Brick-and-mortar casinos stole the spotlight from social gaming in Churchill Downs Inc’s third quarter earnings report.
CDI’s latest financial report card showed overall revenue of $314.8m in the three months ending September 30, a 4% rise over the same period last year. Adjusted earnings improved 7% to $76m while net income nearly doubled to $16.7m, with half of the $8m profit surge coming via income from CDI’s equity investments.
As usual, CDI’s social gaming division Big Fish Games topped the revenue chart with just under $118m, but this was $4.4m less than the division reported in Q3 2016. Big Fish’s earnings fared even worse, falling from $27.2m to just $17m, thanks in part to an extra $5.5m in user acquisition costs.
Big Fish’s overall bookings – the sale of virtual credits and goods – were up 4.6% year-on-year to $123.9m (up 10.6% sequentially) with social casino bookings up nearly 21% to $53.4m. But bookings declined in both the casual and midcore free-to-play and premium game segments.
CDI’s land-based casino division reported revenue up 5.4% to $87.5m but adjusted earnings shot up 30% to $39.5m. Of this extra $9m in earnings, $5.5m came via equity investments, including the Ocean Downs casino (pictured) in Maryland, which CDI acquired last year as part of a joint venture with Saratoga Casino Holdings.
CDI’s online advance deposit wagering business TwinSpires had a solid quarter, with revenue spiking 19% to $66.1m and earnings up 28% to $18.8m. TwinSpires saw active customers jump 24% in Q3, resulting in online handle rising 20.6%, beating the pants off the US thoroughbred industry average.
Finally, CDI’s land-based racing operations nudged up 1.4% to $41.9m, while earnings jumped to $1.7m from just $400k last year.
CDI’s chief exec Bill Carstanjen told analysts that the company’s $37m, three-story add-on to its flagship Churchill Downs Racetrack in Louisville, Kentucky was “on time and on budget” to add an extra 1,800 seats in luxury suites, plus a third-floor grandstand and new dining areas, all in time for the 2018 Kentucky Derby.
To handle the influx of extra guests, CDI spent around $13m earlier this year buying up adjacent properties, part of a $32m parking and transportation plan that will include a new front entrance, pedestrian plaza and an enlarged bus depot.
