Bwin.party's struggles continue in Q1 2015
Operator reports a 6% year-on-year decline in revenues, expects to reach a decision over sales talks in the coming weeks
Bwin.party enjoyed mixed fortunes in the first quarter, but despite making progress on mobile revenues fell 6% compared with the same period last year driven by “lower than expected” sportsbook win margin and “continued challenges” in poker.
The operator saw revenues tumble from 165m in Q1 2014 to 155.3m this year with double digit decline across all verticals expect bingo where net revenues remained relatively flat, although total revenues were up 6% sequentially.
“The Group has delivered solid growth since Q4 2014 on the back of continued mobile expansion,” bwin.party CEO Norbert Teufelberger said.
“Despite slightly lower revenue and additional taxes, continued careful management of our costs and further operational efficiencies have meant that group clean EBITDA margins for Q1 are ahead of the Board’s expectations and also ahead of last year,” he added.
Poker suffered the biggest year-on-year decline, with revenues down 31% to 16.8m with daily average players significantly decreasing from 41,000 in Q1 2014 to 28,900 this year.
Poker revenues were down 9% sequentially, which the operator said was due to a renewed marketing push in the UK and a change to its player rewards program that had been “well received” but led to an increase in bonus costs.
Bwin.party said its performance “confirms the challenging environment” in European poker.
Casino and games revenues were also down, falling 11% YoY to 46.8m despite a 1% increase in amounts wagered to 1.7bn. Lower VIP activity and reduced cross-sell from poker, coupled with the application of VAT in certain markets, caused win margin to fall to 3.4%.
The firm’s focus on mobile saw massive uptick in the number of customers using the platform, increasing from 9% in Q1 2014 to 21% this year, and accounting for 30% of gross gaming revenues (GGR) compared with 17% last year.
Sportsbook wagers were up 9% YoY to 738.9m, but “unfavourable” football results saw margin fall to 8.7% driving a 10% decrease in net revenue to 58m. The operator said that a “steady stream of new product launches” on mobile saw the channel account for 41% of sportsbook GRR during the period.
Bingo was the only vertical to see YoY growth in Q1 2015, with net revenue up 1% to 13.8m. Bwin said that its Foxy Bingo brand continued to perform well, with player sign-ups increasing 24% compared with the same period last year.
Revenues from bwin.party’s other businesses, including its payments arm Kalixa, almost doubled to 19.9m. The operator said the was primarily due to a licensing deal in Asia signed by The World Poker Tour, and “strong growth” in Kalixa following its acquisition of PXP last year.
The light at the end of the bwin.party tunnel is that a decision over a takeover of the operator looks set to be reached in the coming weeks, after GVC and Amaya, and 888 both tabled £1bn+ offers to acquire the firm in its entirety.
“The company is now entering a further stage of discussions regarding proposals received from third parties. The proposals contain a significant element of share consideration and the Board is in the process of assessing the comparative merits of these along with other elements of the proposals,” the firm said.
Bwin.party’s share price was up 4% to 107.60p at the time of writing.