UK-listed online gambling operator Bwin.party digital entertainment recorded a pre-tax net loss of €97.9m in 2014 thanks to falling revenue and a massive writedown of its struggling PartyPoker division.
Bwin.party’s 2014 revenue fell 6% to €612m, although mobile revenue doubled to €153m. Earnings fell 5% to €102.2m, marking the third consecutive year of negative trajectory. The black ink turned to red thanks to a non-cash impairment charge of €104.4m against “poker-related” and other intangible assets and non-core investments.
Revenue from regulated/taxed markets – Austria, Belgium, Denmark, France, Germany, Italy, Spain, the UK and New Jersey – rose 1% to €345.2m while Bwin.party’s remaining grey/black market business fell 14% to €266.7m.
Bwin.party’s operations in New Jersey’s regulated online market recorded a €9.8m loss for the year. The Win social gaming division, which Bwin.party has been unsuccessfully trying to sell, lost €6.7m.
Incredibly, Bwin.party’s core sports betting revenue barely budged in a FIFA World Cup year, rising just 1% to €237.1m while earnings fell 7% to €50.1m. Total stakes fell 3%, which the company blamed on its Greek market exit. Mobile’s share of sportsbook revenue rose to 45% from 28% in 2013.
Casino revenue fell 6% to €203.7m while stakes were flat at €7b. The casino vertical enjoyed increased cross-sell from sports betting while poker cross-sell fell. Mobile accounted for 17% of casino revenue in December 2014, up from 10% the previous December.
Poker revenue was off 29% to €81.7m although earnings improved 3% to €8m. Mobile’s share of poker revenue doubled to 10%, but remains well behind the other verticals.
Bingo revenue slipped 2% to €51.9m thanks to increased bonuses and Italian market declines. Mobile channels benefited greatly from the new Foxy Bingo app, accounting for 34% of bingo revenue compared to just 6% in 2013.
‘Other’ revenue provided the lone bright spot, rising 13% to €37.5m on the strength of the Kalixa payment services division, which benefited from last May’s acquisition of card payment processor PXP Solutions.
Bwin.party said trading over the first eight weeks of 2015 had enjoyed improved betting volumes but average daily net revenue was down 12% thanks to softer than expected margins. (Poker is down 30% year-on-year and down 6% from Q4.) Bwin.party shares were flat on Wednesday, closing at 78.7p after briefly touching a new historic low of 74.3p.
BWIN.PARTY STILL TALKING POTENTIAL ACQUISITION
Bwin.party non-executive chairman Philip Yea said the company is in “further discussions” with undisclosed suitors looking to acquire some or all of Bwin.party. Yea told the Financial Times that the key to progressing these talks lay on the other end of the table. ”We think the industry has good reasons to consolidate. But just because we’re ready to discuss it, it doesn’t mean everyone else is.”
Rumors of potential buyers kicking Bwin.party’s tires first surfaced in November, with names like Amaya Gaming and Playtech cited as likely lads. Bwin.party shares nosedived last month after word spread that at least one suitor had walked away from the table, reportedly after failing to convince Bwin.party to sell their assets piecemeal, rather than forcing a buyer to accept the dead weight that PartyPoker has become. Shares rebounded a few days later on speculation that Amaya was still interested.
In August, Bwin.party initiated a corporate “label-led” restructure that separates its business under new headings: bwin, gaming, the US market, studios and ‘other.’ Cynics could be forgiven for thinking this is a new way of obfuscating the scope of future declines but CEO Norbert Teufelberger (pictured) said the idea was to create “separate and distinct units, which we could potentially spin out and create value.”
