The online betting group reported a fourfold increase in operating profit up to £22.3m, boosted by last year\’s acquisition of Paradise Poker and continued growth in online sports betting.
The total turnover for the three months ended October 31 was up 35% to £480.4m and earned a gross margin of £64.6m, up 167%. Profit before tax was up 450% to £14.3m.
The number of new customers who funded accounts in the quarter was up 67.2% to 170,322. These customers were acquired at an average cost of acquisition of £148 (+8%).
Sports betting turnover was £440.6m (2004: £344.6m), earning a gross margin of £24.8m (2004: £13.1m) at a gross margin percentage of 5.6% (2004: 3.8%). The poker rake was up to £24.3m (2004: £0.8m), including £21.5m contributed by the acquisition of Paradise Poker.
The number of sports and gaming bets placed rose sharply by 44% to 123.2m. The average number of games played per day (including free to play games) on Paradise Poker rose 96% over last year, to 1.6m per day, and 39% since the last quarter.
European sports customers rose by 54% to 142,476. The sports margin percentage after betting tax was strong at 8.2% (2004:5.7%). The average number of bets per active customer and the average sports bet size were both stable respectively at 47 bets per quarter and £14. The cost of acquiring customers was up 12% at £154 per new active customer, giving a cash payback in under six months.
As a result of significantly increased marketing activity in the US region, the number of American sports customers rose by 60% to 173,748. The sports margin percentage, at 7.2% (2004: 5.1%), was above the long term average and as a result, the number of sports bets per active customers was marginally lower at 49 bets per customer (2004: 57 bets) with an average sports bet size of $54 (2004: $57). The cost of acquiring new active customers remained within normal parameters at $349 per new active customer, yielding a cash payback in less than three months.
At the end of July 2005, Sportingbet introduced a shared purse technology, allowing customers of its US-facing brands to bet across sports, casino and poker platforms with one account, username and password. 17,729 (12.7%) of US active sports customers also played poker during the quarter, generating an average of $26,000 rake per day throughout the quarter and $41,000 rake per day by the end of the quarter. 13,296 (8.8%) of US active poker players bet on sports / casino during the quarter generating $1m of margin.
Last year\’s improvements in the group\’s Australian business has continued in the first quarter of the current year. The number of Australian sports customers rose by 45% to 10,365, but the average number of bets per active customer and the average sports bet size were sligthly lower respectively at 87 bets per annum (2004: 92 bets) and at A$257 (2004:A$327. The increased internet focus, augmented through the introduction of a new suite of sports internet products, a new website, improved risk management tools and increased marketing spend, together with more normal sports results, have increased sports gross margin to 3.0% (2004: 1.5%). The cost of acquiring new active customers fell to AUS$863 (12 months 2005: AUS$917), yielding a cash payback in less than seven months.
“We have recruited more new customers, taken more bets, played more games of poker and made more profit than in any previous first quarter. The benefits of he increased scale of our business across our multi-product \’one-stop-shop\’ environment have been clearly demonstrated,” said Chairman Peter Dicks.
Last week, DBS Advisors Ltd, the vendor of Sportsbook.com, converted its convertible loan note into 83,171,926 ordinary shares of Sportingbet, representing a 19.76% stake.
While Sportingbet reiterated that it remains on the lookout for potential acquisition targets, it ruled out the chance of a renewed bid for Empire Online despite a recent sharp slide in the poker operator\’s price.
“We\’ve always said the industry is ripe for consolidation and that we\’re the natural acquirer, and we haven\’t changed our view. But as regards Empire we\’ve moved on,” said Sportingbet Finance Director Andrew McIver.
He added that the limited due diligence the company had performed on Empire Online\’s accounts indicated the company “wouldn\’t be an easy fit.”
Calculators
