The casino and poker software developer increased its revenue by 52% to a record $30.4 million, well ahead of the company\’s estimate of $26.4 to $26.7 million, and 12% higher than in Q1 2006-typically a stronger quarter. EBITDA for the quarter grew 69% to a record $9.4 million, while EBITDA margin grew in the quarter to 31% of revenue (Q2 2005: 28%).
CryptoLogic said the better-than-expected performance was attributable to strong organic growth in internet poker fees and to a stronger than anticipated quarter in online casino fees, driven by the release of innovative new casino games and CryptoLogic\’s expanded high-margin slot portfolio.
These achievements are especially notable because the second quarter is typically slower in online gaming and because the company\’s licensees had to compete for players\’ attention with the World Cup-particularly in the UK and continental Europe.
“CryptoLogic\’s new casino games went head-to-head with the World Cup and warm weather-and won. Our Q2 revenue and earnings were far ahead of expectations and surpassed our results in Q1 2006, which is typically a stronger quarter,” said Lewis Rose, CryptoLogic\’s President and CEO. “Players have embraced our new games and industry commentators agree that we have \’taken the online slot experience to the next level.\’ CryptoLogic\’s player-centric, product diversification and innovation strategy is paying off.”
Revenue for the first half of 2006 increased 43% to $57.3 million. EBITDA for the first six months in 2006 rose by 59% to $18.1 million. EBITDA margin for the first six months in 2006 grew to 32% of revenue (Q2 2005 YTD: 28%).
CryptoLogic grew its internet casino software licensing revenue by 53% to $17.9 million in the quarter, and by 32% to $32.9 million for the six months ending June 30. The Q2 2006 result was significantly ahead of expectations and 19% higher than in Q1 2006. Internet casino remains CryptoLogic\’s largest revenue contributor at 59% of Q2 2006 revenue and 57% of year-to-date revenue.
CryptoLogic increased its internet poker software licensing revenue by 41% to $9.3 million in Q2 2006, and by 56% to $18.9 million for the first six months of the year. The increase in Q2 2006 resulted from organic growth among its poker licensees. Poker fees were 4% lower than in Q1 2006. As expected, the reduced player activity was due to competition for players\’ attention from the FIFA World Cup (June 9 to July 9). Poker fees represented 31% of total Q2 2006 revenue and 33% of year-to-date revenue.
Other revenues, which include online bingo software licensing revenue and fees for software customization, advertising and marketing support, in Q2 2006 was $3.1 million, or 10% of total revenue (Q2 2005: $1.5 million, or 8% of revenue). For the year-to-date, revenue from other sources was $5.3 million, or 9% of total revenue (Q2 2005 YTD: $2.9 million, or 7% of revenue).
CryptoLogic continues to be well-diversified in key global markets that embrace online gaming. Licensees\’ revenues from international players accounted for more than 65% of overall Q2 2006 and year-to-date revenues, as they did in Q2 2005 and Q2 2005 YTD. For all periods, the UK and Continental Europe together accounted for over 60% of revenues.
For Q3 2006, CryptoLogic forecasts revenue of $26.5-$27.0 million and earnings of $6.6-$7.0 million. These estimates reflect the fact that Q3 is typically the softest quarter for internet gaming, as players spend less time online during summer months.
Elsewhere, Cyberslotz.com, the online gaming business owned by Talarius that operates only in the UK, grew like for like sales by 90% for the 28-week period to 15 July 2006. Talarius, which runs the chain of Quicksilver Adult Gaming Centres, saw like for like sales in its high street gaming centres soar 15% in the same period.
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