The online gambling group whose subsidiary operate internet betting sites and license software and services to third party operators, announced the second quarter and first half year results for the three and six months ended 30 June 2006.
The group\’s two key revenue streams are: 1. Operations, representing revenue derived from its wholly-owned internet betting sites 2. Royalties and fees which includes royalties charged to the group\’s continuing licensees plus hosting fees charged to Sportingbet for hosting services provided from its wholly-owned hosting infrastructure.
Turnover from operations, representing gross sports and horse racing wagers and net casino and poker win, was of $57.2m for the second quarter and of $133.2m for the six months ended 30 June 2006. For comparative purposes, the proforma growth in turnover was 39.2% for the second quarter and 36.3% for the thye first half of 2006.
Turnover from new and continuing licensees on a like-for-like basis grew by 12.4 % to $0.7m in the second quarter and by 36% to $1.8m for the six months ended 30 June 2006. Overall turnover from royalties and fee income decreased by 36.4% to $1.4m for the second quarter and 35.7% to $3.1m for the first half of the year. The reduction is attributable to the group no longer receiving software royalties from the Sportsbetting.com business as a result of the acquisition.
Gross profit increased $6.0m to $7.5m for the second quarter and $15.5m to $18.9m for the six months ended 30 June 2006. On a proforma basis gross profit from the operating division grew 40.0% to $6.9m in the second quarter and 39.3% to $17.4m in the first half of 2006.
The total gross margin percentage for the second quarter was 12.7% compared to 68.7% for the same period last year. Gross margin percentage for the six months ended 30 June 2006 was 14.0% compared to 70.0% for the same period last year. The considerable change resulted from the significant change in revenue mix as a result of the acquisition of Sportsbetting.com. On a proforma basis the gross margin percentage for the operating division for the second quarter was 12.2% compared to 12.1% for the same period a year earlier. The proforma gross margin percentage for the first halh of 2006 was 13.2% compared to 12.9% for the comparative period of 2005.
Profit after tax for the second quarter increased $1.3m to $1.6m. Profit after tax for the six months ended 30 June 2006 increased $4.9m to $6.1m.
A review of the operating division shows that Sportsbetting.com added 31,288 new customers in the first half of 2006; 19,360 new customers in the first quarter and 11,928 in the seasonally slower second quarter of 2006. Of these new customers 48% were converted to new active betting customers compared to 46% for the six months ended 30 June 2005.
New player cost per acquisition, excluding retention bonuses to existing players, for the first half of 2006 were $101 compared to $100 in 2005. Inclusive of retention bonuses and rebates to existing players, new active customer acquisition costs were $164 in the six months to 30 June 2006 compared to $146 in 2005. The increase in customer acquisition costs inclusive of existing player retention bonuses is the result of growth in player activity driving higher loyalty bonuses in the period.
The average yield per unique active player on a rolling annual basis was $263 as at 30 June 2006 compared to $266 as at 30 June 2005. The average life of a customer as at 30 June 2006 was approximately 527 days compared to 498 days as at 30 June 2005. The average lifetime value of a customer at 30 June 2006 on a rolling twelve month basis was approximately $1,540.
Sports margins including horse racing in the second quarter were 7.0% (2005: 7.0%) and for the six months ended 30 June 2006 were 8.3% (2005: 8.2%). Gaming margins in the second quarter were 2.1% (2005: 2.2%) and for the six months ended 30 June 2006 were 2.1% (2005: 2.2%).
Sportsbetting.com\’s poker product, launched in the middle of 2005, yielded revenue before commissions of $1.4m for the second quarter bringing total poker revenue before commissions for the year to date to $2.7m. Continued growth in poker has been derived primarily from cross-selling the sports betting product.
The operating division continued to deliver strong cross-sell from sports betting players with an average 35.6% (2005: 35.3%) of players in the six months to 30 June 2006 placing a sports wager going on to place a bet on a gaming product or poker. This yielded $5.5m (2005: $4.8m) of gaming revenue and $1.5m (2005: $0.1m) of poker revenue for the group in the period.
The cross-sell of products within the database is enhanced by the group\’s single player account status across all products. Growth in the group\’s 3-card poker product that was launched in March 2006 has been encouraging.
“Similar to our first quarter, growth rates from the Sportsbetting.com business have continued at or near 40% across all key performance indicators. The Group has recorded strong growth in its seasonally slowest April – June trading quarter, complemented by the World Cup. The growth in revenues has been preserved through a scalable business model that has invariably delivered strong earnings growth. We look to maintain organic growth levels in addition to continuing to seek further acquisition opportunities both strategic in terms of geography or product and scalable as complementary to our existing strong operating business. The Group continues to closely monitor recent events in the United States,.” commented Daniel Moran, CEO of World Gaming.
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