Online bookmaker Sportingbet says it performed solidly in its third quarter (ending April 30), posting £19.0 million in profit over the period.
Overall gaming revenues reached £44.1 million in Q3. After subtracting £3.4 million in promotional bonuses, net gaming revenue amounts to £40.7 million.
Sportingbet is following a geographically broad-based business strategy after having learned crucial lessons from its experience in the U.S., which represented 65 percent of net gaming revenue before the group left the market. The company says one of its goals is to have no single country representing more than 20 percent of its net gaming revenue.
Net gaming revenues in Europe totaled £35.3 million in Q3. £7.8 million came from Spain, £5.6 million came from Turkey, £6.6 million came from Greece and £15.3 million came from the rest of the continent.
With two of its UK-based Sportingbet employees still being detained in Turkey, the company says it is reducing its reliance on the Turkish market by reducing its level of investment there. 13.9 percent of net gaming revenues came from Turkey in Q3, compared to 25.8 percent in Q2. The company notes, however, that "this strategy has impacted on the Group’s secondary product offerings of casino, games and poker, which were disproportionately popular with Turkish customers."
As for its broader European strategy, "the Group continues to focus on increasing yields from its existing customer base as well as seeking to attract new high value customers," according to a statement accompanying Sportingbet's operating results. "To support this the Group is investing in its customer proposition by both enhancing service levels for more valuable customers as well as increasing the quality and breadth of content offered. Additionally, the Group is implementing measures to improve registration and funding rates as well as rigorously examining the value and returns from marketing campaigns."
The statement added: "Casino and games revenue has held much of the gains made in Q2 following the implementation of product upgrades, but has suffered marginally by the reduction in Turkish volumes. Poker, much like the casino business has also suffered from a withdrawal of Turkish based volumes in what remains a very competitive non-US market."
The number of Australian customers increased by 34.4% to 15,933 in Q3. Margins in Australia, after betting taxes, came to 3.5 percent compared to 2.3 percent over the same period last year. Gross gaming revenues in Australia reached £5.2 million compared to £2.7 million over the same period last year.
Sportingbet's board of directors expects to meet full year expectations.
Financial Highlights
•Amounts wagered up 25.4% to £364.6m (2007: £290.8m)
•Group operating profit* up 143.3% to £7.3m (2007: £3.0m) in the quarter; £19.0m
year to date (2007: £7.0m)
•Operating profit* at 17.9% of net gaming revenue (2007: 8.9%) versus stated target
for the year of 13%
•Cash on the balance sheet, net of customer liabilities, of £34.9m (2007: £38.1m)
•Diluted earnings per share* of 1.2p (2007: 0.7p)
(* stated before charging exceptional items, fair value restatements and amortisation)
Business Highlights
•Continued strong growth in gaming revenue across both Europe and Australia
•Significantly improved operational profit margin – 17.9% vs. 8.9% Q3 07
•Broader geographical diversification – no single market representing over 20% of net
gaming revenue
•Year to date operating profit £19.0m (2007: £7.0m)