Probability boosted by growth in Italy but suffers Q3 revenue decline22nd January 2014 9:06 am GMT
Mobile gambling specialist Probability has reported its second successive quarter of growth for the third quarter ended December 31st, although net gaming revenue fell by 13 per cent to £2.0m compared to the same period last year.
Revenue rose 5 per cent versus the previous quarter following continued improvements in the company’s core B2C business, as well as increased contributions from Italy which saw revenue grow by 36 per cent quarter-on-quarter.
The company’s Italian business was boosted by new product launches with partners including Lottomatica and its sports betting product for SNAI prior to the two-week winter break for Italian football at the end of December.
Probability CEO Charles Cohen said: “This was the second quarter of growth in a row, as we continue to focus upon delivering a business built upon solid foundations of cost efficient marketing and higher per-player revenues.
“All the underlying metrics, such as conversion rates, deposits per active player, and wagering levels point to this being a sustainable trend that we can build upon.”
Cohen said that revenue from UK smartphone players in December in the company’s higher margin B2C and white label businesses were better than at any time in the last twelve months, and on significantly lower marketing and promotional cost than previously.
“This more than offset the continuing decline in revenues from legacy featurephone customers, which is now down to a third of its value a year ago,” he said.
Gaming margins remained stable at 4.8 per cent, compared to 4.9 per cent in Q2, while average revenue per player was 6 per cent higher.
Wagering volume per active player in the core B2C business was 3 per cent higher than the previous quarter and 16 per cent higher than the equivalent period a year ago, boosted by innovations such as the unique Daily Bonus Bonanza feature for LadyLuck's customers in the UK.
Probability reduced player acquisition costs by a further 37 per cent per new customer in the period through continued efficiencies in targeting and higher conversion rates.
During the quarter, the company renews its contract with William Hill’s online business as a B2B partner, and also launched a bespoke slot ‘Project Xmas’ for Paddy Power.
“The upward trend is continuing into January as we continue to drive efficiency in marketing spend and improve revenues from our database,” continued Cohen. “Marketing investment in the quarter was £0.5m which typically takes up to six months to produce a positive net return.
"Looking forward to the final quarter of this financial year, we have seen good momentum coming in to January in Italy, the football season has also re-commenced after the Christmas break, increasing betting activity again.”
Cohen said that the company has a number of “exciting” product launches in the pipeline for the next few months both for the UK and Italy where it is also preparing to launch its first white label offering.
“As we mentioned in our last update, the company is in advanced discussions with a major US casino operator to provide a solution for the regulated market there. These conversations are proceeding well and we will continue to update investors on this new opportunity when appropriate to do so.”
As at December 31st the company had net cash and equivalents of £1.4m compared to £1.7m at the end of the previous quarter.