Shuffle Master posts strong Q3 revenues
Year-on-year revenues up 9% despite increase in expenses attributed to the collapsed Ongame deal and hiring of chief strategy officer.
Nevada licensee Shuffle Master has posted a year-on-year increase in revenues of 9% to US$63.4m in its results for the third quarter, with proprietary table games (PTG) and electronic gaming machines (EGM) both attracting double-digit growth compared to the same period last year.
The boost in revenue comes despite around $500,000 spent on final due diligence expenses and related professional fees for the ill-fated Ongame acquisition.
Shuffle Master had agreed to acquire the bwin.party-owned poker network for 19.5m in March but “mutually agreed” to cancel the deal three months later. It cited Ongame’s recent performance, along with difficult economic conditions in Europe, for making the deal no longer financially viable. “It has become evident to us that Ongame’s operations post-acquisition will not achieve the near-term results we initially expected and will require a larger ongoing investment than anticipated,” Shuffle Master’s CEO Gavin Isaacs (pictured) said at the time.
The acquisition of Ongame’s poker technology was intended to aid Shuffle Master’s entry into new online gaming markets both in Europe and the US “ a strategy it still intends to pursue despite not announcing alternative plans since the deal fell through. The company is one of a handful to have received an online poker licence in the state of Nevada, having gained approval from the state’s Gaming Commission in July.
This Shuffle Master’s memorandum of understanding with Bally Technologies, which would have seen the companies pool poker content and liquidity along with Ongame and Aristocrat, also collapsed. Ongame, however, having iself applied for an online poker licence in Nevada, remains part of the deal.
Elsewhere in the results, third quarter PTG revenues increased 17% year-over-year to $12.4 million, primarily due to increased placements across all categories including premium branded table games Ultimate Texas Hold’em and Mississippi Stud.
Other expenses in the Q3 results include the hiring of Louis Castle to the position of chief strategy officer. Selling, general and administrative expenses increased $2.2m year-on-year to $19m, reflecting a payroll-related increase of $1.2m.
EGM revenue grew 11% compared to the same period last year to around $20m, driven by an increase in units largely due to a large sale to customers in the Philippines.
Isaacs said of the Q3 results: “We are pleased to have produced another solid quarter of operating results, with year-over-year growth in all key categories, including revenue, earnings per share, net income, EBITDA and recurring revenue. We are well-positioned to deliver strong results and are excited by the upcoming launches of our innovative products at G2E, including a new card shuffler, revamped e-Tables, and a suite of new live and online games.
“I’m also incredibly encouraged by the customer enthusiasm surrounding our new slots highlighted at the Australian Gaming Expo including 88 Fortunes, Samurai Spirit and the Flintstones stand-alone progressive. I am confident that we will finish 2012 with a deeper product portfolio and a stronger organization as we continue to execute on a clear, deliberate game plan to position Shuffle Master for sustainable growth and value creation for the long term.”