Tipp24 defiant despite Q1 profit wipe out
Net profit slashed following investments into new markets but operator confirms full-year guidance
Tipp24 insisted it remains on course to meet full-year expectations despite witnessing a near wipe out of Q1 profits following investments into new markets and higher than expected payouts.
The lottery provider saw net profit for the three months ending 31 March 2014 fall 98.5% to 109,000 from the 9m it recorded in the corresponding quarter last year despite a 9% rise in adjusted revenues to 35.2m.
The profit slide follows a 65% slip in EBIT to 19.5m during 2013, however, the operator said it will still achieve forecasted 2014 EBIT of between 25 and 35m.
The operator noted the rise in costs has mainly been caused by an increase in marketing activities, higher than expected lottery pay outs and the recruitment of additional staff as it looked to enter new markets, with Tipp24 having previously announced an interest in obtaining a Dutch egaming licence.
Tipp24’s staff costs swelled to 3.6m, up 37% year-on-year, after the number of employees retained by the company increased to 143.
“We are confident that we can offset the special items of the first quarter over the course of the year,” Hans Cornehl, CEO at Tipp24, said. “Following the successful relocation of our head office to the UK in February we continue to focus on the implementation of our internationalisation strategy.”
Despite the investment the operator admitted that the legal and tax situations in some of its jurisdictions “ particularly Spain and the US “ remained unclear.
“We continue to regard Tipp24’s situation as generally robust: Tipp24 has sufficient resources to successfully prevail even in the face of significant regulatory restrictions,” the company’s results disclosure said.
“The global online lottery market is still underdeveloped and offers significant growth potential in the coming years.”