BUSINESS

Amaya Q3 revenue up 10%, need new lenders to cover deferred Scheinberg payment

TAGs: Amaya Gaming, Isai Scheinberg, PokerStars

Amaya Q3 revenue up 10%, need new lenders to cover deferred Scheinberg paymentCanadian online gambling operator Amaya Gaming says it expects to report a 10% rise in Q3 revenue despite the waning influence of its PokerStars brand’s core poker product.

On Tuesday, Amaya issued preliminary results for the three months ending September 30, saying it expects revenue to come in between $263m to $273m (all figures in US dollars), up from $247m in Q3 2015. Final figures will be released on November 14.

Amaya expects roughly 73% of Q3 revenue to come from poker, with 24% coming from its combined sportsbook and casino operations. This compares to 81% poker and 15% sports/casino in Q3 2015. The most recent figures suggest PokerStars’ core poker revenue suffered declines of roughly 1% year-on-year and 8% sequentially.

In more positive news, Amaya says its quarterly real-money active unique (QAU) customer ranks improved 5% to 2.4m. Around 2.3m of these played online poker in Q3, up 3% year-on-year. Amaya’s online casino QAUs totaled 490k while sportsbook reported 230k.

Amaya said it expects 2016’s full-year results to show revenue of between $1.127b-$1.157b and adjusted net earnings of $332m-$352m, below most analysts’ expectations.

Of more immediate concern is a $400m deferred payment Amaya needs to make on February 1, 2017, the final installment of its 2014 purchase of the Rational Group from former owners Isai and Mark Scheinberg.

Amaya says its currently sitting on $144m in required excess cash flow deposits, as well as $99m in unrestricted cash on its balance sheets. But Amaya says it will need to pursue “various non-dilutive options to pay the balance” of the $400m deferred payment. Amaya said it expects to announce which of these options makes the most financial sense before the year is through.

Amaya is likely counting its blessings that former CEO David Baazov’s prediction that Russia would grant Amaya an online poker license in 2016 hasn’t come true. Had that license been issued, the deferred payment would have grown to $550m. On the flip side, if Russia explicitly outlaws online poker before 2017, the payment shrinks to $300m, so don’t be surprised if Amaya’s interim CEO Rafi Ashkenazi goes on an anti-Putin Twitter tirade in the coming weeks.

Amaya’s earnings preview came the same day that the company revealed it had broken off merger talks with UK betting operator William Hill. Amaya also said it had concluded its protracted strategic review by deciding that it was better off “remaining an independent company,” although it left the door open for Baazov to finally make good on his vow to submit a formal offer to take the company private.

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