The online sports betting and gaming group announced its results for the third quarter, posting a gross margin of £84.4m, up 58%, on turnover of £507.3m, up from £386.9m for the same period in 2005.
Sports betting turnover was £454.0m (2005: £355.5m), earning a gross margin of £31.1m (2005: £22.0m) at a gross margin percentage of 6.8% (2005: 6.2%). Excluding customer bonuses the sports margin percentage was 7.3% (2005: 6.7%). Casino, gaming and poker contributed respectively a further £17.5m, £3.1m and £32.7m. Of the poker turnover, Paradise Poker accounted for £28.3m (2005: £13.6m).
Operating profit for the quarter was £28.8m, up 43%, while profit before tax was up 55% to £21.2m.
During the period, the number of registered customers rose by 0.5m (2005: 0.3m) increasing the group\’s database of registered customers from 3.9m to 4.4m. Of these new registrations, 170,580 customers funded accounts in the quarter, an increase of 58% over last year, at an average cost of £142 (12 months 2005: £137).
The number of customers who bet on the European sports betting websites rose by 47% to 196,245. The number of sports bets placed by these customers rose by 71% to 10.6m, the equivalent of 54 bets per active customer (2005: 47 bets). The average sports bet size was broadly constant at £13 (2005: £12). The sports margin percentage after betting tax was strong at 8.7% (2005: 8.9%). The number of customers who bet on the European gaming websites rose by 59% to 48,872. The number of gaming bets placed by these customers rose by 51% to 44.3m at a constant average bet size of £5. The gaming margin percentage also remained relatively constant at 3.9% (2005: 3.5%). Notwithstanding the significant scale change in volume, the cost of acquiring customers continued to be cost effective at £145 (12 months 2005: £137) per new active customer, yielding a cash payback in less than six months.
The US region delivered a record third quarter, with the number of customers who bet on the region\’s sports betting websites rising by 51% to 164,265. The sports margin percentage, at 8.0% (2005: 7.5%), was above the long term average. This, combined with the effect of Paradise customers, who tend to bet on sports slightly less frequently, resulted in a marginally lower number of sports bets per active customer of 50 bets (2005: 56 bets). The total number of sports bets placed in the quarter rose by 35% to 8.2m at an average bet size of $51 (2005: $56). The number of customers who bet on the region\’s gaming websites rose by 22% to 62,533. The number of gaming bets placed by these customers rose by 31% to 85.1m at an average bet size of $11 (2005: $12). The gaming margin percentage was constant at 1.9%. The cost of acquiring new active customers remained within normal parameters at $291 per new active customer (12 months 2005: $368), yielding a cash payback of less than three months. During the quarter, 22,551 (16.9%) active sports customers also played poker using the group\’s shared purse technology, generating an average rake of $54,324 per day.
The significant improvement seen in the group\’s Australian business over the past twelve months continued in the current quarter. During the three months to 30 April 2006, the percentage of bets taken over the internet rose to 75% (2005: 61%). The number of customers who bet on the region\’s sports betting business rose by 9% to 7,775. The number of sports bets placed by these customers rose by 35% to 1.1m at a rate of 142 bets per active customer (2005: 115 bets). The average sports bet size was lower at A$176 (2005: A$297), reflecting the increased activity on the more leisure-oriented internet platform. The cost of acquiring a new active customer fell to A$778 (12 months 2005: A$917), yielding a cash payback of less than six months. The significantly improved business dynamics, combined with consistent and stable gross margin of 3.0% (2005: 3.5%) enabled the region to deliver a strong quarterly profit.
The group\’s poker business continues to perform well. In the third quarter, the number of active customers who have contributed to rake at Paradise Poker rose by 71% to 187,522. The number of games of poker played per day rose by 84% to 2.2m, generating an average daily rake of $575,339, an increase of 90% over 2005. The cost of acquiring new active customers to Paradise Poker in the quarter was $204 (12 months 2005: $139), yielding a payback period of less than two months. During this seasonally quieter US sports quarter, 22,685 (13.8%) active real money poker customers also bet on the group\’s US-facing sports or casino websites, generating $2.6m of incremental margin.
Sportingbet announced the acquisition of a 50% interest in Puntobet, a licensed Italian online sports bookmaker, for an initial sum of €2.875m in cash. The joint venture will provide Sportingbet with the required license to operate in the Italian market as well as Puntobet\’s existing business and access to Puntobet\’s substantial Italian marketing distribution channels and affiliate network.
Puntobet will be renamed and re-branded as Sportingbet Italia and the website will be changed from www.puntobet.it to www.sportingbet.it (becoming the joint venture\’s sports betting Italian brand). As additional consideration, Sportingbet will pay a twenty percent profit share of its existing Italian gaming url http://it.sportingbet.com to Puntobet.
In the twelve months ended 31 December 2005, Puntobet generated an operating profit of €0.4m from turnover of €10.0m.
In a separate announcement released today, Sportingbet outlined its management succession plans. Andrew McIver, Group Finance Director for the last five years, will be appointed CEO with effect from 17 October 2006. At that time, Nigel Payne, current CEO, will take on Executive Director responsibility for regulation and business development.
During the first three weeks of the fourth quarter, organic growth and trading volumes have continued to grow in line with management\’s expectation. Gross margin across the group\’s products has been solid and Sportingbet remains confident with regard to the prospects for the current financial year.
“We are delighted with the performance of the Group this quarter. Our strategy of providing customers with multi-product, safe, online gambling opportunities via localised websites under one virtual roof has yielded yet another record performance for us. In the three months ended 30 April 2006, we have recruited more new customers, taken more bets, played more games of poker and made more profit than in any previous third quarter,” commented Chairman Peter Dicks.
“We continue to be delighted with the growth that the Group\’s strategy is delivering. In particular, we are pleased with the spend patterns of our customers, which have remained in line with previous years despite a significant increase in the scale of the business,” added CEO Nigel Payne
“The further development of our product offering, with the introduction of a new casino suite and in-running betting for our US facing brands, should further enhance our customer focused product offering. In addition, we look forward to the FIFA World Cup, which will boost volumes in the usually quiet season for our European business,” concluded Payne.
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