Cashcade & Casino Save PartyGaming as Q3 Revenues Fall

PartyGaming plc reported Thursday that total revenues fell by 4% to $112.7 million for the third quarter of 2009, with the newly acquired Cashcade and the company's online casino offering helping to offset significant declines in both its poker and sports betting product.

Revenues from poker suffered the biggest drop, down 31% to $45.1 million versus the same period last year, continuing to be impacted by competitive pressures from U.S facing sites. Yield per unique active player fell 35% to $103.40, while average daily revenues fell 31% to $489,700.

Casino revenues however increased by 8% to $49.2 million, benefiting from new slot games added during the course of the year and a revised jackpot strategy increasing the maximum potential prize available on jackpot slot machines, currently over $4.2 million. Yield per unique active player increased 28% to $285.80 while average daily revenues rose 8% to $534,900.

Sports betting revenues continued to suffer, falling 18% year-on-year as a result of adverse currency movements and poor sporting results, while the inclusion of Cashcade for the first time helped bingo revenues to increase significantly to $13.8 million, compared to $2.0 million in the corresponding period last year.

The company added 208,000 new player sign-ups during the quarter, up 14% quarter-on-quarter, benefiting from the launch of new marketing campaigns for both PartyPoker and PartyCasino under the 'Feel It' tag-line. Total unique active players increased 33% to 726,300 versus the previous quarter, the highest level since the company exited the U.S. market.

Total player yields declined year-on-year due to foreign exchange movements as well as competitive pressures that resulted in bonus costs increasing to 25% of gross revenue during the quarter, approximately 5% higher than the previous quarter.

Poker now accounts for only 40% of total revenues with casino and bingo contributing 44% and 12% respectively, and sports betting the remaining 4%.

"Our performance in the seasonally weak third quarter was in line with our expectations. Casino once again delivered a robust performance with solid growth in player yields," said Jim Ryan, CEO of PartyGaming.

"We have increased the gross win margin in sports betting and remain focused on operational improvements to enhance the quality of our product and risk management tools. Poker remains challenging from a competitive standpoint, but we are encouraged by the increased player traffic during September and into October on the back of our new retention initiatives such as the enhanced loyalty programme, improved VIP offer and automated reactivation campaigns.

"Finally, the addition of Cashcade transformed our presence in the $1.5 billion online bingo market and was the driver behind the substantial increase in our bingo revenue.

"Our strategy is to drive both our B2C and B2B offerings and become a top three player in all of our product verticals. Having launched sites on behalf of four new customers in the quarter, our B2B strategy is progressing well. The important fourth quarter has started strongly, as expected, and we remain confident about the full year outlook," said Ryan.

As at September 30th the company had no bank borrowings or other loans, with total cash and cash equivalents of $132.4 million following the acquisition of Cashcade earlier this year.

Shares in PartyGaming plc (Co. Profile) (LSE:PRTY) are currently trading down 1.24% at 279.00 pence per share following the announcement.