32Red Issues 2009 Profit Warning2nd November 2009 9:03 am GMT
Despite recording the company's highest ever quarterly revenue figure in the third quarter, 32Red plc said that profits for the full year 2009 will be significantly below market expectations, with player yields during the second half of the year unlikely to overcome the challenging trading conditions experienced in the first half.
In a trading update released Friday, 32Red said that third quarter revenues were the "highest ever experienced" by the company, up 11% on last year and an increase of 24% quarter-on-quarter, reflecting the continued growth of the company's online casino which saw revenues gain 10% against last year and 21% on the previous quarter.
The company said that player activity levels were also strong during the third quarter, with active casino players up 16% on the corresponding period last year, although the growth in active players was partially offset however by reduced player yields.
Despite the growth in revenues and active players however, 32Red said that it is unlikely that the company will see sufficient growth in player yields during the second half of 2009 to be able to overcome the effect of the challenging trading conditions experienced in the first half the year, when revenues dropped 11% to £5.8 million and profit fell 70% to £233,777 (more).
As a result of these factors and an unusually high level of customer wins in October, the company's Board now believes that profit for the full year will be significantly below market expectations.
32Red said that it has considered a reduction in marketing spend in order to maintain its short-term profitability, but has concluded that this would not be in the best interests of the company.
The Board added that it remains confident that the significant ongoing investment in marketing and in new technology during the year positions the company well for 2010 and beyond.
Shares in 32Red plc (Co. Profile) (AIM:TTR) dropped 5.71% to 16.50 pence per share Friday but have since recovered to 17.45 pence in London this morning.