Mobile gambling specialists Probability PLC reported a small positive earnings result in its most recent fiscal year, but option payments and acquisition charges resulted in a net loss of £600k. The UK-based firm saw net gaming revenue rise 20% to £8.6m in the 12 months ending March 31, resulting in earnings of £41k. Not a vast sum, perhaps, but better than the £360k earnings loss the year before.
Average annual revenue per user from B2C active players rose 7% to £161 in fiscal 2013, but Probabilitly’s B2B arm saw its share of overall revenue grow from 44% to 55%. This slice grew to 60% in Q4 2013, and Q1 of FY 2014 featured the best month in a year for the higher margin B2B White Label managed service.
CEO Charles Cohen (pictured right) said the company had made some “tough decisions” over the past year, equating it with taking “a pit stop for new tires and fuel.” Higher customer acquisition costs led Probability to slash its Q4 marketing spend and stockpile resources for the launch of its new HD Slots and Casino HTML5 games, which promise more “attractive returns.” As a result, the company’s reserve of cash and equivalents nearly doubled to £3.4m in FY 2013.
Probability says efforts to reduce its focus on feature-phone customers have “reached a stable position,” although it intends to work hard to retain a few “long term and very valuable” feature-phone whales. With the bulk of its customers now using smartphones, Probability is in a better position to dedicate its tech and marketing resources to these customers. Probability plans to place particular emphasis on customers using the Android platform “which appears to be growing much faster” than Apple’s customer base.
With smartphone adaptation at “near saturation levels” in the UK, Italy and other markets, Probability senses the birth of a “mass market for direct-to-mobile gambling services.” Even better, Probability figures its game portfolio, unique technology platform, decade’s worth of pure mobile experience and no ‘bad actor’ taint gives it “specific advantages as a first mover” in future mobile markets, including the US.
Probability says what most Johnny-Come-Mobiles don’t understand is that Android’s increasing popularity will bring increased fragmentation. Probability says the average day sees its games played on anywhere from 800 to 1k variations of mobile device in the UK alone, “something which the competition cannot do at present.”
ANGRY BIRDS V. HARDENED GAMBLERS
The UK is also where Probability primarily views its B2C competition as social casino game companies, not high street bookies. With an average wager of just £1.10, Probability says its players are more like the type of people who play Angry Birds than the “mostly male … hardened gamblers” betting on sports and risking $100 on a spin of virtual roulette. (Careful, guys… That’s perilously close to Zynga saying it wasn’t chasing “hardcore real-money gamers” right before things really went south.)
All in all, it was a very good year. In Italy, Probability acquired Playyoo SA and started providing mobile games for Lottomatica’s Vegas Club brand. Similar deals with SNAI and Cogetech await the nod of Italian regulators, while Probability’s Hosted Gaming Services clients in the UK include 888, Paddy Power and William Hill.
In between adding new clients, Probability announced that COO Matthew Sunderland had resigned with immediate effect to “pursue opportunities outside the UK.” There are no immediate plans to replace Sunderland, who joined Probability in 2009. For the moment, at least, Sunderland’s tasks will be divvied up between Cohen, CFO Qurban Hussain and new head of B2B Glenn Elliott.