per dayreflecting both a fall in the number of active players as well as yield forbackgammon. The first television airings of the PartyGammon Million tournamentthat were expected to occur in April have not yet taken place but it is hopedthat they will commence later this year. 1 Cost per acquisition ("CPA") affiliate sign-ups are those where the companypays a fixed fee to the affiliate for each real money sign-up whereas theassociated revenue benefit is received over the lifetime of the player. Thiscontrasts to revenue share affiliate signups where a % of the revenue generatedby the player (minus certain deductions) is paid to the affiliate over thelifetime of the player. 2 Hybrid affiliate sign-ups are those where the Company pays a fixed fee and arevenue share to the affiliate for each real money sign-up. Trading Update In the five weeks ended 1 April 2007, including contributions from EOL and IOG,average gross daily revenue increased to $1,393,000, a 5% increase from thatachieved in the four weeks ended 25 February 2007, as disclosed in the Company'sfull year results announcement for 2006. In poker, new player sign-ups averagedover 2,100 per day and there were on average 72,000 active players per daygenerating gross average daily revenue of $922,000. In casino, average grossdaily revenue increased to $409,000 while in sports betting, gross win per dayaveraged $62,000 per day. Backgammon generated average gross revenue of $6,000per day. In the following four weeks, ended 29 April 2007, average gross daily revenuedecreased to $1,331,000 reflecting the seasonal pattern seen in previous years.In poker, new player sign-ups averaged over 1,800 per day, and there were onaverage 69,000 active players per day generating average gross daily revenue of$870,000. In casino, average gross daily revenue had decreased to $379,000while in sports betting, gross win per day had increased to $67,000 per day.Revenue from emerging games remained at $6,000 per day. While net revenue during the first quarter was in line with the Board'sexpectations, with good performances from the Company's core operations, pokerand casino, investment in new player sign-ups and a lower yield per player havemeant that distribution costs as a % of revenue for the full year are nowexpected to be between 43% and 45% of revenue. As a result, while the Groupremains comfortable with current market expectations for revenue, the Group'sClean EBITDA for 2007 is expected to be significantly below the current marketconsensus. However, the higher numbers of active players and new playersign-ups achieved in the year to-date should benefit future performance. Mitch Garber, PartyGaming CEO said: "Our decision to aggressively pursue new sign-ups in order to rebuild ourliquidity following the enactment of the UIGEA has resulted in a substantialincrease in player numbers to a record 538,000 non-US unique active players inthe first quarter. While this front-loading of marketing expense will affectour profit performance in the short-term, I believe that the prospects for thelonger term will be materially enhanced, particularly as we move towards a moreeven playing field with competitor sites who continue to take bets from USplayers. Following changes to our affiliate programme it is expected that forthe second half of 2007 new player sign-ups from affiliates will resume a morebalanced mix between CPA and revenue share deals with a consequent positiveimpact on Clean EBITDA margins." Contacts: PartyGaming Plc +44 (0)20 7337 0100Peter Reynolds, Director of Investor RelationsJohn Shepherd, Director of Corporate Communications Financial Dynamics +44 (0)20 7831 3113Edward Bridges / Juliet Clarke Conference call Wednesday 2 May 2007 For analysts and investors there will be an opportunity to put questions toMitch Garber and Martin Weigold, Group Finance Director, by way of a conferencecall at 09.00 BST. The details of the call are as follows: Dial-In No: +44 (0)1452 562 815Password: PartyGamingReplay no: +44 (0)1452 550 000Replay passcode: 8078963 Appendix Poker - Key Performance Indicators - Continuing operations* Three months to 31 March % % change change versus versus 2007 Q4 2006 prior year 2006Active player days (m) 5.9 31% 90% 3.1Daily average players (000) 66.0 35% 94% 34.1Yield per active player day ($) 11.4 -12% -46% 21.1Yield per unique active player in the quarter ($) 150.8 -13% -47% 282.4New real money sign-ups (000) 206.2 60% 100% 103.2Unique active players during the period (000) 448.1 33% 95% 230.0Average daily revenue (excluding skins) ($000) 750.9 19% 4% 721.7 *excluding EOL/IOG acquisitions so as to be comparable with prior periods Casino - Key Performance Indicators - Continuing operations* Three months to 31 March % % change Change versus versus 2007 Q4 2006 prior year 2006Active player days (000) 906.9 39% 168% 338.7Daily average players (000) 10.1 42% 166% 3.8Yield per active player day ($) 24.7 -2% -18% 30.3Yield per unique active player in the quarter ($) 105.7 -10% -24% 138.2New real money sign-ups (000) 5.7 -7% 19% 4.8Unique active players during the period (000) 211.8 50% 185% 74.3Average daily revenue (excluding skins) ($000) 248.9 38% 118% 114.1 *excluding EOL/IOG acquisitions so as to be comparable with prior periods Sports Betting - Key Performance Indicators - Continuing operations Three months to 31 March % % change Change versus versus 2007 Q4 2006 prior year 2006Active player days (000) 916.0 4% n/a -Daily average players (000) 10.2 6% n/a -Yield per active player day ($) 4.8 23% n/a -Yield per unique active player in the quarter ($) 57.5 8% n/a -New real money sign-ups (000) 20.7 5% n/a -Unique active players during the period (000) 76.2 17% n/a -Average daily revenue ($000) 48.7 30% n/a - Emerging Games - Key Performance Indicators - Continuing operations Three months to 31 March % % change change versus versus prior year 2007 Q4 2006 2006Active player days (000) 134.6 1% n/a -Daily average players (000) 1.5 0% n/a -Yield per active player day ($) 3.2 -37% n/a -Yield per unique active player in the quarter ($) 24.2 -1% n/a -New real money sign-ups (000) 1.3 -7% n/a -Unique active players during the period (000) 18.0 -35% n/a -Average daily revenue ($000) 4.9 -34% n/a - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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