In a second-quarter trading update, the mobile gambling operator Probability revealed a 10 percent rise in revenue quarter on quarter -- growth the company's chief executive told IGamingNews was driven by new games and advertising relationships with mobile networks like Three and T-Mobile.
Net gaming revenue -- which comprises the majority of the company's total revenue -- came in at £1.37 million on a gross margin of nearly 74 percent. When asked about the company's net margin, however, Chief Executive Charles P. Cohen said he could not disclose.
Significantly, in the three months ending September 30, the company registered 56,297 new customers; Mr. Cohen, however, could not disclose the cost per acquisition.
As Mr. Cohen suggested on the company's annual results in July, mobile gambling customers do not typically moonlight as online gamblers; player acquisition, therefore, can be done "economically with the right marketing and relationships," he said.
Looking at the bottom line, the company said that it had generated a net profit and cash, but did not specify further. For reference, Probability, which debuted on London's Alternative Investment Market in August 2006, has been profitable since the second half of 2007.
According to Paul Leyland, an analyst with the company's house broker Collins Stewart, Probability is positioned via deals with Three, T-Mobile and O2 to reach approximately 95 percent of the United Kingdom's mobile users.
"Probability has proved that is [sic.] now able to acquire customers rapidly, consistently and profitably," Mr. Leyland wrote in a research note today. "Due to the (increasing) complexity of the space, mobile gambling supply remains limited. We believe this places Probability in a compelling strategic position."
Mr. Leyland also suggested in a Sept. 30 note that, broadly, mobile gambling is "too small and too new" to respond meaningfully to macroeconomic pressure, and that the mobile gambling product itself is resilient.
He said the mobile device is ubiquitous and convenience-led, which drives both the potential of mobile gambling penetration and what he called "snacking behavior." Probability's products, moreover, are primarily casino and slots games -- both of which tend to be resilient.
Mr. Cohen, who holds a 10 percent stake in Probability, said that low-stakes, high-volume gaming has been his company's strategy since day one: "For the same reason that EA (Electronic Arts) sells mobile versions of games for 25% the price of the equivalent franchise on XBox, mobile game playing (of any kind) is more 'casual' and 'snacking.' "
Perhaps the most intriguing development for Probability will be returns on its deal with Three. The agreement, inked in May, sees the mobile network operator roll out two million of its handsets with a link to Probability's casino, Ladyluck's, pre-installed.
Asked about the prospective returns, Mr. Cohen said pithily: "We live in hope."
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.