Probability to address customer-facing “challenges” as Q2 revenues fall29th October 2013 8:06 am GMT
Mobile gambling specialist Probability has warned that the slow start to its financial year has increased the “challenge” of meeting its full year expectations, as the company posted a 14 per cent drop in net gaming revenues to £1.9m for its second quarter ended September 30th.
Revenues were up 4 per cent compared the previous quarter, with growth in the company’s B2B division (up 47 per cent quarter-on-quarter) offsetting a 9 per cent decline in revenues from its direct-to-consumer (B2C) offering.
Probability said that B2C margins were impacted by a “spate of big wins”, particularly in September, which led to revenues for the quarter dropping 9 per cent compared to Q1. The company added that gaming margins have returned to normal levels since the end of the quarter.
Revenues from legacy featurephone customers continued to decline, as expected throughout the quarter, with gross gaming revenue down 20 per cent quarter-on-quarter from these customers.
Probability has taken “decisive steps” to address the challenges which the B2C business has continued to experience, including the appointment of a new chief commercial officer earlier this month.
The company’s B2B offering continues to grow however, with the business unit remaining the “strategic focus” for Probability for the medium term. Revenues from B2B operations, including UK white-label managed services as well as UK and Italian-facing platform services, were up 47 per cent compared to Q1.
Average revenue per user (ARPU) from B2C and white label players managed by Probability in the quarter amounted to £106 per player, an increase of 2 per cent versus the corresponding period last year.
During the quarter, 57 per cent of platform revenues were derived from B2B services, compared to 52 per cent a year ago.
Highlights in the quarter included a successful exclusive game for Paddy Power (Hot and Slotty) and a new deal with Italy’s Sisal to create an iOS and Android application for its Superenalotto service.
Despite the growth in its B2B business, Probability warned that the “slow start” to the financial year, highlighted in its last trading statement and continuing into the summer period, increases the challenge of meeting management’s full year expectations.
“The company is encouraged that CPA (cost of player acquisition) levels appear to have stabilised at sustainable levels once more, and that staking levels continue to signal strong growth,” said Probability in a statement this morning. “A comprehensive new B2C marketing and retention (CRM) strategy will be implemented from November which will aim to stabilise CPA at sustainable levels, as well as continuing to grow the contribution of higher margin (and non-cash intensive) affiliate marketing techniques.”
Probability added that the launch of a new white label business in Italy, along with new product rollouts to existing customers, should support faster revenue growth from this division in the coming six months.
“The company has a strong pipeline for new white label services in the UK and anticipates that improved CRM strategies will support revenue growth from new and existing partners,” said Probability.
As at September 30th the company had net cash and equivalents of £1.7m.