The internet gaming software developer announced a 32% increase in quarterly revenue to $27.7 million and a 27% increase in earnings to $7.6 million, due to solid organic growth in internet poker and internet casino fees. For the nine months ended September 30, revenue increased 39% to $85.0 million, while earnings rose by 48% to $25.7 million.
Internet casino fees grew 29% to $16.3 million and accounted for 59% of total Q3 2006 revenue. For the year to date, internet casino software revenue grew 31% to $49.2 million and represented 58% of total revenue.
Internet poker fees grew 19% to $8.3 million and represented 30% of Q3 2006 revenue. For the year to date, internet poker software revenue grew 43% to $27.2 million and represented 32% of total revenue.
Other revenue in Q3 2006, including fees for online bingo, software customization, advertising and marketing support, was $3.1 million or 11% of total revenue. For the year to date, revenue from other sources was $8.5 million or 10% of total revenue.
“CryptoLogic\’s excellent results for the third quarter and the first nine months of 2006 reflect our strategy of innovation and our strong diversified revenue base,” said Lewis Rose, CryptoLogic\’s President and CEO. “We have already recorded higher earnings in the nine months to date in 2006 than we did for all of 2005.”
During Q3, the UK and continental Europe together accounted for over 60% of total revenue generated. Following the passing of the Unlawful Internet Gambling Enforcement Act, CryptoLogic has taken action to ensure that all of its licensees stop accepting bets from US players. While this will significantly reduce the company\’s revenue and earnings in the short-term, CryptoLogic remains confident in its global diversification strategy.
“Since 2001, CryptoLogic has been preparing for this eventuality by shifting its business to continental Europe and the UK. We have achieved record year-to-date revenue and earnings and we now power the world\’s largest poker network that excludes US players,” Rose added. “Our company\’s diversification, strong balance sheet, thriving European customers and potential new business in emerging markets enable us to face the future with confidence.”
For Q4 2006, CryptoLogic estimates that revenue will be $19.0-$20.0 million and earnings will be $1.5-$2.0 million.
Elsewhere, Boss Media reported a 33% increase in third quarter sales to SEK 76.9m and a net profit of SEK 23.1m, compared to SEK 9.0m a year earlier. For the period January-September 2006, the Swedish online gaming software developer increased its sales by 39% to SEK 231.5m and almost doubled its net profit to SEK 57.1m.
During the third quarter, Bwin’s players were migrated from Boss Media’s poker network to Ongame’s poker network, which Bwin acquired earlier this year. Excluding Bwin’s gaming revenues, the growth in Boss Media’s partner-based poker network amounted to about 50 per cent during the first nine months of the year and about 12 per cent in the third quarter.
Following the UIGEA, Boss Media has taken action to block American players, which accounted for approximately 5 per cent of Boss Media’s total royalty revenues in the third quarter. From October 13, no American players can access gaming software and services provided to gaming operators by Boss Media, or deposit funds for online gaming purposes using the payment services of Boss Media.
WPT Enterprises, creator of the World Poker Tour and Professional Poker Tour television shows, announced revenues for the third quarter 2006 of $5.9 million, a 176% increase over the same period in 2005, and net earnings of $2.7 million, compared to a net loss of $1.6 million in the 2005 period.
Online gaming generated revenues of $0.9 million, compared to $0.2 million in the third quarter of 2005. The increase was a result of higher levels of player activity versus the prior year period despite reduced marketing efforts in the quarter.
For the fourth quarter of 2006, WPT expects lower gross profits based on the change in the revenue sharing agreement with its current service provider, as well as higher administrative costs associated with the re-launch of the online poker website in 2007.
Steve Lipscomb, founder and CEO of WPT Enterprises, commented; “The poker industry has changed dramatically since our first television show aired in 2003; and while the last couple of years have not been without bumps in the road, we have managed through them and the WPT brand is now stronger than ever. We have been financially responsible and as a result, have a strong balance sheet, and with the anticipated re-launch of our internet gaming site expected in 2007, we are excited about our future.”
Lipscomb continued: “Many are aware that the U.S. Congress recently passed the Unlawful Internet Gambling Enforcement Act of 2006, restricting payment processing with regards to unlawful online gaming in the United States. Since we have had a policy from inception of not accepting wagers from U.S. players, we believe the Act will not require a change in our day-to-day business activities.”
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