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Caesars Interactive’s social gaming unit continues to monetize like a mofo

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caesars-interactive-social-casino-revenueOnline gambling and social gaming operator Caesars Interactive Entertainment (CIE) reported yet another strong quarterly revenue performance but it wasn’t enough to prevent profits falling by nearly three-quarters.

On Thursday, CIE’s parent Caesars Acquisition Company (CACQ) reported revenue of $643.6m in the three months ending March 31, up 13.6% from the same period last year, while adjusted earnings rose 31.5% to $194.6m.

But operating income fell 43.4% to $116m and net income fell 74.4% to $37m due to the change in the fair value of “contingently issuable non-voting membership units.” Absent these recalculations, CACQ says operating income would have risen $28.7m.

The units in question were issued to Caesars Entertainment Corporation (CEC), from which CACQ was – illegally, by most accounts – spun off prior to the bankruptcy of CEC’s main unit, and were required based on CIE having exceeded certain earnings targets. So, sorry CIE shareholders, but CEC’s hedge fund bosses get paid first. As usual.

The interactive division remains firmly behind CACQ’s steering wheel, with revenue up 29% to $227.8m and operating income up 31.5% to $53.4m, although profit fell 9.2% to $24.8m on increased sales and marketing costs as well as the company making CEC’s day with the aforementioned stock-based compensation.

CIE’s social and mobile game revenue was up 30% year-on-year and nearly 10% sequentially to $218.2m. By contrast, CIE’s World Series of Poker operations and its real-money online gambling business in New Jersey and Nevada was up 6% to $9.6m.

CIE’s social and mobile games unit continues to set the pace in terms of monetization, as average revenue per user rose 4¢ year-on-year to 35¢. Average daily active users were up more than 10% while average monthly unique payers improved nearly 21% to 922k, representing 4.5% of average monthly unique users (versus 1.7% in rival Zynga’s latest report).

CACQ’s brick-and-mortar casino operations – Bally’s Las Vegas, The Cromwell, The LINQ, Planet Hollywood, Harrah’s New Orleans and Horseshoe Baltimore – reported revenue rising 6.6% to $415.8m.

The gains were based largely on a full quarter’s contribution from The LINQ, which underwent an extensive renovation last year. These gains were blunted by decreased visitation at Harrah’s New Orleans following the city imposing an indoor smoking ban last April.

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