Crypto losses double but costs fall as restructure kicks in
August restructuring plan sees costs fall by more than half in three months. CEO says full impact will be seen next quarter.
Cryptologic’s losses for the first nine months of this year have doubled, but its restructuring plan, initiated in August, has seen its total expenses cut by more than half, the company has revealed this morning.
The branded games and online casino software firm posted a loss of US$19.5m for the nine months to the end of September “ up from $10.7m in the same period last year. Its third quarter loss for 2010 was up to $3.6m from $3.2m last year, while its nine-month revenues fell to $20.5m from $29.9m and in Q3 were down at $5.1m from $9.6m.
Following poor second quarter results, continuing losses and slow progress being made to restructure the business the company announced several changes on 12 August this year including the resignation of former CEO Brian Hadfield. Chairman David Gavagan stepped in to act as interim chief executive and to oversee further restructuring and a plan to cut the company’s workforce at the end of this year.
Cryptologic today said it had implemented a “further restructuring programme” which would “make a full impact in subsequent quarters”. Asked what the new phase of restructuring would involve, Gavagan told eGaming Review it was “work in progress” and called the lack of detail “intentional” with the “full impact” of restructuring emerging in the fourth quarter.
“We will be able to talk more freely then but in the meantime we have substantially reduced costs, consolidated our operation and moved it to Malta, reduced the headcount significantly and are focusing all our energies into driving revenues, creating as much value from the operating side and revenue side,” Gavagan added.
Gavagan refused to disclose the number of staff that had lost their jobs, however he confirmed it had been a “substantial number” and that the current size of the business was “in excess of 100 people”.
Cryptologic said it had cut its total expenses to $9.9m in the third quarter from $20.2m in Q2 of this year, including $7.3m of “non-recurring charges” that includes staff cuts and a “costly lease in Toronto”, according to Gavagan.
During the quarter it appointed a new operational management team to lead its hosted casino business with Huw Spiers becoming group head of operations and chief financial officer and Ian Price becoming group head of business development.
Revenue from fully hosted virtual casino rooms provided to online gaming brand operators was $5.6m in Q3 compared to $5.8m in the second quarter.
Revenues from branded games fell to $1.4m in Q3 from $1.5m in Q2, due, according to the company, to a “decline in revenue contribution from a key licensee”. Thirteen new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 156 from 143 at the end of the second quarter.