While PartyGaming's year-over-year first-half metrics showed growth across all revenue segments -- including the newly added bingo stream -- the company and its analysts were concerned by soft growth trends in sports betting and stagnation in its flagship poker offering.
Poker revenue came in at $153.9 million, up 6.4 percent against the comparable period last year but down 9.2 percent quarter over quarter. As part of its strategy to reignite growth and curb its loss of market share, the company intends to relaunch its PartyPoker platform during the second half.
"We think that that (relaunching the platform) will be a major driver in terms of bringing players back to see what we've done and to also acquire players," James A. Ryan, the company's recently installed chief executive, told analysts and investors during this morning's conference call in London.
Mr. Ryan said that a platform rebrand will accompany the relaunch in an effort to make the product "more relevant" to the European player community. He also projected that the company will improve management of high rollers -- some of whom were lost to technical difficulties this month -- as well as add needed steam to player-targeted marketing.
To boost liquidity on its poker network -- which, according to PokerScout.com, sits in fourth place behind Playtech Ltd. -- the company is set to offer a network licensing and service model, whereby Party's proprietary poker software will be licensed to clients.
"Whilst new for the group, this (licensing software) is not new for me," said Mr. Ryan, who prior to his post with Party was chief executive of St. Minver Ltd., a white label service provider. "It will add a new and we believe profitable revenue stream."
Analysts maintain, however, that until the network is in place, strong growth in poker is not likely.
"The group intends to re-launch its 'skins' programme and we understand it has been approached by a number of major potential licensees," Andrew P. Lee, an analyst with Party's house broker, Dresdner Kleinwort, wrote in a research note this morning. "This will take time, however, and until such time, growth in poker is likely to be limited."
Meanwhile, sports betting revenue grew 36 percent to $9 million, with a gross win margin of 4.4 percent during the six-month period.
"Still a one-trick pony -- virtually impossible to develop sports betting out of gaming," one analyst told IGN this morning, when asked about the company's performance in sports betting.
With regard to gross win margins, Martin Weigold, the company's chief financial officer, said on the call: "We would hope to see a recovery in the second half, certainly to above 5 percent, hopefully 6 percent."
Casino and bingo performed well, up 38 percent and 82 percent to $89.9 million and $2 million, respectively. Clean earnings before interest, taxes, depreciation and amortization came in at $60.9 million with profits after tax at $26.7 million.
Current trading, the company said, is in line with expectations though poker continues to be "slightly softer than expected." However, Richard Carter and Wyn Ellis, analysts with Numis Securities in London, estimate that between the second and third quarter, poker revenue has experienced a nearly double-digit drop.
Like its competitor 888 Holdings, the company was reluctant to offer details regarding its negotiations with the United States Department of Justice.
Mr. Ryan called the negotiations "a necessary but undue distraction" for the company. Rod W. Perry, who was appointed non-executive chairman today, will take over for Mr. Ryan in leading discussions with the American authorities.
The company was noticeably less optimistic on wrapping up a deal before the fiscal year concludes.
"The organization had set a target," Mr. Ryan said, "but the reality of it is that the process isn't in our control."
On the London Stock Exchange, PartyGaming, with a market capitalization of $1.5 billion, was down 1.99 percent to 209.25 pence.
Mr. Ryan was not available for comment.