On its second-quarter key performance indicators, Playtech Ltd. continued to outperform with record year-over-year growth in total revenue. Quarter-on-quarter growth in the company's core casino business was strong, while growth in poker remained unchanged -- financial behavior about which analysts drew different conclusions.
The London-listed company revealed total quarterly revenue of $42.4 million, up 75 percent against the previous-year quarter and 9 percent against the first quarter of this year.
Casino revenue came in at $30.8 million, up 77 percent over the same quarter last year and 13 percent over the previous quarter.
Other revenue, which was primarily comprised of contributions from the company's bingo and server-based gaming arms, totaled $600,000, up 21 percent over the first quarter. A split was not given.
Poker revenue, up 74 percent versus the second quarter of last year, came in at $11 million, unchanged against the previous quarter.
"Poker was flat quarter on quarter, which we think represents significant market out performance," Richard Carter and Wyn Ellis, analysts with Numis Securities in London, wrote in a research note Wednesday.
"Poker is flat on Q1, highlighting seasonal effects, but also likely to concern bears of the increasingly competitive European poker market," James Hollins, an analyst with Daniel Stewart & Co., observed in a note to clients. Shares, incidentally, were indifferent, down 1 percent to 490 pence.
Whatever the explanation may be, Mor Weizer, chief executive of Playtech, told analysts and investors on Wednesday's conference call that poker revenue would grow on the back of new licensing agreements.
"We do expect that new licensees will enhance our poker revenues going forward, but in the first two quarters it was mainly existing licensees, meaning organic growth," he said.
Currently one of the industry's most prolific licensee acquirers, Playtech now maintains 60; ten new licensing agreements have come this fiscal year alone, and the company has a strong pipeline of potential additional licensees.
New launches will certainly be in abundance.
At least three licensees are expected to go live in the third quarter, with between three and five, conservatively, set to go live during the fourth, Mr. Weizer said on Wednesday's call.
Mr. Weizer also said branded slot games, by way of its new partnership agreement with Paramount Pictures Corporation, are expected to launch in the beginning of the fourth quarter.
The company is set to hard launch its suite of Asia-facing player-to-player games in the third quarter, after a successful soft launch during the first half. Its Flash-based poker product, too, is expected to go live during the third quarter.
Analysts, meanwhile, were curious regarding what kind of acquisition the company's $320 million war chest might fund.
"I can only say that we are looking at various opportunities, mainly software providers and the affiliated companies," Mr. Weizer said. "I can say that the company has commenced due diligence in relation to one of the affiliated companies, and so far progress has been satisfactory."
Asked when the market could expect a substantive announcement, he said: "It's hard to say, but if I had to estimate it, in the next couple of months."
With regard to the company's bingo arm, Mr. Weizer observed that it is still small but that "we have a few opportunities with some of our licensees that intend to grow the business quite significantly."
Bingo, he said, is expected to be revamped late in the third quarter, or early in the fourth.
"So far, we have only seen only a limited portion of our licensees requesting bingo," Mr. Weizer said. "Now that we have a few opportunities with some of our licensees, we realize that there is a bigger opportunity for our licensees and for Playtech, and we've put more focus on bingo to grow bingo."
Current trading in casino and poker has started well, the company said.
Mr. Hollins of Daniel Stewart retained his "hold" recommendation, noting: "The one potential negative in the statement would be the news that it is redeveloping its bingo offering, we assume given a level of underperformance relative to expectations."
Mr. Carter and Mr. Ellis of Numis have a "buy" recommendation on Playtech's shares. "Given . . . the upcoming launch of new licensees and products," they wrote, "we think the risks to forecasts are clearly on the upside."