Sportingbet Q1 results mean Party losing market sh

[Stephen]

Sportingbet Q1 results mean Party losing market share to Paradise

In the wake of strong first quarter results released this week by Sportingbet, a research note from Goldman Sachs revealed PartyGaming had been “losing market share to Paradise (Poker) this year”.

And although the figures are not “quite a LFL (like for like) comparable”, Sportingbet’s Q1 and Q4 2005 (Aug-Oct v May-July) figures reveal “gross win growth of 33%” for Paradise Poker, while Party’s Q3 and Q2 2005 (July-Sept v April-June) figures reveal a “growth rate of only 2%”.

And while the research note does not expect Party’s growth rates to be “in line with those of Paradise, we are anticipating a strong QoQ (quarter on quarter) poker growth rate of 9.4% for PRTY (PartyGaming) on 4Q2004”.

Egaming shares rallied this week after Sportingbet released strong first quarter results and the markets reacted positively to what was seen as very strong sets of figures across the board. Sportingbet’s share price rose 5.5p on the day of the announcement to end at 355.5p at the close.

For the three months to end of October 2005, Sportingbet revealed gross margin of £64.6m, up 82% (£24.2m) on a pro-forma basis on Q1 2004 from a £480.4m turnover, and profit before tax of £14.3m, up 81% (£2.6m) on a pro-forma basis on the same 2004 period.

Sportingbet registered 700 000 new customers, up 245% on a pro-forma basis on 2004, recording a 60% rise in the number of US customers betting on its US-facing sportsbooks to 170,748 (2004: 108, 803) and a 29% rise to 63, 028 (2004: 48,707) betting on its US gaming websites.

The number of customers who bet on its European sports betting websites rose by 54% to 142,476 (2004: 92,660), the number of customers who bet on the region's gaming websites rose 86% to 36,931 (2004: 19,895).

Nigel Payne, Sportingbet chief executive, said: “The introduction of the new US-facing shared purse technology has generated over US$2.4m of incremental poker margin and a further US$1m in sports and casino margin in the quarter.”

Sportingbet finance director Andy McIver highlighted the growth in customer numbers and said this was due to an increase in “front-end marketing spend” and cross selling opportunities thanks to the shared purse technology.

“We have always said we wanted 25% active customers going from sports betting to poker and vice versa within 18 months (of the introduction of the shared purse). So this is a good start. We have approximately 11% in three months, and this is happening at virtually no cost to us,” McIver said.

The European egaming market also presented great opportunities: “Europe has a much larger overall population than the US and Spain, Turkey and Greece are our most active markets at the moment, which shows how much more growth and scale there still is there,” McIver said.

McIver added the European legal situation was unlikely to change in any meaningful way in the near future, while in the US, new attorney general Alberto Gonzales had to date “shown no interest” in trying to prevent the sector from advertising or carrying out its commercial activities.



Full article can be found here;
http://www.egrmagazine.com/cgi-bin/article...&action=display