Bwin.party shows signs of recovery
All verticals show sequential growth but year-on-year revenue decline continues following "volume to value" switch
Bwin.party has recorded its second successive quarter of sequential growth with a 1% increase in revenue, but total revenues were 6% down on the previous year as its “volume to value” switch continues to impact the business.
Total revenue for the three months to March 31 rose 1% to 165.7m, but numbers were down 6% year-on-year, which the firm blamed on ISP blocking in Greece and general decline in the poker market.
The percentage of revenue from regulated markets increased to 56% from the 51% reflecting the much trumpeted “volume to value” switch with sports in particular seeing lower activity in dot com markets.
Having described Q3 2013 as a “low point” for the business, CEO Norbert Teufelberger revealed the company was to “drive higher clean EBITDA margins” this year and has earmarked an additional 20m in cost savings.
“Whilst we are now moving into the seasonally quiet trading period, with the roll-out of new products, more mobile extensions and the FIFA World Cup to come, the Board remains confident about the Group’s full-year prospects,” Teufelberger said.
The operator’s sportsbook recorded revenue of 64.7m, up 3% sequentially, but down 3% year on year with ISP blocking in Greece having a major impact.
The sequential growth was driven largely by a 58% year-on-year increase in revenue derived from mobile devices following new mobile product launches in both Belgium and Spain.
Casino revenue rose more modestly at just 1% to 52.6m, however the operator revealed plans to launch more than 100 new casino games by June this year and forecasted an increase in cross-sell to the vertical once it has integrated casino products into its native mobile sports and poker apps.
The largest sequential rise was in bingo revenue, up 5% on Q4 2013 to 14.2m as new iOS apps for its Foxy Bingo brand “ set to undergo a rebrand this year – drove new player sign-ups up 24% and daily average players up 2%.
Poker, the vertical arguably hit hardest by the volume to value strategy with revenue down 26% year-on-year, remained flat sequentially despite a launch in the US market.
The firm noted it had outperformed the general poker market, which saw 15% decline in the period, and pointed to the release of mobile poker offerings in Belgium, Denmark and Spain as factors expected to enhance the vertical’s performance moving forward.
Revenue from mobile devices proved to be a particular high point for the company as it boosted revenue across all of its verticals and represented 17% of total gross gaming revenue over the quarter, up on the 8% in Q1 2013.
Revenue from other sources, most notably payments provider Kalixa and the firm’s B2B arms, increased 16% year-on-year to 10.3m amid suggestions that bwin.party could consider spinning one or more of them off to focus on its core business.
Teufelberger also revealed that Simon Duffy is to stand down as bwin.party chairman at the company’s AGM on 22 May 2014, to be replaced by former Manchester United, HBOS and Halifax non-executive director Philip Yea.
Yea is also a former chief executive of private equity group 3i and managing director of Investcorp, and is a current non-executive director for mobile telecoms firm Vodafone.
“There are some exciting opportunities and challenges for the business as it looks to leverage its technology, further reduce costs and build shareholder value through development of its regulated business, particularly in the US,” Yea said.