Revenues were up 63% to $977.7m, reflecting continued growth in poker and the introduction of blackjack, while Clean Earnings Before Interest, Taxes, Depreciation, and Amortization were up 49% to $583.7m, corresponding to a pre-tax profit after share option charges, IPO expenses and skin-related settlement costs of $349.7m.
Poker remained the largest individual business segment, representing 88% of 2005 revenues and 87% of Clean EBITDA. PartyPoker was the driving force behind the group’s poker business and total poker revenues rose 55% to $859.1m, while earnings increased by 41% to $509.2m.
The casino business saw sales increase by 144% to $118.6m with earning almost tripled at $75.6m. The launch of blackjack during the fourth quarter of 2005 has improved the balance of the group’s business and the company expects this to be further reflected in the 2006 financial results.
Margins slipped from 65.0% to 59.7% reflecting an increase in marketing and administration expenses, due respectively to competitive pressures in the online gaming market and to the additional infrastructure costs associated with becoming a public listed company.
In terms of geographic spread, the group continued to reduce its dependence on the US, where total revenue growth was 55% over 2004, whilst outside the US it was even higher at 125%. As a result, the proportion of revenue coming from US players dropped to 84% in 2005 from 89% in the previous year.
The firm increased the total number of real money sign-ups during the year to 839,317 (2004: 596,565), 24% of which were outside the US (2004: 10%). This contributed to an 81% increase in unique active poker players and a 68% year-on-year increase in active poker player days to a record 47.4 million. A further 92,838 new poker players joined up in January. 39% of them came from outside the US.
Yield per active poker player day fell to $17.5 (2004: $19.1), reflecting an increasing number of recreational players, the introduction of blackjack in the fourth quarter and an increase in the level of bonuses arising from competitive pressures in the marketplace.
Blackjack dominated all of the casino player metrics with total active player days increasing substantially from 0.7 million to 2.9 million, while the number of unique active casino players increased more than five-fold to 444,005. Yield per active player day fell to $40.7 (2004: $73.9) again driven by the impact of blackjack. The proportion of real money sign-ups for casino coming from countries outside the US increased from 25% in 2005 to 32% in 2005.
PartyGaming fulfilled a pledge at the time of its listing to return $200m to investors by awarding a maiden final dividend of 5.25 cents per share. The group confirmed to be interested in buying a sports betting company to add to its online gaming operations. Chief Executive Richard Segal said the company would only consider buying such a business outside the US, where the legality of sports betting is not clear.
Segal added that PartyGaming will offer its site in 15 different languages and will introduce a multicurrency payment system by the end of the year.
On the issue of legislation against online gaming, PartyGaming said there are three current legislative initiatives in the US, all of which are similar to a number of previous initiatives, which have failed either in the Senate or the House of Representatives.
In Italy the authorities have ordered internet service providers to block online gaming sites from being accessed, a move the online gaming industry intends to challenge as being in contravention of EU law.
PartyGaming continues to monitor closely developments regarding these and other proposed regulatory changes around the globe and remains committed to promoting a uniform international regulatory framework for all online gaming.
In the seven weeks to February 18, PartyGaming said its trading performance has been in line with the expectations, with daily poker revenues up 9% to $3.0m, compared to the fourth quarter of 2005, while blackjack revenues fell slightly.The online casino division\’s daily win averaged $920,000, compared to $980,000 in the final quarter of 2005. The group said the fall off had been expected and it now planned to give blackjack a bigger promotional push.
“PartyGaming\’s full-year performance has again been outstanding, endorsing the strategy mapped out at the time of the IPO.” said Chairman Michael Jackson.
“The rapid pace of development has continued in 2006,” he added.
PartyGaming shares closed at 130.5p on Monday, valuing the group at just over £5.2 billion
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